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Financial skeptic

The more things change in the USA casino capitalism the more they stay the same

Cruise to Frugality Island for stock holding  401K Lemmings

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“When the capital development of a country becomes a by-product
of the activities of a casino, the job is likely to be ill-done.”

John Maynard Keynes

"Life is a school of probabilities."

Walter Bagehot

Note: Some thoughts  on 2019  added on Jan 3, 2019.

Neoliberal economics (aka casino capitalism) function from one crash to another. Risk is pervasively underpriced under neoliberal system, resulting in bubbles small and large which hit the economy periodically. The problem are not strictly economical or political. They are ideological. Like a country which adopted a certain religion follows a certain path, The USA behaviour after adoption of neoliberalism somewhat correlate with the behaviour of alcoholic who decided to booze himself to death. The difference is that debt is used instead of booze.

Hypertrophied role of financial sector under neoliberalism introduces strong positive feedback look into the economic system making the whole system unstable. Any attempts to put some sand into the wheels in the form of increasing transaction costs or jailing some overzealous bankers or hedge fund managers are blocked by political power of financial oligarchy, which is the actual ruling class under neoliberalism for ordinary investor (who are dragged into stock market by his/her 401K) this in for a very bumpy ride. I managed to observe just two two financial crashed under liberalism (in 2000 and 2008) out of probably four (Savings and loan crisis was probably the first neoliberal crisis). The next crash is given, taking into account that hypertrophied role of financial sector did not changes neither after dot-com crisis of 200-2002 not after 2008 crisis (it is unclear when and if it ended; in any case it was long getting the name of "Great Recession").

Timing of the next crisis is anybody's guess but it might well be closer then we assume. As Mark Twain aptly observed: "A thing long expected takes the form of the unexpected when at last it comes" ;-):

This morning that meant a stream of thoughts triggered by Paul Krugman’s most recent op-ed, particularly this:

Most of all, the vast riches being earned — or maybe that should be “earned” — in our bloated financial industry undermined our sense of reality and degraded our judgment.

Think of the way almost everyone important missed the warning signs of an impending crisis. How was that possible? How, for example, could Alan Greenspan have declared, just a few years ago, that “the financial system as a whole has become more resilient” — thanks to derivatives, no less? The answer, I believe, is that there’s an innate tendency on the part of even the elite to idolize men who are making a lot of money, and assume that they know what they’re doing.

As most 401K investors are brainwashing into being "over bullish", this page is strongly bearish in "perma-bear" fashion in order to serve as an antidote to "Barrons" style cheerleading. Funny, but this page is accessed mostly during periods of economic uncertainty. At least this was the case during the last two financial crisis(2000 and 2008). No so much during good times: the number of visits drops to below 1K a month.

Some thoughts  on 2019

It was clear that 2017 stock market run was detached from fundamentals. Mostly speculative run. And the current stock market decline could well happen three months aerler or three month later but it was in the cards. It is difficult to estimate the power of inertia in such speculative runs. Also layoffs and decline of the standard liming of workers and lower middle class still can continue to improve the balance sheet until "Yellow Vests" moment stops them.

Jobs created now are mostly "inferior" low paid or temp/contractor jobs and the numbers just mask the cruel reality of the USA job market.

Which in reality is dismal, especially for young and old workers. several more or less paid specialties disappeared in 2018 due to automation (cash office worker is one). automatic cashier is supermarkets are also now more visible.  So spontaneous cases of vandalism, killings of coworkers and other form of "action of desperation" (as well as the rate of death from opioids -- which is yet another form of the same) would not be too surprising in such an atmosphere. Even with the power of the current national security state. Trump is playing with fire trying to cut on food stamps and implementing some other action in this program of "national neoliberalism" which is in internal policy is almost undistinguishable from neofascism.  He risk facing "Macron situation" sooner or later.

In any case at some point Minsky moment should arrive for the stock market. I am not sure that the current decline is that start of such an event. It might be postponed further down the line for a year or two.  But it will eventually come.  We can only guess what form it might take, but with the current Apple troubles and valuations of tech sector I think it might take the form of something similar to dot-com bubble deflation No.2

I do not see Amazon, Google, Facebook and Microsoft and other tech high flyers completely immune to the stock crash of 50% magnitude or more. For example, Google is overly dependent on advertising revenue which can grow only by strangulating small sites owners which use it as the advertizing platform (which it successfully implements fro several years now). But at some point owners might revolt and start dropping it for Microsoft or other platform.  Facebook might face a backlash, if people understand that selling data about them in the part of the business model, not an aberration.

One of the most unexplainable things that happened in 2018 was dramatic fall of oil prices in the Q4. This was quite surprising (and destructive) after the period of little or no capital investment in the new fields for three years or so.  Shale oil production increases in the USA are only possible if junk bonds can be produced along with it. Junks bonds that will never be paid. With the current debt load and prices below $50 most of the USA shale oil companies are zombies. Most if not all of thenm are losing money.  Only return of ~$70 oil prices can save them, if anything at all. WSJ touched this topic recently.

So this surprising fall of oil prices (from around $70 to around $43 WTI) looks connected to the speculations in the "paper oil" market.

Financialization allows for oil price to be completely detached from fundamentals for a year or even two (Saudis need over $80 I think to balance the budget, I think; this represents "fair price" as they are one of the three largest producers).

But you will never know this unless there are shortages at gas stations. The difference is covered by inflated statistics from IEA and similar agencies as well as "paper oil" -- future contracts which are settled in dollars.

This is the reality of "casino capitalism" ( aka neoliberalism ) with its rampant and destructive financialization.


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[Aug 22, 2019] My advice is to relocate someplace with moderate weather

Aug 22, 2019 | peakoilbarrel.com

TechGuy x Ignored says: 08/18/2019 at 11:49 am

"A reason to go long on NG? US consumption rate is mind-boggling. NG is now banned for new construction in some regions."

Should get interesting when NG prices start rising considering that Power companies have been shutting down lots of coal and nuclear plants & replacing then with NG plants. It would not surprise me to see power prices soaring to 35 to 50 cents per kwh in the US. I would imagine lots of people that use NG or Propane for heating also find it difficult to heat their homes in the winter.

My advice is to relocate someplace with moderate weather: Not too cold (heating) or not too hot (air conditioning) as energy prices rise. Either build new or retrofit your home to be extremely energy efficient. My guess is that probably 50% of US home are not going to be livable without affordable heating & cooling. During the bubble years lots of poor quality homes need cheap energy. Not sure if many of them could be retrofitted because of poor layouts & construction.

Also a good idea not to relocate near any major urban regions. I would imagine high unemployment, uncomfortable living conditions is going to make a lot of unhappy & desperate campers: ie lots of violence, riots, general despair.

GuyM x Ignored says: 08/18/2019 at 12:02 pm
Or, move to Texas. Unlimited NG and has its own energy grid.
Longtimber x Ignored says: 08/18/2019 at 1:07 pm
Unless you have 25,000 gal Buried Propane tank to last you a Lifetime, I'd consider lightly populated areas of the Ozarks, IMO Need to be above 1500 feet elevation and have ancient water. I've been buying remote land with and without grid access for decades. If anyone wants to share strategies email me at my handle at gmail. Texas Energy much too Fragile and Centralized. Solar 2.0 will allow abundant battery-optional energy. You can light a mansion with a handful of 18650's, so you really don't need much in that way of eChem Storage. Note that Li Batteries are on the Sept 1st Tariff List. So if you been thinking of a BattleBorn LFP (Lithium Phosphate) Battery for your RV or UPS, now may be the best time for a while.
islandboy x Ignored says: 08/19/2019 at 11:50 am
"It would not surprise me to see power prices soaring to 35 to 50 cents per kwh in the US."

Over what sort of time frame? Maybe for short periods in the short term but, prices like that would result in massive surges of capacity growth for wind and solar. LCOE for solar and wind are now under 2c per kWh in some locations and I suspect at some point in the next decade they will both have an LCOE of under a cent per kWh. 35 to 50 cents? Please!

TechGuy x Ignored says: 08/19/2019 at 12:41 pm
IslandBoy Wrote:
"Maybe for short periods in the short term but, prices like that would result in massive surges of capacity growth for wind and solar."

I doubt it. Electric prices in Germany are about 35 to 40 cents per kwh, and they have a lot of solar & wind which is backed by cheap Polish Coal fired power plants. Issue with both Solar & wind is intermittent generation. Every watt produced by solar & wind in the US is backed by NG fired plants. There is no massive storage system to back Solar & wind production. The only reason why Solar & Wind works is due to the very low cost of NG prices & the fast ramp up/ramp down of NG fired turbines which can change output in just a minute or two.

US power companies are borrowing billions to replace old coal fired & nuclear plants with new NG plants. That debt isn't going disappear even if NG prices go through the roof. The US also has an grid that is showing its age likely needing $300B to $500B in investment for updates and to replace worn out equipment and distribution lines over the next 25 years. We also have to pay a huge cost in decommission shutdown Nuclear power plants (currently shutting down between 2 & 4 Nuke plants per year).

The USA is dead broke with $23T in national debt, and about $70T in unfunded pensions & entitlements. Currently the only way the US economy can function is with ultra low interest rates so it can continue to borrow trillions to keep its doors open. Sooner or later the USA is going to run out road to kick the can, and my guess is that all comes apart in the 2020s.

The US lacks a skilled workforce for the electrical grid as there are few young workers in the industry. Most of the US power companies are in panic mode because their boomer workers are retiring & they cannot find replacements:

https://www.tdworld.com/safety-and-training/trends-report-power-companies-facing-labor-shortage-and-skills-gap

Plus NG is the #1 resource in the US for home heating and Domestic hot water. So even if somehow NG is completely eliminated (very improbable) from power generation it does nothing to solve heating needs.

islandboy x Ignored says: 08/20/2019 at 9:15 am
I can only respond by saying I think Watcher is on to something with regards to money. US Politicians are unlikely to let a lack of money get between their voters and the voters' energy needs. If money is what is needed, it will be borrowed or "quantitatively eased" or whatever (created out of thin air!). That applies to tight oil now and will probably apply to renewables any time they are seen as a viable substitute for FF. I follow developments in the solar PV, EV and battery space very closely. You might be surprised at some of the stuff that is coming down the pike!

[Aug 22, 2019] Banks and investors took away the punch bowl from shale oil, and second quarter losses reflect that.

Aug 22, 2019 | peakoilbarrel.com

TechGuy : 08/19/2019 at 9:40 am

Hugo,

The only production preventing Oil from peaking as far back as 2013-2014 was US Shale, which can only function by borrowing Billions from gullible investors that will never be paid back. If investors were not so gullible, US production would have peaked years ago. Global Peak Oil is controlled by cheap & easy credit. Take away the credit punch bowl and US Shale production collapses, and global production peaks. PO is no longer dependent of geology, but credit.

FWIW: I suspect Shale drillers are going to have a hard time finding more investors willing to part with their capital, especially when Oil prices are very low. That said its possible that the Federal gov't (via Fed) will step in and start buying billions of shale debt (via QE or some other financial bailout mechanism) so Shale drilling can continue on. It appears that the US is running into liquidity problems again as Bond markets are showing signs that they are freezing up again.

GuyM : 08/19/2019 at 10:00 am
Banks and investors took away the punch bowl, and second quarter losses reflect that. Third is going to be the same, and too late for any price increases to reflect anything but losses for this year. No positives going into 2020. Their best option is to find adoption. And being a bunch of spoiled brats, that's going to be somewhat difficult.
Hugo : 08/19/2019 at 12:22 pm
Tech

I agree that shale has been the biggest contributor to increase in global oil supply. However it has also distorted the entire industry.

If the shale companies had to make a profit each year, global supply would have been a less and prices much higher.

This in turn would have supported e&p investment around the world. The fall in investment has been due entirely to shale companies that have been allowed to run at a loss for so many years.

https://www.iea.org/oil2018/

A fall from $800 billion to $400 billion will have a detrimental knock on effect in the mid 2020s

https://www.iea.org/newsroom/news/2018/november/crunching-the-numbers-are-we-heading-for-an-oil-supply-shock.html

TechGuy : 08/19/2019 at 1:04 pm
I don't think we would see a massive rebound in E&P if US shale was eliminated. Shell, Exxon, BP and other started pulling back on Megaprojects back in 2012-2013, since it was doubtful that it would be economical. Basically megaprojects (deepwater & arctic) required $120 to $150 (in 2013 dollars) per bbl to be economically. I don't believe those prices would be sustainable as it would result in demand destruction as consumers would cut back on consumption. The fact that Oil majors were looking at Arctic and deepwater back in 2010-2013 indicates they are reaching the bottom of the barrel for production. There was a long term trend of declining exploration finds even when exploration budgets increased.

At this point any major rebound isn't going to make a difference, if a Oil major started on a new megaproject it would be between 5 and 7 years before new oil reaches the market, and very unlikely to offset declines from existing production (5% to 7% annual declines). We are already behind the curve on gains from any new projects to offset ongoing declines with out shale growth). Perhaps a some of the declines in existing fields could be offset some with higher oil prices. Still reaching to scrap the bottom by trying to extract trapped oil in fields in terminal decline. With all of the supergiants in terminal decline (with the exception of Kazakhstan), its going to be very difficult to expand production further.

Personally I am guessing that global production has already peaked or within the next 18 months if we are lucky). Its difficult to pinpoint an exact period since their are way to many variables to gage effectively. That said I cannot say my record for guessing peak production is any better than winning a lottery, but as the window narrows due to depletion and a shrinking supply of future projects the guessing gets a lot easier.

Hugo : 08/20/2019 at 1:31 am
Tech

Did the majors start cutting back because having knowledge of the geology of the shale plays they realised their potential?

https://www.eia.gov/todayinenergy/detail.php?id=38372

Shale had already taken off by then and predictions of possible productions were being made and importantly have come true.

The majors would have realised there would be too much oil in the short to medium term, so they sensibly postponed more expensive drilling.

How this mess with heavy indebted shale companies and years of under investment plays out I am not sure.
Probably a lower and sooner peak oil than would otherwise have been.

Dennis Coyne : 08/19/2019 at 6:32 pm
Hugo,

Not sure anyone has said US has peaked, the point is that US tight oil growth will slow and it is not apparent that any other nations are increasing output in 2019, so far the drop by OPEC/NOPEC has been greater than any US increase in 2019 and it is looking like 2019 output will be lower than 2018 if current trends continue. When we get to the point that oil prices rise to $80/b, I expect OPEC/NOPEC will increase output, but we do not know when that will be and it is certainly possible that US output might be falling at a faster rate than the rest of the World's rise in output so the net might be a plateau or decline.

Note also that my "medium URR" estimates might be too optimistic, if my "low URR scenarios" prove correct, the peak is likely to be earlier (2022/2023), and if there is a fast transition to EVs, more public transport, etc perhaps the peak in World C+C output could be earlier still. I doubt this will be the case, but in the past I doubted that World C+C output would exceed 80 Mb/d, I was wrong then and I may be wrong now.

Survivalist : 08/20/2019 at 10:00 am
Hugo, something peaked in 2011, so I'd say the peak oil gang is onto something worth listening to. Perhaps you disagree. The graph is a bit dated, but you get the point I'm sure.
I'd say calling peak oil to be in 2018/2019, vs to be within 2022 to 2026 time frame, is pretty much splitting hairs. Perhaps you're just smarter than everyone else here and don't tolerate such loose parameters?
How did you come to your prediction, riding on Dennis' coattails, or do you have any original ideas of your own to contribute?

... ... ...

GuyM : 08/19/2019 at 6:05 am
The assumptions make all the difference. And no one can accurately predict what will happen the rest of the day, much less tomorrow.

The key to the future, so far, is how the majority of independents will fare. Dennis sees prices improving so that many of them heal up, and production is restored to a norm. Ron sees them as totally messed up, which is more my take.

And I am also betting on the majors. They don't lay out hundreds of billions of dollars for downstream without a big plan in mind. And, that plan could not call for those investments to be totally useless in ten years. It wouldn't surprise me to see the skies over the shale areas filled with golden parachutes.

Ten years, or less, based on EOGs quarterly tell sheet. Do you opt for the golden parachute soon, or use your own just before the plane crashes?

[Aug 22, 2019] Attacks of Saudi infrastructure will continue: Houthi drone is mounted with a 30kg warhead and it is flown into the target, usually in a swarm attack.

Aug 22, 2019 | peakoilbarrel.com

Hightrekker

x Ignored says: 08/17/2019 at 11:16 am
Yemen rebel drone attack targets remote Saudi oil field

https://www.miamiherald.com/news/business/article234108062.html

Things are getting even more interesting.

Tom Wilson x Ignored says: 08/17/2019 at 11:49 pm
This attack was 750 miles from Houthi territory.
Round trip would be 1,500 miles.
A Predator has a published range of 1,150 miles.
My guess is they are infiltrating Saudi Arabia, attacking from much closer than 750 miles out and maybe sacrificing the drone. Sort of like the Jimmy Doolittle raid on Tokyo in WWII, for similar purpose. With a similar result. Message sent, message received.
Hightrekker x Ignored says: 08/18/2019 at 9:11 am
You know more than I do.
Sounds reasonable.
Survivalist x Ignored says: 08/18/2019 at 10:55 am
It's a one way trip. The drones used by houthis don't fire a missile and then fly home, they are the missile. The drone is mounted with a 30kg warhead and it is flown into the target, usually in a swarm attack.

https://www.defensenews.com/unmanned/2019/05/21/how-yemens-rebels-increasingly-deploy-drones/

https://en.m.wikipedia.org/wiki/HESA_Ababil

Hightrekker x Ignored says: 08/18/2019 at 11:01 am
Thats was my understanding also --

[Aug 22, 2019] Trump energy policy is sanctions, regime change and more regime change

Aug 22, 2019 | peakoilbarrel.com

Longtimber x Ignored says: 08/17/2019 at 8:35 am

It appears that the US (25% of global oil consumption/waste?) has but 3 choices. 1. Become Trading partners with Russia and Iran. 2. Get serious on Energy Transition execution. 3. War, Terror and more regime change 4. Deploy the Alan Parsons Project.
https://youtu.be/Ei_GZnrr1nw?t=23
What say You?
Rob H x Ignored says: 08/17/2019 at 8:51 am
Usually 1 and 3 are combined in the resource rich country aren't they? Then it goes wrong some way down the road when the new regime 'turn', and things get worse than before
Tom x Ignored says: 08/17/2019 at 11:26 am
3. seems to fit the history. I don't blame anyone not patient enough to scroll down to the bottom.

https://en.wikipedia.org/wiki/List_of_wars_involving_the_United_States

Watcher x Ignored says: 08/17/2019 at 11:03 am
Oh for God's sake.

Here you go, chew on this. The day there are the initial 2 mile long lines at gasoline stations, not just in the US but all over the world . . . that day we will still see announcements of record oil production globally.

This is species killing stuff. Wall Street popular saying . . . no one rings a bell at the top. Well, no one is going to give you any warning whatsoever that oil scarcity deaths start that month. You will know nothing of it. You will be told it is all from some temporary factor that will soon be fixed.

So if you see something now that looks like a warning sign, it's probably not legit.

Ron Patterson x Ignored says: 08/17/2019 at 6:58 pm
Perhaps. OPEC is producing at 2011 levels. The world is kept at bay from peak oil only by US shale production. And US shale production is on shaky legs, just trying to stay ahead of the red queen.

I just don't see this blind optimism that US shale will continue upward for the next 5 to 6 years.

I well remember when it was said that: "When Saudi Arabia peaks, the world peaks". That was just not correct. But now it is obvious that when the US of A peaks, the world peaks.

Ron Patterson x Ignored says: 08/17/2019 at 7:54 pm
Dennis, OPEC produced more oil per day in 2005 than they are producing today. OPEC peaked in 2016. End of story.

OPEC will not save the world from peak oil.

Ron Patterson x Ignored says: 08/18/2019 at 7:31 am
. Thats 3 to 4 mbod without question.

Sanctions are not affecting Venezuela's oil production. It is collapsing for another reason. And it will take them a decade or more to recover when they finally settle their economic problems.

But there will always be political problems. They are likely to get worse, not better.

Peak oil will be when the most oil is produced, not what could be produced if there were no political problems anywhere in the world.

hole in head x Ignored says: 08/18/2019 at 12:09 pm
Opec will not save the world and neither will USA . The problem is that all the increase in the last few years is from shale or LTO ,call it what you will . Problem is that this is mostly + 45 API so poor in middle distillates . In reality peak oil is when the^ black goo^ peaks . NGL's ,NGPL,s ,bio fuels, LTO and the term ^all liquids^ are used as a fig leaf to hide the real peak of the ^black goo ^ . We are past peak as far as the ^black goo^ is concerned .
Watcher x Ignored says: 08/18/2019 at 1:02 pm
The nature of the liquid is a big deal.

The bigger deal is this believing of numbers that come from people with agendas.

You're not going to get any warning. No one has any incentive to give anyone correct data.

Han Neumann x Ignored says: 08/18/2019 at 3:06 pm
"The problem is that all the increase in the last few years is from shale or LTO ,call it what you will . Problem is that this is mostly + 45 API so poor in middle distillates . "

In 2005 (!) on Bloomberg tv channel someone said, in other words, that the most valuable oil to make kerosene of is increasingly difficult to get. I guess that kerosene is a middle distillate.
The shale oil boom might last for many decades, for what it is worth

Ron Patterson x Ignored says: 08/18/2019 at 4:16 pm
The shale oil boom might last for many decades, for what it is worth.

Shale production may continue for a decade, or a bit longer, but not decades. However, that is not the point. The point is, how long can shale continue to increase production.

The legacy decline for shale varies between 5% and 6% per month! The EIA's Drilling Productivity Report says US Shale production will increase by 85,000 barrels per day in September. Probably not, but that is not the point. To get an increase of 85,000 barrels per day, they had to have new well production of 649,000 barrels per day. That is because they had 564,000 barrels per day of legacy decline. For every one barrel per day of increased production, they had to produce 7.64 barrels per day of new oil because they had 6.64 barrels per day of legacy decline.

The more they produce the more they have to produce just to stay even.

Frugal x Ignored says: 08/18/2019 at 5:29 pm
For every one barrel per day of increased production, they had to produce 7.64 barrels per day of new oil.

This is the key point regarding shale oil production. The higher the production, the more new production is needed to increase production. It's essentially an exponential function. Shale oil production will not increase for much longer because it's not physically possible to drill/frack at a sustained exponential rate.

This is the key

Ron Patterson x Ignored says: 08/18/2019 at 6:19 pm
Frugal, damn, why is that so hard for some people to understand?
Eulenspiegel x Ignored says: 08/19/2019 at 3:52 am
I don't see this exponential problem in shale.

Shale production is not oil production, it's mining.

You need 3 drilling teams, 4 fracking teams and get over long time a constant production. When you want to increase (say you have enough acres, as enough ore in a iron mine) you hire 2 new teams, as in mining employing a new excavator and conveyor belts.

So, like in a mine, when you fire a team production drops almost immediately.

The big ones (XON) in the Permian do Shale oil mining exactly like this – they have own drilling and fracking team, working constantly.

The same thing as mining is when you have to drill your b-class acres. As in a mine when the ore veins run out in thickness.

So either close your mine, hire more teams to maintain production or life with decreasing production at constant costs when the qulity is declining.

I've left out technical progress. This is just a cost reducer (need less drilling / fracking teams to do the same output).

Ron Patterson x Ignored says: 08/19/2019 at 7:59 am
Eulenspiegel, your mining example is not a good comparison at all. That is because new mines don't decline in production by 6% per month.

Here is the exponential function of shale oil. They must produce new oil at the decline rate just to stay even. Growth in production is only accomplished if they produce more oil than declined that month.

But if they do produce more oil than the decline rate, then the decline will be even higher the next month. That is, if they had to produce 649,000 barrels of new oil in September to grow production by 85,000 barrels, then to grow oil by a like amount in October, they will have to produce more than 649,000 barrels. The more they increase production each month, then the more they will have to produce the next month just to stay even.

When production increases, the monthly loss through legacy decline also increases. Therefore just producing the same increase as they did last month will not do. They must always continue to increase by more than they did last month just to stay even.

Entropy x Ignored says: 08/19/2019 at 8:43 am
As always: The greatest shortcoming of the human race is our inability to understand the exponential function
Eulenspiegel x Ignored says: 08/19/2019 at 10:55 am
Ron, in my opinion it is a better model than conventional oil.

In conventional oil, you can pump 20 years after drilling. For 50 you'll have to do more things like water flooding etc. So increasing production is just drilling a few more holes (and install the additional infrastructure).

In mining, you have a decline rate of 100% / day.
You send a team in, they mine 100 tons of ore in their shift, move out and production after their shift is 0.

When you want more ore, you have to send in a team next day again.

Having 1 minint team gives you constant ore / day. Firing them gives you sudden production of 0.

So with LTO you send a fracking team in to create 1 well, produce oil for a few months (I'm exaggerating) and then you have 0 production again.

So you have to send in the team again. And again.

If you use 1 team drillling constantly new holes. you'll have nearly constant production (after the first ramp up time of overlaying declining productions, in reality a few years).

Increasing production means more teams constantly drilling new holes (as in mining: drill hole, fill with explosives, boom, carry away ore, repeat).

The big question for the peak shale oil is here: How many drilling/fracking teams can be payed and supplied with anything they need for working efficient. It's not just hiring teams.

To employ more teams they need more road capacity, sand capacity, water transport, take away pipelines, more stuff you know better than me.

As in deep mining: The elevator capacity / tunnel train capacity limits the maximum possible production. For increasing production, you have to increase everything, and then hire new teams.

So the question is: How much money do they invest to stretch all these capacities.

ProPoly x Ignored says: 08/20/2019 at 12:35 pm
Well the world's conventional oil production certainly peaked a while ago. Even if one treats Venezuela and Canada as conventional because their production was usually in forecasts, the USA fracking has to be considered a separate thing. The industry cycle is different, the grade produced is different, the economics are "different." The tail is *very* different as without new drilling the entire patch would disappear in less than three years. Blap, gone to stripper wells.
HuntingtonBeach x Ignored says: 08/17/2019 at 9:26 pm
Not so fast Ron

This is the age of Trump. I know for us simpletons it makes sense the average would be production. I'm not sure how Trump would do it, but I'll bet the tangerine could make 2019 peak the best ever. A world depression followed by war.

Ron Patterson x Ignored says: 08/18/2019 at 12:30 pm
No, but OPEC + Russia + Canada, about 58% of world oil production, is down 667,000 barrels per day, April to July. I doubt that the other 42% of world oil production is up anywhere near that amount.

The 2019 7 month average for OPEC + Russia + Canada is 1,629,000 barrels per day below their 2018 average.

I have posted that chart up top, just below OPEC+ Russia.

[Aug 22, 2019] I'm astonished that completions are continuing almost regardless of the oil price but they have been.

Aug 22, 2019 | peakoilbarrel.com

Sean x Ignored says: 08/19/2019 at 6:26 pm

So to summarise, Denis assumes completions will continue in Permian at a steady rate while Guym/ Ron assume a drop in completions.

I'm astonished that completions are continuing almost regardless of the oil price but they have been.

Is there a tipping point where oil companies suspend/ reduce drilling in the Permian until it is profitable again?

I guess only time will resolve that question.

My guess is that some companies will review their q3 operations, possibly seriously affecting production growth but what do i know?

[Aug 22, 2019] I have read the shale oil have change some character especially in 2019. It have become more light that means lower quality

Aug 22, 2019 | peakoilbarrel.com

Freddy x Ignored says: 08/19/2019 at 11:08 am

Thanks for valuable informstion Guy, in my mind from what I have read the shail oil have change some caracter espesialy in 2019. It have become more light that means lower quality. If quality goes down this will mean less profit if any at all to drill new wells after all exspensives, loan balones are payed. The good thing is it seems now low sulfur diesel demand increase because new IMO rules and prices, refinery margins in Asia increases. But it might be this will have minor Impact for WTI price as they demand more heavey oil , brent i.e for their marine diesel..

[Aug 21, 2019] Trump's Deficit Economy is bonanza for large coporation but not for the US workers. Fiscal stimulus now is just pushing on the string

Highly recommended!
The US economy has not been working for most Americans, whose incomes have been stagnating – or worse – for decades. These adverse trends are reflected in declining life expectancy. The Trump tax bill made matters worse by compounding the problem of decaying infrastructure, weakening the ability of the more progressive states to support education, depriving millions more people of health insurance, and, when fully implemented, leading to an increase in taxes for middle-income Americans, worsening their plight.
Notable quotes:
"... Long ago, John Maynard Keynes recognized that while a sudden tightening of monetary policy, restricting the availability of credit, could slow the economy, the effects of loosening policy when the economy is weak can be minimal. Even employing new instruments such as quantitative easing can have little effect, as Europe has learned. In fact, the negative interest rates being tried by several countries may, perversely, weaken the economy as a result of unfavorable effects on bank balance sheets and thus lending. ..."
"... The lower interest rates do lead to a lower exchange rate. Indeed, this may be the principal channel through which Fed policy works today. But isn't that nothing more than "competitive devaluation," for which the Trump administration roundly criticizes China? ..."
"... But, at another level, the Fed action spoke volumes. The US economy was supposed to be "great." Its 3.7% unemployment rate and first-quarter growth of 3.1% should have been the envy of the advanced countries. But scratch a little bit beneath the surface, and there was plenty to worry about. Second-quarter growth plummeted to 2.1%. Average hours worked in manufacturing in July sank to the lowest level since 2011. Real wages are only slightly above their level a decade ago, before the Great Recession. Real investment as a percentage of GDP is well below levels in the late 1990s, despite a tax cut allegedly intended to spur business spending, but which was used mainly to finance share buybacks instead. ..."
"... America should be in a boom, with three enormous fiscal-stimulus measures in the past three years. The 2017 tax cut, which mainly benefited billionaires and corporations, added some $1.5-2 trillion to the ten-year deficit. An almost $300 billion increase in expenditures over two years averted a government shutdown in 2018. And at the end of July, a new agreement to avoid another shutdown added another $320 billion of spending. If it takes trillion-dollar annual deficits to keep the US economy going in good times, what will it take when things are not so rosy? ..."
"... Redistribution from the bottom to the top – the hallmark not only of Trump's presidency, but also of preceding Republican administrations – reduces aggregate demand, because those at the top spend a smaller fraction of their income than those below. This weakens the economy in a way that cannot be offset even by a massive giveaway to corporations and billionaires. And the enormous Trump fiscal deficits have led to huge trade deficits, far larger than under Obama, as the US has had to import capital to finance the gap between domestic savings and investment. ..."
"... Trump promised to get the trade deficit down, but his profound lack of understanding of economics has led to it increasing, just as most economists predicted it would. Despite Trump's bad economic management and his attempt to talk the dollar down, and the Fed's lowering of interest rates, his policies have resulted in the US dollar remaining strong, thereby discouraging exports and encouraging imports ..."
Aug 10, 2019 | economistsview.typepad.com

anne , August 10, 2019 at 06:18 AM

https://www.project-syndicate.org/commentary/trump-trade-and-fiscal-deficits-by-joseph-e-stiglitz-2019-08

August 9, 2019

Trump's Deficit Economy

Economists have repeatedly tried to explain to Donald Trump that trade agreements may affect which countries the US buys from and sells to, but not the magnitude of the overall deficit. But, as usual, Trump believes what he wants to believes, leaving those who can least afford it to pay the price.
By JOSEPH E. STIGLITZ

NEW YORK – In the new world wrought by US President Donald Trump, where one shock follows another, there is never time to think through fully the implications of the events with which we are bombarded. In late July, the Federal Reserve Board reversed its policy of returning interest rates to more normal levels, after a decade of ultra-low rates in the wake of the Great Recession. Then, the United States had another two mass gun killings in under 24 hours, bringing the total for the year to 255 – more than one a day. And a trade war with China, which Trump had tweeted would be "good, and easy to win," entered a new, more dangerous phase, rattling markets and posing the threat of a new cold war.

At one level, the Fed move was of little import: a 25-basis-point change will have little consequence. The idea that the Fed could fine-tune the economy by carefully timed changes in interest rates should by now have long been discredited – even if it provides entertainment for Fed watchers and employment for financial journalists. If lowering the interest rate from 5.25% to essentially zero had little impact on the economy in 2008-09, why should we think that lowering rates by 0.25% will have any observable effect? Large corporations are still sitting on hoards of cash: it's not a lack of liquidity that's stopping them from investing.

Long ago, John Maynard Keynes recognized that while a sudden tightening of monetary policy, restricting the availability of credit, could slow the economy, the effects of loosening policy when the economy is weak can be minimal. Even employing new instruments such as quantitative easing can have little effect, as Europe has learned. In fact, the negative interest rates being tried by several countries may, perversely, weaken the economy as a result of unfavorable effects on bank balance sheets and thus lending.

The lower interest rates do lead to a lower exchange rate. Indeed, this may be the principal channel through which Fed policy works today. But isn't that nothing more than "competitive devaluation," for which the Trump administration roundly criticizes China? And that, predictably, has been followed by other countries lowering their exchange rate, implying that any benefit to the US economy through the exchange-rate effect will be short-lived. More ironic is the fact that the recent decline in China's exchange rate came about because of the new round of American protectionism and because China stopped interfering with the exchange rate – that is, stopped supporting it.

But, at another level, the Fed action spoke volumes. The US economy was supposed to be "great." Its 3.7% unemployment rate and first-quarter growth of 3.1% should have been the envy of the advanced countries. But scratch a little bit beneath the surface, and there was plenty to worry about. Second-quarter growth plummeted to 2.1%. Average hours worked in manufacturing in July sank to the lowest level since 2011. Real wages are only slightly above their level a decade ago, before the Great Recession. Real investment as a percentage of GDP is well below levels in the late 1990s, despite a tax cut allegedly intended to spur business spending, but which was used mainly to finance share buybacks instead.

America should be in a boom, with three enormous fiscal-stimulus measures in the past three years. The 2017 tax cut, which mainly benefited billionaires and corporations, added some $1.5-2 trillion to the ten-year deficit. An almost $300 billion increase in expenditures over two years averted a government shutdown in 2018. And at the end of July, a new agreement to avoid another shutdown added another $320 billion of spending. If it takes trillion-dollar annual deficits to keep the US economy going in good times, what will it take when things are not so rosy?

The US economy has not been working for most Americans, whose incomes have been stagnating – or worse – for decades. These adverse trends are reflected in declining life expectancy. The Trump tax bill made matters worse by compounding the problem of decaying infrastructure, weakening the ability of the more progressive states to support education, depriving millions more people of health insurance, and, when fully implemented, leading to an increase in taxes for middle-income Americans, worsening their plight.

Redistribution from the bottom to the top – the hallmark not only of Trump's presidency, but also of preceding Republican administrations – reduces aggregate demand, because those at the top spend a smaller fraction of their income than those below. This weakens the economy in a way that cannot be offset even by a massive giveaway to corporations and billionaires. And the enormous Trump fiscal deficits have led to huge trade deficits, far larger than under Obama, as the US has had to import capital to finance the gap between domestic savings and investment.

Trump promised to get the trade deficit down, but his profound lack of understanding of economics has led to it increasing, just as most economists predicted it would. Despite Trump's bad economic management and his attempt to talk the dollar down, and the Fed's lowering of interest rates, his policies have resulted in the US dollar remaining strong, thereby discouraging exports and encouraging imports. Economists have repeatedly tried to explain to him that trade agreements may affect which countries the US buys from and sells to, but not the magnitude of the overall deficit.

In this as in so many other areas, from exchange rates to gun control, Trump believes what he wants to believe, leaving those who can least afford it to pay the price.

Joseph E. Stiglitz, a Nobel laureate in economics, is University Professor at Columbia University.

[Aug 21, 2019] Losing a job in your 50s is especially tough. Here are 3 steps to take when layoffs happen by Peter Dunn

Unemployment benefits currently are usually is just six month or so; this is the time when you can plan you "downsizing". You do not need to rush but at the same time do not expect that you will get job offers quickly, if at all. Usually it does not happen. many advertised positions are fakes, another substantial percentage is already reserved for H1B candidates and posting them is the necessary legal formality.
Often losing job logically requires selling your home and moving to a modest apartment, especially if no children are living with you. At 50 it is abut time... You need to do it later anyway, so why not now. But that's a very tough decision to make... Still, if the current housing market is close to the top (as it is in 2019), this is one of the best moves you can make. Getting from your house several hundred thousand dollars allows you to create kind of private pension to compensate for losses in income till you hit your Social Security check, which currently means 66.
$300K investment in A quality bonds that returns 3% per year is enough to provides you with $24K per year "private pension" from 50 to age of 66 when social security kicks in. That allows you to pay for the apartment and amenities. The food is extra but with this level of income you qualify for food assistance.
This way you can take lower paid job, of much lower paid job (which mean $15 per hour), of temp job and survive.
And if this are many form you house sell your 401k remains intact and can supplement your SS income later on. Simple Excel spreadsheet can provide you with a complete picture of what you can afford and what not. Actually the ability to walk of fresh air for 3 or more hours each day worth a lot of money ;-)
Notable quotes:
"... Losing a job in your 50s is a devastating moment, especially if the job is connected to a long career ripe with upward mobility. As a frequent observer of this phenomenon, it's as scary and troublesome as unchecked credit card debt or an expensive chronic health condition. This is one of the many reasons why I believe our 50s can be the most challenging decade of our lives. ..."
"... The first thing you should do is identify the exact day your job income stops arriving ..."
"... Next, and by next I mean five minutes later, explore your eligibility for unemployment benefits, and then file for them if you're able. ..."
"... Grab your bank statement, a marker, and a calculator. As much as you want to pretend its business as usual, you shouldn't. Identify expenses that don't make sense if you don't have a job. Circle them. Add them up. Resolve to eliminate them for the time being, and possibly permanently. While this won't necessarily lengthen your fuse, it could lessen the severity of a potential boom. ..."
Feb 15, 2019 | finance.yahoo.com

... ... ...

Losing a job in your 50s is a devastating moment, especially if the job is connected to a long career ripe with upward mobility. As a frequent observer of this phenomenon, it's as scary and troublesome as unchecked credit card debt or an expensive chronic health condition. This is one of the many reasons why I believe our 50s can be the most challenging decade of our lives.

Assuming you can clear the mental challenges, the financial and administrative obstacles can leave you feeling like a Rube Goldberg machine.

Income, health insurance, life insurance, disability insurance, bills, expenses, short-term savings and retirement savings are all immediately important in the face of a job loss. Never mind your Parent PLUS loans, financially-dependent aging parents, and boomerang children (adult kids who live at home), which might all be lurking as well.

When does your income stop?

From the shocking moment a person learns their job is no longer their job, the word "triage" must flash in bright lights like an obnoxiously large sign in Times Square. This is more challenging than you might think. Like a pickpocket bumping into you right before he grabs your wallet, the distraction is the problem that takes your focus away from the real problem.

This is hard to do because of the emotion that arrives with the dirty deed. The mind immediately begins to race to sources of money and relief. And unfortunately that relief is often found in the wrong place.

The first thing you should do is identify the exact day your job income stops arriving . That's how much time you have to defuse the bomb. Your fuse may come in the form of a severance package, or work you've performed but haven't been paid for yet.

When do benefits kick in?

Next, and by next I mean five minutes later, explore your eligibility for unemployment benefits, and then file for them if you're able. However, in some states severance pay affects your immediate eligibility for unemployment benefits. In other words, you can't file for unemployment until your severance payments go away.

Assuming you can't just retire at this moment, which you likely can't, you must secure fresh employment income quickly. But quickly is relative to the length of your fuse. I've witnessed way too many people miscalculate the length and importance of their fuse. If you're able to get back to work quickly, the initial job loss plus severance ends up enhancing your financial life. If you take too much time, by your choice or that of the cosmos, boom.

The next move is much more hands-on, and must also be performed the day you find yourself without a job.

What nonessentials do I cut?

Grab your bank statement, a marker, and a calculator. As much as you want to pretend its business as usual, you shouldn't. Identify expenses that don't make sense if you don't have a job. Circle them. Add them up. Resolve to eliminate them for the time being, and possibly permanently. While this won't necessarily lengthen your fuse, it could lessen the severity of a potential boom.

The idea of diving into your spending habits on the day you lose your job is no fun. But when else will you have such a powerful reason to do so? You won't. It's better than dipping into your assets to fund your current lifestyle. And that's where we'll pick it up the next time.

We've covered day one. In my next column we will tackle day two and beyond.

Peter Dunn is an author, speaker and radio host, and he has a free podcast: "Million Dollar Plan." Have a question for Pete the Planner? Email him at AskPete@petetheplanner.com. The views and opinions expressed in this column are the author's and do not necessarily reflect those of USA TODAY.

[Aug 21, 2019] US shale production is stresssed. Any estimates past this point in time are totally meaningless

Aug 21, 2019 | peakoilbarrel.com

GuyM

x Ignored says: 08/17/2019 at 1:26 pm
Inventory draws should begin to pick up for the US soon. 1 million in pipeline from the Permian to the coast. Exports to increase, Cushing to decrease, and production mostly flat. A lot of the Permian production has been going to Cushing as an outlet. Depends on how much can be loaded on to ships, now, and how much lite oil can be sold. Pipelines are going to be losers for awhile. Additional pipelines need to take note.
GuyM x Ignored says: 08/17/2019 at 4:17 pm
There are two, sure fire, statistics and reports that will define where we are going. You can argue them, but you will lose. One is the EIA monthly 914 report, the other is the Texas RRC permits. There's some DUCs, but by this time, I consider them as normal DUCs between drilling and completion as is norm. And the 914 May show it up a little for June, but I don't see it going up further. Or, much more.
Ovi x Ignored says: 08/17/2019 at 6:36 pm
Guy

Attached is the latest LTO data from the monthly EIA 914 page. The main difference that I can see is the drop in the monthly production growth from 2018 to 2019. 2018 production growth averaged 153 kb/d/mth. 2019 production growth over the first seven months has dropped to an average of 97 kb/d/mth. The total July increase over June was 107 kb/d/mth. The biggest increases for July came from Sprayberry (33 kb/d) and Wolfcamp (46 kb/d).

GuyM x Ignored says: 08/18/2019 at 5:46 am
Not sure what that is. This is what I was referring to:
https://www.eia.gov/petroleum/production/

Any estimates past this point in time are totally meaningless.

[Aug 21, 2019] Creative use of Taiwan to fuel protests by providing asylum to protesters

Aug 21, 2019 | news.yahoo.com

China slammed Taiwan Monday for offering asylum to Hong Kong people facing prosecution for involvement in anti-government protests, telling the island's leaders to "stop meddling" in the territory's affairs.

Taiwan's President Tsai Ing-wen voiced support last month for granting asylum to some Hong Kong protesters, with the semi-autonomous financial hub in the midst of an unprecedented political crisis.

Ma Xiaoguang, a spokesperson for the Chinese cabinet's Taiwan Affairs Office, warned Taiwan's ruling Democratic Progressive Party to "stop undermining the rule of law in the Hong Kong Special Administrative Region, stop meddling in Hong Kong affairs, and stop indulging criminals in any way".

Taiwanese authorities "ignore the facts and reverse black and white, not only masking the crimes of a small number of Hong Kong militants, but also fuelling their arrogance for destroying Hong Kong", said Ma.

Last month after dozens of Hong Kong activists reportedly involved in an unprecedented storming of the city's parliament fled to Taiwan, the Taipei said it would provide assistance to those seeking sanctuary.

"They openly claim to provide (protesters) asylum, making Taiwan into a 'haven sheltering criminals', where does this put the safety and welfare of the Taiwan people?" asked Ma.

Beijing regards Taiwan as a part of China awaiting reunification, but the island is a self-ruled democracy.

The protest movement in Hong Kong was sparked by widespread opposition to a plan for allowing extraditions to the Chinese mainland, but has since morphed into a broader call for democratic rights.

Taiwan's history of providing sanctuary to Chinese dissidents has been mixed.

The island still does not recognise the legal concept of asylum but has, on occasions, allowed dissidents to stay on long-term visas.

Ties with Beijing have soured since Tsai came to power in 2016 because her party refuses to recognise the idea that Taiwan is part of "one China". lawrence

2 days ago

Taiwan is an independent country. Of cause it has the right and authority to grant any asylum to the eligible asylum seeker. Respect Taiwan as an respected country ,equal to china, and the world will put china in a better place. Loving freedom and democracy is a human basic right realty and could not be altered by force...wake up china..

[Aug 20, 2019] Is the So-Called Manufacturing Renaissance a Mirage

Without suppression of Wall Street speculators the renaissance on manufacturing is impossible...
Notable quotes:
"... A tooling firm closes, and a complex organism withers. The machinery is sold, sent to the scrapyard, or rusts in place. The manuals are tossed. The managers retire and the workers disperse, taking their skills and knowledge with them. The bowling alley closes. The houses sell at a loss, or won’t see at all. Others, no doubt offshore, get the contracts, the customers, and the knowledge flow that goes with all that. All this causes hysteresis. “The impact of past experience on subsequent performance” cannot be undone simply by helicoptering a new plant in place and offering some tax incentives! To begin with, why would the workers come back? ..."
Aug 20, 2019 | www.nakedcapitalism.com

If I lived in the past, I might assume that re-industrialization would be as easy as building a new plant and plopping it down in my model town; "build it and they will come." But this America is not that America. Things aren't that frictionless. They are not, because of a concept that comes with the seventy five-cent word hysteresis attached, covered here in 2015. Martin Wolf wrote :

"Hysteresis" -- the impact of past experience on subsequent performance -- is very powerful. Possible causes of hysteresis include: the effect of prolonged joblessness on employability; slowdowns in investment; declines in the capacity of the financial sector to support innovation; and a pervasive loss of animal spirits.

(To "loss of animal spirits" in the entrepreneurial classes we might add "deaths of despair" in the working class.) And if there were a lot of people like me, living in the past -- in a world of illusion -- that too would would cause hysteresis, because we would make good choices, whether for individual careers, at the investment level, or at the policy level, only at random.

Our current discourse on a manufacturing renaissance is marked by a failure to take hysteresis into account. First, I'm select some representative voices from the discourse. Then, I will present a bracing article from Industry Week, " Is US Manufacturing Losing Its Toolbox? " I'll conclude by merely alluding to some remedies. (I'm sure there's a post to be written comparing the policy positions of all the candidate on manufacturing in detail, but this is not that post.)

The first voice: Donald Trump. From " 'We're Finally Rebuilding Our Country': President Trump Addresses National Electrical Contractors Association Convention " (2018):

"We're in the midst of a manufacturing renaissance -- something which nobody thought you'd hear," Trump said. "We're finally rebuilding our country, and we are doing it with American aluminum, American steel and with our great electrical contractors," said Trump, adding that the original NAFTA deal "stole our dignity as a country."

The second voice: Elizabeth Warren. From " The Coming Economic Crash -- And How to Stop It " (2019):

Despite Trump's promises of a manufacturing "renaissance," the country is now in a manufacturing recession . The Federal Reserve just reported that the manufacturing sector had a second straight quarter of decline, falling below Wall Street's expectations. And for the first time ever , the average hourly wage for manufacturing workers has dropped below the national average.

(One might quibble that a manufacturing renaissance is not immune from the business cycle .) A fourth voice: Trump campaign surrogate David Urban, " Trump has kept his promise to revive manufacturing " (2019):

Amazingly, under Trump, America has experienced a 2½-year manufacturing jobs boom. More Americans are now employed in well-paying manufacturing positions than before the Great Recession. The miracle hasn't slowed. The latest jobs report continues to show robust manufacturing growth, with manufacturing job creation beating economists' expectations, adding the most jobs since January.

Obviously, the rebound in American manufacturing didn't happen magically; it came from Trump following through on his campaign promises -- paring back job-killing regulations, cutting taxes on businesses and middle-class taxpayers, and implementing trade policies that protect American workers from foreign trade cheaters.

Then again, from the New York Times, " Trump Promised a Manufacturing Renaissance. What Happens in 2020 in Places That Lost Those Jobs ?" (2019):

But nothing has reversed the decline of the county's manufacturing base. From January 2017 to December 2018, it lost nearly 9 percent of its manufacturing jobs, and 17 other counties in Michigan that Mr. Trump carried have experienced similar losses, according to a newly updated analysis of employment data by the Brookings Institution.

Perhaps the best reality check -- beyond looking at our operational capacity, as we are about to do -- is to check what the people who will be called upon to do the work might think. From Industry Week, " Many Parents Undervalue Manufacturing as a Career for Their Children " (2018):

A mere 20% of parents associate desirable pay with a career in manufacturing, while research shows manufacturing workers actually earn 13%more than comparable workers in other industries.

If there were a manufacturing renaissance, then parents' expectations salaries would be more in line with reality (in other words, they exhibit hysteresis).

Another good reality check is what we can actually do (our operational capacity). Here is Tim Cook explaining why Apple ended up not manufacturing in the United States ( from J-LS's post ). From Inc. :

[TIM COOK;] "The products we do require really advanced tooling, and the precision that you have to have, the tooling and working with the materials that we do are state of the art. And the tooling skill is very deep here. In the US you could have a meeting of tooling engineers and I'm not sure we could fill the room. In China you could fill multiple football fields.

"The vocational expertise is very very deep here, and I give the education system a lot of credit for continuing to push on that even when others were de-emphasizing vocational. Now I think many countries in the world have woke up and said this is a key thing and we've got to correct that. China called that right from the beginning."

With Cook's views in mind, let's turn to the slap of cold water administered by Michael Collins in Industry Week, " Is US Manufacturing Losing Its Toolbox? ":

So are we really in the long-hoped-for manufacturing renaissance? The agency with the most accurate predictions on the future of jobs is the Bureau of Labor Statistics. Their projection to 2026 shows that US manufacturing sector will lose 736,000 manufacturing jobs. I spoke with BLS economists James Franklin and Kathleen Greene, who made the projections, and they were unwavering in their conclusion for a decline of manufacturing jobs.

This prompted me to look deeper into the renaissance idea, so I investigated the changes in employment and establishments in 38 manufacturing North American Industry Classification System (NAICS) industries from 2002 to 2018. I really hoped that the optimists were right about the manufacturing renaissance, but the data I collected in Table 1 (see link) shows some inconvenient truths -- that 37 out of the 38 manufacturing industries are declining in terms of both number of plants and employees.

So, yeah. Mirage.

... ... ...

A tooling firm closes, and a complex organism withers. The machinery is sold, sent to the scrapyard, or rusts in place. The manuals are tossed. The managers retire and the workers disperse, taking their skills and knowledge with them. The bowling alley closes. The houses sell at a loss, or won’t see at all. Others, no doubt offshore, get the contracts, the customers, and the knowledge flow that goes with all that. All this causes hysteresis. “The impact of past experience on subsequent performance” cannot be undone simply by helicoptering a new plant in place and offering some tax incentives! To begin with, why would the workers come back?

So, when I see no doubt well-meant plans like Warren’s “Economic Patriotism” — and not to pick on Warren — I’m skeptical. I’m not sure it’s enough. Here are her bullet points:

There’s a lot to like here, but will these efforts really solve the hysteresis that’s causing our tooling problem? Just spit-balling here, but I’d think about doing more. Start with the perspective that our tooling must be, as much as possible, domestic. (“If your business depends on a platform, you don’t have a business.” Similarly, if your industrial base depends on the tooling of others, it’s not an industrial base.)

As tooling ramps up, our costs will be higher. Therefore, consider tariff walls, as used by other developing nations when they industrialized. Apprenticeships and training are good, but why not consider skills-based immigration that brings in the worker we’d otherwise have to wait to train?

Further, simply “training” workers and then having MBAs run the firms is a recipe for disaster; management needs to be provided, too.

Finally, something needs to be done to bring the best and brightest into manufacturing, as opposed to having them work on Wall Street, or devise software that cheats customers with dark patterns. It’s simply not clear to me that a market-based solution — again, not to pick on her — like Warren’s (“sustainable investments,” “research investments,” “R&D investments,” “export promotion,” and “purchasing power”) meets the case.

It is true that Warren also advocates a Department of Economic Development “that will have a single goal: creating and defending good American jobs.” I’m not sure that’s meaningful absent an actual industrial policy, democratically arrived at, and a mobilized population (which is what the Green New Deal ought to do).

[Aug 20, 2019] Looks like in Trump mind the value of Dow and S P500 stock indexes is equivalent to the level of health of the US economy

This is the psychology of a huckster...
Notable quotes:
"... Trump Panicked As Stocks Fell, Called Top 3 Bank CEOs ..."
"... As The Dow dropped 800 points, the 4th largest point drop in history, Bloomberg reports that Trump held a conference call with three of Wall Street's top executives - JPMorgan Chase & Co.'s Jamie Dimon, Bank of America Corp.'s Brian Moynihanand Citigroup Inc.'s Michael Corbat. ..."
"... No draining of the swamp..has actually added with lunatic Bolton and Pompous. His winning BIGLY on his trade wars have done nothing but destroy American farmer and retail closings in record numbe ..."
"... What he called a big fat bubble in the fraud market when a candidate is now his bubble of hope to a second term. We won't even get into his Israeli foreign policy which are in violation of international law not to mention war crimes. ..."
"... Trump is making a HUGE mistake! His equating Wall Street profits with Main Street health will sink his chances for 2020. ..."
"... The American people are not stupid - they see that all the cheap money is flowing directly into the CEOs' pockets of all the major corporations with a stream of never-ending buy-back opportunities. ..."
"... I don't care for anybody in our current political establishment, Republican or Democrat, so I don't give an iota if Trump is re-elected. ..."
"... The man was born and raised in The Great Swamp, somewhere near Pennsylvania Avenue, if you know what I mean. ..."
"... So???? Why bankers? Why not tractor supply companies or steel makers? Bankers, markets, Trump, what is the connection, what can bankers do? ..."
"... Like calling the foxes to fix a missing chicken problem? Or telling the foxes to lay off the chickens? ..."
"... Back in 2008, the word was that money laundering from drug kingpins was what avoided an even worse monetary collapse. So, are they making sure everything is in place should economic turmoil necessitate a repeat performance? https://www.theguardian.com/global/2009/dec/13/drug-money-banks-saved-un-cfief-claims ..."
"... The "plunge protection team" was used by Obama too after the markets got volatile, and last December by Trump. https://www.zerohedge.com/news/2018-02-07/paul-craig-roberts-exposes-plunge-protection-teams-fraud ..."
Aug 16, 2019 | www.zerohedge.com

Trump Panicked As Stocks Fell, Called Top 3 Bank CEOs

"When it's serious, you have to lie... or call the CEOs of the nation's biggest banks."

Amid the drop in US equity markets on Wednesday - culminating in a 'Markets In Turmoil' special on CNBC - President Trump appears to have hit the panic button and grabbed the big red Plunge Protection Team bat-phone.

As The Dow dropped 800 points, the 4th largest point drop in history, Bloomberg reports that Trump held a conference call with three of Wall Street's top executives - JPMorgan Chase & Co.'s Jamie Dimon, Bank of America Corp.'s Brian Moynihanand Citigroup Inc.'s Michael Corbat.

The three chief executives were in Washington for a previously scheduled meeting with Treasury Secretary Steven Mnuchin on banking secrecy and money laundering, according to people familiar with the matter. On a conference call, they briefed the president, who was at his resort in Bedminster, New Jersey.

So Trump panicked with stocks a mere 5% below all-time-highs? What happens when we enter a bear market?


tobagocat , 3 minutes ago link

All you always Trumper's are just as bad as the lunatic left never Trumper's..refusing to see what's directly in front of you....a loud mouth Orange *** puppet who in the big picture has accomplished very little of the promises he had made as a candidate.

No draining of the swamp..has actually added with lunatic Bolton and Pompous. His winning BIGLY on his trade wars have done nothing but destroy American farmer and retail closings in record number.

What he called a big fat bubble in the fraud market when a candidate is now his bubble of hope to a second term. We won't even get into his Israeli foreign policy which are in violation of international law not to mention war crimes.

Face it always Trumper's...the Orange *** is a failed President and his name will be mentioned with the likes the Clinton's and Bushes ..fitting since none of those went to jail...another failed promise

Xingqiwu , 22 minutes ago link

Trump is making a HUGE mistake! His equating Wall Street profits with Main Street health will sink his chances for 2020.

The American people are not stupid - they see that all the cheap money is flowing directly into the CEOs' pockets of all the major corporations with a stream of never-ending buy-back opportunities.

Charlie_Martel , 14 minutes ago link

I bet you think the $26 trillion in bailouts went to " Hope & Change."

MrNoItAll , 23 minutes ago link

Bloomberg wouldn't know that Trump called the three banking CEOs on a conference all unless Trump's handlers wanted Bloomberg to know. This is a propaganda event intended to assure the "investing community" that Trump really does care about the stock market, that he is fixated on it and will do "whatever it takes" to keep the stock market from falling... too far.

In this time of great economic turmoil and with grim reality creeping ever closer through the fog of lies and propaganda that keep people thinking "all is well", the elites who really run things need to keep "investors" reassured, all in, and OUT of precious metals.

Todosqueremosmas , 19 minutes ago link

Why would he want to end the Fed when he is one of its primary beneficiaries???? I don't care for anybody in our current political establishment, Republican or Democrat, so I don't give an iota if Trump is re-elected.

But to believe that he will do anything to benefit the American citizenry at large by doing something such as ending the Fed is the epitome of naďveté. He couldn't care a rat's *** about you or I. The man was born and raised in The Great Swamp, somewhere near Pennsylvania Avenue, if you know what I mean.

two hoots , 34 minutes ago link

So???? Why bankers? Why not tractor supply companies or steel makers? Bankers, markets, Trump, what is the connection, what can bankers do?

conraddobler , 34 minutes ago link

Like calling the foxes to fix a missing chicken problem? Or telling the foxes to lay off the chickens?

Hmmm hard to say but time will tell although it's hard to see time as an ally here.

In the fullness of time God is on the job so it's all good, it's all for the edification of souls everywhere some just take to learning quicker than others.

rwe2late , 42 minutes ago link

"The three chief executives were in Washington for a previously scheduled meeting with Treasury Secretary Steven Mnuchin on banking secrecy and money laundering ..."

Back in 2008, the word was that money laundering from drug kingpins was what avoided an even worse monetary collapse. So, are they making sure everything is in place should economic turmoil necessitate a repeat performance? https://www.theguardian.com/global/2009/dec/13/drug-money-banks-saved-un-cfief-claims

T.Gracchus , 43 minutes ago link

Trump is a ******* moron, hanging his presidency on the fragile and fickle world of stock prices. When they fall, he will fall too.

Thalamus , 44 minutes ago link

The "plunge protection team" was used by Obama too after the markets got volatile, and last December by Trump. https://www.zerohedge.com/news/2018-02-07/paul-craig-roberts-exposes-plunge-protection-teams-fraud

[Aug 20, 2019] Trump Promised Massive Infrastructure Projects -- Instead We ve Gotten Nothing>

Highly recommended!
Notable quotes:
"... So far, that wager has netted Americans nothing. No money. No deal. No bridges, roads or leadless water pipes. And there's nothing on the horizon since Trump stormed out of the most recent meeting. That was a three-minute session in May with Democratic leaders at which Trump was supposed to discuss the $2 trillion he had proposed earlier to spend on infrastructure. In a press conference immediately afterward, Trump said if the Democrats continued to investigate him, he would refuse to keep his promises to the American people to repair the nation's infrastructure. ..."
"... Candidate Donald Trump knew it was no joke. On the campaign trail, he said U.S. infrastructure was "a mess" and no better than that of a "third-world country. " When an Amtrak train derailed in Philadelphia in 2015, killing eight and injuring about 200 , he tweeted , "Our roads, airports, tunnels, bridges, electric grid -- all falling apart." Later, he tweeted , "The only one to fix the infrastructure of our country is me." ..."
"... Donald Trump promised to make America great again. And that wouldn't be possible if America's rail system, locks, dams and pipelines -- that is, its vital organs -- were "a mess." Trump signed what he described as a contract with American voters to deliver an infrastructure plan within the first 100 days of his administration. ..."
"... He mocked his Democratic opponent Hillary Clinton's proposal to spend $275 billion. "Her number is a fraction of what we're talking about. We need much more money to rebuild our infrastructure," he told Fox News in 2016 . "I would say at least double her numbers, and you're going to really need a lot more than that." ..."
"... In August of 2016, he promised , "We will build the next generation of roads, bridges, railways, tunnels, seaports and airports that our country deserves. American cars will travel the roads, American planes will connect our cities, and American ships will patrol the seas. American steel will send new skyscrapers soaring. We will put new American metal into the spine of this nation." ..."
"... That contract Trump signed with American voters to produce an infrastructure plan in the first 100 days: worthless. It never happened. He gave Americans an Infrastructure Week in June of 2017, though, and at just about the 100-day mark, predicted infrastructure spending would "take off like a rocket ship." Two more Infrastructure Weeks followed in the next two years, but no money. ..."
"... This year, by which time the words Infrastructure Week had become a synonym for promises not kept, Trump met on April 30 with top Democratic leaders and recommended a $2 trillion infrastructure investment. Democrats praised Trump afterward for taking the challenge seriously and for agreeing to find the money. ..."
"... Almost immediately, Trump began complaining that Democrats were trying to hoodwink him into raising taxes to pay for the $2 trillion he had offered to spend. ..."
"... Trump and the Republicans relinquished one way to pay for infrastructure when they passed a tax cut for the rich and corporations in December of 2017. As a result, the rich and corporations pocketed hundreds of billions -- $1 trillion over 10 years -- and Trump doesn't have that money to invest in infrastructure. Corporations spent their tax break money on stock buybacks, further enriching the already rich. They didn't invest in American manufacturing or worker training or wage increases. ..."
"... I have seen this movie before. A State builds a highway, it then leases that highway to a corporation for a bucket of cash which it uses to bribe the electorate to win the next election or two. The corporation shoves brand new toll booths on the highway charging sky high rates which puts a crimp in local economic activity. After the lease is up after twenty years, the State gets to take over the highway again to find that the corporation cut back on maintenance so that the whole highway has to be rebuilt again. Rinse and repeat. ..."
"... Promises by any narcissist mean nothing. You cannot hang your hat on any word that Trump speaks, because it's not about you or anyone else, but about him and only him. ..."
"... Here is a heads up. If any infrastructure is done it will be airports. The elite fly and couldn't give a crap about the suspension and wheel destroying potholes we have to slalom around every day. They also don't care that the great unwashed waste thousands of hours stuck in traffic when a bridge is closed or collapses. ..."
Jul 26, 2019 | www.nakedcapitalism.com

Yves here. In a bit of synchronicity, when a reader was graciously driving me to the Department of Motor Vehicles (a schlepp in the wilds of Shelby County), she mentioned she'd heard local media reports that trucks had had their weight limits lowered due to concern that some overpasses might not be able to handle the loads. Of course, a big reason infrastructure spending has plunged in the US is that it's become an excuse for "public-private partnerships," aka looting, when those deals take longer to get done and produce bad results so often that locals can sometimes block them.

By Tom Conway, the international president of the United Steelworkers Union (USW) . Produced by the Independent Media Institute

Bad news about infrastructure is as ubiquitous as potholes. Failures in a 108-year-old railroad bridge and tunnel cost New York commuters thousands of hours in delays. Illinois doesn't regularly inspect , let alone fix, decaying bridges. Flooding in Nebraska caused nearly half a billion dollars in road and bridge damage -- just this year.

No problem, though. President Donald Trump promised to fix all this. The great dealmaker, the builder of eponymous buildings, the star of "The Apprentice," Donald Trump, during his campaign, urged Americans to bet on him because he'd double what his opponent would spend on infrastructure. Double, he pledged!

So far, that wager has netted Americans nothing. No money. No deal. No bridges, roads or leadless water pipes. And there's nothing on the horizon since Trump stormed out of the most recent meeting. That was a three-minute session in May with Democratic leaders at which Trump was supposed to discuss the $2 trillion he had proposed earlier to spend on infrastructure. In a press conference immediately afterward, Trump said if the Democrats continued to investigate him, he would refuse to keep his promises to the American people to repair the nation's infrastructure.

The comedian Stephen Colbert described the situation best, saying Trump told the Democrats: "It's my way or no highways."

The situation, however, is no joke. Just ask the New York rail commuters held up for more than 2,000 hours over the past four years by bridge and tunnel breakdowns. Just ask the American Society of Civil Engineers , which gave the nation a D+ grade for infrastructure and estimated that if more than $1 trillion is not added to currently anticipated spending on infrastructure, "the economy is expected to lose almost $4 trillion in GDP , resulting in a loss of 2.5 million jobs in 2025."

Candidate Donald Trump knew it was no joke. On the campaign trail, he said U.S. infrastructure was "a mess" and no better than that of a "third-world country. " When an Amtrak train derailed in Philadelphia in 2015, killing eight and injuring about 200 , he tweeted , "Our roads, airports, tunnels, bridges, electric grid -- all falling apart." Later, he tweeted , "The only one to fix the infrastructure of our country is me."

Donald Trump promised to make America great again. And that wouldn't be possible if America's rail system, locks, dams and pipelines -- that is, its vital organs -- were "a mess." Trump signed what he described as a contract with American voters to deliver an infrastructure plan within the first 100 days of his administration.

He mocked his Democratic opponent Hillary Clinton's proposal to spend $275 billion. "Her number is a fraction of what we're talking about. We need much more money to rebuild our infrastructure," he told Fox News in 2016 . "I would say at least double her numbers, and you're going to really need a lot more than that."

In August of 2016, he promised , "We will build the next generation of roads, bridges, railways, tunnels, seaports and airports that our country deserves. American cars will travel the roads, American planes will connect our cities, and American ships will patrol the seas. American steel will send new skyscrapers soaring. We will put new American metal into the spine of this nation."

In his victory speech and both of his State of the Union addresses, he pledged again to be the master of infrastructure. "We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, school, hospitals. And we will put millions of our people to work," he said the night he won.

That sounds excellent. That's exactly what 75 percent of respondents to a Gallup poll said they wanted. That would create millions of family-supporting jobs making the steel, aluminum, concrete, pipes and construction vehicles necessary to accomplish infrastructure repair. That would stimulate the economy in ways that benefit the middle class and those who are struggling.

That contract Trump signed with American voters to produce an infrastructure plan in the first 100 days: worthless. It never happened. He gave Americans an Infrastructure Week in June of 2017, though, and at just about the 100-day mark, predicted infrastructure spending would "take off like a rocket ship." Two more Infrastructure Weeks followed in the next two years, but no money.

Trump finally announced a plan in February of 2018 , at a little over the 365-day mark, to spend $1.5 trillion on infrastructure. It went nowhere because it managed to annoy both Democrats and Republicans.

It was to be funded by only $200 billion in federal dollars -- less than what Hillary Clinton proposed. The rest was to come from state and local governments and from foreign money interests and the private sector. Basically, the idea was to hand over to hedge fund managers the roads and bridges and pipelines originally built, owned and maintained by Americans. The fat cats at the hedge funds would pay for repairs but then toll the assets in perpetuity. Nobody liked it.

That was last year. This year, by which time the words Infrastructure Week had become a synonym for promises not kept, Trump met on April 30 with top Democratic leaders and recommended a $2 trillion infrastructure investment. Democrats praised Trump afterward for taking the challenge seriously and for agreeing to find the money.

"It couldn't have gone any better," Ways and Means Committee Chairman Richard E. Neal , D-Mass., told the Washington Post, even though Neal was investigating Trump for possible tax fraud.

Almost immediately, Trump began complaining that Democrats were trying to hoodwink him into raising taxes to pay for the $2 trillion he had offered to spend.

Trump and the Republicans relinquished one way to pay for infrastructure when they passed a tax cut for the rich and corporations in December of 2017. As a result, the rich and corporations pocketed hundreds of billions -- $1 trillion over 10 years -- and Trump doesn't have that money to invest in infrastructure. Corporations spent their tax break money on stock buybacks, further enriching the already rich. They didn't invest in American manufacturing or worker training or wage increases.

Three weeks after the April 30 meeting, Trump snubbed Democrats who returned to the White House hoping the president had found a way to keep his promise to raise $2 trillion for infrastructure. Trump dismissed them like naughty schoolchildren. He told them he wouldn't countenance Democrats simultaneously investigating him and bargaining with him -- even though Democrats were investigating him at the time of the April meeting and one of the investigators -- Neal -- had attended.

Promise not kept again.

Trump's reelection motto, Keep America Great, doesn't work for infrastructure. It's still a mess. It's the third year of his presidency, and he has done nothing about it. Apparently, he's saving this pledge for his next term.

In May, he promised Louisianans a new bridge over Interstate 10 -- only if he is reelected. He said the administration would have it ready to go on "day one, right after the election." Just like he said he'd produce an infrastructure plan within the first 100 days of his first term.

He's doubling down on the infrastructure promises. His win would mean Americans get nothing again.

Arizona Slim , July 26, 2019 at 6:26 am

Paging Bernie Sanders: You need to be all over this Trump-fail. And sooner, rather than later.

The Rev Kev , July 26, 2019 at 6:40 am

The whole thing seems so stupid. The desperate need is there, the people are there to do the work, the money spent into the infrastructure would give a major boost to the real economy, the completed infrastructure would give the real economy a boost for years & decades to come – it is win-win right across the board. But the whole thing is stalled because the whole deal can't be rigged to give a bunch of hedge fund managers control of that infrastructure afterwards. If it did, the constant rents that Americans would have to pay to use this infrastructure would bleed the economy for decades to come.

I have seen this movie before. A State builds a highway, it then leases that highway to a corporation for a bucket of cash which it uses to bribe the electorate to win the next election or two. The corporation shoves brand new toll booths on the highway charging sky high rates which puts a crimp in local economic activity. After the lease is up after twenty years, the State gets to take over the highway again to find that the corporation cut back on maintenance so that the whole highway has to be rebuilt again. Rinse and repeat.

When President Dwight D. Eisenhower signed the Federal Aid Highway Act in 1956, can you imagine how history would have gone if they had been handed over to a bunch of corporations who would have built toll booths over the whole network? Would have done wonders for the American economy I bet.

Wukchumni , July 26, 2019 at 6:48 am

One of the things discussed at our town hall meeting the other night, was a much needed $481k public bathroom, and that was the low bid.

It has to be ADA compliant with ramps, etc.

$48,100 seems like it'd be plenty to get 'r done, as you can build a house with a couple of bathrooms, and a few bedrooms, a kitchen and living room for maybe $200k.

Ignacio , July 26, 2019 at 8:58 am

And if toll revenues don't come as high as expected, mother state will come to the rescue of those poor fund managers. I find it amazing that Trump uses the stupid Russia, Russia, Russia! fixation of democrats as an excuse to do nothing about infrastructure. Does this work with his electorate?

cnchal , July 26, 2019 at 7:09 am

Tom, grow up.

Promises by any narcissist mean nothing. You cannot hang your hat on any word that Trump speaks, because it's not about you or anyone else, but about him and only him.

Here is a heads up. If any infrastructure is done it will be airports. The elite fly and couldn't give a crap about the suspension and wheel destroying potholes we have to slalom around every day. They also don't care that the great unwashed waste thousands of hours stuck in traffic when a bridge is closed or collapses.

Carla , July 26, 2019 at 7:47 am

Well, fix the airports and you've still got Boeing, self-destructing as fast as it can. And Airbus can't fill all the orders no matter how hard it tries. Guess everybody will just have to . stay home.

WheresOurTeddy , July 26, 2019 at 7:16 am

Are all the coal jobs back? How about the manufacturing? NAFTA been repealed and replaced with something better yet? How's the wall coming and has Mexico sent the check yet? Soldiers back from Afghanistan/Iraq/Syria yet?

Got that tax cut for rich people and a ton of conservative judges through though, didn't he?

Katniss Everdeen , July 26, 2019 at 8:17 am

"It couldn't have gone any better," Ways and Means Committee Chairman Richard E. Neal, D-Mass., told the Washington Post, even though Neal was investigating Trump for possible tax fraud.

What a surprise. It's simply "amazing" that the insane status quo jihad that has been waged against Trump since he announced his candidacy had real consequences for the country. Who would have thought that calling ANY president ignorant, ugly, fat, a liar, a traitor, a cheater, an agent of Putin, a racist, a misogynist, a xenophobe, a bigot, an isolationist and an illegitimate occupant of the White House 24/7 since he or she won the election would make actual accomplishment nearly impossible.

The mere mention of his name on college campuses has even been legitimized as a fear-inducing, "safety"-threatening "microagression."

It's just so rich that having determined to prevent Trump from doing absolutely anything he promised during the campaign by any and all means, regardless of what the promise was or how beneficial it may have been, his numerous, bilious "critics" now have the gonads to accuse him of not getting anything done.

With all due respect to the author of this piece, the result he laments was exactly the point of this relentless nightmare of Trump derangement to which the nation has been subjected for three years. I tend to think that the specific promise most targeted for destruction was his criticism of NATO and "infrastructure" was collateral damage, but that's neither here nor there.

The washington status quo has succeeded in its mission to cripple a president it could not defeat electorally, and now tries to blame him for their success. Cutting off your nose to spite your face has always been a counterproductive strategy.

[Aug 20, 2019] The Numbers Are In, and Trump's Tax Cuts Are a Bust>

Jul 17, 2019 | www.nakedcapitalism.com

By Marshall Auerback, a market analyst and commentator. Produced by Economy for All , a project of the Independent Media Institute

The most commonly heard refrain when Donald Trump and the GOP were seeking to pass some version of corporate tax reform went something like this : There are literally trillions of dollars trapped in offshore dollar deposits which, because of America's uncompetitive tax rates, cannot be brought back home. Cut the corporate tax rate and get those dollars repatriated, thereby unleashing a flood of new job-creating investment in the process. Or so the pitch went.

It's not new and has never really stood up to scrutiny. Yet virtually every single figure who lobbied for corporate tax reform has made a version of this argument. In the past, Congress couldn't or wouldn't take up the cause, but, desperate for a political win after the loss on health care, Trump and the GOP leadership ran with a recycled version of this argument, and Congress finally passed the Tax Cuts and Jobs Act on December 22, 2017. The headline feature was a cut in the official corporate tax rate from 35 percent to 21 percent.

So did reality correspond to the theoretical case made for the tax reform bill? We now have enough information to make a reasonably informed assessment. Unless you think that tax havens like Ireland, Bermuda or the Cayman Islands, all of which continue to feature as major foreign holders of U.S. Treasuries , have suddenly emerged as economic superpowers, the more realistic interpretation of the data shows the president's much-vaunted claims about the tax reform to be bogus on a number of levels. Even though some dollars have been "brought home," there remain trillions of dollars domiciled in these countries (at least in an accounting sense, which I'll discuss in a moment). If anything, the key provisions of the new legislation have given even greater incentives for U.S. corporations to shift production abroad, engage in yet more tax avoidance activities and thereby exacerbate prevailing economic inequality. Which, knowing Donald Trump, was probably the whole point in the first place.

This tax bill was constructed on a foundation of lies. To cite one obvious example, the real U.S. corporate tax rate has never been near the oft-cited 35 percent level. As recently as 2014, the Congressional Research Service estimated that the effective rate (the net rate paid after deductions and credits) was around 27.1 percent, which was well in line with America's international competitors.

But even the new and supposedly more competitive 21 percent rate has not been as advertised. As Brad Setser (a senior fellow at the Council on Foreign Relations) has illustrated , the new tax bill also included a provision that enabled "companies that shift their profits abroad to pay tax at a rate well below the already-reduced corporate income tax Why would any multinational corporation pay America's 21 percent tax rate when it could pay the new 'global minimum' rate of 10.5 percent on profits shifted to tax havens, particularly when there are few restrictions on how money can be moved around a company and its foreign subsidiaries?" The upshot, as Setser concludes , is that "the global distribution of corporations' offshore profits -- our best measure of their tax avoidance gymnastics -- hasn't budged from the prevailing trend."

Although this new 10.5 percent rate applies to "global intangibles," such as patents, trademarks, and copyrights, the legislation still creates incentives for companies (notably pharmaceuticals and high-tech companies) to shift investment in tangible assets as well (such as factories) in order to maximize the benefits of this global rate on intangibles.

Many anticipated this result at the time the new law was enacted. The legislation incentivizes increased offshore investment in real assets such as factories, because the more companies invest in these "tangibles" in offshore low tax jurisdictions such as Ireland, the easier it becomes to incur a "calculated minimum tax on your offshore intangible income (the patents and the like on a new drug, for example)," according to Setser . The effect is also to exacerbate the trade deficit. A $20 billion jump in the pharmaceutical trade deficit last year provides excellent evidence of this trend. Ironically, this works at variance with Trump's "America First" trade nationalism, and his concomitant efforts to wield the tariff weapon in order to disrupt global supply chains and get corporate America to re-domicile investment at home.

Parenthetically, a further political by-product has been to give the deficit hawks more political ammunition in their goal to cut supposedly "unsustainable" social welfare expenditures, perpetuating even greater economic inequality, on the grounds of insufficient tax revenues to "fund" these programs. That is another lie (see this New York Times op-ed by Stephanie Kelton to understand why).

As for the other bogus arguments used to justify this legislation, it is worth noting that most of dollars allegedly "trapped" overseas are in fact domiciled in the U.S. They have been classified as "offshore" purely for tax accounting purposes. Yves Smith of "Naked Capitalism," for example, has pointed out that Apple stored the dollars "related to its Irish sub in banks in the US and managed it out of an internal hedge fund in Arizona." Similarly, the Brookings Institute notes that American tax accounting rules do not place geographic restrictions on where those U.S. dollars are actually held, even if the Treasury data records them as "offshore" for tax purposes. Quite the contrary: "[T]he financial statements of the companies with large stocks of overseas earnings, like Apple, Microsoft, Cisco, Google, Oracle, or Merck show most of it is in U.S. treasuries, U.S. agency securities, U.S. mortgage backed securities, or U.S. dollar-denominated corporate notes and bonds." In other words, the dollars are "home" and invested in the U.S. financial system.

So in what ways are the dollars actually "trapped" (i.e., unavailable for domestic use without severe tax repercussions)? They have never been so in reality. Through financial engineering, the banks that have held the dollars "offshore" on behalf of these American multinationals have extended loans against the stockpile so as to "liberate" the capital to be used as the companies saw fit. It's a form of hypothecated lending . Not only has the resultant " synthetic cash repatriation " provided a nice margin for what are effectively risk-free loans, but it also has enabled the beneficiary companies to deploy the dollars within the U.S. while avoiding tax penalties.

But here's the key point: instead of investing in new plants and equipment, a large proportion of these dollars have instead been used for share buybacks or distributed back to shareholders via dividend payments . Anne Marie Knott of Forbes.com quantifies the totals : "For the first three quarters of 2018, buybacks were $583.4 billion (up 52.6% from 2017). In contrast, aggregate capital investment increased 8.8% over 2017, while R&D investment growth at US public companies increased 12.5% over 2017 growth." So the top tier again wins in all ways: net profits are fattened, shareholders get more cash, and CEO compensation is elevated, as the value of the stock prices goes higher via share buybacks.

The dollars, in other words, have only been "trapped" to the extent that corporate management has chosen not to deploy them to foster real economic activity. "Punitive" corporate tax rates, in other words, have been a fig leaf. But the American worker has derived no real benefit from this repatriation, which was the political premise used to sell the bill in the first place.

Since the passage of the tax bill, the data show no significant evidence of corporate America bringing back jobs or profits from abroad. In fact, there is much to suggest the opposite: namely, that tax avoidance is accelerating in the wake of the legislation's passage, rather than decreasing. Consider that the number of companies paying no taxes has gone from 30 to 60 since the bill's enactment.

But it's worse than that, as Setser highlights :

"Well over half the profits that American companies report earning abroad are still booked in only a few low-tax nations -- places that, of course, are not actually home to the customers, workers and taxpayers facilitating most of their business. A multinational corporation can route its global sales through Ireland, pay royalties to its Dutch subsidiary and then funnel income to its Bermudian subsidiary -- taking advantage of Bermuda's corporate tax rate of zero."

Again, the money itself does not make this circuitous voyage. These are all bookkeeping entries for accounting purposes. In another report, Setser estimates the totals in revenue not accrued by the U.S. Treasury to be equivalent to 1.5 percent of GDP , or some $300 billion that is theoretically unavailable for use on the home front.

Global tax arbitrage, therefore, runs in parallel with global labor arbitrage. That's the real story behind globalization, which its champions never seem to mention, as they paint a story of worldwide prosperity pulling millions out of poverty. However, as I've written before , "a big portion of Trump voters were working-class Americans displaced from their jobs by globalization, automation, and the shifting balance in manufacturing from the importance of the raw materials that go into products to that of the engineering expertise that designs them." During the 2016 election and beyond, Trump has consistently addressed his appeals to these " forgotten men and women ." Yet the president's signature legislative achievement, corporate tax reform, suggests that his base continues to receive nothing but a few crumbs off the table. The tax reform also works at variance with the main thrust of his trade policy or, indeed, his restrictionist immigration policies (and it's questionable whether these forgotten voters are actually deriving much benefit from those policies either). Not for the first time, therefore, the president's left hand is working at cross-purposes with the right. The very base to whom he continues to direct his re-election appeals get nothing. And the country as a whole remains far worse off as a result of his policy incoherence and mendacity.

Larry , July 17, 2019 at 8:11 am

A very nice summary that details how the new boss is the same as the old boss, just more offensive on Twitter. The only place where Trump's campaign promises seem to hold up at all are the sound and furry over trade with China and the border wall with Mexico. Nothing will come of this bluster most likely, but at least it makes it appear that Trump is still working on behalf of his base.

Ignacio , July 17, 2019 at 8:34 am

Will these voters realise what is really happening? Which are the alternative narratives they are receiving/accepting?

Monty , July 17, 2019 at 10:15 am

Spoiler alert: NO. As long as the alternative is giving free healthcare to undocumented immigrants, learning to code, reparations and a focus on transgender rights.

marym , July 17, 2019 at 12:13 pm

Is this the actual alternative or, at least in part, a fear mongered version of universal benefits like M4A or a jobs program; civil rights; and righting some of the wrongs of the past? It preserves the status quo or promotes it becoming even more inequitable to convince people to reject any option that also helps someone not like them, or offers relief for a problem they never had or surmounted on their own. I mean, no viable politician is "focusing on transgender rights" or doing more than barely (and opportunistically imo) giving lip service to reparations. Is the rejection of any move toward justice or equity just the result of propaganda, or are we fundamentally unable to do any better without resentment? I'm very pessimistic at the moment.

Monty , July 17, 2019 at 1:04 pm

Did you watch the Democratic debates?

marym , July 17, 2019 at 1:35 pm

No – have I misjudged? I know at least some have said they'd sign on to a "study" of reparations, even Sanders eventually, but he's been clear that he doesn't think "writing a check" is the way to address problems in distressed communities. M4A that included undocumented immigrants wouldn't bother me from a candidate who supported a path to citizenship and humane forms of enforcing future immigration restrictions, and I'm not opposed to transgender rights so maybe some of that wouldn't seem so fearsome to me if I heard it. Why it should be fearsome enough to disqualify a candidate with a platform of universal or widely distributed social benefits, economic justice, and criminal justice reform is inexplicable and sad to me.

Monty , July 17, 2019 at 3:59 pm

It doesn't matter how you understand it. It only matters what contorted misrepresentations of Democrat's actual policies that 'regular folks' aka greedy, selfish, frightened 'suburban republicans' (aka a majority of voters in most states) can be led to believe.
The focus on these kind of divisive topics is the gift that keeps giving for the right wing. What you see as reasonable, they see as a threat to their way of life. So while virtue signalling to one group, they are simultaneously alienating another and galvanizing their own opposition against them.

False Solace , July 17, 2019 at 12:40 pm

This is why Trump screams about immigrants so loudly. It's all he's got. When the facts aren't on your side, pound the table. Remember this is the guy who invented birtherism. He won't lift a finger for his voters but he sure knows how to yell about foreigners. He also promised not to cut Social Security or Medicare then submitted a budget that makes them look like Jack the Ripper victims.

Ignacio , July 17, 2019 at 1:08 pm

Yes, i think it is as simple a that. Progressives should just ignore racist and antimigrant discourse and focus on Health care, infrastructures, GND, jobs etc.

Glen , July 17, 2019 at 10:06 am

Tax cuts for the rich? Screw everyone else?

That's been true since Reagan.

a different chris , July 17, 2019 at 10:16 am

>Again, the money itself does not make this circuitous voyage.

Haha the one way you gold bugs could get me on board is if you were able to force all cross-border money flows to be limited to actual, physical gold. Ideally in wooden sailing ships.

That would change things quite a bit.

The Rev Kev , July 17, 2019 at 10:59 am

Good article this. Trump must know that the whole thing is just financial shenanigans. After all, that has been his specialty for the past few decades. But he and Washington went along with it anyway and now America's financial situation is even worse. Every actor is trying to make out in their game and hopes that the consequences fall after they have exited the market. Maybe they think that at that stage they will be able to swoop in and grab up everything else on the cheap. Having just read some history on France in 1848 and 1871 I think that the may be playing with fire and not the FIRE that they are used to.

Softie , July 17, 2019 at 11:18 am

The idiots take over the final days of crumbling civilizations. Idiot generals wage endless, unwinnable wars that bankrupt the nation. Idiot economists call for reducing taxes for corporation and the rich and cutting social service programs for the poor. They project economic growth on the basis of myth. Idiot industrialists poison the water, the soil, and the air, slash jobs and depress wages. Idiot bankers gamble on self-created financial bubbles. Idiot journalists and public intellectuals pretend despotism is democracy. Idiot intelligence operatives orchestrate the overthrow of foreign governments to create lawless enclaves that give rise to enraged fanatics. Idiot professors, "experts", and "specialists" busy themselves with unintelligible jargon and arcane theory that buttresses the policies of rulers. Idiot entertainers and producers create lurid spectacles of sex, gore and fantasy. There is a familiar checklist for extinction. We are ticking off every item on it.

– Chris Hedges, America: The Farewell Tour

JimTan , July 17, 2019 at 12:49 pm

Maybe we should create a 'national intangibles tax', and levy it specifically on the patents, trademarks, and copyrights of all U.S. domiciled companies, and on these 'intangibles' for all companies that have the majority of their common equity securities registered in the U.S.

[Aug 20, 2019] Trumponomics on the march: Israeli and EU farmers say thank you to Trump .

Notable quotes:
"... "The sentiment out in farm country is getting grimmer by the day," said John Heisdorffer, the chairman of the American Soybean Association. "Our patience is waning, our finances are suffering and the stress from months of living with the consequences of these tariffs is mounting. ..."
"... The Republican senator Chuck Grassley, who represents Iowa, a state heavily reliant on agriculture, has called for a quick resolution to the dispute. "Americans understand the need to hold China accountable, but they also need to know that the administration understands the economic pain they would feel in a prolonged trade war," Grassley said in a statement. ..."
May 14, 2019 | www.theguardian.com

American farmers are likely to feel the pain first. Soybean exports to China collapsed last year when the trade war began, and agricultural exports will be hit harder when, or if, the new tariffs are imposed. Farmers are also suffering from extensive flooding that has delayed planting.

"The sentiment out in farm country is getting grimmer by the day," said John Heisdorffer, the chairman of the American Soybean Association. "Our patience is waning, our finances are suffering and the stress from months of living with the consequences of these tariffs is mounting."

The new round of tariffs will hit other parts of the US food industry, with beans, lentils, honey, flour, corn and oats all on the list of goods that will be taxed.

... ... ...

The Republican senator Chuck Grassley, who represents Iowa, a state heavily reliant on agriculture, has called for a quick resolution to the dispute. "Americans understand the need to hold China accountable, but they also need to know that the administration understands the economic pain they would feel in a prolonged trade war," Grassley said in a statement.

[Aug 20, 2019] In this sordid world, people without power have absolutely no value.

Notable quotes:
"... When Trump was first elected, I tried to calm down friends with advanced TDS, who expected Kristallnacht to be directed at their favorite brunch spots, by saying that "This is what empires in decline look like." ..."
"... In this sordid world, girls/women have absolutely no value ..."
"... Don't forget the young boys who get traded around like fudge recipes. Something quick on the Hollywood angle on bent dicks. It applies almost everywhere in America now: https://news.avclub.com/corey-feldman-made-a-documentary-about-sexual-abuse-he-1834310252 ..."
"... My reinterpretation of your comment would be; In this sordid world, people without power have absolutely no value. ..."
"... Epstein's World was tied in with Hollywood and Wall Street. Both are homoerotic paedophile havens. The world of the Vatican is tied in to Wall Street; it has it's own bank, the Instituto per le Opere de Religioni. ..."
"... As is true with the continued withholding of key documents in the JFK assassination, I believe that if the lousy reporting and official screwups in the Epstein case persist, it will be perfectly fine for the public to conclude and believe the absolute worst and act accordingly. ..."
"... Given the spotiness and inadequacy of reporting on the Epstein affair I wonder if an avenue for exploration might be that of a more direct involvement of media moguls and highly placed media staff in being serviced by Epstein i.e., the decision-makers regarding what gets covered and published are themselves subject to exposure, embarrassment, and other things that befall men caught in such matters. ..."
Aug 14, 2019 | www.nakedcapitalism.com

Michael Fiorillo , , August 14, 2019 at 11:38 am

I can't add much to Yve's excellent post and the follow-up comments, except to say that the events of recent days and weeks have made Pizzagate (as deranged as it was) into some kind of weird Jungian premonition which is to say, the s&#* is out of control.

When Trump was first elected, I tried to calm down friends with advanced TDS, who expected Kristallnacht to be directed at their favorite brunch spots, by saying that "This is what empires in decline look like."

In regard to this sordid tale, I'm reminded of Robert Graves' (and the superb BBC TV version of) "I, Claudius."

"Don't eat the figs."

adrena , , August 14, 2019 at 11:48 am

In this sordid world, girls/women have absolutely no value.

ambrit , , August 14, 2019 at 12:16 pm

Don't forget the young boys who get traded around like fudge recipes. Something quick on the Hollywood angle on bent dicks. It applies almost everywhere in America now: https://news.avclub.com/corey-feldman-made-a-documentary-about-sexual-abuse-he-1834310252

My reinterpretation of your comment would be; In this sordid world, people without power have absolutely no value. Otherwise, I'm with you all the way. Abuse is abuse. No other definition is logical.

ambrit , , August 14, 2019 at 4:18 pm

Epstein's World was tied in with Hollywood and Wall Street. Both are homoerotic paedophile havens. The world of the Vatican is tied in to Wall Street; it has it's own bank, the Instituto per le Opere de Religioni.

Who knows? Perhaps there will be some Prelates unearthed from the Lolita Express passenger log.

Pelham , , August 14, 2019 at 1:54 pm

As is true with the continued withholding of key documents in the JFK assassination, I believe that if the lousy reporting and official screwups in the Epstein case persist, it will be perfectly fine for the public to conclude and believe the absolute worst and act accordingly.

Actually, we SHOULD believe the worst.

Robin Kash , , August 14, 2019 at 2:16 pm

Given the spotiness and inadequacy of reporting on the Epstein affair I wonder if an avenue for exploration might be that of a more direct involvement of media moguls and highly placed media staff in being serviced by Epstein i.e., the decision-makers regarding what gets covered and published are themselves subject to exposure, embarrassment, and other things that befall men caught in such matters.

Who covers the press and roots out its secret malefactions? Rogue reporters? And who publishes them? Indeed!

[Aug 20, 2019] There is a chance that the recession won t wait until next year to hit

Oversized military expenditures (military Keysianism) might still keep the economy afoot for a while.
Notable quotes:
"... For Morgan Stanley Wealth Management's Shalett, the most recent economic reports show "slowing that is far worse than the 2015-2016 minirecession," she writes -- due in large part to "outright contractionary" PMI (an indicator surveying purchasing managers at businesses) data and global new orders. ..."
"... The Fed is criminally unprepared for a recession, after making the fateful decision to rescue the banks and financial markets at the expense of the working class. Washington is criminally unprepared for a recession, after making the fateful decision to invest everything in pointless wars at the expense of infrastructure and the working class. ..."
"... Guess who else is unprepared for a recession? ..."
"... "Warning lights are flashing. Whether it's this year or next year, the odds of another economic downturn are high -- and growing," Warren wrote in a post on the blogging platform Medium. ..."
"... Free market, my ass. End days of run amok capitalism? I sure hope so for the sake of the planet and the people who are at the mercy of this nasty 'world we live in'. ..."
"... Moving from taxing the rich to taxing the proletariat (the poor have no money of their own to buy goods and hence pay tariffs). since the rich invest most of their wealth and workers spend most (or more!) the tax burden shifts downward (by design!) ..."
Aug 06, 2019 | caucus99percent.com

gjohnsit on Mon, 08/05/2019 - 5:42pm

There is a chance that the recession won't wait until next year to hit, but there is almost no chance that we won't be in a recession in 2020. A whole list of economic indicators are flashing red, starting with the most accurate recession forecaster of all - the yield curve .

The latest eruption in the U.S.-China trade dispute pushed a widely watched Treasury-market recession indicator to the highest alert since 2007.

Morgan Stanley says Trump's trade war could cause a recession in 9 month's time, but there is a lot else going on than just a trade war.
The yield curve is just one of four major recession indicators that are flashing red .

Since the 1960s, one indicator of a looming recession has been the New York Fed's recession probability index breaking 30%.

The probability of a U.S. recession predicted by the treasury spread hit 32.9% in July -- the highest since 2009, according to the New York Fed.

... ... ...

Although consumer confidence is still historically high, the most recent June consumer confidence index (released by The Conference Board every month) dropped to two-year lows, to 121.5.

... ... ...

For Morgan Stanley Wealth Management's Shalett, the most recent economic reports show "slowing that is far worse than the 2015-2016 minirecession," she writes -- due in large part to "outright contractionary" PMI (an indicator surveying purchasing managers at businesses) data and global new orders.
...
According to a Reuters report in May, factory activity dropped to near 10-year lows, sparking fresh concern.

The U.S. has seen its longest economic expansion in the nation's history - 120 months. The Fed had to know that it would eventually end. Yet the Fed never came even close to normalizing interest rates and that leaves them with few options .

The Fed's main recession-fighting tool has long been lowering the benchmark federal funds rate, which governs short-term rates for things ranging from auto loans to credit card charges. In the past, the average reduction needed to fight a recession was a whopping 5.5 percentage points. Such a bold step is mathematically impossible now.

The Federal Open Market Committee, or FOMC, its policymaking arm, just decreased the rate a quarter-point to a 2.0% to 2.25% band, thus not a lot of room exists to cut much more. And if the Fed ends up decreasing the rate another half-point, as many suspect it will, then the central bank has even less to work with.

"They're out of ammo," said economist Gary Shilling, who owns his own eponymous firm. "Going from 2.25% to zero is not an awful lot."

... ... ...

What happens if the Fed reverses course and starts purchasing bonds once more? There's a school of thought that this too will be less effective than in the past. Reason: Banks have so much extra funding these days that they don't know what to do with all the money. The previous rounds of QE, which finally ended in 2014, stuffed banks with trillions of new dollars, which they hold in reserve to buffer themselves against economic bad spells and also to make loans. Plus, loan demand is low, even now in an expansion. Demand will be a lot less in a recession.

The Fed is criminally unprepared for a recession, after making the fateful decision to rescue the banks and financial markets at the expense of the working class. Washington is criminally unprepared for a recession, after making the fateful decision to invest everything in pointless wars at the expense of infrastructure and the working class.

Guess who else is unprepared for a recession?

The brutal reality is that most Americans are not prepared for the next economic downturn or recession.
gjohnsit on Mon, 08/05/2019 - 6:09pm
Warren has noticed give the lady some credit
Democratic presidential contender Sen. Elizabeth Warren warned on Monday that the next financial crisis is on its way.

"Warning lights are flashing. Whether it's this year or next year, the odds of another economic downturn are high -- and growing," Warren wrote in a post on the blogging platform Medium.

The Massachusetts Democrat said that increasing household and corporate debt has left the economy on precarious footing. Citing a top economist, Warren wrote that a failure to raise the debt ceiling in September could be "more catastrophic" than the 2008 collapse of Lehman Brothers.

She also noted weakness in the manufacturing sector, putting the blame for its recent slowdown on President Donald Trump, who has tangled with China over trade. Despite Trump's pledge to bring back manufacturing jobs, the sector is now in recession, she wrote, and wages for the industry lag the national average

A 2020 recession, if it starts no later than summer, would doom Trump's reelection. It would also boost progressives like Bernie and Liz because people would be less willing to accept incrementalism.

ggersh on Mon, 08/05/2019 - 6:29pm
It's coming before the primaries start

@gjohnsit @gjohnsit in tit for tat action the moron in chief needs
to win....the currency war ameriKa can't win is upon
us.

Slight summary, tRumpolini put tariffs on China of 10% on what was left to tariff, this happened yesterday. Today China reciprocated by weakening it's currency causing the stock markit to swan to the tune of 900 points. So thinking me(tRumpolini) lost, he doubles down by doing this.

https://www.zerohedge.com/

For The First Time In 25 Years, US Treasury Just Designated China A Currency Manipulator

"This pattern of actions is also a violation of China's G20 commitments to refrain from competitive devaluation."

416

Grab your guns and Bibles money and buy some goods to keep you comfy cuz inflation is coming bigtime, IMHO.

His ego is bigger than his hands and I wouldn't bet on him beating China in this game even though he's gonna keep on trying

shaharazade on Mon, 08/05/2019 - 8:59pm
Elisabeth Warren is progressive?

@gjohnsit

I somehow don't buy this. Dodd-Frank? What a joke. Both me and Eric never bought her political shtick. Man she's another ex-Republican. I just can't believe that this insane global economy will be reformed or resolved by our current, corrupt, fucked up political electoral system.

There is no way for ordinary people who are not 'invested' to stop this insanity. What are our options when the Demorat's refuse to clean house or even regulate the disaster global cappies who own and run 'the place'?

Free market, my ass. End days of run amok capitalism? I sure hope so for the sake of the planet and the people who are at the mercy of this nasty 'world we live in'.

doh1304 on Mon, 08/05/2019 - 8:12pm
People have been forecasting recession since 2009

(when we refused to admit that we were actually in a depression) and so far it hasn't happened - officially. Maybe the only reason capitalism hasn't collapsed is that the rich and powerful refuse to admit that it has and we are all afraid to admit that they're liars.

gjohnsit on Mon, 08/05/2019 - 9:33pm
I did predict a double-dip recession in 2010

@doh1304
but that was nine years ago. Don't you think that after 10 years of record low interest rates things have changed?

Either way, the leading economic indicators are measurable facts.

(when we refused to admit that we were actually in a depression) and so far it hasn't happened - officially. Maybe the only reason capitalism hasn't collapsed is that the rich and powerful refuse to admit that it has and we are all afraid to admit that they're liars.

The Voice In th... on Mon, 08/05/2019 - 9:26pm
Tariffs replace the graduated income tax.

@snoopydawg

Moving from taxing the rich to taxing the proletariat (the poor have no money of their own to buy goods and hence pay tariffs). since the rich invest most of their wealth and workers spend most (or more!) the tax burden shifts downward (by design!)

shaharazade on Mon, 08/05/2019 - 9:28pm
Trumps tiffs

@snoopydawg are so fake. A deliberate distraction which enables the neoliberal/pigs from both parties to continue with their raping and pillaging the earth and the humans who live here. For what? Somebody tell me why a fascistic insane demagogue is still in office? Because he serves their agenda, all of them R's and D's.

Yes they could stop Trump but why would they? He's getting it done and the Dems. can put the blame on Trump and Co. The Demorat's can then focus on fake social issues and rile up the populace with mayhem and social unrest.

If this is not the case why have they once again taken off the table the legal remedy for lunatics, unfit for office demagogues of the worst order. What can ordinary people do to prepare for their crashes? Nothing. We're all dependent on this fucked up economy one way or another.

travelerxxx on Tue, 08/06/2019 - 12:56am
Just theater

@The Voice In the Wilderness

Yes, a tool all right. Remember when the House Democrats were considering who would be the Speaker of the House, Trump actually supported her. Some were perplexed by this. I commented at the time that this didn't surprise me in the least, as if Trump didn't have someone like Pelosi as Speaker, they would have to invent someone identical. They would have, too.

Trump needs a foil in the House, and Pelosi is perfect for the role. It's part of what allows Mega-party team A and Mega-party team B to achieve the goals their owners have tasked them with.

Our MSM screams and raises hell over it all, but that's part of the act, too. Meanwhile We the People continue to get the shaft.

Pluto's Republic on Tue, 08/06/2019 - 3:01am
I find it difficult to believe

....that Trump would try to throw the economy into a recession at this time. In fact, he has been dogging the Fed Reserve for that interest cut just to push the possibility of a recession back and further boost the stock market.

I believe it is common knowledge that the incumbent party almost always wins a second term if the economy does not fail catastrophically. And Trump is poised to win according to historian Allan Lichtman, whose system has never failed to accurately predict the outcome of the past nine Presidential elections. Lichtman tracks the 13 variables that determine the outcomes of Presidential elections going back to the Civil war -- the health of the short-term and long-term economy being two of them.

Lichtman, a Democrat himself, says there is only one way to trick the situation at this point. Can you guess what it is?

[Aug 19, 2019] The Increasingly Bizarre Interplay Between Trump's Trade Policy and the Fed

Notable quotes:
"... China gambit is a huge gamble for Trump. It he plays it right and signd the deal with China later this year while Fed slashed rates he might create an artificial boost for the economy, enough to secure his victory. In this case his demagogy might resonate with voters. ..."
"... While Warren has her weak spots and Trump has several avenue of attack against her, she has a real program for the country and that lessen Trump chances for re-election because Trump is incapable of any serious discussion of economics and problems facing the country. His only forte is demagogy. ..."
"... Also Warren in not entangled into any foreign policy controversy and can attack Trump impulsivity and incompetence in this area with impunity. She also can leverage Russiagate sentiments, which, while pure neo-McCarthyism, will be a factor in 2020 elections. ..."
"... Many people in Mid-West now understand that he betrayed all his 2016 elections promises and just carried water for Mitch McConnell. So the question whether Trump can carry Midwestern states in 2020 is open to review. ..."
"... It is also important to note that Trump lost anti-war right. ..."
Aug 03, 2019 | economistsview.typepad.com

Fred C. Dobbs , August 03, 2019 at 03:59 PM

The Increasingly Bizarre Interplay Between Trump's Trade Policy and the Fed https://nyti.ms/331ItNz
NYT - Neil Irwin - August 1

Here's a question for economy watchers: Is American economic policy in 2019 more like ouroboros, the ancient Egyptian symbol of a snake eating its own tail, or maybe more like an M.C. Escher painting in which a series of stairs wrap around a room in mind-bending ways?

Both seem like decent approximations of the strange ways in which trade policy, monetary policy and financial markets are intersecting this year. And never more so than this week.

On Wednesday, the Federal Reserve cut its main interest rate target, aiming to guard the American economy against damage from "trade uncertainty" and a slowing world economy, as the Fed chair, Jerome Powell, said at a news conference. But markets fell, with investors interpreting his comments to mean that the Fed won't cut rates much more in the months to come.

Then on Thursday, President Trump announced a new round of 10 percent tariffs on $300 billion worth of China exports, suggesting that a trade war détente from earlier the summer may be coming to an end. That, in turn, caused a huge swing in bond markets that implied investors now do expect further interest rate cuts as the Fed tries to contain the trade-related damage.

Going back a bit further in time, the interplay between different aspects of economic policy becomes even more convoluted.

In late spring, trade talks between the United States and China broke down, and escalation of the trade wars seemed inevitable. The stock market fell, as the conflict seemed sure to hit corporate earnings. And bond yields fell, as investors became confident that the Fed would need to cut interest rates to contain the damage.

In late June, talks got back on track, but by that time Fed officials had largely made up their minds that it would be worthwhile to cut interest rates at least once to provide insurance against the slowing global economy.

Those plans, in turn, fueled a big stock market rally in late June and July, and most economic data has been solid in that time. Whatever the risks and downsides, the Fed's shift toward lower interest rates seemed to have accomplished its goal of a financial environment that will support continued economic growth.

"After simmering early in the year, trade policy tensions nearly boiled over in May and June, but now appear to have returned to a simmer," as Mr. Powell summarized in his news conference Wednesday. President Trump turned the metaphorical stove back to high less than 24 hours after those words passed Mr. Powell's lips.

This suggests the president and his trade negotiators believe they have downside protection against the possibility that trade policies will cause any lasting damage to the economy or the stock market. After all, the

Fed has very publicly shown that it views it as appropriate to cut interest rates to combat any slowdown related to trade wars.

There is always interplay between different elements of economic policy set by various parts of government. For example, the Fed's practice is to take tax and spending decisions by Congress as a given and plug them into its models -- and adjust its interest rate policies accordingly.

What's different now is that Mr. Trump's administration seems willing to weaponize that practice, offering no qualms about openly bullying the Fed while using its presumed reaction as a source of advantage in international negotiations.

Even as Mr. Trump is comfortable abandoning the norm that the president should not explicitly pressure the Fed, Mr. Powell appears to be obeying the tradition that the Fed should not try to use its power over monetary policy to twist the arms of elected officials.

It has worked out fine for Mr. Trump so far -- the economy continues to grow heading into an election year, and while the stock market fell Wednesday after the latest trade news, the S&P 500 was down only 0.9 percent; it would surely have been down more if not for assumptions that further rate cuts were now more likely.

But it also creates a number of risks for the American economy, in both the short and longer term.

First, the Fed's interest rate policies are blunt instruments. They seem to be more effective at generating big swings in asset prices than at fine-tuning the economy, and it would be easy for Mr. Powell and his colleagues to make a mistake -- either cutting interest rates by too much, fueling inflation, or too little, allowing a slump.

There's no modern precedent for having the world's two largest economies, major trading partners, enter a trade war. And already the consequences have been more complex than one might have guessed.

The slowing Chinese economy has pulled down the price of oil, which has both lowered inflation in the United States and lowered capital investment by American energy companies. Even if the Fed is successful at boosting the overall stock market, lower rates probably won't do much to help the industries and consumers directly damaged by tariffs.

Second, the monetary policy firepower that the Fed is using to try to offset the damage from trade wars may not be available if an economic slump caused by some other factor were to emerge. The central bank would have less room to stimulate the economy than it would if it were not deploying rate cuts now.

Finally, this pattern could do longer-term damage to the Fed's credibility as an independent, credible central bank. The United States dollar is central to transactions around the world, a source of long-term geopolitical advantage. Confidence in the Fed is part of the reason. Global investors generally believe that the central bank will act with a long-term view, not based on the political needs of the current American president.

This leaves Mr. Powell in a pretty miserable spot. One way he could decisively break the cycle would be to abandon deeply held principles -- threatening to ignore the potential damage to the economy from trade wars because he thinks the president's policies will do damage over the longer term. That's not the role for unelected officials like the Fed chief, or at least it isn't supposed to be.

In this particular ouroboros, in other words, it sure seems like Mr. Trump is the mouth, and Mr. Powell is the tail.

likbez -> Fred C. Dobbs... , August 03, 2019 at 07:54 PM

China gambit is a huge gamble for Trump. It he plays it right and signd the deal with China later this year while Fed slashed rates he might create an artificial boost for the economy, enough to secure his victory. In this case his demagogy might resonate with voters.

If he does not sign the deal with China, he implicitly increases chances for Warren to become Democratic nominee (Kamala now is weakened; Biden is problematic and not only due to his semi-senility; Sanders is viewed as an enemy by the Democratic Party elite and proved to be Hillary sheepdog in 2016).

While Warren has her weak spots and Trump has several avenue of attack against her, she has a real program for the country and that lessen Trump chances for re-election because Trump is incapable of any serious discussion of economics and problems facing the country. His only forte is demagogy.

Also Warren in not entangled into any foreign policy controversy and can attack Trump impulsivity and incompetence in this area with impunity. She also can leverage Russiagate sentiments, which, while pure neo-McCarthyism, will be a factor in 2020 elections.

Especially bad Trump chances are in case economics slides into recession in the second half of 2020 or, God forbid, stock market crashes.

Other then Fed rate cuts Trump does not have any real tools to stimulate the economy and his tax cut for the rich is not viewed too positively by the majority of the population. Trumpcare is viewed mostly negatively.

Many people in Mid-West now understand that he betrayed all his 2016 elections promises and just carried water for Mitch McConnell. So the question whether Trump can carry Midwestern states in 2020 is open to review.

It is also important to note that Trump lost anti-war right.

[Aug 19, 2019] Statistics from the government and other sources do not support Mr. Trump s claim about his policies effectiveness in drawing investment and jobs from abroad

Notable quotes:
"... Foreign investment in the United States grew at a slower annual pace in the first two years of Mr. Trump's tenure than during Barack Obama's presidency, according to Commerce Department data released in July. Growth in business investment from all sources, foreign and domestic, accelerated briefly after Mr. Trump signed a $1.5 trillion tax-cut package in late 2017 but then slowed. Investment growth turned negative this spring, providing a drag on economic output. ..."
"... Now manufacturing is struggling amid a global slowdown and fallout from the trade war, which Mr. Trump has escalated by imposing additional tariffs on Chinese goods and by labeling China a "currency manipulator." ... ..."
Aug 13, 2019 | economistsview.typepad.com

Fred C. Dobbs , August 13, 2019 at 10:33 AM

Trump's Push to Bring Back Jobs to US Shows
Limited Results https://nyti.ms/31y1HsE
NYT - Jim Tankersley - August 13

WASHINGTON -- From tax cuts to relaxed regulations to tariffs, each of President Trump's economic initiatives is based on a promise: to set off a wave of investment and bring back jobs that the president says the United States has lost to foreign countries.

"We have the greatest companies anywhere in the world," Mr. Trump said at the White House recently. "They're all coming back now. They're coming back to the United States."

Mr. Trump's tax cuts unquestionably stimulated the American economy in 2018, helping to push economic growth to 2.5 percent for the year and fueling an increase in manufacturing jobs. But statistics from the government and other sources do not support Mr. Trump's claim about his policies' effectiveness in drawing investment and jobs from abroad.

Foreign investment in the United States grew at a slower annual pace in the first two years of Mr. Trump's tenure than during Barack Obama's presidency, according to Commerce Department data released in July. Growth in business investment from all sources, foreign and domestic, accelerated briefly after Mr. Trump signed a $1.5 trillion tax-cut package in late 2017 but then slowed. Investment growth turned negative this spring, providing a drag on economic output. ...

Fred C. Dobbs said in reply to Fred C. Dobbs... , August 13, 2019 at 10:41 AM
... the Reshoring Initiative ( http://www.reshorenow.org/) data show fewer than 30,000 jobs that companies say they will relocate to the United States because of Mr. Trump's tariffs on imported steel, aluminum, solar panels, washing machines and a variety of Chinese goods. Researchers at A.T. Kearney (*) said last month that Mr. Trump's trade policies, including tariffs, had pushed factory activity not to the United States but to low-cost Asian countries other than China, like Vietnam.

Manufacturers of primary metals, which include steel and aluminum, have added fewer than 15,000 jobs since Mr. Trump took office, with more than half of those gains coming before Mr. Trump imposed tariffs on foreign-made metals last year.

Now manufacturing is struggling amid a global slowdown and fallout from the trade war, which Mr. Trump has escalated by imposing additional tariffs on Chinese goods and by labeling China a "currency manipulator." ...

* US Trade Policy and Reshoring:
The Real Impact of America's New Trade Policies
https://www.atkearney.com/operations-performance-transformation/us-reshoring-index

[Aug 19, 2019] President Trump has pegged the success of his Presidency on the rise and fall of the markets

This is the nature of all petty speculators. And Trump is a petty speculator, a huckster by nature. He has a typical "rag trader mentality".
ZeroHedge comments became very critical to Trump. As they reflect certain demographic which previously supported Trump this is not a good sign.
What is interesting that in this libertarian paradise almost nobody supports classic neoliberal liberalization. Most support tariffs. Times definitely changes.
Aug 19, 2019 | www.zerohedge.com

Of course, since President Trump has pegged the success of his Presidency on the rise and fall of the markets, on Wednesday, as "tweets" about a "trade talks continuing" failed to lift the markets, he resorted to more direct measures to manipulate the markets: Via CNBC:

"Trump held the call with J.P. Morgan Chase CEO Jamie Dimon, Bank of America's Brian Moynihan and Citigroup's Michael Corbat, according to people with knowledge of the situation."

This, of course, was reminiscent of the call made by Steve Mnuchin, U.S. Treasury Secretary, during the market rout last December. But most importantly, this is about the upcoming election:

"Trump has been reaching out to corporate leaders this week amid his concerns that a slowing U.S. economy could impact his reelection chances, according to a Thursday piece from the Washington Post."

Hopefully, he will listen to them.

But even if the trade dispute was ended today, the damage is likely already done.

In other words, while investors have hung their portfolios hopes of a "trade deal," it may well be too little, too late.

Art Of The Deal Versus The Art Of War

This is all assuming Trump can actually succeed in a trade war with China.

Let's step back to the G-20 meeting between President Trump and President Xi Jinping. As I wrote then:

"There is a tremendous amount of 'hope' currently built into the market for a 'trade war truce' this weekend. However, as we suggested previously, the most likely outcome was a truce but no deal. That is exactly what happened.

While the markets will likely react positively next week to the news that ' talks will continue,' the impact of existing tariffs from both the U.S. and China continue to weigh on domestic firms and consumers.

More importantly, while the continued ' jawboning' may keep ' hope alive' for investors temporarily, these two countries have been ' talking' for over a year with little real progress to show for it outside of superficial agreements.

Importantly, we have noted that Trump would eventually ' cave' into the pressure from the impact of the ' trade war' he started.


I am Groot , 4 minutes ago link

Trump will always be better than Hillary but he always folds like a house of cards in a windstorm when he's up against the Democrats or anyone for that matter. He turned out to be a ******* giant orange *****.

I really don't know if he will win in 2020. And a lot of that is based on him screwing his own base like farmers and gun owners. He didn't lock up Hillary, or build us a wall. He hasnt stopped the illegals from coming over the border. And he hasnt cut off their benefits. So he hasn't really done any of the major things he promised.

All the Democrats have to do is cheat in Pennsylvnia, Michigan and Florida and he's finished. We end up with Pedo Joe as POTUS.

Antifaschistische , 14 minutes ago link

Meanwhile in Arkansas...

https://www.marketwatch.com/story/the-walton-family-gets-100-million-richer-every-single-day-2019-08-12

Remember when Sam Walton used to be proud of his "made in America" products...literally saving companies from their demise by buying truckloads of their products.

Skip the Trade War....do I sound too much like Bernie if I suggest that we go after the family that makes $100,000,000.00 per DAY off selling Chinese goods....they ARE the storefront for China. Well, along with few dozen other retailer and etailers (like Amazon)

...and don't give me the "they pay their taxes" BS...because the billionaire boys club hire multi-millionaire Tax Attorneys to avoid paying taxes.

Quivering Lip , 16 minutes ago link

When are you people going to realize that the "trade war" isn't about bringing jobs back. It's about the global corporations getting a better deal in China. It's about Financial Services and US banks gaining market share in China.

Those corporations won't move jobs back here. They'll just make more in China. Those same corporations that offshored those American jobs already got their tax cuts. Why would they bring jobs back now. Talk about putting the cart in front of the horse.

By the way US steel had been and will continue to lay people off.

The US is running Trillion dollar plus yearly deficits with stocks up 50% since Trump took office. This with all-time low unemployment and no inflation (bwahahahahaha).

Now imagine what the deficits will look like if things turn South.

green dragon , 22 minutes ago link

Lance Roberts just does not get it. I wonder if he actually read the art of war. For it was the Globalist who created what is China today with the largest transfer of technology, capital, etc. in the history of the world.

We are now at the point of no return. The western system will either decline or it will pull itself out of it self destruction. Make no mistake China intends to be a military power and it is just a matter of time before China challenges USA domination. I see no way this will be avoided at this time.

As such you will see economic conflict going forward. China will likely win this one but it will set the stage for the continued decline of the western economic system. For the current system of western debt and financialization of Western economies cannot sustain itself. China still depends on this system that cannot last. So in time Globalist system will have to reset and the relationship between Western Nations and China will change into trade conflict.

June 12 1776 , 22 minutes ago link

What has been accomplished? Stolen Democrat Marxist Redistribution is all that Trump has accomplished while getting exposed as the illiterate fraud that he is.

Corp/Fascist, CIA MOSSAD Trump was never in a "trade war". Trumps sole mission has been to steal and redistribute, at a ongoing DEFICIT , out of the property of American People, leaving the American People, fked. Same as it ever was!

Corp/Fascist, CIA MOSSAD Trump continues to line up all bonafide working and saving Americans in front of his deficit debt devaluation firing squad. All he intended to do, he has accomplished: redistributed stolen plunder and bounties and plundered all bonafide working and saving white, black, brown, red and yellow Americans.

the6thBook , 32 minutes ago link

Was this written by China? Hong Kong imploding...

Jazzman , 11 minutes ago link

HK is just a trivial Maidan-like side scenario to support the US position in a trade war that is meant to force the Chinese into submission. Since the trade war is collapsing, the Donald Trump has to try to escalate somewhere else - in this case it's Taiwan. That really is the only option the US culture allows him to consider. Escalation, escalation, escalation. Very predictable strategy. Problem is, in this way the Trump puts the very existence of the USA at risk when he tries to win against all odds against an adversary that absolutely doesn't want to lose.

Asoka_The_Great , 27 minutes ago link

"

One of the things I will allow, however, is -- a lot of people are surprised we send and we sell to Huawei a tremendous amount of product that goes into a lot of the various things that they make -- and I said that that's OK, that we will keep selling that product." – President Trump

Before the Great Trade War , and the endless attacks on Huawei by Trumptard and the US Dark State, in order, to kill Huawei, many people, including myself, have not heard of Huawei's name before, now, it is a world famous brand, thanks for the massive free publicity, from the US War State.

Despite the total ban and blacklisting, Huawei not only survived, without a scratch, it's revenue in 2019, actually grew an astonishing 23% .

WHY IS THE US DARK STATE SO TERRIFIED OF HUAWEI'S 5G WIRELESS TECHNOLOGY?

The US Dark State/War State/Deep State, that is the NSA/CIA/Pentagon/MIC/MSM . . . etc has forced every western tech companies to install backdoors and malwares on their equipments, except Huawei. They have tried to force Huawei to install those NSA backdoors and malwares, in 2014, but the company categorically refused.

"The real issue is that nothing has changed since a 2014 report from The Register that Huawei categorically refuses to install NSA backdoors into their hardware to allow unfettered intelligence access to the data that crosses their networks.

All our emails, text messages, phone calls, internet searches, web browsing, library records, . . . etc, are recorded and stored by NSA/CIA's vast servers farms.

Now, Huawei is not only the leading 5G wireless provider, but it is the only one, so far. The other companies like Nokia and Ericsson are far behind.

5G is going to completely replace 4G and 3G. It is about 200 times faster than 4GLTE, in download speed.

What this means is that if the world adopts the Huawei equipments and standards, it will threaten to UNDO the US Dark State's vast global surveillance network.

This is what terrifies the US Dark State. Their vast Global Surveillance Network is the basis of its power, and tools to enslave mankind.

There is a very good reason, why the American Founding Fathers , enacted every measures, to protect our rights and privacy, so that we will not be controlled and enslaved by the tyranny of totalitarian government, which is already upon us, in the form of US Dark State/War State .

The US Dark State/Deep State/War State does not represent America. It is Un-American. It is not the American Republic founded by our Founding Fathers, and enshrined in the US Constitution.

RedBaron616 , 33 minutes ago link

The problem is that this President has no clue has to use tariffs.

If you want the jobs to come back to the USA instead of playing Asian musical chairs, you have to slap the tariffs on every country that has low wages/benefits and no/low environmental laws (that are enforced). If you don't, they are just shuffling factories around.

I'm no fan of China, but tariffs only on China won't bring a single job back to the USA unless tariffs encompass all the "beggar-my-neighbor" countries, like Mexico, China, Malaysia, Vietnam, Indonesia, etc.

ohm , 31 minutes ago link

Absolutely correct. This shows that this has nothing to do with Trade but just trying to weaken China.

ElBarto , 22 minutes ago link

What's wrong with making China weaker? Makes more sense than making them stronger.

ohm , 12 minutes ago link

Rather than invading countries or trying to make countries weaker, we should focus on fixing our crumbling infrastructure, manufacturing base collapse, declining life expectancy etc. And don't even start babbling about how Trump's China tariffs help US manufacturing. As RedBaron correctly pointed out in his post, unless you put tariffs on all the low wage countries, singling out China does nothing for US workers.

[Aug 18, 2019] Why Was Trumponomics a Flop? Neither tax cuts nor tariffs are working.

Notable quotes:
"... But why has Trumponomics failed to deliver much besides trillion-dollar budget deficits? The answer is that both the tax cuts and the trade war were based on false views about how the world works. ..."
"... Republican faith in the magic of tax cuts -- and, correspondingly, belief that tax increases will doom the economy -- is the ultimate policy zombie, a view that should have been killed by evidence decades ago but keeps shambling along, eating G.O.P. brains. ..."
"... What about the trade war? The evidence is overwhelming: Tariffs don't have much effect on the overall trade balance. At most they just shift the deficit around: We're importing less from China, but we're importing more from other places, like Vietnam. ..."
"... And there's a good case to be made that Trump's tariffs have actually hurt U.S. manufacturing. For one thing, many of them have hit "intermediate goods," that is, stuff American companies use in their production processes, so the tariffs have raised costs. ..."
"... Now, none of this has led to economic catastrophe. As Adam Smith once wrote, "There is a great deal of ruin in a nation." Except in times of crisis, presidents matter much less for the economy than most people think, and while Trumponomics has utterly failed to deliver on its promises, it's not bad enough to do enormous damage. ..."
Aug 02, 2019 | economistsview.typepad.com

anne , August 02, 2019 at 04:05 AM

https://www.nytimes.com/2019/08/01/opinion/trump-economy.html

August 1, 2019

Why Was Trumponomics a Flop? Neither tax cuts nor tariffs are working.
By Paul Krugman

Donald Trump has pursued two main economic policies. On taxes, he has been an orthodox Republican, pushing through big tax cuts for corporations and the wealthy, which his administration promised would lead to a huge surge in business investment. On trade, he has broken with his party's free(ish) trade policies, imposing large tariffs that he promised would lead to a revival of U.S. manufacturing.

On Wednesday, the Federal Reserve cut interest rates, even though the unemployment rate is low and overall economic growth remains decent, though not great. According to Jerome Powell, the Fed's chairman, the goal was to take out some insurance against worrying hints of a future slowdown -- in particular, weakness in business investment, which fell in the most recent quarter, and manufacturing, which has been declining since the beginning of the year.

Obviously Powell couldn't say in so many words that Trumponomics has been a big flop, but that was the subtext of his remarks. And Trump's frantic efforts to bully the Fed into bigger cuts are an implicit admission of the same thing.

To be fair, the economy remains pretty strong, which isn't really a surprise given the G.O.P.'s willingness to run huge budget deficits as long as Democrats don't hold the White House. As I wrote three days after the 2016 election -- after the shock had worn off -- "It's at least possible that bigger budget deficits will, if anything, strengthen the economy briefly." And that's pretty much what happened: There was a bit of a bump in 2018, but at this point we've basically returned to pre-Trump rates of growth.

But why has Trumponomics failed to deliver much besides trillion-dollar budget deficits? The answer is that both the tax cuts and the trade war were based on false views about how the world works.

Republican faith in the magic of tax cuts -- and, correspondingly, belief that tax increases will doom the economy -- is the ultimate policy zombie, a view that should have been killed by evidence decades ago but keeps shambling along, eating G.O.P. brains.

The record is actually awesomely consistent. Bill Clinton's tax hike didn't cause a depression, George W. Bush's tax cuts didn't deliver a boom, Jerry Brown's California tax increase wasn't "economic suicide," Sam Brownback's Kansas tax-cut "experiment" (his term) was a failure.

Nevertheless, Republicans persist. This time around, the centerpiece of the tax cut was a huge break for corporations, which was supposed to induce companies to bring back the money they've invested overseas and put the money to work here. Instead, they basically used the tax savings to buy back their own stock.

What went wrong? Business investment depends on many factors, with tax rates way down the list. While a casual look at the facts might suggest that corporations invest a lot in countries with low taxes, like Ireland, this is mainly an illusion: Companies use accounting tricks to report huge profits and hence big investments in tax havens, but these don't correspond to anything real.

There was never any reason to believe that cutting corporate taxes here would lead to a surge in capital spending and jobs, and sure enough, it didn't.

What about the trade war? The evidence is overwhelming: Tariffs don't have much effect on the overall trade balance. At most they just shift the deficit around: We're importing less from China, but we're importing more from other places, like Vietnam.

And there's a good case to be made that Trump's tariffs have actually hurt U.S. manufacturing. For one thing, many of them have hit "intermediate goods," that is, stuff American companies use in their production processes, so the tariffs have raised costs.

Beyond that, the uncertainty created by Trump's policy by whim -- nobody knows what he'll hit next -- has surely deterred investment. Why build a manufacturing plant when, for all you know, next week a tweet will destroy your market, your supply chain, or both?

Now, none of this has led to economic catastrophe. As Adam Smith once wrote, "There is a great deal of ruin in a nation." Except in times of crisis, presidents matter much less for the economy than most people think, and while Trumponomics has utterly failed to deliver on its promises, it's not bad enough to do enormous damage.

On the other hand, think of the missed opportunities. Imagine how much better shape we'd be in if the hundreds of billions squandered on tax cuts for corporations had been used to rebuild our crumbling infrastructure. Imagine what we could have done with policies promoting jobs of the future in things like renewable energy, instead of trade wars that vainly attempt to recreate the manufacturing economy of the past.

And since everything is political these days, let me say that pundits who think that Trump will be able to win by touting a strong economy are almost surely wrong. He most likely won't face a recession (although who knows?), but he definitely hasn't made the economy great again.

So he's probably going to have to do what he's already doing, and clearly wants to do: run on racism instead.

anne -> anne... , August 02, 2019 at 07:49 AM
https://fred.stlouisfed.org/graph/?g=oxlA

January 30, 2019

United States Imports of Goods from China and Vietnam, 2017-2019

(Percent change)

Plp -> anne... , August 02, 2019 at 12:31 PM
The economy needs a trillion dollar
Demand injection
Over the next 4 quarters

Will Trump find away

Awareness Awakens said in reply to anne... , August 02, 2019 at 07:11 PM

https://2.bp.blogspot.com/-3rVOpJjNWDE/XURd7OHkw6I/AAAAAAAAyuY/QWZBJxk2sP8VgFu5VTTxhz1Kliuah9SEgCLcBGAs/s1600/PublicJuly2019.PNG

https://2.bp.blogspot.com/-B1-QKHDmxIw/XURd4i2Ku0I/AAAAAAAAyuU/2Iflx0lBX5MrsAwzezy4pzV5dSVc_0negCLcBGAs/s1600/PrivateJuly2019.PNG

anne , August 02, 2019 at 04:07 AM
https://www.nytimes.com/2019/07/25/opinion/trump-foreign-investors.html

July 25, 2019

Trump's Secret Foreign Aid Program
He's giving away billions to overseas investors.
By Paul Krugman

Donald Trump often complains that the media don't give him credit for his achievements. And I can think of at least one case where that's true. As far I can tell, almost nobody is reporting that he has presided over a huge -- but hidden -- increase in foreign aid, the money America gives to foreigners. In fact, the hidden Trump program, currently running at around $40 billion a year, is probably the biggest giveaway to other nations since the Marshall Plan.

Unfortunately, the aid isn't going either to poor countries or to America's allies. Instead, it's going to wealthy foreign investors.

Before I get there, let's talk for a second about a claim Trump often makes about a highly visible part of his economic strategy, the tariffs he has imposed on imports from China and other countries. These tariffs, he has insisted again and again, are being paid by China and represent billions in gains to the United States.

This claim is, however, demonstrably false. Tariffs are normally paid by consumers in the importing country, not exporters. And we can confirm that this is what's happening with the Trump tariffs: Prices of goods subject to those tariffs have risen sharply, roughly in line with the tariff increases, while prices of goods not subject to the new tariffs haven't gone up.

So Trump's tariffs aren't a tax on foreigners, whatever he may think. On the other hand, his other policies have given selective foreigners a huge tax break.

Remember, Trump's only major legislative achievement so far is the 2017 Tax Cut and Jobs Act. The core of that bill was a sharp reduction in corporate tax rates, which has led to a drastic fall in tax revenues, on the order of $140 billion over the past year.

Who gains from this tax cut? Supporters of the bill claimed that the benefits would be passed on to workers in the form of higher wages, and they made a big deal over a flurry of corporate bonus announcements in early 2018. But those bonuses weren't actually very big, and they didn't continue.

In fact, at this point it's clear that the bonus surge, such as it was, was all about tax avoidance: By moving up payments they were going to make anyway, corporations got to deduct the expense at the old, higher tax rate. Now that this option has expired, bonuses have dropped back to their normal level, or even a bit lower.

What about the argument that tax cuts would promote a huge swell in business investment, which would push up wages? Well, that isn't happening, either; when it comes to business spending, the tax cut has been a big fizzle.

So who is benefiting from the tax cut? Basically, shareholders, who have received increased dividends and seen a lot of capital gains as corporations use their windfall not to invest, but to buy back their own stocks.

And a big share of these gains to shareholders has gone to foreigners.

We live, after all, in an era of globalized finance, in which wealthy investors normally own assets in many countries. Americans own trillions in foreign equity, both directly in the form of foreign stocks and indirectly in the form of stocks of U.S. corporations with foreign subsidiaries. Foreigners, correspondingly, have a big stake here, again both through direct stock ownership and via operation of their corporate subsidiaries.

Over all, foreigners own about 35 percent of the equity in corporations subject to U.S. taxes. And as a result, foreign investors have received around 35 percent of the benefits of the tax cut. As I said, that's more than $40 billion a year.

To put this in perspective, Trump's tariffs on China have raised $20 billion so far. Even if China were paying those tariffs -- which it isn't -- that would fall well short of the gift he's made to foreign investors.

Alternatively, we can compare Trump's gift to foreign investors with our actual spending on foreign aid (which is much smaller than most people imagine). In 2017, the U.S. spent $51 billion on "international affairs," but much of that was either the cost of operating embassies or military assistance. The Trump tax break for overseas investors is considerably bigger than the total amount we spend on foreign aid proper.

Now, the U.S. economy is almost inconceivably huge, producing more than $20 trillion worth of goods and services every year. We're also a country that investors trust to honor its debts, so the tax cut, irresponsible as it is, isn't causing any immediate fiscal stress.

So Trump's giveaway to foreign investors isn't going to make or break us, although it's probably enough to ensure that the tax cut will be, over all, a net drain on economic growth: Even if the tax cut has some positive effect on the total income generated here (which is doubtful), this will probably be more than offset by the increased share of that income accruing to foreigners rather than U.S. citizens.

Still, even in America, $40 billion here, $40 billion there, and eventually you're talking about real money. Furthermore, it does seem worth pointing out that even as Trump boasts about taking money away from foreigners, his actual policies are doing exactly the opposite.

Plp -> anne... , August 02, 2019 at 12:34 PM
The present domestic economy has net leaks
Of a trillion every year even with
the current fiscal deficit

No way engineered wealth effects
On consumption
can
Replace that entirely


We need a signifigant fiscal injection

Plp -> Plp... , August 02, 2019 at 12:37 PM
At least 1/2 A trillion

New Infrastructure spending
can't get spent that fast

So

Trump ought propose a payroll tax holiday

anne -> Plp... , August 02, 2019 at 12:58 PM
The present domestic economy has net leaks (net exports)
Of a trillion every year even with
the current fiscal deficit

No way engineered wealth effects
On consumption
can
Replace that entirely

We need a significant fiscal injection

[ Interesting argument. ]

anne -> anne... , August 02, 2019 at 12:58 PM
https://fred.stlouisfed.org/graph/?g=lrqm

January 15, 2018

Net Exports of goods and services, 2000-2018


https://fred.stlouisfed.org/graph/?g=lVai

January 30, 2018

Net Exports as Share of Gross Domestic Product, 2000-2018

[Aug 18, 2019] New Poll Shows Almost Half Of Americans Think Trump's Trade War Is Bad

Notable quotes:
"... Consumers figuring out that it is they who pay the tariffs could backfire on the Trump administration. ..."
"... According to our reporting last month , a 25% tariff on $200 billion in Chinese goods would cost the average American household $831 per year, something that could anger many families as the overall economy is cycling down through summer. ..."
"... ...Farmers get hurt most. They still steadfastly support Trump. ..."
Jun 30, 2019 | www.zerohedge.com

Consumers figuring out that it is they who pay the tariffs could backfire on the Trump administration.

While the President continues to insist that China pays the tariffs, Americans are starting to become more spectacle that he could be deceiving them.

Of all respondents, 46% said the economy is set to deteriorate if a near-term deal isn't reached, while 44% are convinced that China will be the biggest loser.

The poll found that 45% believe tariffs on Chinese goods is slowing the economy, while only 26% believe they help. A National Bureau of Economic Research report shows that American consumers fully pay tariffs - and it's one of the main reasons why respondents are becoming increasingly pessimistic about the trade war. The 2018 report noted, "The U.S. experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply-chain network" and reduced availability of imports.

According to our reporting last month , a 25% tariff on $200 billion in Chinese goods would cost the average American household $831 per year, something that could anger many families as the overall economy is cycling down through summer.


raymeejrs , 1 minute ago link

Most Americans, yes, even conservatives are to selfish, tech blinded, media watching sheep, to realize how unbalanced trade has been {against the US} for decades now.

Not to mention they are totally clueless that this was set up this way on purpose..

To transfer wealth, and jobs out of this country to the east... Sadly, many steel workers, auto workers, die makers and setters are more than aware of this "fair trade" fiasco that has eliminated their jobs.

We went from being a producing based country, to a consumer based country during my life time.

Granted, I was born{1965} already at the end of our producing cycle. People just wont care, and will believe ANYTHING the establishment feeds them until its to late.

It already is..

847328_3527 , 3 minutes ago link

Trump can get support by eliminating free shipping from China to USA. Small businesses would hug him for that.

g3h , 6 minutes ago link

...Farmers get hurt most. They still steadfastly support Trump.

[Aug 18, 2019] The Trump-McConnell-Ryan tax cut has been a complete failure at boosting the American economy through increased investment in America

Notable quotes:
"... There are still no signs the U.S. has entered that phase of the recovery in which inflation is accelerating. ..."
"... There are still no signs of interest rate normalization: secular stagnation continues to reign. ..."
Jun 11, 2019 | www.bradford-delong.com

Key Points:

Specifically, it is still the case that:

[Aug 18, 2019] Vox Popoli The end of world revolution

Aug 18, 2019 | voxday.blogspot.com

Sunday, July 15, 2018 The end of world revolution This is a particularly interesting article on the end of the Bilderberg era in light of some of the rumors that are supposedly coming out of the most recent Bilderberg meeting. And notice how it all just keeps going back to Leon Trotsky:

The beginning of the end of the Bilderberg/Soros vision is in sight. The Old Order will cling on, even to the last of its fingernails. The Bilderberg vision is the notion of multi-cultural, international cosmopolitanism that surpasses old-time nationalism; heralding the end of frontiers; and leading toward a US-led, 'technocratic', global economic and political governance. Its roots lie with figures such as James Burnham, an anti-Stalin, former Trotskyite, who, writing as early as 1941, advocated for the levers of financial and economic power being placedin the hands of a management class: an élite – which alone would be capable of running the contemporary state – thanks to this élite's market and financial technical nous. It was, bluntly, a call for an expert, technocratic oligarchy.

Burnham renounced his allegiance to Trotsky and Marxism, in all its forms in 1940, but he would take the tactics and strategies for infiltration and subversion, (learned as a member of Leon Trotsky's inner circle) with him, and would elevate the Trotskyist management of 'identity politics' to become the fragmentation 'device' primed to explode national culture onto a new stage, in the Western sphere. His 1941 book, "The Managerial Revolution," caught the attention of Frank Wisner, subsequently, a legendary CIA figure, who saw in the works of Burnham and his colleague a fellow Trotskyite, Sidney Hook, the prospect of mounting an effective alliance of former Trotskyites against Stalinism.

But, additionally, Wisner perceived its merits as the blueprint for a CIA-led, pseudo-liberal, US-led global order. ('Pseudo', because, as Burnham articulated clearly, in The Machiavellians, Defenders of Freedom, his version of freedom meant anything but intellectual freedom or those freedoms defined by America's Constitution. "What it really meant was conformity and submission").

In short, (as Paul Fitzgerald and Elizabeth Gould have noted), "by 1947, James Burnham's transformation from Communist radical, to New World Order American conservative was complete. His Struggle for the World, [converted into a memo for the US Office of Strategic Services (OSS, the forerunner of CIA)], had done a 'French Turn' on Trotsky's permanent Communist revolution, and turned it into a permanent battle plan for a global American empire. All that was needed to complete Burnham's dialectic was a permanent enemy, and that would require a sophisticated psychological campaign to keep the hatred of Russia alive, "for generations".

What has this to do with us today? A 'Burnham Landscape' of apparently, 'centrist' European political parties, apparently independent think-tanks, institutions, and NATO structures, was seeded by CIA – in the post war era of anti-Sovietism – across Europe, and the Middle East – as part of Burnham's 'battle plan' for a US-led, global 'order'. It is precisely this élite: i.e. Burnham's oligarchic technocracy, that is facing political push-back today to the point at which the Liberal Order feels that it is struggling for its very survival against "the enemy in the White House", as the editor of Spiegel Online has termed President Trump.

"Burnham renounced his allegiance to Trotsky and Marxism, in all its forms in 1940."

Sure he did. The Scarlet Pill, redder than red, is to grasp the fact that the Trotskyite communists, the World Revolutionaries, the Neoliberal world order, the New World Order, Bilderberg, the neoconservatives, the Never Trumpers, NATO, the European Unionists, and the Silicon Valley technocracy are all different aspects of the same thing. And their latest vision for global empire has observably failed, and failed faster and more conclusively than anyone would have imagined.

It will be very interesting to learn if the elite can learn from its failures or not. There have been rumors floating around that the European migration is to be reversed for fear that the whole thing will come crashing down amidst a series of large-scale civil wars. Maybe saner minds have prevailed, maybe the God-Emperor is behind it, or maybe it's just fake news.

Interesting times, to be sure.

[Aug 18, 2019] IV- MICHELS: THE IRON LAW OF OLIGARCHY by Dr. Mustafa Delican

Highly recommended!
Aug 18, 2019 | dergipark.org.tr

To Michels organizations are the only means for the creation of a collective will and they work under the Iron Law of Oligarchy. He explicitly points out the indispensability of oligarchy from the organizations by saying that "It is organization which gives birth to the domination of the elected over electors, of the mandatanes over the mandators, of the delegates over delegators, who says organization, says oligarchy" (Michels 1966, p.365).

Oligarchical tendencies in organizations is not related to ideology or ends of the organizations. Of course, it is evident that any organization which is set up for autocratic aims , it is oligarchic by nature. To Michels, regardless of any ideological concerns, all types of organizations have oligarchic tendencies. It was his major question in political parties that "how can oligarchic tendencies be explained in socialist and democratic parties, which they declared war against it?"( Michels 1966, pp. 50-51).

When he examines this question throughout in his book: Political Parties, he sees organization itself particularly bureaucracy, nature of human being and the phenomenon of leadership as major factors for oligarchical tendencies in organizations. According to Michels' assessments, the crowd is always subject to suggestion and the masses have an apathy for guidance of their need. In contrast the leaders have a natural greed of power ( Michels 1966, pp. 64, 205). To Michels, leadership itself is not compatible with the most essential postulates of democracy, but leadership is a necessary phenomenon in every form of society. He says "At the outset, leaders arise spontaneously, their functions are ACCESSORY and GRATUITOUS. Soon however, they become professional leaders, and in this second stage of development they are stable and irremovable"(

Michels 1966, p. 364).

Leaders also have personal qualities that make them successful as a ruling class. These qualities are , the force of will, knowledge, strength of conviction, self sufficiency, goodness of heart and disinterestedness ( Michels 1966, p. 100 ). Furthermore there is a reciprocal relationship between leadership functions and the organizational structure. Majority of leaders abuse organizational opportunities for their personal aims by using their personal qualities and by creating means, organizational process or principles like party discipline.

As for as organization itself is considered as a source of oligarchy, Michels says that it is generally because of "PSYCHOLOGY OF ORGANIZATION ITSELF, that is to say, upon the tactical and technical necessities which result from the consolidation of every disciplined political aggregate."( Michels 1966, p. 365). Further as a particular type of organization bureaucracy and its features require an oligarchic structure.

At the societal level, although development in the democracy, oligarchy still exists. First of all he says by looking at the state as an organization, which needs a bureaucracy that is the source of enemy of individual freedom, the state represents a single gigantic oligarchy. An attempt to destroy this gigantic* oligarchy in fact brings a number of smaller oligarchies in society but does not eliminate it ( Michels 1966, p. 188,191,202). Secondly he agrees with Jean Jack Rousseau on the idea that "it is always against the natural order of things that the majority rule and the minority ruled." (Michels 1965, p. 106). Along with this idea professional leadership is seen by Michels as an incompatible phenomenon with

democracy, because , although the leaders at once are not more than executive agents off collective will, as soon as they gain the technical specialization, they emancipate themselves form the masses and start to use their power against the majority. ( Michels 1966, p.70). In addition to this, representative political system is not compatible with the ideal democracy, because to Michels, "a mass which delegates its sovereignty, that is to say transfer its sovereignty to the hands of the few individuals, abdicates its sovereign function ( Michels 1966, p. 73).

The third factor is related to level of socio-economic development of societies and experience of democracy in history. To him in this time ideal democracy is impossible due to socio-economic conditions, that further more he says that," The democracy has an inherent preference for the authoritarian solution of the important questions" (Michels 1966, p. 51, 342).

As a logical result of his iron law of oligarchy, he admits there are elites in society but not elite circulation in terms of replacing one another. He does not redefine the concept of elite, he took Pareto's theory of circulation of elites and modified it. To Michels, there is a battle between the old and new elites, leaders.

The end of this war is not an absolute replacement of the old elites by the new elites, but a reunion of elites, a perennial amalgamation. Complete replacement of elites is rare in history. The old elites attract, absorb and assimilate the new ones, and it is a continuous process (Michels 1966, p. 182, 343; Michels 1949, p. 63). Because for Michels, first " old aristocracy does not disappear, does not become proletarian or impoverished ( at least in absolute sense ), does not make way for new group of rulers , but that always remains at the head of nations, which it led over the course of centuries...[and second]...the old aristocracy be it very old rejuvenated, does not exercise the rule alone but is forced to shave it with some kind of new ruler" (Michels 1965, p. 75-76).

Aristocracy for Michels is not homogenous stratum, and consists of nobility and ruling class. Nobility represents a small but strong part of aristocracy. In this sense it seems that nobility represents real oligarchical power in the society. To Michels nobility holds itself at the helm and does not even dream of disappearing from the stage of history. Though not coinciding with aristocracy,

To Michels nobility holds itself at the helm and does not even dream of disappearing from the stage of history. Though not coinciding with aristocracy, and not constituting more than a part of it, nobility generally takes hold of it and makes itself its master. It pervades, conquers, and molds, the high middle class according to its own moral and social essence" ( Michels 1949,p. 77, 80 ). In contrast to nobility aristocracy is heterogeneous and a place where lower classes' members can easily rise and members of aristocracy can be subject to downward social mobility. For his time, he describes elements of aristocracy (1) aristocrats by birth (2) aristocracy of government clerks, (3) aristocracy of money (4) aristocracy of knowledge . All this groups also represent ruling class (Michels 1965, p. 76 ).

Michels does not get in too much special analysis of the relationships between aristocracy, ruling class and majority. I think he doesn't see that there are much differences in oligarchy in organization and oligarchy in society at large.

To me these two must be separated because (1) for individuals society in a sense an unavoidable place to be in contrast to organizations, particularly voluntary organization , (2) while society represent a more natural entity, organizations are more artificial entities and (3) organizations are set to realize certain targets in a certain period of time, in contrast society's targets are relatively unstable, and subject to reconstruction by people. To think of these questions, does not necessarily reject the existence of oligarchical tendencies in societies. In fact as Michels pointed out democracy has a legacy to solve important questions of society, by using oligarchic methods. Furthermore he also points out that at any social organization there is an intermixture of oligarchic and democratic tendencies. He says that"... In modem party life, aristocracy gladly present itself in democratic guise, while the substance of democracy is permeated with aristocratic elements. On the one side we have aristocracy is a democratic form, and on the other hand democracy with an aristocratic context" (Michels 1966, p.50).

... ... ...

In terms of replacement of old elites by new ones, there is a distinction between Pareto and Michels. Michels does not admit replacement of elites, but admits, amalgamation of new and old elites. In fact historically we can see both of them happened. In short term amalgamation of old and new elites, and in long terms replacement of old elites by new ones. This time period depends on changes in society at large. For example, consider socialist revolutions and aftermath of independent movement in developing countries where these two movements took place, old elites were wiped out. This type of changes are rarely in history. In short term, amalgamation of elites takes place and new elites gradually increases its proportion in the elite strata and ruling class. For example as a result of

industrialization in burope, Hughes observes that at the beginning ...upper class oligarchy shared power with the old aristocracy-but with each year that passed the balance seemed to incline more heavily in favor of the former" (Hughes 1965, pp.149-150). It can be concluded that new elites are bom as a result of socio- economic , political, and historical changes in society, and then these new elites via upward mobility, and that in the end the new elites take place the highest position in the society. In this process the adaptation ability of old elites determine their fates.

On democracy, Pareto always separate ideal democracy and democracy applied, and prefers to talk about the subjects of democracy rather than democracy itself. Michels is clearly in favor of democracy, Mosca was previously against democracy but after the experience of Fascism in Italy, he changed his mind.

How elitist theories affected democracy ? Two answers have given for this question. On the negative side, it has been said that these anti-democratic theories helped European ruling classes by restoring their self confidence and by increasing their consciousness about their privileges; therefore, elite theories become a vehicle for ruling classes (Hughes 1965 (b), p. 149), On the positive side, it has said that elitist theories have helped to enhance democratic theories, Michels himself believed that research on oligarchies necessary for development of democracy by saying that "...a serene and frank examination of oligarchical dangers of democracy will enable us to minimize these dangers,...(Michels 1966, p.370).

It can be said that elitist theories extended and increased awareness of masses and scientist against governments and ruling classes. As a result, many researches have been conducted on application of democracy in organizations.

Researches have shown that oligarchical tendencies are dominant in organizations and can not be eliminated totally. Further more, attempts to reduce oligarchic contrgl in organizations with very few exception have failed. In general, in voluntary organizations, the functional requirements of democracy con not be met most of the time (Lipset, Trow, and Coleman 1956, p.4,6,452).

Is democracy still compatible with elite theories? That has been the question that lead to redefine, reconceptualize the democracy. Here we must pay attention that Pareto, Mosca, and Michels worked J.J. Rousseau's definition of democracy: government by the people, but not government for the people (Burnham 1943, pp.156-7).

New democratic theories like political pluralism, theory of the mass society are compatible with elitist theories. Schumpeter was one of the earliest thinker that he redefined democracy considering elitists 1 arguments. To him democracy defined as "...institutional arrangement for arriving the power to decide by means of competitive struggle for the people's vote" (Bottomore 1964, p.10).

In contrast to compatibility of elitist theories with democracy, it can not be compatible with Marxism. Michels pointed out that M [t]he law of circulation of elites destroy the thesis of the possibility of a society without social levels...[and]... destroy equally the supposition of a ruling class that remains closed and inaccessible" (Michels 1965, p. 106). In terms of preference of political systems he clearly says that "the defects inherent in democracy are obvious. It is none the less true that as a form of social life we must choose democracy as the least of evils" (Michels 1966, p.370).

VI- CONCLUSIONS

Elitist theorists not only introduced elites but also contributed on better understanding of social and political life of societies. The key concept is "power" and who has the power she/he is the leader of society. Heredity, wealth, intellect, organizations are the means to get power.

[Aug 17, 2019] America is the richest country in the world, but it has more than half a million homeless and 28 million people without health insurance out of a population of around 325 million. Is America Crazy? by John Feffer

Decline of neoliberalism in not a pretty picture. Whom the gods would destroy they first make mad. Greek version of this saying which appers in Sophocles’ play Antigone is more precise: "evil appears as good in the minds of those whom god leads to destruction". Oscar Wilde — 'When the Gods wish to punish us, they answer our prayers.'
Aug 17, 2019 | www.counterpunch.org
The United States witnessed three mass shootings in one week recently in California, Texas, and Ohio. There have been more than 250 mass shootings so far in 2019, more than one a day. This year in America, more than 33,000 shooting incidents have killed more than 8,700 people.

America is the richest country in the world, but it has more than half a million homeless and 28 million people without health insurance – out of a population of around 325 million. The U.S. infant mortality rate places it 33rd out of wealthiest 36 nations.

... ... ...

People from other industrialized countries must think that the United States has simply gone insane. It is a nation of terrible extremes: grotesque wealth and horrific poverty, brilliant minds and widespread ignorance, high rates of volunteerism and endemic violence. America seems to be suffering from some kind of bipolar disorder with pockets of manic energy and large areas of deep depression.

It would be tempting to argue that America is only suffering from a bout of temporary insanity. But mass shootings, gross economic inequality, and corruption didn't begin when Donald Trump became president. He has made matters worse, to be sure. But these trends are longstanding.

So, why do Americans put up with such violence, economic inequality, and political nonsense?

... ... ...

Moreover, more than half of Americans have never traveled to another country. One in ten hasn't even gone outside the state in which he or she was born. Since most of the news about other countries is negative, Americans naturally believe that life is more dangerous outside their borders. They haven't actually seen what it's like in other countries, so there's no way for them to compare the craziness of life in America with life anywhere else.

Of course, plenty of countries experience considerable violence, economic inequality, and political corruption. But they are usually not powerful industrialized nations.

In the 2019 Global Peace Index , for instance, the United States ranks 128 th in the world, between South Africa and Saudi Arabia. Kosovo, Haiti, and Bangladesh all rank higher than America. Part of the reason that the United States ranks so poorly is the amount of military violence that the country inflicts around the world – through war, arms sales, and military bases. But the high homicide rate in the United States also dragged its score down.

The GINI index measures a country's economic inequality. The United States, according to OECD figures , is fourth from the bottom of the wealthiest countries in the world. Only Chile, Turkey, and Mexico have greater income inequality after taxes and transfers.

On corruption issues, the United States has generally been in the top twenty in terms of transparency. But in 2018, it dropped six places to number 22 in the Transparency International rankings. Here, the influence of the Trump administration has been significant. The problem is not ordinary corruption like bribery. Rather, Trump is challenging the very foundations of the rule of law. He promised to "drain the swamp" of political influence-peddling in Washington, DC. But he has only made the nation's capital swampier.

Individuals with mental disorders can seek professional help. They can take medications and enter psychotherapy. They can check themselves into a hospital.

But what happens when a country is crazy?

[Aug 17, 2019] Bankruptcy-related job losses are rising at rates not seen since 2009

Aug 17, 2019 | economistsview.typepad.com

im1dc , August 07, 2019 at 05:44 PM

"Bankruptcy-related job losses are rising at rates not seen since 2009"

Grim foreshadowing of what may come and quickly...

https://www.marketwatch.com/story/bankruptcies-cause-the-highest-number-of-job-losses-since-2009-when-the-us-was-in-the-depths-of-the-great-recession-2019-08-06

"Bankruptcy-related job losses are rising at rates not seen since 2009, invoking grim reminders of the Great Recession"

By Quentin Fottrell, Personal Finance Editor...Aug 7, 2019...8:24 p.m. ET

"The recent spate of bankruptcies in corporate America is taking its toll.

In the first seven months of the year, U.S.-based companies announced 42,937 job cuts due to bankruptcy, up 40% on the same period last year and nearly 20% higher than all bankruptcy-related job losses last year, a report released Tuesday concluded. Despite record-low unemployment, bankruptcy filings have not claimed this many jobs since the Great Recession.

"It is the highest seven-month total since 2009 when 50,258 cuts due to bankruptcy were announced," according to the report by outplacement and business coaching firm Challenger, Gray & Christmas. "In fact, it is higher than the annual totals for bankruptcy cuts every year since 2009."...

[Aug 17, 2019] On currency manipulation: The USA afministration wants to weaken dollar but this is not an easy task

Aug 17, 2019 | economistsview.typepad.com

Fred C. Dobbs , August 07, 2019 at 02:23 PM

A Weak Dollar Could Help the US. Getting One
Isn't So Easy. https://nyti.ms/33j7eFe
NYT - Matt Phillips - August 6

President Trump has made no secret of his
frustration that the United States dollar
has strengthened against other currencies.

The trade war between Washington and Beijing took an unexpected turn this week as China let its currency drop sharply and the United States responded by officially designating the country a currency manipulator.

The confrontation underscored the Trump administration's focus on weakness in foreign currencies -- and the corresponding strength of the dollar -- as a drag on the American economy.

Now, investors are gaming out the prospect that the United States could actively intervene in the financial markets, in a significant break from a decades-long commitment to free-floating currencies.

"It's a big deal because I think it would mark a new sort of phase in how the U.S. approaches the international economy," said Michael Feroli, chief United States economist with JPMorgan Chase.

But while the president might want a weaker dollar, engineering one is complicated. Here's the context you need to understand the United States' changing approach to the dollar.

Why would the U.S. benefit from a weaker dollar?

A weaker currency makes a country's exports cheaper for buyers overseas, giving a country a competitive advantage. For years, an artificially weak renminbi underpinned China's growth as a manufacturing base for the rest of the world.

The Trump administration's tariffs on imports of Chinese-made goods are meant to raise the price of those products once they land in the United States, discouraging Americans from buying them.

But one way for China to respond is to weaken the renminbi and undermine the impact of those tariffs by making those products cheaper.

That's why when China allowed its closely controlled renminbi to depreciate sharply against the dollar on Monday, it was taken as a sign that the trade war between the United States and China was getting worse.

The currency has since strengthened, easing this tension somewhat, but China isn't the only trading partner the president has a problem with.

For instance, in June, after the European Central Bank said it might restart stimulus programs to bolster the economy, Mr. Trump accused it of pushing down the value of the euro, "making it unfairly easier for them to compete against the USA."

"They have been getting away with this for years, along with China and others," he said on Twitter.

A weaker dollar has other benefits. For instance, it could also bolster corporate earnings. Roughly 40 percent of the revenue of the biggest American companies now comes from overseas, and a weaker dollar means those foreign sales make a bigger contribution to the bottom line. Those higher earnings can help give the stock market a lift.

None of this is a secret. But in the past, governments have shied away from weakening their currencies, in part because they were afraid it would also lead to an ugly bout of inflation, which was traditionally viewed as the big risk of a weak currency. These days, inflation around the world is incredibly low and shows little sign of rising.

"You have almost the perfect macro backdrop for policymakers to encourage currency weakness," said Alan Ruskin, chief international strategist at Deutsche Bank in New York.

How did this become a political issue?

Foreign exchange markets are a zero-sum game: If China's currency weakens against the dollar, the dollar, by definition, strengthens.

So whether China is deliberately lowering the value of the renminbi, or the euro is tumbling because currency traders are worried about the region's growth, the ultimate impact is that the dollar is stronger.

Strong currencies tend to weaken a country's exports and bolster the consumption of foreign products. That can lead to larger trade deficits.

President Trump has made reducing the trade deficit with China a crucial focus of his administration and a crucial goal of the tariff war that began in 2018.

But that effort has had mixed results. The United States' goods deficit with China initially widened to a record $43 billion in October before shrinking significantly since then. It is now hovering around $30 billion a month.

In theory, if the dollar weakened against the Chinese currency, it could do more to cut that trade deficit than a tariff battle, potentially offering the president a chance for a political victory going into the 2020 election.

If other countries can weaken their currency, why doesn't the United States do the same?

In theory, it can. But in practice it isn't easy.

In part, that's just because the currency markets are so big. Every day, more than $5 trillion changes hands in those markets, and more than $4 trillion of those trades involve the dollar.

China controls the renminbi because it can use the bottomless buying power of its central bank, which publishes an official price for the currency every day around which it allows a certain amount of trading.

The People's Bank of China has the ability to print renminbi to weaken the currency if the exchange rate gets too high. On the flip side, Beijing has $3 trillion in reserves it can deploy to keep the currency from getting too weak.

Right now, the United States doesn't operate that way.

It has some capacity to intervene in financial markets by using the Exchange Stabilization Fund, a vehicle under the control of the Treasury secretary, with about $100 billion of buying power.

"Unless Congress gives Treasury authority to beef up the Exchange Stabilization Fund, it just doesn't have enough firepower," said Joseph Gagnon, senior fellow at the Peterson Institute for International Economics.

Last month, Larry Kudlow, director of the National Economic Council, said the White House had considered an intervention to weaken the dollar before deciding against it. The same day, however, Mr. Trump contradicted Mr. Kudlow, telling reporters that all options were on the table.

"I could do that in two seconds if I wanted," Mr. Trump said. "I didn't say that I'm not going to do something."

So in the past, when American politicians wanted to change the value of the dollar, they had to coordinate efforts involving a number of countries. That's what happened in 1985, when the United States engineered an agreement to weaken the dollar as part of an agreement known as the Plaza Accord.

Of course, those countries were all strategic allies of the United States. Persuading China to let its currency strengthen to help the United States is a different situation all together.

[Aug 17, 2019] If the U.S. abuses its exorbitant privilege too much by bullying, there will eventually be a switch.

Notable quotes:
"... The real concern is about the primacy of the dollar and US hegemony. When Krugman trumpeted 'free' trade with China back in 2000, falsely claiming that US labor would benefit, his main point was that it was good policy strategically. Krugman was woefully wrong, as China grew to be a geopolitical rival, not a US client state like Japan or Germany as the Clintonistas and the foreign policy borg had hoped. ..."
"... Folks, it ain't about US jobs and consumer prices, which will be affected at worst only marginally. What it's really about is the dominance of the empire and its enormous, tax-free profits overseas. ..."
Aug 17, 2019 | economistsview.typepad.com

Fred C. Dobbs , August 07, 2019 at 06:22 AM

What's at Risk if US Stumbles Into
a Currency War https://nyti.ms/2yKGPC1
NYT - Neil Irwin - August 7

... ... .. ...

The Trump administration has introduced a zero-sum approach to global currency policy -- envisioning a loser for every winner -- that violates the spirit of those rules.

In that sense, the latest moves risk upsetting a relatively stable order, creating unpredictable ripple effects. When currencies swing wildly, they can pull along the economies of some of the most powerful nations, such as by crushing entire sectors of the economy that find themselves uncompetitive after a swing in global exchange rates.

And it could undermine the central role the United States has played in the international financial system, especially if the accusations of manipulation are followed up with concrete retaliation to try to artificially depress the value of the dollar.

"The dollar being the primary global currency has enormous benefits for the U.S., but with the side effect that when the U.S. tries to depreciate, there are limits on how much it can do that," said Adam Posen, president of the Peterson Institute for International Economics. "But if the U.S. abuses its privilege too much by bullying, there will eventually be a switch."

The decision to name China a currency manipulator does not, in and of itself, do much. But it could be followed up with pressure on the International Monetary Fund and other nations to make similar findings and lean on the Chinese to adjust their policies. Or it could lead to direct intervention in foreign exchange markets by the United States Treasury.

This is not the first time President Trump has accused a major trading partner of using currency policy to mistreat the United States.

... ... ...

A habit of the Trump administration has been to link seemingly unrelated items in its dealings with other countries -- using tariff threats to try to influence Mexican immigration policy, for example.

If the Trump administration continues down the path of using currency policy to try to bludgeon China over trade, technology and national security issues, it will signal a remarkable expansion into a policy area that has been a source of stability in recent decades.

"It's dangerous to start a currency war because you don't know where it will end," said Eric Winograd, chief U.S. economist at AllianceBernstein. "We've seen with the trade war that it started in one place, and ended up much broader. There's every risk a currency war will do the same."

JohnH -> Fred C. Dobbs... , August 07, 2019 at 09:26 AM
No we're talking turkey!

"It could undermine the central role the United States has played in the international financial system."

All the talk about hurting consumers and jobs is just noise that policy elites emit to win support on false pretenses.

The real concern is about the primacy of the dollar and US hegemony. When Krugman trumpeted 'free' trade with China back in 2000, falsely claiming that US labor would benefit, his main point was that it was good policy strategically. Krugman was woefully wrong, as China grew to be a geopolitical rival, not a US client state like Japan or Germany as the Clintonistas and the foreign policy borg had hoped.

Now there is a real debate about global strategy going on. Trump wants to whack China back into place, reduce it as a geopolitical threat. The other side is still wedded to the 2000 notion having China follow US global leadership and defending the exorbitant privileges of US corporations, their banksters, and their profits. Their latest gambit is to raise a potentially real issue--the primacy of the US dollar.

Folks, it ain't about US jobs and consumer prices, which will be affected at worst only marginally. What it's really about is the dominance of the empire and its enormous, tax-free profits overseas.

[Aug 17, 2019] Wells Fargo Blindsides Customers By Charging Thousands In Overdraft Fees On 'Closed' Accounts

This is a Buffet controlled bank...
Aug 16, 2019 | www.zerohedge.com
It seems like barely a quarter goes by without Wells Fargo being exposed for some abusive practices, like opening millions of fake credit card accounts, or selling customers of its auto loans insurance that they didn't really need (but that the company insisted they did).

In the latest violation, the New York Times reports that Wells Fargo continued to charge overdraft and other charges to customers even after closing their accounts for one of a myriad reasons.

The paper used Xavier Einaudi, a small business owner who banked with Wells, as its primary example. A few months back, the bank informed Einaudi that it would be closing all 13 of the checking accounts he had with the bank related to his roofing company, CRV Construction. When asked why it was closing the accounts, it replied that the issue was "confidential".

Anyway, Einaudi went to his local Wells branch and picked up a check compensating him for the contents of the accounts. One June 27, the bank said, the accounts would go defunct, and no more transactions would be allowed.

As it turns out, that wasn't exactly the case.

Shortly after the closure date, Einaudi realized that Wells had kept some of the accounts active with a zero balance. Meaning that some of Einaudi's payments to vendors like his insurer and his Google advertising accounts continued from the empty accounts. But this time, each transaction was accompanied by a $35 overdraft fee.

By the time Einaudi realized what was going on, he had wracked up thousands of dollars in overdraft fees.

Payments to his insurer, to Google for online advertising and to a provider of project management software were paid out of the empty accounts in July. Each time, the bank charged Mr. Einaudi a $35 overdraft fee

Mr. Einaudi called the bank's customer service line. He went to his local branch. Nobody could help him. "They told me, 'The accounts are closed out - we cannot do anything.'"

This left Einaudi in an untenable position: The accounts were technically closed, but he was still being hit with overdraft fees that nobody at the bank could make stop. By the middle of July, he owed the bank nearly $1,500.

Fortunately for him, Einaudi wasn't alone with this problem.

Xavier Einaudi

As it turns out, Wells has failed to address these complaints from customers and employees, including one in the bank's debt-collection department who grew concerned after being hit by an estimated $100,000 in overdraft fees over eight months. Customers say the bank should wipe these fees, since they were unfairly and arbitrarily charged on accounts that the bank had deliberately closed without its customers requests.

It's not clear, exactly, how many customers have been affected by this glitch. But many angry customers have filed complaints with the Consumer Financial Protection Bureau.

Robust discussions about the issue have continued on websites like Reddit and Quora, while some have expressed their misgivings with Wells.

"I don't even know what happened," he said.

According to the NYT, Einaudi's problem stems from the way Wells' computer system processes closed accounts: Accounts that customers believe to be closed can, in fact, stay open for months past their closure date if there's a balance, even if the balance is negative (from fees charged by the bank).

And each time a transaction involving these accounts happens, the banks tacks on a fee.

Since the financial crisis, Wells has paid more than $15 billion in settlements to resolve investigations into its misdeeds, including the ones described above. With more of these scandals surfacing, who is going to step up and take the top job at Wells, particularly when you'd be liable to be blindsided by scandals like these, that hurt ordinary Americans.


StreetObserver , 5 minutes ago link

Let them bill you after you close your account. If they pressure you to pay, or threaten your credit rating, then sue Wells Fargo in your local small claims court for the maximum amount .

If you get a judgement, bill them. If they don't pay, take your judgement to your local sheriff and have them do a "Till tap" on them. That means the sheriff goes in and takes the money out of a teller's drawer to satisfy the judgement.

If thousands of people do this...well, you can just imagine.

Whatever you do Brer' Rabbit, never stick the little red straw of a can of insulating foam into an ATM card slot!

uhland62 , 20 seconds ago link

Good advice. But with all that digitizations come so many events that require these actions and they rely on the fact that some people cannot spend unlimited amounts of time on these things.

A banking ombudsman would not go astray. As people register their stuff, patterns emerge a lot earlier and maybe can be addressed.

chippers , 16 minutes ago link

Fck I hate banks, the only thing they do is move ones and zeros around, and the can't even do that without ripping people off. But wait till the globalists have their way and society becomes cashless , stuff like this going to be nothing compared to what the banksters and government is going to be able to do to your life.

ItsTooHotForThis , 24 minutes ago link

Anybody who banks with Wells Fargo is an idiot. I closed my account with them years ago. I hope they go under.

CHoward , 27 minutes ago link

And this completely corrupt country of ours - this ******* bottom feeding scumbag bank still has a license to operate. Seriously?!?

Balance-Sheet , 28 minutes ago link

Wells Fargo can be force merged with Bank of America and dissolved over a number of years out of public view and under Fed oversight. There is vat over employment in the banking sector and an overall staffing cut of 30% is long overdue.

It is the same with Commerz and Deutsche Banks. Given the power of technology politicians are trying to force banks to carry far more employees than can economically be employed.

Online and robo banking will eventually lead to most branches being closed and most employees released.

Stone walling this simply makes the crime, pain, and inevitable dislocation ever worse.

mdarkcloud , 31 minutes ago link

I, too, got my money away from these thieves this year. My annuity with my employer locked me into not being able to rollover any of my money unless I had a break in service for and entire year. Now that I am of a certain age, I was able to to rollover after only eight weeks which I was able to do during recovery after a job related surgery.

I have been waiting to do this for four years since I found a rap sheet on these guys. If I counted correctly, since 2000, the banks that were the predecessors and Wells as we know it today have stolen, or been fined and had to pay back $43bn!!!! That is 43,000 million for ****'s sake. What is it going to task to get rid of these thieves?

Wells Fargo: Corporate Rap Sheet | Corporate Research Projecthttps://www.corp-research.org/wells-fargo

Hatterasjohn , 36 minutes ago link

I have a friend that works at Wells Fargo. She said since Warren Buffet took control the whole place is going to hell. Buffet keeps screaming the employees have to do better. Make more profits or hit the door. So the management has to skin the sheeple in order to keep their jobs.

swmnguy , 41 minutes ago link

I had a neighbor a while ago who worked in Wells' mortgage division. I don't know what his job was called, but he was the guy people called when they first got a foreclosure notice and wanted to work out a way to keep their homes.

He told me Wells kept track of who paid right at the deadline, usually the 15th of the month, rather than on or by the 1st like people do when they aren't strapped for cash. He said when they got payments on the 14th, say, they'd "drawer" them, or put them in a drawer until the 16th. Then they'd enter the payments as late, assess a late payment fee, and deduct that from the payment. So the borrower hadn't actually made a full payment that month; they were $35 short, or whatever the fee was.

Oh, no, they didn't tell the borrower.

So after a few years of that, the borrower would be a full payment or two behind. And then the foreclosure would kick in, and then these confused people would call my former neighbor.

He asked me to guess how many months, on average, the people who called him were behind on their mortgage. I thought, "Well, they're getting their first notice of looming foreclosure, I'm kind of naive, uh...6 months?"

He laughed at me. "Try, 30 months," he said. I was gobsmacked. Wells found it to their advantage to have these people 2-1/2 years behind on their mortgage payments before getting around to foreclosing? He said yes, it was worth it to them to have them living in the property and taking care of it for Wells Fargo.

Oh, I had this conversation with him while I was refinancing my little starter home at the time.

It was 2002.

They were pulling this **** in 2002 and it wasn't new then. It only took what, 5 more years for the Finance Sector to almost destroy itself and the rest of us?

I'll be dipped in ****.

MarsInScorpio , 57 minutes ago link

To All:

If they jailed the people at Wells for this, it'd stop.

However, the fully criminalized DOJ, speaking through AG Eric Holder, declared these people too critical to the banking system to work under threat of arrest.

[Aug 17, 2019] Is the US Economy Headed for Another Recession

Aug 17, 2019 | www.strategic-culture.org

After a decade of aggressive market manipulation by the Federal Reserve's Federal Open Market Committee , most of the indicators we use to assess economic growth and job creation have been distorted beyond recognition. The good news is that the economy has recovered from the depression of 2008 despite the actions taken by the Fed, Congress, and Washington agencies. The bad news is that it may not survive the after-effects of some of these actions.

First and foremost, investors point to the fact that the Treasury yield curve is inverted -- short-term interest rates are higher than longer-term bond yields -- as evidence of an approaching recession. The investment firm Sandler O'Neill sets the stage:

Over the past week, fresh salvos in the U.S.-China trade war have renewed concerns about slowing global growth and triggered a flight to safe haven assets. The S&P 500 has fallen 4.4% over the past week while the 10-year U.S. Treasury has rallied to yield 1.63%, its lowest level in nearly three years. The 3-month/10-year Treasury yield spread, a closely-watched recession indicator, has become even more inverted, which, in turn, has rekindled speculation about an imminent slowdown.

So is the yield curve being inverted a sign that America is sliding into recession? No. In fact, the U.S. economy is actually the strongest part of the global economy. Europe and Asia are far weaker, even leaving aside the question of trade tensions. That's why nearly $14 trillion in debt around the world is trading at negative rates of return: investors in Japan, India, and Europe are desperate to buy safe long-term assets such as Treasury securities. The increased global demand for Treasury debt, combined with the large stock of Treasury and agency mortgage-backed securities siphoned off the private market by the Fed during "quantitative easing," may also be forcing the yield curve negative.

A second, related reason why the yield curve is negative is the dollar. Global investors have been hesitant to purchase Treasury securities, private bonds, and other assets in the U.S. out of fear that a strong dollar would wipe out their returns. Now with the dollar starting to weaken, large investors such as central banks and giant institutions such as Japan's Norinchukin are back into the market, buying U.S. securities and driving down yields on Treasury bonds, and then selling the dollar foreign exchange risk to lock in safe returns.

So the two chief reasons for an inverted yield curve -- low or negative interest rates and a huge demand for safe assets -- have nothing to do with the direction of the U.S. economy. Indeed, the economy continues to grow strongly, albeit at slower rates than from 2016 to 2018. Brian Wesbury, chief economist at First Trust Advisors, argues that we're doing just fine:

The rate of growth in the service sector continued to decelerate in July, with the headline index falling to the lowest level in nearly three years. However, it still showed growth and we anticipate a re-acceleration in the service side of the economy in the second half of the year. It's important to recognize that thirteen of eighteen service sub-sectors reported growth in July, while only five reported contraction. And, if survey respondent comments are any indication, direct impacts from the China tariff dispute remain minor, with only the construction and management/support services sectors claiming increased costs.

The third reason for the inverted yield curve has nothing to do with the performance of the economy and everything to do with the dismal job that the FOMC has done managing monetary policy. Since 2008, the Fed has managed to inflate asset prices for stocks, bonds, and real estate, but has created serious problems along the way.

The FOMC's attempt to artificially raise short-term interest rates when there was no compelling reason to do so gave us the inverted yield curve. Now, under Jerome Powell, the FOMC must figure out a way to back out of this mistake without completely destroying what remains of the Fed's credibility. In fact, the FOMC is probably the single biggest threat to the U.S. economy.

For literally years now, the FOMC has stated repeatedly that getting inflation up to a 2 percent level is the target of U.S. monetary policy, including quantitative easing and low rates. Yet none of the Ph.D. economists that populate the committee have taken notice of the fact that the apparent link between interest rates and inflation expectations has been broken for nearly half a century.

After the FOMC failed to reach its inflation target, the committee decided that it needed to raise short-term interest rates in order to have "dry powder" to use in the event of a recession. If you follow the tortured logic of the Fed, the central bank wanted to raise short-term interest rates so as to be able to lower them in the event of a recession. The result of this bizarre thinking has been the extreme market volatility seen since the end of June.

The good news is that the U.S. economy is actually doing just fine and, if left to its own devices, will continue to outperform the rest of the world despite the threat of trade wars and other maladies. The one note of caution, however, is that the FOMC is truly lost when it comes to forming monetary policy and the narrative the markets desperately need in order to make decisions about investments and risk. Were it possible to address the members of the FOMC, the message would be: "stand down, do nothing." The economy will thank

The good news is that the U.S. economy is actually doing just fine and, if left to its own devices, will continue to outperform the rest of the world despite the threat of trade wars and other maladies. The one note of caution, however, is that the FOMC is truly lost when it comes to forming monetary policy and the narrative the markets desperately need in order to make decisions about investments and risk. Were it possible to address the members of the FOMC, the message would be: "stand down, do nothing." The economy will thank you.

theamericanconservative.com

[Aug 17, 2019] If the bond market is any indication, Donald Trump's escalating belligerence on trade is creating seriously increased risks of recession.

Aug 17, 2019 | economistsview.typepad.com

anne , August 07, 2019 at 09:17 AM

https://www.nytimes.com/2019/08/07/opinion/tariff-tantrums-and-recession-risks.html

August 7, 2019

Tariff Tantrums and Recession Risks
Why trade war scares the market so much
By Paul Krugman

If the bond market is any indication, Donald Trump's escalating belligerence on trade is creating seriously increased risks of recession. But I haven't seen many clear explanations of why that might be so. The problem isn't just, or even mainly, that he really does seem to be a Tariff Man. What's more important is that he's a capricious, unpredictable Tariff Man. And that capriciousness is really bad for business investment.

First things first: why do I emphasize the bond market, not the stock market? Not because bond investors are cooler and more rational than stock investors, although that may be true. No, the point is that expected economic growth has a much clearer effect on bonds than on stocks.

Suppose the market becomes pessimistic about growth over the next year, or even beyond. In that case, it will expect the Fed to respond by cutting short-term interest rates, and these expectations will be reflected in falling long-term rates. That's why the inversion of the yield curve -- the spread between long-term and short-term rates -- is so troubling. In the past, this has always signaled an imminent recession:

[That scary yield curve]

And the market seems in effect to be predicting that it will happen again.

But what about stocks? Lower growth means lower profits, which is bad for stocks. But it also, as we've just seen, means lower interest rates, which are good for stocks. In fact, sometimes bad news is good news: a bad economic number causes stocks to rise, because investors think it will induce the Fed to cut. So stock prices aren't a good indicator of growth expectations.

O.K., preliminaries out of the way. Now let's talk about tariffs and recession.

You often see assertions that protectionism causes recessions -- Smoot-Hawley caused the Great Depression, and all that. But this is far from clear, and often represents a category error.

Yes, Econ 101 says that protectionism hurts the economy. But it does its damage via the supply side, making the world economy less efficient. Recessions, however, are usually caused by inadequate demand, and it's not at all clear that protectionism necessarily has a negative effect on demand.

Put it this way: a global trade war would induce everyone to switch spending away from imports toward domestically produced goods and services. This will reduce everyone's exports, causing job losses in export sectors; but it will simultaneously increase spending on and employment in import-competing industries. It's not at all obvious which way the net effect would go.

To give a concrete example, think about the world economy in the 1950s, before the creation of the Common Market and long before the creation of the World Trade Organization. There was a lot more protectionism and vastly less international trade then than there would be later (the containerization revolution was still decades in the future.) But Western Europe and North America generally had more or less full employment.

So why do Trump's tariff tantrums seem to be having a pronounced negative effect on near-term economic prospects? The answer, I'd submit, is that he isn't just raising tariffs, he's doing so in an unpredictable fashion.

People are often sloppy when they talk about the adverse effects of economic uncertainty, frequently using "uncertainty" to mean "an increased probability of something bad happening." That's not really about uncertainty: it means that average expectations of what's going to happen are worse, so it's a fall in the mean, not a rise in the variance.

But uncertainty properly understood can have serious adverse effects, especially on investment.

Let me offer a hypothetical example. Suppose there are two companies, Cronycorp and Globalshmobal, that would be affected in opposite ways if Trump imposes a new set of tariffs. Cronycorp would like to sell stuff we're currently importing, and would build a new factory to make that stuff if assured that it would be protected by high tariffs. Globalshmobal has already been considering whether to build a new factory, but it relies heavily on imported inputs, and wouldn't build that factory if those imports will face high tariffs.

Suppose Trump went ahead and did the deed, imposing high tariffs and making them permanent. In that case Cronycorp would go ahead, while Globalshmobal would call off its investment. The overall effect on spending would be more or less a wash.

On the other hand, suppose that Trump were to announce that we've reached a trade deal: all tariffs on China are called off, permanently, in return for Beijing's purchase of 100 million memberships at Mar-a-Lago. In that case Cronycorp will cancel its investment plans, but Globalshmobal will go ahead. Again, the overall effect on spending is a wash.

But now introduce a third possibility, in which nobody knows what Trump will do -- probably not even Trump himself, since it will depend on what he sees on Fox News on any given night. In that case both Cronycorp and Globalshmobal will put their investments on hold: Cronycorp because it's not sure that Trump will make good on his tariff threats, Globalshmobal because it's not sure that he won't.

Technically speaking, both companies will see an option value to delaying their investments until the situation is clearer. That option value is basically a cost to investment, and the more unpredictable Trump's policy, the higher that cost. And that's why trade tantrums are exerting a depressing effect on demand.

Furthermore, it's hard to see what can reduce this uncertainty. U.S. trade law gives the president huge discretionary authority to impose tariffs; the law was never designed to deal with a chief executive who has poor impulse control. A couple of years ago many analysts expected Trump to be restrained by his advisers, but he's driven many of the cooler heads out, many of those who remain are idiots, and in any case he's reportedly paying ever less attention to other people's advice.

None of this guarantees a recession. The U.S. economy is huge, there are a lot of other things going on besides trade policy, and other policy areas don't offer as much scope for presidential capriciousness. But now you understand why Trump's tariff tantrums are having such a negative effect.

[Aug 17, 2019] Life, Deferred Student Debt Postpones Key Milestones for Millions of Americans naked capitalism

Aug 17, 2019 | www.nakedcapitalism.com

https://c.deployads.com/sync?f=html&s=2343&u=https%3A%2F%2Fwww.nakedcapitalism.com%2F2019%2F08%2Flife-deferred-student-debt-postpones-key-milestones-for-millions-of-americans.html

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https://acdn.adnxs.com/ib/static/usersync/v3/async_usersync.html <img src="http://b.scorecardresearch.com/p?c1=2&c2=16807273&cv=2.0&cj=1" /> By Natalia Abrams, the Executive Director of Student Debt Crisis, and Cody Hounanian, the Program Director of Student Debt Crisis. Originally published at openDemocracy

Student debt has been solely responsible for the majority of my decision-making as an adult
(Erin – Portland, Maine)

The student debt crisis is not the burden of a single generation. It impacts Baby Boomers in their 60s and 70s; Gen Xers in their 40s and 50s; Millennials in their 20s and 30s – as well as Gen Z high school students still planning for college. Thus it's a grave mistake to frame student loan debt as exclusively or even primarily a "Millennial problem." At the same time, Millennials have borne the brunt of the astounding rise in college costs. They are the first generation to experience a life shaped by the near-certainty of student debt.

Weighted for inflation, college costs (including tuition and fees) rose 81% between 2001 and 2009 – the decade when well over half of Millennials graduated high school.

Traditionally, when the price of a commodity rises rapidly, demand for that commodity drops. Necessities like food and shelter are usually exempt from that general rule. However, college has become one of those essentials, with the perceived cost of not attending growing at least as fast as the actual costs themselves. As a result, student loans make the essential, attainable.

Not everyone saddled with a tremendous debt burden ends up with a degree. Whether a borrower receives a degree or not, few are in a position to rapidly repay their student loans. While a college degree may or may not expand opportunities; as we're finding, student loan debt absolutely shuts doors that might have otherwise remained open.

Lower Homeownership rates

Growing up I was told by my parents, teachers, and guidance counselors to go to college because it would give me a better life. I graduated in 2013 with a Master's Degree in English with the hopes of being a teacher myself. There are no teaching jobs in high schools or colleges and I owe over $100,000 in student debt. I now work a job that doesn't even require a degree, and was turned down for a mortgage because my debt to income ratio was too high. Not a day goes by where I don't think about my debt
(Danielle – Roseville, California)

If homeownership is fundamental to the 'American dream', then student loan debt puts that dream out of reach for millions of Americans. After years of growth, homeownership rates noticeably declined in 2017. While partly due to factors unrelated to student debt (such as rising housing prices , particularly in urban areas), the rate of Millennial homeownership has fallen faster than that of the general population.

In a January 2019 study, the Federal Reserve revealed the connection between lower homeownership rates and the Millennial generation most burdened by student debt: "our estimates suggest that increases in student loan debt are an important factor in explaining (young people's) lowered homeownership rates." The study went on to conclude that "a little over 20 percent of the overall decline in homeownership among the young can be attributed to the rise in student loan debt. This represents over 400,000 young individuals who would have owned a home in 2014 had it not been for the rise in debt."

While the Federal Reserve study focused on the decade between 2005-2014, a 2019 survey by Bankrate of nearly 4,000 American borrowers found that 31% of Millennial respondents postponed buying a home because of student loan debt. By comparison, when the Baby Boomers were entering the housing market 40 years ago, only 15% delayed a purchase because of student loan debt.

It's also worth noting that the real number of Millennials unable to purchase a home because of student debt is likely much higher. While 31% of Millennial respondents reported that student debt directly delayed homeownership, this figure only accounts for potential buyers who still consider future homeownership a real possibility. Thus it does not reflect the unknown number of those whose debt to income ratio is so high that they don't expect to ever afford a home. As Forbes noted in 2019, "no matter how many possible solutions are tossed around Washington and beyond on reducing the crushing burden of student loan debt, it remains one of the top reasons millennials are putting off buying a home."

Historically, home mortgages defined middle-class debt. Yet due to pre-existing debt, student loan borrowers face difficulty qualifying for a mortgage. In tandem with rising housing prices, and stringent mortgage qualification requirements adopted in the wake of the 2008 economic crisis, those with already exorbitant levels of student debt face a near-perfect storm for obtaining a mortgage: placing a key component of the 'American dream' out of reach for millions of young Americans.

A 2018 study by Summer and Student Debt Crisis found that 56% of respondents reported that student loan debt made it more difficult to buy a home. That figure excludes those who consider homeownership so unattainable that they have preemptively "given up." The same study notes that 58% of those surveyed experienced a decline in their credit score as a direct result of their student debt. Credit scores, based on past payment habits as well as debt-to-income ratios, are pivotal to mortgage qualification. Even borrowers who haven't yet considered buying a home are keenly aware that their student-debt-burdened credit scores have put a mortgage out of reach.

Fewer Marriages

I have put off having children, marrying, or purchasing a home due to the high costs of student debt repayment. Regularly, I contemplate selling everything and living in my car to help free up money to pay off the debt sooner.
(Melissa – Granbury, Texas)

Homeownership is not the only dream deferred, or abandoned altogether, because of crushing student loan debt.

One theme in the stories we've collected – and in our studies – is that student debt is an overwhelming factor in declining marriage and birth rates. Millennial borrowers like Melissa, regularly told us that there were three central dreams that debt had put out of reach: buying a home, getting married, and having children.

In 1990, 26% of adults under 65 were never married – by 2018, that number rose to 36%. Today, only one in five adults are married before the age of 30 – and the average age of first marriage has risen by more than six years since 1960. There are a host of factors that have driven the marriage rate to record lows – and we do not suggest that student debt is the sole (or even primary) driver of delayed marriage. Evolving and elevated expectations for romantic partnership, economic shifts, greater equality for women and increased acceptance of premarital sex all play critical roles in changing marriage habits. One cause of social transformation however, doesn't negate the impact of another.

Student loan debt delays marriage in several ways. One way is through a sheer misunderstanding of the law regarding debt. Several borrowers told us they were reluctant to marry and "make my spouse responsible for my debt." Though the laws concerning spousal responsibility vary by state, the fears of saddling a partner with one's debts are not unfounded. Similarly, if a spouse with pre-existing debt returns to school after marriage, both the debt incurred before and during marriage gets lumped together as a shared liability.

Practically, the legal responsibility for the liability is a nominal matter. Most couples cannot simply isolate one partner's debt. The money spent each month on student loans could be collectively used for other essentials, like rent, car repairs, or childcare.

A study released in June 2019 by the think-tank Demos showed that those who start college after age twenty (or go back to college following a break) have a particularly hard time paying off loans. Twelve years after leaving school, the average borrower (who started college after the age of twenty) will have paid off only 5% of their student debt. If a borrower is determined not to bring their student debt into a marriage, research suggest that they will have to wait a very long before they wed.

Media coverage tends to ignore that finances, rather than changing social mores, are the primary driver of diminishing marriage rates. For every young person who "never wants to marry", statistics suggest there are far more who would like to wed someday but can't imagine ever being able to afford to do so. A Pew Organization study in 2017 found that nearly six out of ten unmarried American adults hope to marry someday. That same report noted that unmarried Millennials cited "not being financially stable" as one of the chief reasons why they haven't yet wed. 41% of those unmarried cited financial instability as a primary reason for remaining single, while 28% described it as a "secondary" reason. (By comparison, only 24% of young adults named "not being ready to settle down" as the primary explanation for not being married.)

The research is clear: the primary reason why Americans delay wedlock, or forego it altogether, is financial insecurity. Debt is reshaping our most intimate relationships, putting a profound source of happiness further and further out of reach.

Falling Birthrates

My wife and I have been married 3 years and she desperately wants kids. But paying out $350 a month to pay off my 45k in loans has shattered our dreams of family. We both work but it's not enough. I've paid my loans since 2004 and I'm not getting ahead.
(James – Kansas City, Missouri)

With less homeownership, along with fewer marriages – it's hardly surprising that the most debt-laden generation in history is also having far fewer babies than their parents and grandparents. Millennials are on track to have a lower birth rate than any generation in American history. In 2018, the overall birth rate in the United States fell to 59 births per 1000 women, the lowest on record and a 2% drop from the previous year.

The birth rate has fallen steadily since the start of the Great Recession in 2008. Yet even after the recovery, the birth-rate continued to decline.

There's a disagreement as to whether the birthrate decline can be attributed to women wanting fewer babies (or wanting them later), versus women being unable to afford children. Yet the survey data is fairly compelling: most young people have had (or expect to have) fewer children than they consider ideal. In a 2018 New York Times/Morning Consult survey , four of the top five reasons respondents cited for not having as many children as they wanted focused on financial concerns:

Child care is too expensive (64% of respondents) Want more time for the children I have (54%) Worried about the economy (49%) Can't afford more children (44%) Waited because of financial instability (43%)

Furthermore, a 2015 study by the National Institutes of Health examined the impact of debt on the decision to have children. The results were stunning. While mortgage holders were more likely than renters to have children, and credit-card debt had no impact among debtors, the study found that "holding student loans more significantly affects fertility at higher levels of indebtedness." Low levels of student loan debt reduced fertility only slightly; high levels of student debt sharply reduced the chances of having a baby.

Every generation reassesses priorities. Some pundits look at the lives of Millennials and conclude that they're simply less interested in homeownership, simply more suspicious of enduring monogamy, simply less interested in having children. The evidence shows that's a false narrative.

The research in fact reveals that a high percentage of Millennials want homeownership, marriage, and children. The chief obstacle is not the timeless problem of finding the right person, but financial insecurity. Student loan debt is a central driver behind this precarity – affecting the fundamental milestones of our lives.

Freshstart , August 16, 2019 at 6:05 am

I hear the phrase "student loan forgiveness " quite often these days. "Forgiveness" for being a victim of financial predators and a failed leadership class? No, that's not forgiveness. That's justice. Forgiveness comes from the victims, not the perpetrators. Personally, I'm not forgiving anybody involved. Politicians, schools, the "financial industry", etc. These are the folks that should be begging for forgiveness from the borrowers, not the other way around. These policies have destroyed lives. They then try to frame any corrective action as doing the victims a favor, "forgiveness", rescuing the borrowers from their own failures and poor choices. Right. This is basically a war on the poor. I wonder if it isn't a way to curb greenhouse emissions without inconveniencing the wealthy.

Carla , August 16, 2019 at 6:18 am

Excellent comment -- thank you! Let us never let our fellow Americans forget Joe Biden's central role in killing bankruptcy protection for student debtors.

Michael Fiorillo , August 16, 2019 at 7:27 am

Extremely perceptive and wise comment.

I also think your final point is very important, as I am increasingly convinced that "environmental footprint reduction" is likely to be used as a pretext for further austerity for the working class. Environmentalism has always been a mostly elite and middle class phenomena, and working class interests are often unmindfully ignored or disregarded. In fact, I don't think it's unduly paranoid to anticipate ostensibly radical environmentalists (Extinction Rebellion and the like) being used as cat's paws to extend Overclass policies of extraction and control.

Bugs Bunny , August 16, 2019 at 8:35 am

It's already happened in France – the Gilets Jaunes movement was a direct result of the radical neoliberal Macron government putting higher taxes on diesel – a regressive tax on the poor and rural working class.

Michael Fiorillo , August 16, 2019 at 9:14 am

Yes, of course: thanks for pointing that out.

bmeisen , August 16, 2019 at 10:27 am

No, penury and exploitation as a result of educational debt is not a way to cut greenhouse gas emissions without inconveniencing the wealthy. It's just another example of Americans being suckered by their own delusions and ignorance, just another example of wealthy Americans, many of whom are rich without being educated, ripping off poorer Americans, many of whom ernestly believe that going into long-term crippling debt in order to pay for a college degree is a good way to get up and out of living from week to week with maxed out credit cards.

The typical American university/college student has drunk the kool-aid. She believes that higher education is a personal choice, freely made, to invest in earning potential. The possibility that this is not necessarily the case apparently does not occur to her. She genuinely believes, or sometimes she is compelled to believe, that it makes sense to take on for example 100k in educational debt because the degree that should follow will allow her to earn a hopefully large multiple of that number. Such students and their parents are apparently blind to the fact that a country that struggles to defend a primitive form of democracy is doomed to dystopic horrors without an educated population. Education, including higher education, is not a personal choice alone – much more it is a national mission that compels the government to provide instruction to qualified candidates at a minimal cost to candidates. This is a not a utopian vision – this is reality in democracies that are not as primitive as the American.

The attempt to associate the diesel tax with French educational policy needs clarification: The French have free public higher education. Their free public higher education consists of institutions that are selective, some highly selective, as well as institutions that are not selective. The selective institutions are intended to provide a nominally meritocratic elite-building function at the service of both public and private beneficieries. Public transport infrasturcture is weak in the country, and the Gilets Jaunes (GJ) argue that that's becasue administrators and mangers, many of whom are graduates of tuition-free elite universities, have not only failed to improve it: they threw salt in GJ wounds by attempting to impose a diesel tax. Though for many the tax is a tax-deductable expense, there are enough economically non-rural residents of rural areas in France to make the salt really sting. The GJ should more aggressively criticize the meritocratic fallacy of (highly) selective public institutions and bring attention to the phenomenon of economically non-rural residents of rural areas. They are relatively heavy polluters (lots of driving, single-family homes). I wonder if public transport infrastructure in rural areas could be expanded or if economically non-rural residents of rural areas could be compelled to live in less isolation.

Keith Newman , August 16, 2019 at 12:27 pm

For bmeisen: Thanks for the interesting insights on the Gilets jaunes.

juliania , August 16, 2019 at 9:25 am

The most repressive and draconian indebtedness has been thrust upon the youth of America by its government. I say 'youth' because many of those suffering under this burden were young once but have struggled long enough to be middle aged and even beyond in the search for a quality education, not only so they could have a good job but also in order to develop their minds. This was not a foolish pursuit – – until it was.

Something has to be done about this. And if it has to be done, it will be done, to paraphrase what Professor Hudson has said: if a debt can't be paid it won't be paid. And also lest we forget, these neoliberal shenanigans came about as financiers figured they could layer everything into juicy offerings for the players on Wall Street. Tranches or trenches as with mortgages – you know, like layers of filo dough with yummy stuff sandwiched in between. (Hah, my spellcheck doesn't like the word 'neoliberal'. Phooey on you, spellcheck; it's a word!)

Thank you, Yves.

bmeisen , August 16, 2019 at 11:01 am

Hasn't been thrust upon the youth of America by its government – the student debt crisis is a result of predatory financial interests consorting with ignorant, anti-government ideologues to corrupt the wise support of state and federal governments for public education. Private non-profit as well as private for-profit "educators" have lobbied lobbied lobbied for example to expand government lending facilities for students while doing little to regulate the "institutions" that were convincing candidates to use the facilities to borrow funds to pay for the questionable degrees that the "institutions" were awarding. There should have been a major cultural effort to convince Americans that we need public education including virtually free higher education and to contradict the delusion that an investment in higher education was essentially an investment in earning potential. Free public education including effectively free public higher education is essential for the success of democracy. Sadly many Americans have forgotten a fundamental aspect of the American Way of Life.

JohnnySacks , August 16, 2019 at 10:09 am

Brother in law couldn't make the payments, went underground and worked for cash, then ultimately committed suicide in his 50's. Not saying he wasn't unstable to begin with, but will say that having a mountain of debt he was never going to be able to get out from under certainly was a major factor.

With an 81% increase adjusted for inflation in under a decade, why aren't schools being penalized? Why not stop writing any and all loans for those schools?

polecat , August 16, 2019 at 12:37 pm

Schools WILL be penalized, by going out of business .. as many surely will !! .. especially the ones specializing in SJW studies

Medbh , August 16, 2019 at 9:11 am

That's an excellent point. I had burdensome student loans and eventually paid them off, but I support student loan forgiveness. However, from a political standpoint, I understand why some people are angry about the concept. They think they were smart and chose not to go to college because of the financial danger, and if loans are forgiven, they're being "punished" in the housing and job market for being "responsible."

Your "justice" framing could address both of these interest groups. Instead of just looking at the student loans alone, we'd consider all the ways in which the loans and the degrees have influenced people's lives. Maybe everyone could have access to "educational credit," which could be used to directly pay off existing loans, allow people to enroll in a degree program now, or be credited towards a new or existing mortgage. The program becomes a universal benefit, and depending upon one's situation, the money could be used in different, socially beneficial ways.

The main point is I like the "justice" framing, and it should be used to create a program that benefits everyone. Then the messaging is more about rectifying a dysfunctional system, then bailing out irresponsible spendthrifts (I don't believe this is true, but that is how loan forgiveness is framed).

Joe Well , August 16, 2019 at 10:32 am

How about the government takes over all consumer debt and charges only the Fed rate in interest? And writes down any amount considered unpayable? Would anyone not connected to the financial industry be opposed?

Big River Bandido , August 16, 2019 at 5:05 pm

The arguments against student loan forgiveness on the basis of "I paid mine off, why can't you?" are short-sighted and ultimately injure the person making them.

Everyone is harmed by the toxic environment of debt that we're living in -- even those of us who never had student loans and those of you who paid them off. We are all suffering under a regime that has paralyzed people economically. The act of debt cancellation, as those whose incomes were locked up now get a little piece of it back to spend on other things, would have a stimulative effect on the economy.

Tyronius , August 16, 2019 at 11:50 am

We can start holding those responsible accountable by refusing to support Joe Biden for office!

The key is to tell everyone, including poll takers, the reason why we won't vote for him.

I graduated in 1995 and I'm still over $65k in debt. I'll vote for any politician who will fight to redress this injustice.

It's time Washington fights for We the People instead of the already outrageously wealthy.

Carla , August 16, 2019 at 2:40 pm

Hear, Hear!

timbers , August 16, 2019 at 8:26 am

I work with a lady who's only child entered college last year, and was exposed at work to her discussions with her daughter over the phone and with co workers what is on the list she choose for her student loans. Things like room and board/rent, etc. This lady has a killer personality that works smashingly well in corporate offices – only positive things may be talked about and she juggles her aging, ailing mom, her daughter off to college, and work quite well.

It wasn't my place to offer advice, but I got a bad feeling listening to the load up of student loan debt. Then I overhead her advice to her mother regarding what package from Comcast to get. She recommended the package for seniors with insurance that protects seniors from phishing and that sort of thing. I don't recall the fee, but she also has insurance for her smart phone screen.

The $$$ signs of how I could manager their budget and save them some money where dancing in my head.

I guess they call that being a Financial Advisor today. It used to be called common sense.

When I was with my former, much younger partner, I told him he would live free with me on condition he cut back his 60+hrs/week working at multiple Dunkin Donuts and go to school, take NO school debt and pay everything with his paycheck. He did, and got tax credits on top of that. He choose medical billing and coding at a school that has since gone bankrupt. But it got him in the door. He is now supervisor in the billing department at Boston Children's Hospital and they told him they are sending him to management training at their expense.

He too has a killer personality. Perfect for Facebook where only positive things are said. He will do well but I worry he will later be not so well off because he doesn't save, he spends everything he has.

My first year at University of Chicago undergrad was $4,000. Second year $5,000. Then I moved to Boston and my employer paid most of my school expense while I finished up at Northeastern University. Peanuts compared to today.

I would never pay for College education at todays prices. I'd take that same money and buy a house.

Arizona Slim , August 16, 2019 at 8:57 am

Insurance for a smartphone screen? Yeesh!

And I say that as someone who just dropped a smartphone face-down on a hardwood floor.

I'm here to say that my screen protector, which cost something like 30 bucks, did its job. It took one for the Arizona Slim team and cracked in several places. The screen was intact. Hooray!

However, the replacement protector doesn't stick, so back to the phone repair shop I go. While I'm there, I think I'll strike up a conversation about the right to repair. Hey, I might just be able to turn another person on to Naked Capitalism.

Arizona Slim , August 16, 2019 at 12:09 pm

Indeed I did. The phone repair guy was very interested in NC.

Matter of fact, I showed him how to pull up the site and read that recent article about Apple. Link:

https://www.nakedcapitalism.com/2019/08/rotten-apple-right-to-repair-roundup.html

And then I went down the street to a state senator's office. Said senator is very interested in fracking issues. So, another recruit to our site.

JohnnySacks , August 16, 2019 at 10:49 am

I'd say that a robust course in home economics would be valuable in public schools. But I'm guessing our owners would heavily attack that effort.

Fact is, if you want to have any professional career, an education is mandatory. I don't want my nurse practitioner or doctor to be the likes of the Trump children simply because they're the only ones who will be able to afford the education, same as all economics, political science, law etc. workers to only be the ones who can afford it. Sort of insures that our future leaders won't have any clue whatsoever about the lives of the 90% they'll be claiming to support. A crappy situation made even worse.

Joe Well , August 16, 2019 at 8:44 am

The author claims that college costs (that term is not defined) rose 80% from 2001 to 2009. That is far higher than any figure I have seen. According to National Center for Education Satistics, the figure for tuition+fees is closer to 30% which is still outrageous. If the descrepancy means that aid is being cut back more or non-tuition/fee costs are increasing faster, that would be good to know. Defenders of high prices claim that aid is increasing (I doubt that but do not have figures).

Anyway, #freecollege

Arizona Slim , August 16, 2019 at 8:53 am

Good discussion topic. Permit me to share a little tale from the Arizona Slim file:

As mentioned here before, I am learning the Russian language. After completing all 30 lessons in Mark Thompson's "Russian Made Easy" video series on YouTube, I decided that it was time for some classroom training.

So, off to look at the University of Arizona website. I couldn't easily find any information about enrolling as a non-degree student, so I sent an email to the department where I'd be taking an intro Russian class.

Reply: In order to become a UA non-degree student, I would have to complete an online application. And pay a $45 application fee.

Nyet.

Instead of paying the UA 45 bucks just to apply, I could spend that same money on a vocabulary builder course, which is taught by a native Russian speaker. From her home in Moscow, she has built a global business as a language teacher. So, look out, Real Russian Club, here I come. Link:

https://realrussianclub.com/

anonymous , August 16, 2019 at 10:23 am

Arizona Slim, take a look at the free Russian language courses on Coursera.org. I've taken excellent Italian courses on EdX, but Coursera looks better now for conversational Russian. (EdX has a couple of classes on Russian for scientific work.) With foreign languages, the more practice and exposure, the better, so maybe Coursera could be useful in addition to your vocabulary builder course.

Arizona Slim , August 16, 2019 at 12:10 pm

Spasibo!

David Carl Grimes , August 16, 2019 at 11:48 am

I was wondering about the kids and parents who pay full freight for college. Can that cost ever be recouped? Even for top colleges? For instance, financial aid at Harvard maxes out at $110K in household income. So a high income family will have to pay full sticker price every year. Tuition and living expenses could be $70K per year or more. So a four year education could cost $280K to $350K. It's like buying a house in many parts of the country without buying a house. Yet the median salary for a Harvard graduate is $90K ten years after entering school (six years after graduation). If college costs are paid back in ten years, the college graduate will have to pay back $30K every year, on top of everything else. Not much left for savings, retirement, or a house. Even for Harvard College graduates.

Shiloh1 , August 16, 2019 at 12:01 pm

I love these articles. At no point is it ever questioned or addressed why cost of college has gone exponential relative to the real economy (taking out real estate and healthcare) since the late 1970s,

It is because "financial aid", especially loans, spends the same as cash. The colleges will charge what the market will bear, Econ 101,taking account the new money those loans bring into the picture, driving up the price. Colleges have no skin in the game for repayment / default of loans.

Sorry, but I am cool with the whole system collapsing into itself and my bank account sitting this one out.

Please spare me the club med, lazy river, climbing wall stories. FULL DISCLOSURE: I went to Illinois Institute of Technology in Chicago, a garden spot of the city between 31st and 35th and State Street off the Dan Ryan Expressway in the late 70s. The place is a bigger dump now when I went there, full salute to the Mies Van Der Rohe flat roof glass shoe boxes and the post WWII housing project-like dorms.

polecat , August 16, 2019 at 12:50 pm

Campus pizza and beer ain't cheap you know ..

Eudora Welty , August 16, 2019 at 9:39 pm

A friend invited me to lunch at the cafeteria in the university dorm building. Lunch was $11 50, but all-you-can-eat with a gourmet style, nice China tableware. I had pizza, hamburger , pasta al fredo, pudding, cookies, salad, soft drinks. Great opportunity to gain weight & spend $$$!

jrs , August 16, 2019 at 2:45 pm

well also probably due to both the decimation of the non-college job market, and credential inflation (a degree now being required for jobs it didn't use to be). of course college grads are now overproduced relative to demand as well.

Synoia , August 16, 2019 at 12:38 pm

I have some advice for the young with Student debt, as I have some acquaintances whose children have huge debts $400,000 to $600,000..

Emigrate. Don't look back.

polecat , August 16, 2019 at 12:58 pm

Here's an educational experiance one can endeavor : Enter your local thrift/antique establishment/yard sale/dump, etc. and pick an item – any item .. and figure out how to rebuild/repair/make serviceable said item. Presto ! THERE'S your future, waiting in the wings of regression !
Not a bad place to be actually .. beats high penury, no ?

inode_buddha , August 16, 2019 at 1:30 pm

My paleo-conservative dad likes to point out that student loans existed before the government started backing them. He took out a very large loan in 1950 to attend MIT in got his Masters there, PhD at SUNY Buffalo in 1970. He paid it off in 1985. Back then lending standards were based on reality and job market projections. When I went to school, all you had to do was fog a mirror Then in the 1990s prices started doubling and tripling, etcetc . Answer is to ban the government from backing loans, full stop.

Joe Well , August 16, 2019 at 2:21 pm

Or we could do what many other countries do and abolish tuition and fees.

chuck roast , August 16, 2019 at 1:39 pm

I have a bunch of hoops to jump through for that!
Here's what my hoops look like:
One of them cancels $50,000 in student loan debt for every person with household income under $100,000.
Another hoop provides substantial debt cancellation for every person with household income between $100,000 and $250,000. The $50,000 cancellation amount phases out by $1 for every $3 in income above $100,000, so, for example, a person with household income of $130,000 gets $40,000 in cancellation, while a person with household income of $160,000 gets $30,000 in cancellation. Pick you hoop!
I also have a non-hoop, hoop that offers no debt cancellation to people with household income above $250,000 (the top 5%).
For most Americans, cancellation will take place automatically using data already available to the federal government about income and outstanding student loan debt.
We also have a moving hoop private student loan debt is also eligible for cancellation, and the federal government will work with borrowers and the holders of this debt to provide relief.
And our final hoop. Canceled debt will not be taxed as income.
E. Warren (the Hoop Queen)

Joe Well , August 16, 2019 at 2:19 pm

Does anyone else find the idea that parents should pay for, and therefore have veto over, their adult children's college, offensively infantilizing?

jrs , August 16, 2019 at 2:26 pm

Well unless full room and board is paid for, that's how it ends up being though? I mean free tuition is simply not going to solve this, because how to pay for a roof over one's head while going to school?

1) live at the parents home and go to a nearby school, sure a bit infantalizing 2) get the bank of mom and dad to foot the dorm costs again mom and dad paying 3) take out debt for living expenses.

Haha, no you usually can't afford housing on or off campus (renting a room) with some low wage job!!! And if you had the capacity to get a well paying job without a degree (or other training) you might not be pursuing one anyway. Since a large number of students are homeless (actually true here, shocking numbers), I guess that's also an option.

shinola , August 16, 2019 at 3:31 pm

I'm surprised, this being NC, that no one has mentioned this yet – student debt is a modern form of indentured servitude.

While it does not directly tie the indebted (former) student to a single employer, it provides potential employers with leverage in regard to wages & working conditions. Quite simply, someone with a large debt hanging over their head is more likely to accept a job with lower pay, fewer raises and/or benefits than some someone who is debt-free and therefore can afford to be more picky, more demanding to be paid & treated decently.

Get 'em in more debt at an earlier age so they will be more docile and accepting of neoliberal crapification.

Anthony G Stegman , August 16, 2019 at 6:18 pm

At the same time it has become vastly more expensive a college degree has also become watered down and of less value. That is the true injustice. Many jobs that once required only a high school education now require a college degree. This is not because the job requirements have changed. This is due to the simple fact that many more people possess college diplomas, so employers now demand them for a greater number of occupations. However, the pay for these occupations has not risen to be commensurate with the additional costs incurred to gain the newly required credentials. Now these holders of costly credentials find themselves in a real bind. The author of this article offered no solutions.

[Aug 16, 2019] A New Assessment of the Role of Offshoring in the Decline in US Manufacturing Employment naked capitalism

Aug 16, 2019 | www.nakedcapitalism.com

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https://c.deployads.com/sync?f=html&s=2343&u=https%3A%2F%2Fwww.nakedcapitalism.com%2F2019%2F08%2Fa-new-assessment-of-the-role-of-offshoring-in-the-decline-in-us-manufacturing-employment.html <img src="http://b.scorecardresearch.com/p?c1=2&c2=16807273&cv=2.0&cj=1" /> By Christoph Boehm, Assistant Professor of Economics, University of Texas at Austin, Aaron Flaaen, Senior Economist, Research and Statistics Division, Federal Reserve Board, and Nitya Pandalai-Nayar, Assistant Professor of Economics, University of Texas at Austin. Originally published at VoxEU

What has caused the rapid decline in US manufacturing employment in recent decades? This column uses novel data to investigate the role of US multinationals and finds that they were a key driver behind the job losses. Insights from a theoretical framework imply that a reduction in the costs of foreign sourcing led firms to increase offshoring, and to shed labour.

One of the most contentious aspects of globalisation is its impact on national labour markets. This is particularly true for advanced economies facing the emergence and integration of large, low-wage, and export-driven countries into the global trading system. Contributing to this controversy, between 1990 and 2011 the US manufacturing sector lost one out of every three jobs. A body of research, including recent work by Bloom et al. (2019), Fort et al. (2018) and Autor et al. (2013), has attempted to understand this decline in manufacturing employment. The focus of this research has been on two broad explanations. First, this period could have coincided with intensive investments in labour-saving technology by US firms, thereby resulting in reduced demand for domestic manufacturing labour. Second, the production of manufacturing goods may have increasingly occurred abroad, also leading to less demand for domestic labour.

New Facts on Manufacturing Employment, Trade, and Multinational Activity

On the surface, the second explanation appears particularly promising. Manufacturing employment declined from nearly 16 million workers in 1993 to just over 10 million in 2011, shown by the black line in Figure 1. This large decline in manufacturing employment coincided with a surge in outward foreign direct investment (FDI) by US firms (the blue line in Figure 1). Nevertheless, existing theories of trade and multinational production make ambiguous predictions regarding the link between foreign production and US employment. Further, due to a lack of suitable firm-level data on US multinationals, there has been limited research on their role in the manufacturing employment decline (see Kovak et al. 2018 for a recent exception).

Figure 1 US manufacturing employment and US outward FDI

Source : BEA for FDI; Longitudinal Business Database (LBD) and authors' calculations for employment.

In a recent paper, we address the question of whether foreign input sourcing of US multinationals has contributed to a decline in US manufacturing employment (Boehm et al. 2019). We construct a novel dataset, which we combine with a structural model to show that US multinationals played a leading role in the decline in US manufacturing employment. Our data from the US Census Bureau cover the universe of manufacturing establishments linked to transaction-level trade data for the period 1993-2011. Using two directories of international corporate structure, we augment the Census data to include, for the first time, longitudinal information on the direction and extent of firms' multinational operations. To the best of our knowledge, our dataset is the first to permit a comprehensive analysis of the role of US multinationals in the aggregate manufacturing decline in the US. With these data, we establish three new stylised facts.

Fact 1: US-owned multinationals were responsible for a large share of the aggregate manufacturing employment decline
Our first finding is that US multinational firms, defined as those US-headquartered firms with foreign-owned plants, contributed disproportionally to the decline in US manufacturing employment. While 33.3% of 1993 employment was in multinational-owned establishments, this group directly accounted for 41% of the subsequent decline.

Fact 2: US-owned multinationals had lower employment growth rates than similar non-multinationals
In Figure 2, we show that multinationals exhibited consistently lower net job creation rates in the manufacturing sector, relative to other types of firms. Compared to purely domestic firms and non-multinational exporting firms, multinationals created fewer jobs or shed more jobs in almost every year in our sample. Of course, these patterns may not be causal, and other characteristics of multinationals could be driving the low job creation rates. To address this concern, we control for all observable plant characteristics, and find that multinational plants experienced lower employment growth than non-multinational owned plants in the same industry, even when the size and age of the plants are held constant.

Figure 2 Net US manufacturing job creation rates by type of US firm

Source : Authors' calculations based on the LBD, Directory of Corporation Affiliations (DCA), and Longitudinal Foreign Trade Transactions Dataset (LFTTD)

Fact 3: Newly multinational establishments experienced job losses, while the parent multinational firm expanded imports of intermediate inputs
An alternative way to assess the role of multinational activity on US employment with our data is to use an 'event study' framework. We compare the employment growth trajectories of newly multinational-owned plants to otherwise similar plants in terms of industry, firm age, and plant size. As can be seen in Figure 3a, prior to the plants becoming part of a multinational, their growth patterns are not different from the control group. However, in the years following the multinational expansion, there is a brief positive but then sustained negative trajectory of employment at these manufacturing plants. Ten years after the transition, these newly multinational-owned plants have manufacturing employment that is about 20% smaller than an otherwise similar plant.

Figure 3 US employment and import dynamics at new multinational plants

a) Relative imports

b) Cumulative relative employment (Index)

Source : Authors' calculations based on LBD, DCA, and LFTTD.

Further, these newly multinational firms increase imports following the expansion abroad. As Figure 3b demonstrates, these firms substantially increase imports both from related parties and other firms (at arms-length), relative to their control group. Taken together, Figures 3a and 3b suggest that offshoring might explain the observed negative relationship between trade and employment.

Structural Analysis: Did the Offshoring of Intermediate Input Production Result in a Net Employment Decline in the US at the Firm Level?

While the patterns we identify above are suggesting that increased foreign input sourcing by multinational firms led to a decrease in US manufacturing employment, they are not necessarily causal. Standard models of importing, such as Halpern et al. (2015), Antras et al. (2017) or Blaum et al. (2018), make ambiguous predictions as to whether foreign sourcing is associated with increases or decreases in domestic employment. At the heart of this ambiguity are two competing forces. First, a reduction in the costs of foreign sourcing leads firms to have access to cheaper intermediate inputs. As a result, their unit costs fall and their optimal scale increases. This 'scale effect' raises their US employment. On the other hand, firms respond by optimally reallocating some intermediate input production towards the location with lower costs. This 'reallocation effect' reduces US employment. Theoretically, the scale effect could dominate the reallocation effect and lead to positive employment effects of offshoring, or vice versa.

We use our microdata to estimate the relative strengths of these two competing forces. We show that in a conventional class of models and in partial equilibrium, the value of a single structural constant – the elasticity of firm size with respect to firm production efficiency – completely determines which of the two forces dominates. Our estimation approach is to develop a method to structurally estimate an upper bound on this constant using our data on the universe of US manufacturing firms. While a high value of the upper bound leaves open the possibility that foreign sourcing and domestic employment are complements, a low value of the bound unambiguously implies that the two are substitutes.

Our estimates of the bound are small, indicating that during the period 1993-2011, the reallocation effect was much larger than the scale effect. In other words, during this period of aggregate manufacturing employment decline, multinationals' foreign input sourcing was leading to a net decline of manufacturing employment within these firms.

Aggregate Implications for US Manufacturing Employment

It is important to point out that the model we use only speaks to employment changes within existing firms and does not take into account general equilibrium forces that can also affect employment. Since such general equilibrium effects are inherently difficult to assess, estimates of how much of the observed aggregate decline can be attributed to offshoring of multinational firms are uncertain and often require strong assumptions. We thus proceed under two alternative sets of assumptions. In the first, we conduct a simple partial equilibrium aggregation exercise, which uses observed changes in firm cost shares of domestic inputs together with our estimated parameter bounds to obtain model-implied predictions of the employment loss due to foreign sourcing. This approach captures both the direct impact of foreign sourcing by existing firms as well as the first-order impact on domestic suppliers, holding all else equal. Under the second, we model these indirect, general equilibrium effects, such as firm entry and exit, explicitly. In both of these scenarios, we find that the offshoring activities of multinationals explains about one-fifth to one-third of the aggregate US manufacturing employment decline.

Policy Implications

Our research shows that the global sourcing behaviour of US multinational firms was an important component of the manufacturing decline observed in the past few decades. These firms set up production facilities abroad and imported intermediate goods back to the US, with the consequence of reduced demand for domestic manufacturing workers. While our research suggests that offshoring had a negative impact on employment, we caution that it does not support the view that offshoring and trade should be contained with tariffs or other policy interventions. Previous research has shown that both trade and offshoring are critical for consumers' access to affordable goods in the US. Instead, our research implies that government assistance for displaced manufacturing workers could facilitate their transition to new jobs in other sectors.

Authors' note: Any opinions or conclusions expressed herein are those of the authors and do not necessarily represent the view of the US Census Bureau or the Board of Governors or its research staff.

See original post for references

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Louis Fyne , August 16, 2019 at 10:29 am

It's not just big-ticket manufacturing (appliances, etc) .little stuff that a nation uses on a daily basis has been off-shored as well -- electrical wiring, capacitors, even foodstuffs like cookies and candy.

Bobby Gladd , August 16, 2019 at 11:04 am

Rx, military equipment parts

https://regionalextensioncenter.blogspot.com/2019/08/china-rx.html

upstater , August 16, 2019 at 10:51 am

"our research implies that government assistance for displaced manufacturing workers could facilitate their transition to new jobs in other sectors."

How does the research make such an implication? Every person a gig worker, I suppose?

Synoia , August 16, 2019 at 3:56 pm

our research implies .could facilitate their transition

Can we pay our bills with the "implied" income?

"implied" < 40% probability, "facilitated" < 40% probability, overall probability < 16%.

Nice, less than 1 in 4 get a new job.

rd , August 16, 2019 at 11:10 am

I think an overlooked aspect is environmental protection and labor working conditions as well as wages.

We are offshoring our pollution by moving manufacturing to other countries with much less stringent environmental regulation. Similarly, labor rules in those countries don't require as much worker safety, so we are offshoring injuries as well.

As the other countries become wealthier and more educated, they are starting to push for more of these protections as well as higher wages which is forcing the companies to move their production again to keep their costs low.

An interesting recent trend is the rejection of our "recycling" from countries that used to receive it, so the feel-good greenwashing of filling the recycling bins is started to boomerang back to North America as countries ship back the trash parts of the recycling. This will likely require a second recycling revolution with more domestic processing of recycling or an admission that it simply isn't going to happen in which case the righteousness quotient of many suburbanites is going to plummet.

Tyronius , August 16, 2019 at 3:07 pm

This is such an easy problem to solve from a policy standpoint- and it has been solved by countries as small as the Netherlands.

Legally mandate a small list of fully recyclable materials for manufacturers to use in production and packaging, and enforce it with punitive tariffs on non conforming goods. This can take many forms, one logical option being that of holding companies responsible for the costs of recycling their products.

This is as applicable to soda bottles as it is to large and complex products like automobiles; BMW is a world leader in lifecycle waste reduction and recycling of vehicles.

As usual, the impediment isn't technology or consumerism, it's corporate profitability and one time costs of adjusting the supply chain.

neo-realist , August 16, 2019 at 11:15 am

So the writer says "that government assistance for displaced manufacturing workers could facilitate their transition to new jobs in other sectors." I take it to mean that a policy such as "free college" as advocated by Sanders which would involve government funded vocational training in other sectors would go a long away toward helping those displaced by outsourcing?

David Carl Grimes , August 16, 2019 at 11:27 am

It's just another version of "Let them eat training!"

Inode_buddha , August 16, 2019 at 11:51 am

I remember all that BS back in the 80's and 90's everybody was on the bandwagon about careers in computers, or any other hi-tech. I was one of those who had *some* training at least .. right before they offshored all those jobs to India. It was a double kick in the nuts.So, manufacturing went to China, computing went to India. And people wonder why I'm so bitter and cranky sometimes.

Napoleon: "Money has no Fatherland. Financiers are without patriotism and without shame. Their sole object is gain." IMHO US manufacturing is the reason why we're not all speaking German today. And we gave all that capacity away like a bunch of lemmings over the cliff

Katniss Everdeen , August 16, 2019 at 12:35 pm

"that government assistance for displaced manufacturing workers could facilitate their transition to new jobs in other sectors."

This "implies" that there are "jobs in other sectors" that create as much economic value, expertise and "innovation" as manufacturing jobs do. What are they–"service" jobs? Taking in each other's laundry? Delivering McDonald's to your door? Netflix?

Manufacturing is not just a job category that can be changed out for something shiny and new, it's vital infrastructure that represents a nation's ability to provide for itself, and to create a standard of living that reflects that capability. Those "affordable goods" so important to american "consumers" are manufactured goods. It's not just the price to buy them, it's the ability to make them that's important.

Like it or not, the once mighty american economy was built on the mightiest manufacturing capacity that the world had ever known. Trivializing it as being only about cheap stuff is a colossal mistake. We used to know that, and we've only begun to pay the price for forgetting.

polecat , August 16, 2019 at 2:43 pm

We* might very well learn to make lasting things of value again .. on a lesser scale, after half the population is dead from despair, war, and disease ..

*not necessarily as one people, however ..

Summer , August 16, 2019 at 3:31 pm

40 years later?!?! This is the conclusion. Note it's still not being done effectively.

They are full of it.

They may have an effective retraining program once there are about 10 manufacturing workers left in the country

Punxsutawney , August 16, 2019 at 6:15 pm

Let me tell you how useful this is in replacing your income when your 50 and the manufacturing you supported is gone.

Not so much!

sierra7 , August 16, 2019 at 11:58 am

Outsourcing of manufacturing jobs by multi-nationals contributed to job losses ..
Really! LOL!
30 years too late for this info.
Wasn't hard to see even way back in the 1980's how multi-nationals were working very hard to export jobs and import their "anti-labor" behaviour they were excising outside the laws and borders of the US.

Synoia , August 16, 2019 at 12:26 pm

Dear Mr Trump

Tariffs were historically used to protect domestic manufacturers. Both the fees and increased price were use to boot domestic manufacturing, and hence domestic employment.

What's you intention for the tariff money?

doug , August 16, 2019 at 2:23 pm

So , you are implying there is a plan in the man's head?

Synoia , August 16, 2019 at 2:45 pm

No, I'm asking if he has one.

I'm implying nothing.

Trump makes a lot of noise. I'm also familiar with the proverb "Empty Vessels make the most Noise."

MyLessThanPrimeBeef , August 16, 2019 at 5:21 pm

That's a little different from the Zen story about the empty tea cup being more receptive.

The Rage , August 16, 2019 at 5:13 pm

Yes, during the wave of industrialization. But they don't work so well once consolidation starts. 1875-1925(roughly) was the golden age of US manufacturing, even the WWII bounce was government DoD driven. Private ex-DoD manufacturing peaked in 1924 and was flat since then. Then we have the 97-05 downwave which then has boosted us about back to 1925's ex-DoD high. Just like the tech wave, it ended.

I mean, by 1925 Portsmouth Ohio was done by 1925, by 1950 they just bled manufacturing while it consolidated around bigger cities after WWII.

We need self-efficiency not capitalists growth. It ain't happening people. Its over. We need 10% contraction of GDP just to get manufacturing growing again from a much lower base. Tariffs are dead in the water for growth now, and act like the opposite. They are also creating a bubble in "base" consumption while killing domestic production and yes, eventually overcapacity will kill base consumption and it crash again like last years 4th quarter driving down domestic manufacturing further.

Samuel Conner , August 16, 2019 at 12:38 pm

Anecdotally, in a field I worked in for a while, middle management in a small privately owned "needle trades" firm, the "growth" among our competitors was in firms that (we assumed) did their design work in US but manufactured overseas. Domestic manufacturers either adapted to this, or closed down.

At least in this field, automation had next to nothing to do with it.

cirsium , August 16, 2019 at 12:54 pm

Instead, our research implies that government assistance for displaced manufacturing workers could facilitate their transition to new jobs in other sectors.

Ah yes, the subsidised retraining for manufacturing jobs that, in fact, do not exist. Louis Uchitelle covered this policy failure in his 2006 book "The Disposable American: Layoffs and their consequences". Is the phrase "got the T-shirt" relevant here?

Susan the other` , August 16, 2019 at 1:23 pm

For the government to re-employ workers who have lost their factories would be a form of industrial policy. Ours is never clearly stated, if there is one. But one thing is clear and that is the government gave the internationals every opportunity to offshore our national productivity without any safety net for labor except unemployment insurance. Which runs out. Michael Pettis has just backed a proposal to tax foreign capital saving and investment here in this country. Because most of it is just financial "investments". Foreign investment for long term capital projects would be virtually unaffected. It is claimed that this tax on money parking would reduce out trade deficit and make it fluctuate within an acceptable balance. By doing something that sounds like real-time exchange rate adjustments for every transacted trade, now to include foreign investment and savings. So why didn't the government, after offshoring all those jobs, re-employ all the laid-off workers as banking and investment managers? So all this unproductive foreign money is skewing our trade balance. Making our unemployment deeply structural. It is so bizarre that we are "trading" in money at all. We are trading in the medium of exchange, which is fiat, which itself is susceptible to exchange rate adjustments with other money and all of it supposedly backed by the productivity of that country. That foreign productivity is frequently nothing more than IMF money, stolen and taken out of the country. The P word. Because the world has reached manufacturing overcapacity, I assume, all this money is totally skewing the ledgers. It's laughable except for the fact that the bean counters take it seriously. The mess we are in is something more fundamental than balanced exchange rates. It's more like hoarding at its most irrational. Way over my head. And for us to fix unemployment here in the US will take far more than a tax on all this loose international money.

Inode_buddha , August 16, 2019 at 1:40 pm

Yeah it's nice to have it "officially" credentialed etc its not like I haven't been saying this since they passed NAFTA, but then I wasn't "credentialed" so nobody listened . its like, "No $#!t sherlock ???" pretty much *everyone* who has spent some time in the industrial sectors knows this by heart without even needing to be told. Of course maybe now its OK to say it out loud or something . smh.

Glen , August 16, 2019 at 2:25 pm

Can we also admit that American CEOs gave our jobs away?

Inode_buddha , August 16, 2019 at 2:59 pm

Dirty furriners sho didn't steal em trying to get *anyone* to admit this is like pulling teeth

MyLessThanPrimeBeef , August 16, 2019 at 5:19 pm

It's good people are asking questions.

Jerry B , August 16, 2019 at 2:33 pm

===the Role of Offshoring in the Decline in US Manufacturing Employment===

It is not just the role of offshoring in the decline of US manufacturing employment, BUT the effect the offshoring, and the competing with foreign manufacturers, had on the existing US manufacturing workforce. The manufacturers and manufacturing workers that remain in the US have to compete with their cheaper foreign competition for work.

I spent most of the last 25 years working in plastics injection molding. After spending the first six years of my career in plastics/ polymer research and development, I transitioned to injection molding. In the mid 90's when I started in injection molding, globalization had already begun especially in the automotive sector. The car manufacturers were already setting up global and domestic supply chains. But even then the Chicago area (and the US in general) was heavy in mold making and injection molding businesses.

Then China became a major player in the world economy, NAFTA started, etc. and in the early 2000's it was like the last manufacturer who gets stuck in the US gets to turn out the lights!

There were a lot of small to medium size mold maker shops and plastic injection molders in the Chicago area that went under because they could not compete with the cheaper foreign competition. It was very sad as I knew many small mom and pop mold makers and injection molders in the Chicago area who were in business for 20 – 30+ years that closed.

The fact that many businesses/corporations in the US, due to offshoring and globalization, are forced to compete with foreign competitors that have cheaper labor, less regulation, cheaper land costs, etc. etc. is beyond reason.

And to this day you can see the effects of neoliberal globalization in any manufacturing or other business you visit as they are dealing with consequences of having to compete directly with cheaper foreign competitors through cost cutting, low wages, and running the employees into the ground.

The tables were tilted against manufacturers and manufacturing employees in the US. It is like the US manufacturing (and other sectors) are trying to fight a battle with one hand tied behind our backs.

There is a good book that relates to this post. The book is called Failure to Adjust: How Americans Got Left Behind in the Global Economy by Edward Alden.

https://www.amazon.com/Failure-Adjust-Americans-Economy-Relations-ebook/dp/B01M03S1R4

The Rage , August 16, 2019 at 5:04 pm

NAFTA killed a bunch of material extraction jobs, but boosted a bunch of auto production jobs down the supply chain. You can see that on the data. Granted, auto sales have been flat for 20 year which has led to a flattening of employment growth since 2005 after the material extraction driven drop.

That is why the Trump Administration just basically rebooted it.

John , August 16, 2019 at 3:41 pm

Has there been a study of a relationship between off-shoring and the rise of upper management compensation?

Susan the other` , August 16, 2019 at 4:22 pm

can the government itself, operating under a vague constitution, be treasonous?

Subaltern , August 16, 2019 at 4:48 pm

Consider it payback for colonialism and neocolonialism.

The Rage , August 16, 2019 at 4:52 pm

lol, but it created a bunch of debt finance jobs throughout the economy as well, that boosted existing manufacturing. Offshoring accounts for .1% of the job loss. Most of it is consolidation and technology. My great grandfather lost his job in 1925 during the first wave of consolidation. What about that?

This post reeks of globalist propa.

Altandmain , August 16, 2019 at 5:09 pm

As someone working in manufacturing, while I am glad that there is some acknowledgement that outsourcing is responsible, I strongly disagree about not implementing tariffs. Effectively workers are competing for a race to the bottom in wages, working conditions, and other factors like environmental laws.

Guess what if there are tariffs? Things will cost more, but there will also be more jobs for the working class. Actually there will also be quite a few white collar jobs too. Engineering, HR, Finance, Sales, etc, are all needed in any manufacturing industry.

I suspect that net, most workers would be better off even if prices were higher due to the jobs. The thing is, the top 10 percent would not be and the 1 percent would not be. That's the main reason for this outsourcing. To distribute income upwards so the rich can parasitically take it.

While our research suggests that offshoring had a negative impact on employment, we caution that it does not support the view that offshoring and trade should be contained with tariffs or other policy interventions. Previous research has shown that both trade and offshoring are critical for consumers' access to affordable goods in the US. Instead, our research implies that government assistance for displaced manufacturing workers could facilitate their transition to new jobs in other sectors.

This is where I strongly disagree. As discussed above, I think that the net effect might be beneficial for the majority of society.

The other is the old retraining claims, which never pan out. What jobs are there? Visit the communities in the Midwestern US and Southern Ontario. Retraining for what? For jobs that are part time, minimum wage, with few or no benefits?!

Manufacturing may not have been perfect, but at least there were benefits, it was often full time, and the salaries allowed a middle class existence.

When I read things like this, as much as I dislike Trump, I can understand why people would support him.

sierra7 , August 16, 2019 at 7:13 pm

For the life of me I don't see how any other outcome could have happened. With the economic system we have embraced at least in my long lifetime, it was inevitable that "capital" would seek the lowest level playing field in the long term. Nation's boundaries kept that flow "fenced" to a certain limit for as long as there have been physical borders between countries. Once the cat was let out of the bag of competing countries after WW2, for example the Japanese with computer driven machinery (lathes) that crushed American companies that in too many cases refused to invest and welcomed the slow destruction of organized labor here in the US, it was inevitable that that condition would be the future of manufacturing here. The advent of the Mexican maquiladoras gave a great push to the exporting of jobs. NAFTA put the nails in the coffin so many more of those good paying jobs. "Labor" was never invited to those global meetings that proved to be so destructive to so many countries.
But, again. The system we embrace can have no other outcome. "Tariffs" will eventually lead to wars. So in the words of that famous Russian: "What is to be done?"
Anybody have a solution? You will be saving civilization from itself. We need a complete rethinking of how we live on this planet. That will take better humans that we have now that lead nations. In the meantime it's, "kill them all and let God sort them out!" The weak will succumb; the strong will continue to battle for territory, in this case jobs, jobs, jobs.

Rick , August 16, 2019 at 8:35 pm

For a look at what the numbers have been for the past half century:

Manufacturing employment

It's surprisingly linear, and the inflection point at the last recession is curious.

[Aug 16, 2019] This Is How Epstein Manipulated Vulnerable Young Girls (And How You Can Protect Your Children From Predators)

Aug 16, 2019 | www.zerohedge.com

This Is How Epstein Manipulated Vulnerable Young Girls (And How You Can Protect Your Children From Predators)

by Tyler Durden Fri, 08/16/2019 - 18:25 0 SHARES

Authored by Daisy Luther via The Organic Prepper blog,

This article contains content that some may find distressing.

Jeffrey Epstein "was" apparently a serial molester of children. He had manipulation down to an art form, as many molesters do. He seemed to be an expert at figuring out a girl's weak point, whether it was poverty, a deceased family member, or feeling alienated from her peers.

This is a common ploy. Many molesters seek out children or teens who have lost a parent and use this as a way to build a friendship. Then, because children don't think like adults, they are manipulated, coerced, or threatened into sexual activity.

The story below could be told a hundred thousand times with only tiny changes. The names and the faces would be different. The settings might not be a mansion in Manhattan or in Palm Beach but rather a quiet part of a church, a school, or some kind of activity for teens. The setting could be in the house next door to you, where someone with evil intent befriends a vulnerable young person with the stated goal of helping them, but an end result that couldn't be further from reality.

How 14-year-old Jennifer Araoz met Jeffrey Epstein

Jennifer Araoz was 14 years old when she first met her future rapist, Jeffrey Epstein. She wrote about how she was manipulated, first by his recruiter, then by Epstein himself. There are many powerful lessons that we as parents can learn from her story.

During my freshman year, one of Epstein's recruiters, a stranger, approached me on the sidewalk outside my high school. Epstein never operated alone. He had a ring of enablers and surrounded himself with influential people. I was attending a performing arts school on the Upper East Side, studying musical theater. I wanted to be an actress and a singer. ( source )

Another report based on court documents says that the recruiter befriended Jennifer, took her out to eat after school a few times, and learned more about her, such as the fact that Jennifer's father had died from an AIDs-related illness and her family could barely scrape by financially.

The recruiter told me about a wealthy man she knew named Jeffrey Epstein. Meeting him would be beneficial, and he could introduce me to the right people for my career, she said. When I confided that I had recently lost my father and that my family was living on food stamps, she told me he was very caring and wanted to help us financially. ( source )

The recruiter finally got Jennifer to go with her to meet Epstein. Court documents say that they all three met together for the first month or so.

The visits during the first month felt benign, at least at the time. On my second visit, Epstein also gave me a digital camera as a gift. The visits were about one to two hours long and we would spend the time talking. After each visit, he or his secretary would hand me $300 in cash, supposedly to help my family. ( source )

Epstein claimed he was 'a big AIDS activist' which you can imagine would mean a lot to a 14-year-old whose father died of the disease.

Soon the visits would take a dark turn.

By the second month of Jennifer's visits to the mansion, the recruiter no longer attended the visits., the manipulation began in earnest.

But within about a month, he started asking me for massages and instructed me to take my top off. He said he would need to see my body if he was going to help me break into modeling. I felt uncomfortable and intimidated, but I did as he said. The assault escalated when, during these massages, he would flip over and sexually gratify himself and touch me inappropriately. For a little over a year, I went to Epstein's home once or twice a week.

After that day, I never went back. I also quit the performing arts school -- the one I had auditioned for and had wanted so badly to attend. It was too close to his house, the scene of so many crimes. I was too scared I would see him or his recruiter. So I transferred to another school in Queens close to my home. Since I was no longer able to pursue my dream of performing arts I eventually lost interest and dropped out. ( source )

Sure, we can say that she knew things weren't right when he asked her to take her top off. By this point, she was 15 years old. Old enough to know right from wrong. But if she was getting $300 twice a week and helping her family with it, it's pretty easy to see how she would want to continue helping her family despite her discomfort. Epstein knew exactly what he was doing.

Epstein's wealth, power, and connections would have made going against him seem like an insurmountable feat for a vulnerable 15-year-old girl who had recently lost her father. Who would have believed her word against that of this presumed philanthropist?

A few days ago, Jennifer, now 32, filed a massive lawsuit against Epstein's estate, Ghislaine Maxwell, and 3 members of Epstein's household staff. The complaint alleges that Maxwell and the staff "conspired with each other to make possible and otherwise facilitate the sexual abuse and rape of Plaintiff."

Some of Epstein's victims recruited new girls for him.

Epstein's indictment explains how he manipulated some of the girls he sexually abused to bring other girls to him.

Prosecutors say he lured underage girls, some as young as 14, to his residences, promising them a cash payment in exchange for giving him a massage. Instead, he would sexually abuse them -- groping them, making them touch him while he masturbated, and using sex toys on the minors. Then, he would allegedly ask them to recruit other girls. ( source )

A detailed report in the Miami Herald referred to it as a "sexual pyramid scheme." One of Epstein's accusers, Courtney Wild, reiterates the theme of the story told by Jennifer Boaz.

"Jeffrey preyed on girls who were in a bad way, girls who were basically homeless. He went after girls who he thought no one would listen to and he was right,'' said Courtney Wild, who was 14 when she met Epstein. ( source )

Courtney's time spent with Epstein nearly destroyed her.

Before she met Epstein, Courtney Wild was captain of the cheerleading squad, first trumpet in the band and an A-student at Lake Worth Middle School.

After she met Epstein, she was a stripper, a drug addict and an inmate at Gadsden Correctional Institution in Florida's Panhandle.

Wild still had braces on her teeth when she was introduced to him in 2002 at the age of 14.

She was fair, petite and slender, blonde and blue-eyed. ( source )

She began to recruit other girls for him in Palm Beach.

Wild said Epstein preferred girls who were white, appeared prepubescent and those who were easy to manipulate into going further each time

"By the time I was 16, I had probably brought him 70 to 80 girls who were all 14 and 15 years old. He was involved in my life for years," said Wild, who was released from prison in October after serving three years on drug charges.

The girls -- mostly 13 to 16 -- were lured to his pink waterfront mansion by Wild and other girls, who went to malls, house parties and other places where girls congregated, and told recruits that they could earn $200 to $300 to give a man -- Epstein -- a massage, according to an unredacted copy of the Palm Beach police investigation obtained by the Herald. ( source )

Epstein had it down to an art form.

Palm Beach police detective Joseph Recarey explains how Epstein insinuated himself into the girls' lives.

"The common interview with a girl went like this: 'I was brought there by so and so. I didn't feel comfortable with what happened, but I got paid well, so I was told if I didn't feel comfortable, I could bring someone else and still get paid,' '' Recarey said.

During the massage sessions, Recarey said Epstein would molest the girls, paying them premiums for engaging in oral sex and intercourse, and offering them a further bounty to find him more girls

Epstein could be a generous benefactor, Recarey said, buying his favored girls gifts. He might rent a car for a young girl to make it more convenient for her to stop by and cater to him. Once, he sent a bucket of roses to the local high school after one of his girls starred in a stage production. The floral-delivery instructions and a report card for one of the girls were discovered in a search of his mansion and trash. Police also obtained receipts for the rental cars and gifts, Recarey said.

Epstein counseled the girls about their schooling, and told them he would help them get into college, modeling school, fashion design or acting. At least two of Epstein's victims told police that they were in love with him, according to the police report. ( source )

You may look at these stories and scorn the victims. After all, they kept going back, didn't they? They liked the money, didn't they?

But they were children. Many of them were isolated, vulnerable, and without support systems. Many of them felt ashamed but didn't know how to extricate themselves. They were confused and scared, and Epstein was a pro at taking advantage of these emotions and doubts.

The girls are not to blame here. The adults are.

Epstein is not the only predator out there.

While this article focuses on how Epstein was able to lure so many victims, as Dagny Taggert recently wrote , there are many more people in power out there preying on children. Clergy, priests, teachers, neighbors, musicians, and random people on the internet are out there preying on and trafficking children.

Dagny wrote:

According to The National Center for Victims of Crime , the prevalence of child sexual abuse (CSA) is difficult to determine because it is often not reported. Experts agree that the incidence is far greater than what is reported to authorities.

Statistics below represent some of the research done on child sexual abuse.

The U.S. Department of Health and Human Services' Children's Bureau report Child Maltreatment 2010 found that 9.2% of victimized children were sexually assaulted (page 24).

Studies by David Finkelhor , Director of the Crimes Against Children Research Center , show that:

According to Darkness to Light , a non-profit committed to empowering adults to prevent child sexual abuse, only about one-third of child sexual abuse incidents are identified, and even fewer are reported .

The National Center for Missing and Exploited Children operates the CyberTipline , a national mechanism for the public and electronic service providers to report instances of suspected child sexual exploitation.

In 2018 the CyberTipline received more than 18.4 million reports, most of which related to:

Since its inception, the CyberTipline has received more than 48 million reports.

Those statistics are grim. ( source )

How do you keep your children safe?

When my children's father passed away, it wasn't too long afterward that I left my corporate job. I volunteered when the company began layoffs and took a small payment and my retirement fund to start a new life writing freelance. It wasn't long after that when I started this website.

I wanted to be home when they got back from school every day. I didn't want them to seem like prey to those looking for children with weak support systems. My own daughters could so easily have had a story like the one Jennifer has told.

I know that what I did is not possible for every family that suffers a loss. I was pretty fortunate to be able to find work from home that paid enough to allow me to be there.

What you, as a parent, must understand are the things that make your child seem vulnerable.

Some signs that your child could be getting abused or groomed.

Obviously, these lists are not comprehensive, nor are they sure signs of abuse. What teenager doesn't seem angry and withdrawn from time to time? But it's vital, no matter how hard they push you away, to stay involved, particularly after a traumatic event.

Here are some resources you may find helpful.

Teach your kids that some secrets should not be kept.

Predators manipulate children in all sorts of ways. One of the biggest ways is warning them to keep their "relationship" a secret or else.

Or else what?

Predators often put a burden on a child where they feel as though they must stay silent to protect the people they love.

Kids need to know that if anyone threatens them if they tell a secret, then they absolutely must tell that secret. Mom and Dad will be safe and will protect them. People who ask children to keep their presence in their lives a secret are never to be trusted.

And finally, make sure your children know that whatever they tell you, you will believe them and you know it's not their fault.

[Aug 16, 2019] The Perverted Face of Elite America by Matt Purple

Notable quotes:
"... Bill Clinton flew ..."
"... dozens of times ..."
"... on the Lolita Express; was it really beyond him to order a hit? ..."
"... New York Times ..."
"... Are the Elites the arch villains from the comic books, probably not, but then again many of them operate corporations that cause suffering to economically deprived populations all over the world. ..."
"... Why is this surprising? Aristocrats have always behaved this way. ..."
"... The sexual abuse of children and kids in their early teens is a very democratic crime. While physical abuse and neglect are linked to lower-income parents, sexual abuse occurs in all strata of society. It is not confined to the elites or to money changers. Nor to Jews, if that is what you are implying. ..."
"... Unconcerned about negative consequences, these people have become increasingly brazen. They certainly know that the laws that apply to you and me do not apply to them. ..."
"... In the words of George Carlin, "it's a big club, and you ain't in it." I stopped reading after the first two para's on this, tone is exactly the same as the sneering disdain from the empire's various MSM propaganda arms aimed at those "not in the club." ..."
"... 1) Either our intelligence agencies knew what was going on with Epstein and did nothing to stop him. Or... ..."
"... 2) They had no clue .. ..."
"... Occam's Razor says Possibility No. 1 is more likely to be the truth. But what would such a truth tell us? ..."
"... "What I am saying is that Epstein's direct testimony – AND ONLY EPSTEIN'S DIRECT TESTIMONY – had the potential to create a Common Knowledge moment that could bring down – not just specific sociopathic oligarchs like Mob Boss Donald or Mob Boss Bill or Mob Boss Andrew if they were the specific targets of that testimony – but the entire Mob system of sociopathic oligarchy. ..."
"... One strongly suspects that Ghislaine Maxwell knows just as much as Epstein did. Her participation was just as important to the operation of this "trafficking" ring. She was the lead recruiter, handled logistics, "grooming" and also was Epstein's "in" to many of his VIP associates (who were really clients). If witness accounts are accurate, she was also a participant in a good number of these depraved, criminal acts. ..."
"... The fact she has not been charged is quite the tell about our system of "justice." ..."
"... This is a dangerous slope. People once bowed to the elites because there was a principle of enforcement called nobless oblige. Society felt that elites had to be held to a higher standard because they carried greater responsibilities and burdens for society and the welfare of the national good. ..."
"... Since the 1960s nobless oblige has been downgraded to sound bites and photo ops for publicity and marketing. The elites have all but abandoned their responsibilities to support religion, to support education (except to indocrinate), to support tradition and society and the national good. The elites have become inward looking, inbred and narcissistic with little to no outward focus except in a marxist totalitarian vein of thought which serves their interest, indulges their hungers, preserves their wealth and power. ..."
"... My point was that as popolo minuti transform into popolo grossi in terms of access to power, they tend to start to transform into them in terms of moral character as well. (Inequality of) power corrupts, and absolute (inequality of) power corrupts absolutely. Thus, it seems that the over-representation of psychopaths in positions of power is because the psychopathy is acquired (and plenty of studies show drastic declines in empathy with even a little priming for power), rather than because it is easier for psychopaths to rise to the top. The worst of the popolo grossi tend to be hereditary. ..."
"... I think we're a lot closer to 1789 France than we want to believe. Read some Chris Hedges to see how the socialists see the current situation. Here's an example. https://www.commondreams.or... ..."
"... "given that all available evidence points to gross negligence on the part of the jail." How is gross negligence different from deliberate negligence? ..."
Aug 16, 2019 | www.theamericanconservative.com

In our tense populist moment, Jeffrey Epstein's crimes land like a grenade. August 15, 2019

Billionaire Jeffrey Epstein in Cambridge, MA on 9/8/04. (Photo by Rick Friedman/Corbis via Getty Images) Hands up, those of you who made a Fort Marcy Park joke last Saturday. Anyone? Surely there were a few. Fort Marcy Park was the Washington, D.C. woodland where White House attorney Vince Foster was found dead in 1993, and while his demise was repeatedly ruled a suicide, certain conservatives spent years afterwards hallucinating that the Clintons had him killed. Now, a quarter century later, both right and left are back in conspiracy mode. Mere hours after pedo-to-the-stars Jeffrey Epstein was reported to have killed himself, the hash tag #ClintonBodyCount began circulating on Twitter, followed closely by #TrumpBodyCount. Both Bill Clinton and Donald Trump had been associates of Epstein's; both, the thinking went, might have been desperate for him not to take the stand.

It is wrong, of course, to publicly speculate that Epstein was whacked, given that all available evidence points to gross negligence on the part of the jail. But can you really blame people? Twenty-five years ago, if you'd said that a roll call of America's elites, everyone from a former president to the most famous lawyer in the country, would be implicated in a sex trafficking ring masterminded by an enigmatic Wall Street financier who was also a member of the Trilateral Commission , you would have been laughed into the darkest corner of the local subway platform (next to the guy holding the "Vatican Hides Pedophiles" sign, presumably). Today, you'd be reading AP copy. Validate an improbable conspiracy theory, and you grant license to all the related improbable conspiracy theories: Bill Clinton flew dozens of times on the Lolita Express; was it really beyond him to order a hit?

And if we know one thing about the Epstein story, it's that everything about it is utterly improbable. Epstein stands credibly accused of assembling a veritable underage harem . One of his victims, Virginia Guiffre, has already implicated Prince Andrew , the third-born of Queen Elizabeth II, and a picture has since emerged showing the royal with his arm around the then-teenager's waist. Guiffre says she was also ordered to have sex with , among others, a "foreign president," a "well-known prime minister," and a "large hotel chain owner." Such an open secret was all this perversion that the current president of the United States made cheeky reference to it back in 2002. So invincible did Epstein think himself that he discussed underage sex openly, telling a New York Times reporter that laws against pedophilia were a "cultural aberration."

That Epstein looked to other cultures to rationalize his behavior is nothing new -- Oscar Wilde wrapped his similar predilections in lofty talk about the Greek ideal. What is different is that rather than being hunted and exposed by the powerful, as Wilde was, Epstein was protected by them for decades. Even after he was convicted of soliciting an underage prostitute in 2008, he was sentenced to only 18 months in prison, held in a private wing of the Palm Beach County stockade, and let out on generous "work release."

Study the Epstein case long enough and you end up at Alex Jones's favorite conclusion: they're all sons of bitches. Everyone who was anyone seemed to be in on this, or at least acting at the behest of someone who was. The essence of the conspiratorial mindset is that powerful shadowy forces are, first, capable of and engaged in the most dastardly skullduggery imaginable, and, second, in cabal-like cooperation with each other across all levels of power. The Epstein case seems to affirm both planks. It makes our elites seem like aliens, of a different culture, a different moral code, a different species -- how else could they have let slide what none of us ever would? Mary Colum's remark to Ernest Hemingway, "The only difference between the rich and other people is that the rich have more money," has rarely rang less true.

There's been for some time now a sense of drift between most Americans and their elites, driven by factors like income inequality, geographic enclaving, and cultural differences. We are living in a populist moment, to be sure, an era when the usual purveyors of class warfare sound more apt than they otherwise would. In such a fraught environment, the Epstein revelation lands like a grenade. Not only are America's gentry hitching rides on the Acela while mumbling about deplorables -- so the feeling goes -- they're also running cover for a Caligula who's preying on little Susie down the street. Suddenly the populist divide doesn't just run between classes or races or regular toast versus avocado, but between ethical extremes, good and literal evil.

This is, of course, what most populists profess: the people as a group are wholesome, the elites as a group are venal, and the former has to be vaulted over the latter in order for society to be made whole again. Yet Epstein's crimes are so wicked as to potentially set this moral chasm ablaze like never before. That's why, though Trump may have associated with Epstein, he's unlikely to be damaged by him: everything that's happened only confirms what he's been saying for years. In fact, you might view the Epstein fracas as a dialectic between two of his former associates, Trump's throw-them-out populism versus Clinton's benevolent stewardship of society by the smart set. And Trump won out.

Just as populisms aren't driven entirely by economic causes, so too are revolutions often about more than bread. Consider the Russian Revolution, sparked at least in small part by the people's perception of Rasputin as a sexual deviant. Consider, too, the French Revolution's rage against the profligate "Madame Déficit" Marie Antoinette. In such cases, the moral tends to get intertwined with the economic; license is seen as enabling decadence while the people pray and starve. This can be a blind spot in traditional conservative thinking. We rightly detest (most) revolutions and the tremors they cause, but we sometimes fail to notice that the Jacobins have good reason to be angry and that the ruling classes they overthrow really are that loathsome.

America is nowhere near 1789 France, or armed revolution in general. But we are anxious, restive, hungry for justice. A republic likes ours depends on the harmonious coexistence of its people and its elites, a matter that our Founders spent a good deal of time worrying about. Now we have a hideous face f0r elite corruption, one that's enabled fever in the national mind and dehumanized those around him. For those of us who prize stability and liberty in a polity, who think populism is always best in modest doses, the weeks ahead may be reason for worry.

Because it seems there's only more to come. On Wednesday, another victim came forward , alleging that Epstein raped her when she was 14 after she turned down sex with him. That this carnal omega, this pathetic loser, this finger-sniffing pervert from every teen comedy lurking outside the pretty girl's home longing for a piece of discarded lingerie was somehow elevated into a Teflon-coated Wall Street sun god is beyond comprehension. My friend Michael Davis calls Epstein and company the Hellfire Club , but just how much will they torch on their way down?

Matt Purple is the managing editor of .


Amy Ehlers a day ago • edited

When I started to see what was going on in this country, which was my journey, I was amazed to find out that there is sex trafficking 8 blocks from the White House and I learned of this in 2011. Lisa Ling did a great documentary on it. "Night time traffic greater than the day time." Pimps attempting to recruit girls walking home from school. If you pay attention it is also a journey of the food chain of Corporate America that supports this.
This is a Money Changer issue, that is about the closing of eyes from both parties. and please don't tell me this is not so. I know better than that.
Krazy Uncle a day ago
To be absolutely, clear there was speculation that Epstein was going to be assassinated weeks before it happened. For the most part citizens aren't so much surprised, as disappointed that Justice is once again foiled.

Are the Elites the arch villains from the comic books, probably not, but then again many of them operate corporations that cause suffering to economically deprived populations all over the world.

When the World's 26 richest people own as much as poorest 50%, just how close do they seem to achieve a god like status when looking up from the bottom? Maybe that's one reason that people are so angry when it seems that the most vulnerable among us, our children, are the victims of a limited number of the Elites and their twisted and horrific appetites.

I personally doubt much will come of the Epstein affair it will most likely be just one more myth added to the tally of injustice, and the people will have to bitterly swallow it whole. It will probably take many more cases like this being exposed before the people actually have their fill, and decide to do something about it. In the meantime, prepare to see more of the same by the laughing and mocking Elites

Krazy Uncle Bill In Montgomey 15 hours ago
In this day and age, I doubt a reporter will touch this story, and if they did, the real story would never make it into the Main Stream Media. And, most likely the reporter would be permanently black balled, and never work in Journalism again. It's happened many times before, because it doesn't fit within the approved propaganda message.

Give the story a couple decades or more, and it may come out, but otherwise it will be handled as a whack-job Conspiracy Theory.

The Fourth Estate is the only business that is protected by the Constitution, and yet it has been neutered, and those in the Press, who were supposed to be the Watchdogs for the people, have become the Lapdogs of the Elites.

What passes as News today is formulaic programming, passed on from the Propagandist to the Media, both nationally and locally.

Have you ever seen Conan O'Brian's local news videos?
Newscasters Agree: Rising Gas Prices Edition
https://www.youtube.com/watch?v=dAkxR9T01pw
There is one reporter, Julie K. Brown, of the Miami
Herald that actually brought to light the Epstein story again.
Here's the Thing: How Julie Brown broke the Jeffrey Epstein story
https://www.wrvo.org/post/heres-thing-how-julie-brown-broke-jeffrey-epstein-story

So, there is at least one reporter that has the guts to do investigative journalism hope her life insurance policy is up to date.

p.s. I didn't listen to the broadcast in the second link I just posted it in case others are interested. I've read the story elsewhere.

polistra24 a day ago
Why is this surprising? Aristocrats have always behaved this way.
minsredmash a day ago
Two Republican state senators and two New York City Policemen died violently within 72 hours ....

1. On June 4, former Arkansas Senator Linda Collins-Smith, 57, was found dead outside her home, her body unrecognizable on discovery. Police are now investigating her death as a homicide. On June 5, the county prosecutor announced that the circuit judge sealed the documents and statements obtained by police.
2. On June 5, Deputy Chief Steven Silks, 62, weeks away from retirement, was found in an unmarked police car with a gunshot wound to the head. News reports reported indicate it seemed self-inflicted.
3. On June 5, former Oklahoma Sen. Jonathan Nichols, 53, was found shot dead in his home. Police have not announced whether they are investigating a suicide or homicide..
4. On June 6, Detective Joseph Calabrese, 58, was found near his police car on a Brooklyn, NY beach, dead of a gunshot wound in what one report called an apparent suicide.
RIP.
Many other Americans died violently this past week. Why link these four together?

The answer comes down to a dark suspicion and a few hard facts which suggest that one or more of these four deaths might have had something to do with these individuals' work against pedophiles and human trafficking, or the official corruption so often surrounding both.

Source .

Now Jeffrey Epstein...

Jessica Ramer Amy Ehlers a day ago
The sexual abuse of children and kids in their early teens is a very democratic crime. While physical abuse and neglect are linked to lower-income parents, sexual abuse occurs in all strata of society. It is not confined to the elites or to money changers. Nor to Jews, if that is what you are implying.

Just about everyone in America has a family member who was sexually abused by someone who was usually not elite. Therefore, I cannot get worked up about class issues because of Jeffrey Epstein.

What I can get worked up about are the way elites start wars for poor people to die in and the way poor people get cruel sentences while the elite either walk or get the Epstein treatment--private wing, generous work release.

mrscracker Jessica Ramer 16 hours ago
I agree. Young girls are trafficked in more circles than the elite. I don't understand the connection to any particular social class. But better connected people do have better lawyers and can get away with more. Until like Mr. Epstein , they don't.
Bill In Montgomey a day ago • edited
The true character of these people is starting to be revealed. This (lack of) character is not only displayed when these men travel to Pedo Island, it's on display everywhere they go, in everything they do. Every organization they lead, or have anything to do with, is likely rotten to the core.

Unconcerned about negative consequences, these people have become increasingly brazen. They certainly know that the laws that apply to you and me do not apply to them.

If the system is so corrupt to have protected Epstein for decades, who else is being protected? Who else is getting away with figurative rape in every department of government, or house of finance?

The sooner the public recognizes the "true face" of our elites and rulers the better. Left to their own devices, these people - who think they have class but in reality are the worst kind of trash - can bring down a nation.

Krazy Uncle Bill In Montgomey a day ago
who else is being protected?

Good point... who else indeed... and how many more children are suffering?

prodigalson a day ago
Literally no one I know thought this guy would make it to trial alive with the exception of me, as I still had some hope in the system, and I was proven wrong. I've lost whatever remaining faith I had in the system.

In the words of George Carlin, "it's a big club, and you ain't in it." I stopped reading after the first two para's on this, tone is exactly the same as the sneering disdain from the empire's various MSM propaganda arms aimed at those "not in the club."

Sid Finster a day ago
There are two possibilities here:

1) Either our intelligence agencies knew what was going on with Epstein and did nothing to stop him. Or...

2) They had no clue ... which would mean our much vaunted intelligence community knew nothing about the travel habits of the "ruling class" of the world, about Jeff Epstein's real activities, had received no tips, had no insiders, and were incapable of "putting two and two together," etc. In short, Big Brother - with all its resources and intelligence and sources - with capabilities that put the Gestapo or the KGB to shame - had no idea.

Occam's Razor says Possibility No. 1 is more likely to be the truth. But what would such a truth tell us?

Mccormick47 Sid Finster a day ago
The third possibility is that BigBrother was in on it and didn't object to sacrificing teenage girls to get compromising information on people they wanted tp blackmail.
Sid Finster a day ago
"What I am saying is that Epstein's direct testimony – AND ONLY EPSTEIN'S DIRECT TESTIMONY – had the potential to create a Common Knowledge moment that could bring down – not just specific sociopathic oligarchs like Mob Boss Donald or Mob Boss Bill or Mob Boss Andrew if they were the specific targets of that testimony – but the entire Mob system of sociopathic oligarchy.

Jeffrey Epstein was the Missionary to bring down the monsters behind the monster, to bring down the SYSTEM of monsters. Jeffrey Epstein's books and records are not. The individual voices of Jeffrey Epstein's victims are not.

And that's what makes me angriest of all.

That while the individual victims of Jeffrey Epstein's crimes will maybe (maybe!) get some smattering of "justice" and recompense from the show trial of a monster's estate, there will be no Justice served against the monsters behind the monster, that the Mob system of sociopathic oligarchy that CREATED this Jeffrey Epstein and the next Jeffrey Epstein and the next and the next will continue unabated. Untouched. Golden."

https://www.epsilontheory.c...

Bill In Montgomey Sid Finster a day ago
One strongly suspects that Ghislaine Maxwell knows just as much as Epstein did. Her participation was just as important to the operation of this "trafficking" ring. She was the lead recruiter, handled logistics, "grooming" and also was Epstein's "in" to many of his VIP associates (who were really clients). If witness accounts are accurate, she was also a participant in a good number of these depraved, criminal acts.

The fact she has not been charged is quite the tell about our system of "justice."

Tony55398 a day ago
Whether Epstein was killed or committed suicide I don't know. I would however like to know who these elites were who participated in the rapes of these young girls. They are just as guilty as Epstein whether they knew the ages of these girls or not, it was there responsibility to find out.
ChristopherRobin1 a day ago
This is a dangerous slope. People once bowed to the elites because there was a principle of enforcement called nobless oblige. Society felt that elites had to be held to a higher standard because they carried greater responsibilities and burdens for society and the welfare of the national good.

Since the 1960s nobless oblige has been downgraded to sound bites and photo ops for publicity and marketing. The elites have all but abandoned their responsibilities to support religion, to support education (except to indocrinate), to support tradition and society and the national good. The elites have become inward looking, inbred and narcissistic with little to no outward focus except in a marxist totalitarian vein of thought which serves their interest, indulges their hungers, preserves their wealth and power.

What you are have been seeing since the 1960s is the veneer being pulled off the rich and powerful. I would say Nixon and Princess Diana and Ted Kennedy did the most to pull down the veneer from the rich and powerful but it could be argued that Nixon and Princess Diana and Ted Kennedy were accidental victims of circumstance. However Epstein's human trafficking of children for sex and blackmail .... breaks the most because his crimes were no accident nor was he a victim of circumstance. Epstein planned this and created an organization around it elevating his elitist crimes to a level no that I dont think anyone in modern history can match.

atimoshenko ChristopherRobin1 a day ago
I doubt that history's elites were ever any better. It's just that with far less transparency and access, it was much easier for them to hide how awful they were. The 1960s was the start of mass media, and so the veneer started to crack.
Bill In Montgomey ChristopherRobin1 a day ago
I do think this COULD qualify as "the story of the century." That is, If the story was told in its entirety - all "names" exposed.

If fully told, the swamp might, in fact, be "drained."

Now the people in said swamp have a strong incentive to protect their domain. Which is why so many of us are skeptical the true story will ever be told.

If there was ever a time where brave and patriotic whistleblowers were needed ...

BXVI a day ago • edited
"This is, of course, what most populists profess: the people as a group are wholesome, the elites as a group are venal, and the former has to be vaulted over the latter in order for society to be made whole again."

Sorry, but take a look at the average American. The so-called "people" are for the most part just as morally obtuse as the "elites" but they carry the additional burden of being not only ignorant but also stupid. Just look around. Best recent example of the utter stupidity of the American people: a recent survey shows they think 23% of the population is gay. Really.

johnhenry a day ago
"Hands up, those of you who made a Fort Marcy Park joke last Saturday."

Matt, are you tired of people making jokes about *purple prose*?
Just wondering :)

atimoshenko a day ago
But isn't the issue exactly that the "only difference between the rich and other people is that the rich have more money" comment is perfectly true?

The rich and powerful are us, but corrupted by riches and power. Many of them behave the way many of us would quickly start to behave if we found ourselves in their shoes. If the gap in power between you and most other people is so huge that you can do anything to them and get away with it, your morals stop applying to them because you start to view them as somewhat subhuman. In this sense, I'm sure Epstein never even thought of raping the underage daughters of other elites.

Thus, the issue is stratospheric inequality of power (by whatever fungible measure you choose - money, political, religious, social, etc). And we see it happen ALL the time throughout history and across geographies - as soon as the power gap is in excess of social boundaries, as soon as there is a group of people you can do pretty much anything you want to and get away with it, you start going a little crazy. Exploitation, rape, torture, murder, slavery - everything starts looking justified. Then it's just a matter of degree, with tin-pot dictators on one end and Epstein somewhere in the middle.

Cosmin Visan atimoshenko 20 hours ago
Read Machiavelli. He observed that the popolo minuti (regular folks) just wished to be left alone by authorities whereas popolo grossi (fat cats) were of a different psychological composition: they delighted in deception, were vain, greedy and hungry for power.

Centuries later, studies of psychopaths reveal these creatures are different from regular humans at the brain level. The elites are psychopathic (the key ones are) and no, they ain't like regular people. They are literally a different kind.

atimoshenko Cosmin Visan 11 hours ago • edited
My point was that as popolo minuti transform into popolo grossi in terms of access to power, they tend to start to transform into them in terms of moral character as well. (Inequality of) power corrupts, and absolute (inequality of) power corrupts absolutely. Thus, it seems that the over-representation of psychopaths in positions of power is because the psychopathy is acquired (and plenty of studies show drastic declines in empathy with even a little priming for power), rather than because it is easier for psychopaths to rise to the top. The worst of the popolo grossi tend to be hereditary.

In my opinion, there is nothing so dangerous as to believe that evil people are a different breed from the rest of us. Instead, they tend to simply be us, but in different circumstances. History tends to show that revolutions aimed at replacing the evil people with better people end up with corrupted revolutionaries, rather than a fundamentally less abusive system.

minsredmash atimoshenko 6 hours ago • edited
"It reminds me of a well known speech by a defense counsel, who pleaded his client's poverty as an excuse of robbing and murdering six of his victims, on the lines that "My client's poverty drove him to murder six people, everybody else would have done the same!"

Dostoevsky, The Idiot.

phreethink a day ago
Outstanding article. However, I think we're a lot closer to 1789 France than we want to believe. Read some Chris Hedges to see how the socialists see the current situation. Here's an example. https://www.commondreams.or...
Zsuzsi Kruska a day ago
Elites, that is those with more wealth and/or power than the rest of the masses have always been this way. Remember how decadent the European aristocracy was with their sport of "wenching"? that is going around in groups raping young peasant girls. Also, there was the Hellfire Club which you can research if you want details. This scandal will get less and less coverage in the MSM until it fades away like all the others involving the rich and powerful.
Jr. a day ago
The Global "Elite" control our Ruling Class by means of blackmail. A person does not get raised to high truly influential positions of power(Politicians, Judges, Hollywood, etc.) unless they have enough dirt on you to know that they can control you without question. The most powerful form of blackmail that they have is ped0filia because it is THE most abhorrent crime that someone can commit, so much so that even criminals in prison refuse to allow ped0 scumbags to be housed near them.

Trump has an obvious penchant for beautiful WOMEN not kids. He was helping and somewhat part of the "Elite" in that he was joining in with them to buy politicians for influence but Trump neutralized that being over his head by openly admitting to buying politicians. They thought it was safe to allow him to run because they thought it was a joke and he would never get elected. They were wrong. In my opinion, they don't have enough dirt on him to get him to go along with their agenda of selling out the USA to the highest bidder hence the all-out attacks on him.

The key to understanding the "Elite"/Ruling Class dynamic is not conflating the two and realizing that blackmail is the main tool used by the one to keep the other under their control.

*Sorry about the Trump tangent above but it's absolutely ridiculous that people are trying to tie Trump to Epstein even though Trump has been trying to bring national attention to the Epstein case FOR YEARS.

Cosmin Visan 20 hours ago
"given that all available evidence points to gross negligence on the part of the jail." How is gross negligence different from deliberate negligence?

You can tell? And btw the WaPo just came out with news that broken bones in Epstein's neck are more usual in cases of homicide.
I generally see anyone who belittles

'Conspiracy theorists' as part of an Establishment that uses 'incompetence' as the perennial excuse for everything that goes wrong.

stevek9 19 hours ago • edited
The old accusation, that you are a 'conspiracy theorist' (a term invented by the CIA after the Kennedy assassination) is holding less and less weight. The irrational kooks now seem to be the people who think Epstein committed suicide. Jokes were everywhere about how 'we were shocked to hear about the suicide of Jeffrey Epstein, next Tuesday' when a day later we hear, 'Jeffrey Epstein committed suicide'.

By the way, this equivalence between Trump and Clinton is bogus, I believe. There isn't much evidence of any involvement of Trump (some evidence to the contrary in fact), but there is a load of evidence suggesting 'Wild Bill' was availing himself.

JeffK from PA stevek9 5 hours ago • edited
Remember when Maxine Waters was labelled a kook for saying the CIA was bringing cocaine into her LA district? She was mocked and ridiculed. Now we know she was right. You can't make this stuff up.
YoungHegelian2020 18 hours ago
I'm sorry, but this case stinks to high heaven, and if you're ready to accept "gross negligence" as the explanation you're likely to believe ANYTHING the authorities tell you. Epstein was either murdered, as the autopsy and reports of shrieking from his cell indicate, or subbed out by intelligence services and replaced by a murdered homeless person who received plastic surgery. Study the history of modern intelligence services: appearances are deceiving, and systemic disinformation is endemic to politics. Careful public speculation, acknowledging where we're uncertain, is very much the responsible thing to do; otherwise there is no hope of democratic accountability. The investigation we're being promised will be conducted by the exact same institution -- the US Department of Justice -- that was responsible for keeping Epstein safe and securing his public testimony about his criminal network. These are the people you want us to trust? Come on, a little critical reasoning, please!
Bryan 10 hours ago
The most ridiculous part is the idea that being rich and powerful gives you a predilection to turn a blind eye. My wife's family turned a blind eye to a perverted uncle that molested multiple family members over decades. No one stood up, it would've been a shame to them to admit it. How is this any different?
Will Thomas 10 hours ago • edited
No one really cares. He was pretty rich. Talk radio and weird cable conspiracies shows will benefit. Truth is irrelevant.

[Aug 15, 2019] Why the Rich Want to Bury Bernie, the Not-Really-Socialist

Notable quotes:
"... The reason the ruler's have decreed 'anybody but Bernie' is that Sanders' (and to a lesser perceived degree, Warren's) campaign proposals challenge the austerity regime that has been relentlessly erected since the 1970s precisely to set American workers and the whole capitalist world on a Race to the Bottom, in which each year brings lower living standards and more insecurity to the population at large. ..."
"... The obscene increases in wealth inequality are the desired result and true essence of austerity. ..."
"... "the top one-tenth of one percent (.1%) of the population -- households making $2.757 million a year -- now number almost 200,000 families, a cohort big enough to create and inhabit a large and coherent social world of its own. ..."
Aug 15, 2019 | www.nakedcapitalism.com

Sanders (D)(1): "Why the Rich Want to Bury Bernie, the Not-Really-Socialist" [Glen Ford, Black Agenda Report (CI)]. Really excellent.

Here's "why":

"The reason the ruler's have decreed 'anybody but Bernie' is that Sanders' (and to a lesser perceived degree, Warren's) campaign proposals challenge the austerity regime that has been relentlessly erected since the 1970s precisely to set American workers and the whole capitalist world on a Race to the Bottom, in which each year brings lower living standards and more insecurity to the population at large.

The obscene increases in wealth inequality are the desired result and true essence of austerity."

There's much more, but this on local oligarchies is important: "the top one-tenth of one percent (.1%) of the population -- households making $2.757 million a year -- now number almost 200,000 families, a cohort big enough to create and inhabit a large and coherent social world of its own.

From their rich enclaves in every state of the country, this formidable "base" of truly wealthy folks effectively dictate the politics of their regions for the benefit of themselves and the oligarchs at the top of the pyramid. "

[Aug 15, 2019] How Richard Vague Discovered Gravity An Interview + Book Review of A Brief History of Doom Two Hundred Years of Financial Cri

Aug 15, 2019 | www.nakedcapitalism.com

Sound of the Suburbs , August 13, 2019 at 5:25 am

What was the problem with Classical Economics?

The Classical Economists soon noticed those at the top don't do anything economically productive, but maintained themselves in luxury and leisure through the hard work of everyone else.

They couldn't miss it as the European aristocracy never did a stroke of real work.

"The labour and time of the poor is in civilised countries sacrificed to the maintaining of the rich in ease and luxury. The Landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his extractions from the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every savage has the full fruits of his own labours; there are no landlords, no usurers and no tax gatherers." Adam Smith

Economics was a big problem for the powerful vested interests of the 19th century and it was always far too dangerous to be allowed to reveal the truth about the economy.

How can we protect those powerful vested interests at the top of society?

The early neoclassical economists hid the problems of rentier activity in the economy by removing the difference between "earned" and "unearned" income and they conflated "land" with "capital".

They took the focus off the cost of living that had been so important to the Classical Economists to hide the effects of rentier activity in the economy.

The landowners, landlords and usurers were now just productive members of society again.

William White (BIS, OECD) talks about how economics really changed over one hundred years ago as classical economics was replaced by neoclassical economics.

https://www.youtube.com/watch?v=g6iXBQ33pBo&t=2485s

He thinks we have been on the wrong path for one hundred years.

This was the old switcheroo.

Economics, the time line:

We thought small state, unregulated capitalism was something that it wasn't as our ideas came from neoclassical economics, which has little connection with classical economics.

On bringing it back again, we had lost everything that had been learned in the 1930s and 1940s, by which time it had already demonstrated its flaws.

Sound of the Suburbs , August 13, 2019 at 5:48 am

In the second half of the 20th century, the Mont Pelerin society developed the neoliberal ideology from neoclassical economics, under the impression that capitalism was a self-stabilising system that doesn't need regulation.

Their expectations were rather different from the small state, unregulated capitalism that had been observed and documented by the Classical Economists in the 19th Century.

"The interest of the landlords is always opposed to the interest of every other class in the community" Ricardo 1815 / Classical Economist

"But the rate of profit does not, like rent and wages, rise with the prosperity and fall with the declension of the society. On the contrary, it is naturally low in rich and high in poor countries, and it is always highest in the countries which are going fastest to ruin." Adam Smith / Classical Economist

Their belief in the markets came from neoclassical economics, which doesn't consider the elements that ensures markets don't reach stable equilibriums; debt and the money creation of bank loans.

Richard Vague has studied many of those 19th century financial crises in his book "A Brief History of Doom" and charts the rollercoaster progress of 19th century small state, unregulated capitalism.

A self-stabilising system it is not.

Sound of the Suburbs , August 13, 2019 at 5:33 am

Why do policymakers think debt isn't a problem?

Ben Bernanke is famous for his study of the Great Depression and here it is discussed in the Wall Street Journal.

https://www.wsj.com/articles/SB113392265577715881

"Theoretically, neither deflation nor inflation ought to affect long-run growth or employment. After a while, people and businesses get used to changing prices. If prices fall, eventually so will wages, and the impact on profits, employment and purchasing power will be neutral. Borrowers suffer during deflation because their debts are fixed in value, but creditors benefit because the dollars they get back will buy more. For the economy as a whole, deflation ought to be a wash."

What has Ben Bernanke got wrong? He thinks banks are financial intermediaries.

Our knowledge of privately created money has been going backwards since 1856.

Credit creation theory -> fractional reserve theory -> financial intermediation theory

"A lost century in economics: Three theories of banking and the conclusive evidence" Richard A. Werner
http://www.sciencedirect.com/science/article/pii/S1057521915001477

It went backwards between Milton Freidman and Ben Bernanke.

Milton Freidman used fractional reserve theory, which was better than financial intermediation theory, but still wrong.

This is why his Monetarism didn't work.

He though banks lending and the moony supply were controlled by central bank reserves, but they aren't.

Brooklin Bridge , August 13, 2019 at 7:06 am

I like the title. Also, this is one of those cases where the interviewer brings quite a lot to the table as well as the author. An excellent introduction and a well carried/developed near metaphor as in, nail on the is a head.

Daniel Romig , August 13, 2019 at 7:24 am

That was a logical thesis to investigate. It seems strange that it has remained out of sight for so long until Mr. Vague's research and analysis.

The student debt in the USA is currently at $1.5 trillion. That is about 7% of GDP – and growing. I wonder how this may affect the economy in the US going forward.

As Yogi Berra reminds us, "You can observe a lot by watching."

Thank you for observing, Mr. Vague.

Samuel Conner , August 13, 2019 at 9:07 am

I don't think it has been "out of sight" so much as "in sight, but ignored". The relation of private debt to economic downturns has been noticed by others. Irving Fisher in the 20th Century, Steve Keen today come to mind.

The connection between "over-capacity" and "inability to service" may be new.

I would like to see analysis like this subjected to peer review; I think that there must be at least a few journals sympathetic to heterodox approaches to economics that would give a new synthesis like this a fair review process. Going "directly to the people" via popular writing raises a small concern in my mind.

Telee , August 13, 2019 at 2:23 pm

Steve Keen mathematized the Minsky Hypothesis. The results could be displayed in three dimensions. The graphs showed that when private debt was included in the calculations, the recession in 2007 was accurately predicted. Interestingly, there is a period of moderation which is followed by a rapid crash. During this period of moderation Bernanke was saying that all the indicators showed that the economy was in good shape. Of course he didn't consider private debt.

Steve H. , August 13, 2019 at 7:43 am

Some points of discussion, I'm not mad if disproven:

: Is the 2.5 Quadrillion dollars in derivatives considered debt? Or is the ability to create derivatives what drives the excess lending?

: Is the ability to generate excess debt a function of the fractional reserve system, and thus mostly a benefit for robbers who own banks? The Templars couldn't generate excess debt, they needed gold on hand to pay the notes, but wasn't there increased trade from their system, and thus general benefit?

vlade , August 13, 2019 at 8:19 am

No.
The stupid sums on derivatives are notional principals, and usually grossed up. If I have a swap with 10m notional with you, it could be worth anything (and most likely the only debt exposure is any margin-call amount, which would be on 10m swap trivial), but would add 20m to that dumb number.

I can easily enough generate almost any number for the notional principal w/o increasing the risk to the system (for example by creating any number of equal-but-opposite trades between two parties which have a netting agreement)

I can equally (a bit harder, as it requires some thinking) do a few "well placed" derivatives with notionals in say few billions (but nicely levered) that can sink the whole system.

No.
In a full reserve system there's no debt, hence no question of "excess debt". As an aside, "fractional reserve system is a myth". Bank lending is constrained only by capital, not by any reserves (cf number of banking systems that don't even have any rules on reserves).

Steve H. , August 13, 2019 at 2:31 pm

Thank you, Vlade.

Thorstein's Ghost , August 13, 2019 at 8:01 am

I have not read Mr. Vague's book. However, I am curious as to whether he adds anything to the work of Steve Keen, who predicted the 2007-09 financial crisis, and Hyman Minsky. See, for example, Keen's "Can We Avoid Another Financial Crisis?" (2017).

Adam Eran , August 13, 2019 at 8:00 pm

Looks like a nice validation of Keen's (and Michael Hudson's) work. That's fine with me, although a nod in their direction certainly looks warranted since private debt was what led Keen to predict the Great Recession (and win the Revere Prize for doing so).

Hudson's work on ancient debt jubilees exactly parallels Vague's.

vlade , August 13, 2019 at 8:09 am

I can't remember where I wrote it before.

Debt is the only working time machine mankind invented. But the conservation-over-time still holds.

Technically, for any individual, over their lifetime integral of (income + debt destruction) >= integral(expenses+ debt creation) [I'm ignoring cases where debt can be inherited]

So are we heading for a crisis? Right now I(income + debt destruction) < I(expenses + debt creation) for a large number of indivduals over their lifetime. So unless their income raises dramatically (expenses for them are often way less discretionary), yes we are, as the debt destruction will have to compensate.

But to guess the timing – well, that very much depends on the aggregate of those individuals.A trigger that would further reduce income or increase expense (across the population) would make it more probable. A small but not sufficient increase in income (across the population) would postpone it.

John , August 13, 2019 at 8:13 am

"The student debt in the USA is currently at $1.5 trillion."
Thanks to some skillful intervention with the somnolent Congress this debt cannot be discharged in bankruptcy. That seems to fly in the face of Mr. Vague's conclusions while redounding to the benefit of the rentier financial class.

Carla , August 13, 2019 at 9:10 am

@ John -- Please make everyone you know aware that Democrat candidate for president Joe Biden holds a great deal of responsibility for student debt not being dischargeable in bankruptcy. This is only one of his high crimes and misdemeanors. Don't let anyone forget!

Bugs Bunny , August 13, 2019 at 10:06 am

That's only one of many reasons that Biden should be defeated. Here's a really good explanation of how he helped remove educational loans (nearly all of them, not only student loans) from discharge in bankruptcy.

https://www.consumerbankers.com/cba-media-center/cba-news/joe-biden-backed-bills-make-it-harder-americans-reduce-their-student-debt

Telee , August 13, 2019 at 7:16 pm

Biden also strongly supported the Iraq War preventing any opposition views to testify in his committee. Also a strong supporter of NAFTA anf the TTTP. ( Trump will hammer on this if he runs against Biden.) His cooperation with southern segregationists resulted in the unequal drug penalties that fed the prison industrial complex he supported. He had mutiple committee meeting to rail against black crime when it was expedient. He threw Anita Hill under the bus and thus aided in putting Clarence Thomas on the Supreme Court. He says he's a union man as he goes to Comcast, a union buster, for financial aid. He is known as a representative working for the credit card companies. etc. What's not to like if you're a corporate democrat?

Steve Ruis , August 13, 2019 at 2:35 pm

Duh. That was exactly the purpose. That bankruptcy exempt law for student loans was passed based upon falsehoods. Its actual purpose was to enslave the college educated youth (make them debt slaves) so that they don't go on a rampage like they did in the 1960's and 70's vis-a-vis the Vietnam War.

John Merryman. , August 13, 2019 at 8:29 am

I think part of the problem is that we treat money as a store of value, as well as a medium of exchange.
As a medium, it is a contract, with one side an asset and the other a debt, so in order to store the asset, similar amounts of debt have to be created.
This results in a centripedial effect, as positive feedback draws the asset to the center of the system, while negative feedback pushes the debt to the edges.
Since money and finance serve as the value circulation mechanism, this is like the heart telling the hands and feet to go suck dirt, because they don't get any blood.
A medium and a store are distinct functions. Blood is a medium, fat is a store. Roads are a medium, parking lots are a store.
As a medium, we own money like we own the section of road we are using, or the beer passing through our bodies. It's functionality is in its fungibility.
If we store value in healthy communities, we wouldn't need banks to mediate every relationship.
The irony of our individualistic culture, is it leaves us in our atomized cocoons, allowing more effective top down control and a parasitic feedback mechanism. Sort of like The Matrix.

susan the other` , August 13, 2019 at 6:05 pm

good description of the way an ME and a SoV work against each other; I can never think through what I'm sure is this very contradiction in terms. thanks.

Bobby Gladd , August 13, 2019 at 9:43 am

Sound like an interesting book. Just ordered it. I am reminded of "This Time is Different: 700 years of financial folly."

I worked in subprime risk modeling & mgmt during 2000 – 2005 . We made successive record profits every year of my tenure.

I quit to go back to health care analytics. It was too slimy. I knew it was not gonna end well.

Chauncey Gardiner , August 13, 2019 at 10:15 am

Appears to build on the work of economists Hyman Minsky and Steve Keen. Not as concerned with developments in "Asia" (China), as there seems to be a policy willingness there to substitute state money for private sector debt, and to allow currency depreciation as an adjustment mechanism for the implicit debt writedowns. The policy also plays into China's exports-driven macro model. Similar to the US government and central bank "foaming the runway" for the banks and large corporations in the aftermath of the 2008 financial crisis.

Contemplating the role of compound interest in private sector debt growth in a period of low economic growth. Recent rapid growth of leveraged loans and junk bonds to fund corporate stock buybacks, negative real interest rates to push up financial asset and real estate prices/collateral values, and a lax regulatory environment appear to support an intentional policy of excessive growth in private sector debt. Whether the GFC is entirely in the rearview mirror or is till unfolding in terms of ultimately leading to systemic change also remains open IMO, although neoliberal policies remain firmly entrenched at this time.

Summer , August 13, 2019 at 11:40 am

The part about the financial sector, including housing, being the main components of US "industrial policy" shows the country as whole isn't taking the first advice financial advisors usually give for stability: DIVERSIFY ..

And yet again here is another book/article on the US economy that says nothing about defense spending.

Synoia , August 13, 2019 at 12:20 pm

US Defense spending is not debt. The MMT discussions state that clearly.

One test for "debt" is a simple question: Who can demand the debt be paid?

In the case of USG spending, the only party who could "call the debt" is the USG, and a single party cannot be both debtor and creditor on a debt, that is: cannot owe oneself money.

Summer , August 13, 2019 at 1:59 pm

"Debt" is invested, however, and defense spending is a big use of it and still – boom and bust.

Adam Eran , August 13, 2019 at 8:06 pm

Well all government spending is debt if it spends currency. The dollars are debt. Your checking account is debt too to the bank. When you write a check, you're assigning a portion of the bank's debt to the payee. Dollars are just checks made out to "cash" in fixed amounts. They appear in the Fed's books a liability, too.

What are we owed for a dollar? Answer: relief from a dollar's worth of (inevitable) tax liability.

Back to the original post: It's even ambiguous whether defense spending is consumption. After all, the internet is a product of DARPA (the "D" is for "Defense"). Marianna Mazzucato has a nice TED talk about government as innovator.

tegnost , August 13, 2019 at 12:22 pm

" In both cases, the result is about 16% growth to GDP over 15 years. But in the second case, you don't have a financial crisis."

also in the second case there are not foreclosures and repossessions whereby concentrated financial power confiscates what they sold so they can sell it again by the way where does that activity (repos and foreclosures) go in the calculation of GDP

Adam Eran , August 13, 2019 at 8:06 pm

Disaster capitalism!

Susan the other` , August 13, 2019 at 2:51 pm

Gosh. Where has Mr. Vague been? If this isn't the understatement of the century, I don't know what is. Even dear old Ordoliberal Wolfgang Schaeuble said right up front: "We are overbanked." Steve Keen is still fighting with Krugman about the significance of private debt. And to imply that we have an unspoken "industrial policy" that uses real estate to get us out of a slow patch begs the question. It is not industrial policy, it is the blatant chickenshit avoidance of industrial policy. But never mind all that, the sea change Mr. Vague is avoiding is that industrial manufacturing is being drastically trimmed back, limited, maybe even rationed by country for all we know. To forgive debts won't really cut it. Not that we shouldn't do it. We should simply because debt service is nearly impossible these days. We need to have massive fiscal infusions; money spent wisely to improve civilization and save the environment. Please Mr. Vague. You're more like Mr. Vacuous.

Another Amateur Economist , August 13, 2019 at 11:22 pm

No. It is the "Destruction of Industry Policy." Why make and build, when institutionalized theft, graft, and fraud have become more profitable?

p. Fitzsimon , August 13, 2019 at 3:09 pm

" .industrial policy, even though it was largely unstated: namely, support for the financial and real estate sectors"
I would add the agricultural sector to government supported industry.

Generalfeldmarschall von Hindenburg , August 13, 2019 at 3:09 pm

The brother needs to have a look a Portland, Oregon. Overcapacity, a housing bubble and a homeless crisis all at once. It's bound to crash. Yet there're so many boomers retiring from the first wave of the Tech Era (the folks whose awesome ideas and disruption gave us Dot-Bomb. So they've run up the price of beer in a town famous for craft brewing to unaffordability. They never seem to pay the price.

Jack Parsons , August 13, 2019 at 4:43 pm

The earliest worldwide financial crisis that I'm aware of was the Habsburg silver crisis. Fascinating story.

https://aeon.co/essays/potosi-the-mountain-of-silver-that-was-the-first-global-city

Tim , August 13, 2019 at 8:46 pm

Bush Junior tightened the Bankruptcy laws in his final term before the great recession. I still don't think that was coincidence.

The smart people with all the money DO know this is how economics works, and execute their strategies on their behalf accordingly. The rest of us, get the idiot's guide to the galaxy to work with.

none , August 15, 2019 at 12:07 am

"Debt, the first 5000 years" by David Graeber is on my list of probably-good books that I'm unlikely to get around to reading. Is that similar to this one?

[Aug 15, 2019] Ideology is Dead! Long Live Ideology!

Aug 14, 2019 | www.nakedcapitalism.com

Yves here. Quelle surprise! Economists engage in groupthink, which sounds a little less bad if you call it "ideology".

By Mohsen Javdani, Associate Professor of Economics, University of British Columbia – Okanagan Campus and Ha-Joon Chang, Professor, University of Cambridge. Originally published at the Institute for New Economic Thinking website

Mainstream (neoclassical) economics has always put a strong emphasis on the positivist conception of the discipline, characterizing economists and their views as objective, unbiased, and non-ideological. This is still true today, even after the 2008 economic crisis exposed the discipline to criticisms for lack of open debate, intolerance for pluralism, and narrow pedagogy. [1] Even mainstream scholars who do not blatantly refuse to acknowledge the profession's shortcomings still resist identifying ideological bias as one of the main culprits. They often favor other "micro" explanations, such as individual incentives related to academic power, career advancement, and personal and editorial networks. Economists of different traditions do not agree with this diagnosis, but their claims have been largely ignored and the debate suppressed.

Acknowledging that ideology resides quite comfortably in our economics departments would have huge intellectual implications, both theoretical and practical. In spite (or because?) of that, the matter has never been directly subjected to empirical scrutiny.

In a recent study , we do just that. Using a well-known experimental "deception" technique embedded in an online survey that involves just over 2400 economists from 19 countries, we fictitiously attribute the source of 15 quotations to famous economists of different leanings. In other words, all participants received identical statements to agree or disagree with, but source attribution was randomly changed without the participants' knowledge . The experiment provides clear evidence that ideological bias strongly influences the ideas and judgements of economists. More specifically, we find that changing source attributions from mainstream to less-/non-mainstream figures significantly reduces the respondents' reported agreement with statements. Interestingly, this contradicts the image economists have of themselves, with 82% of participants reporting that in evaluating a statement one should only pay attention to its content and not to the views of its author.

Moreover, we find that our estimated ideological bias varies significantly by the personal characteristics of economists in our sample. For example, economists' self-reported political orientation strongly influences their ideological bias, with estimated bias going up as respondents' political views move to the right. The estimated bias is also stronger among mainstream than among heterodox economists, with macroeconomists exhibiting the strongest bias. Men also display more bias than women. Geographical differences also play a major role, with less bias among economists in Africa, South America, and Mediterranean countries like Italy, Portugal, and Spain. In addition, economists with undergraduate degrees in economics or business/management tend to show stronger ideological biases.

We give more details about our methodology and findings in the following sections, but first let us anticipate some of the conclusions and implications. Theoretically, the implications are upsetting for the positivist methodology dominating the neoclassical economics. As Boland (1991) suggests, "[p]ositive economics is now so pervasive that every competing view has been virtually eclipsed." Yet, the strong influence of ideological bias on views among economists that is evident in our empirical results cannot be reconciled with it.

Practically, our results imply that it is crucial to adopt changes in the profession that protect academic discourse, as well as the consumers of the economic ideas, from the damaging impacts of ideological bias. In fact, there exists growing evidence that suggests value judgements and political orientation of economists affect not just research ( Jelveh et al. 2018 , Saint-Paul 2018 ), but also citation networks ( Önder and Terviö 2015 ), faculty hiring ( Terviö 2011 ), as well as economists' positions on positive and normative issues related to public policy (e.g. Beyer and Pühringer 2019 ; Fuchs, Krueger and Poterba 1998 ; Mayer 2001 ; van Dalen 2019 ; Van Gunten, Martin, and Teplitskiy 2016 ). It is therefore not a long stretch to imagine that ideological bias could play an important role in suppressing plurality, narrowing pedagogy, and delineating biased research parameters in economics.

One important step that helps identify the appropriate changes necessary to minimize the influence of ideological biases is to understand their roots.

As argued by prominent social scientists (e.g. Althusser 1976 , Foucault 1969 , Popper 1955 , Thompson 1997 ), the main source of ideological bias is knowledge-based, influenced by the institutions that produce discourses. Mainstream economics, as the dominant and most influential institution in economics, propagates and shapes ideological views among economists through different channels.

Economics education, through which economic discourses are disseminated to students and future economists, is one of these important channels. It affects the way students process information, identify problems, and approach these problems in their research. Not surprisingly, this training may also affect the policies they favor and the ideologies they adhere to. In fact, there already exists strong evidence that, compared to various other disciplines, students in economics stand out in terms of views associated with greed, corruption, selfishness, and willingness to free-ride (e.g. Frank and Schulze 2000 , Frank et al. 1993 and 1996 , Frey et al. 1993 , Marwell and Ames 1981 , Rubinstein 2006 , Want et al. 2012 ). [2]

Another important channel through which mainstream economics shapes ideological views among economists is by shaping the social structures and norms in the profession. While social structures and norms exist in all academic disciplines, economics seems to stand out in at least several respects, resulting in the centralization of power and the creation of incentive mechanisms for research, which in turn hinder plurality, encourage conformity, and adherence to the dominant (ideological) views.

Our own exposure to different parts of this social structure while working on this project has in fact been an unpleasant yet eye-opening experience, and a testament to dominant biases in the discipline that strongly impede critical thinking, new perspectives, and plurality. We have been threatened, accused, and insulted for simply asking an important and legitimate question. We have also had first-hand experience with the Top Five journals in economics and some of their (associate) editors' exertion of their strong prejudiced views, which is often disguised under the vail of "inevitably subjective nature of editors' decision-making process," which is supported by the absolute and unaccountable power that is at their disposal. In some cases, the decision regarding our submission blatantly lacked professionalism and respect for plurality of views.

Our world today is characterized by critical issues that economics has a lot to say about, such as inequality, austerity, the future of work, and climate change. However, relying on one dominant discourse which ignores or isolates alternative views will make the economics profession ill-equipped to engage in balanced conversations regarding these issues. This also makes the consumers of economic ideas skeptical about economists and the views and policies they advocate for. We believe that addressing the issue of ideological bias in economics first requires economists to find out about their own biases. Persistent denial of these biases is going to be more harmful than being aware of their presence and influence, even if mainstream economists do not necessarily change their views. Moreover, the economics profession needs to have an in-depth introspection and a real and open debate about the factors underpinning these biases, including economics training and social structures within the discipline that centralize power, encourage group thinking and conformity, dampen innovative thinking and creativity, and hinder plurality.

Experimental Design

Examining issues such as the impact of bias, prejudice, or discrimination on individual views and decisions is very challenging, given the complex nature of these types of behaviour. This has given rise to a field experimentation literature in economics that has relied on the use of deception -- for example, through sending out fictitious resumes and applications, to examine the prevalence and consequences of discrimination against different groups in the labor market. [3] We take a similar approach, namely using fictitious source attributions, in order to investigate the effect of ideological bias on economists (See Section 4 in our online appendix for a more detailed discussion on the use of deception in economics). More specifically, we employ a randomized controlled experiment embedded in an online survey. Economists from 19 different countries were invited to complete an online survey where they were asked to evaluate fifteen statements from prominent economists on a wide range of topics. We received just over 2,400 responses, with the majority of responses (around 92%) from academics with a PhD degree in economics. As reported in our online appendix , our sample includes a very diverse group of economists from a diverse set of institutions. While all participants received identical statements in the same order, source attribution for each statement was randomly changed without the participants' knowledge . For each statement, participants either received the name of a mainstream economist as the source (Control Group), or an ideologically different less-/non-mainstream economist (Treatment 1), or no source attribution (Treatment 2). See Table A8 in our online appendix for a complete list of statements and sources.

The Findings, in Detail

Our analysis of the experimental results reveals several important findings. First, examining the probability of different agreement levels for each statement as well as their comparative degree of consensus (using relative entropy index derived from information theory), we find evidence of clear dissent among economists on the wide variety of topics evaluated (see Figure 1 below). Given that our statements either deal with different elements of the mainstream economics paradigm -- including its methodology, assumptions, and the sociology of the profession -- or issues related to economic policy, the significant disagreement evident in our results highlights the lack of paradigmatic and policy consensus among economists on evaluated issues.

Figure 1: Probability of different agreement levels – By statement

Note: See Table A8 in our online appendix for a complete list of statements and sources.

Second, we find evidence of a strong ideological bias among economists. More specifically, we find that for a given statement, the agreement level is 7.3% (or 22% of a standard deviation) lower among economists who were told that the statement was from a less-/non-mainstream source. Examining statements individually also reveals that in all but three statements, agreement level drops significantly (both quantitatively and statistically, ranging from 3.6% to 16.6%) when the source is less-/non-mainstream.

For example, when a statement criticizing "symbolic pseudo-mathematical methods of formalizing a system of economic analysis" is attributed to its real source, John Maynard Keynes, instead of its fictitious source, Kenneth Arrow, the agreement level among economists drops by 11.6%. Similarly, when a statement criticizing intellectual monopoly (i.e. patent, copyright) is attributed to Richard Wolff, the American Marxian economist at the University of Massachusetts, Amherst, instead of its real source, David Levine, professor of economics at the Washington University in St. Louis, the agreement level drops by 6.6%.

Interestingly, these results stand in sharp contrast with the image economists project of themselves in our survey. In an accompanying questionnaire that appears at the end of the survey, a strong majority of participants (around 82%) agreed that in evaluating a statement, one should only pay attention to its content, rather than its author. Only 18% of participants agreed that both the content of the statement as well as the views of the author matter, and only a tiny minority (around 0.5%) reported the views of the author should be the sole basis to evaluate a statement.

Third, we find that economists' self-reported political orientation strongly influences their views. More specifically, our results suggest that even when we focus on statements with mainstream sources attributed to them , there exists a very significant difference in average agreement level among economists with different political orientations. For example, for a given statement, the average agreement level among economists self-identified as left is 8.4% lower than those self-identified as far left. This already large difference widens consistently as we move to the far right, reaching a difference of 19.6% between the far right and the far left, which is an increase of 133%. This strong effect of political orientation on economists' evaluation of our statements, which does not change after controlling for a wide set of observed characteristics, is another clear manifestation of ideological bias.

The effect of political orientation on economists' views is even more drastic when we examine how changes in attributed sources affects economists with different political orientations. More specifically, for those on the far left, altering the sources only reduces the average agreement level by 1.5%, which is less than one-fourth of the overall effect of 7.3% we discussed before. However, moving from the far left to the far right of the political orientation consistently and significantly increases the effect of changing the source to a 13.3% reduction in agreement level, which is almost 8 times (780%) larger compared to the far left. Interestingly, this is despite the fact that relative to the far left, those at the far right are 17.5% more likely to agree that in evaluating a statement one should only pay attention to its content.

Fourth, our results uncover striking differences by gender. More specifically, we find that the estimated ideological bias is 44% larger among male economists as compared to their female counterparts, even after controlling for potential gender differences in observed characteristics including political orientation and political/economic typology. Moreover, our results highlight a startling difference between male and female economists in their perception of gender problems in the profession. When faced with the statement " Unlike most other science and social science disciplines, economics has made little progress in closing its gender gap over the last several decades. Given the field's prominence in determining public policy, this is a serious issue. Whether explicit or more subtle, intentional or not, the hurdles that women face in economics are very real. ", the agreement level was a whopping 26% higher among female economists than among their male peers.

In addition, when participants were told that the statement was made by the left-wing British feminist economist Diane Elson (rather than the real source, Carmen Reinhart, a mainstream economist at Harvard), male economists showed ideological biases -- their agreement level fell by 5.8%. Interestingly, however, it stayed unchanged for female economists. This seems to suggest that the gender problem in economics is so severe that female economists, who exhibited ideological biases on many other issues (although less than did their male colleagues), put aside their biases in this particular case and focused on the content of the statement.

The discussion around the gender problem in economics has recently taken the center stage. During the recent 2019 AEA meeting, and in one of the main panel discussions titled "How can economics solve its gender problem?" several top female economists talked about their own struggles with the gender problem in economics. In another panel discussion, Ben Bernanke, the current president of the AEA, suggested that the discipline has "unfortunately, a reputation for hostility toward women ." This is following the appointment of an Ad Hoc Committee by the Executive Committee of the AEA in April 2018 to explore "issues faced by women [ ] to improve the professional climate for women and members of underrepresented groups." AEA also conducted a climate survey recently to "provide more comprehensive information on the extent and nature of these [gender] issues." It is well-understood that approaching and solving the gender problem in economics first requires a similar understanding of the problem by both men and women. However, our results suggest that unfortunately there exists a very significant divide between male and female economists in their recognition of the problem.

Fifth, we find systematic and significant heterogeneity in our estimated effect of ideological bias by country, area of research, country where PhD was completed, and undergraduate major, with some groups of economists exhibiting little or no ideological bias and some others showing very strong bias.

For example, we find that economists with a PhD degree from Asia, Canada, Scandinavia, and the U.S. exhibit the strongest ideological bias. On the opposite end we find that economists with PhD degrees from South America, Africa, Italy, Spain, and Portugal exhibit the smallest ideological bias. Similarly, our results suggest that there is the smallest ideological bias from economists whose main area of research is history of thought, methodology, heterodox approaches; cultural economics, economic sociology, economic anthropology, or economic development. On the other hand, we find that economists whose main area of research is macroeconomics, public economics, international economics, and financial economics are among those with the largest ideological bias.

We also find that undergraduate training in economics has a strong effect on our estimated effect of ideological bias. We find that those economists with an undergraduate major in economics, or business/management, exhibit the strongest bias, while those who studied law; history, language and literature; or anthropology, sociology, and psychology show no ideological bias. These results are consistent with the growing evidence that suggests economic training, either directly or indirectly, induces ideological views in students (e.g. Allgood et al. 2012 , Colander and Klamer 1987 , Colander 2005 , Rubinstein 2006 ).

Discussion

Scholars hold different views on whether economics can be a "science" in the strict sense and be free from ideological biases. However, perhaps it is possible to have a a consensus that the type of ideological bias that could result in endorsing or denouncing an argument on the basis of (one's interpretation of) its author's views rather than its substance is unhealthy and in conflict with scientific tenor and the subject's scientific aspiration, especially when the knowledge regarding rejected views is limited .

Some economists might object that economists are human beings and therefore these biases are inevitable. But economists cannot have their cake and eat it too! Once you admit the existence of ideological bias, the widely-held view that "positive economics is, or can be, an 'objective' science, in precisely the same sense as any of the physical sciences" (Friedman 1953) must be rejected.

Furthermore, the differences we find in the estimated effects across personal characteristics such as gender, political orientation, country, and undergraduate major clearly suggest that there are ways to limit those ideological effects, and ways to reinforce them.

Our finding that those with an undergraduate degree in economics exhibit the strongest ideological bias highlights the importance of economic training in shaping ideological views. In doing so, our study contributes to the literature on economic education, suggesting that ideology can be at least limited by changes in the curricula at earlier stages.

Rubinstein (2006) argues that "students who come to us to 'study economics' instead become experts in mathematical manipulation" and that "their views on economic issues are influenced by the way we teach, perhaps without them even realizing." Stiglitz (2002) also argues that "[economics as taught] in America's graduate schools bears testimony to a triumph of ideology over science."

Economics teaching not only influences students' ideology in terms of academic practice but also in terms of personal behavior. Colander and Klamer (1987) and Colander (2005) survey graduate students at top-ranking graduate economic programs in the U.S. and find that, according to these students, techniques are the key to success in graduate school, while understanding the economy and knowledge about economic literature only help a little. This lack of depth in knowledge acquired, not only in economics but in any discipline or among any group of people, makes individuals lean more easily on ideology. Frank et al. (1993) similarly highlight the importance of economics training in shaping behavior among students by criticizing the exposure of economics students to the self-interest model in economics where "motives other than self-interest are peripheral to the main thrust of human endeavor, and we indulge them at our peril." They also provide evidence that such exposure does have an impact on self-interested behavior.

But education is not the only problem: social structures and norms within the profession also deeply influence economists' adherence to dominant ideological views.

For example, in his comprehensive analysis of pluralism in economics, Wright (2019) highlights several features of the discipline that make the internal hierarchical system in economics "steeper and more consequential" compared to most other academic disciplines. These features include: (1) particular significance of journal ranking, especially the Top Five, in various key aspects of academic life including receiving tenure ( Heckman and Moktan 2018) , securing research grants, invitation to seminars and conferences, and request for professional advice; (2) dominant role of "stars" in the discipline ( Goyal et al. 2006 , Offer and Söderberg 2016 ); (3) governance of the discipline by a narrow group of economists ( Fourcade et al. 2015 ); (4) strong dominance of both editorial positions and publications in high-prestige journals by economists at highly ranked institutions ( Colussi 2018 , Fourcade et al. 2015 , Heckman & Moktan 2018 ; Wu 2007 ); and the strong effect of the ranking of one's institution, as a student or as an academic, in career success ( Han 2003 , Oyer 2006 ).

As another example, in a 2013 interview with the World Economic Association, Dani Rodrik highlights the role of social structure in economics by suggesting that "there are powerful forces having to do with the sociology of the profession and the socialization process that tend to push economists to think alike. Most economists start graduate school not having spent much time thinking about social problems or having studied much else besides math and economics. The incentive and hierarchy systems tend to reward those with the technical skills rather than interesting questions or research agendas. An in-group versus out-group mentality develops rather early on that pits economists against other social scientists." Interestingly, a very similar picture of the profession was painted in 1973 by Axel Leijonhufvud in his light-hearted yet insightful article titled " The life among the Econ ."

It is hard to imagine that the biased reactions we find in our study only emerge in a low-stakes environment, such as our experiment, without spilling over to other areas of academic life. After all, as we discussed at the beginning, there already exists growing evidence which suggests that the political leanings and the personal values of economists influence different aspects of their academic lives. It is also not a long stretch to imagine that such ideological biases impede economists' engagement with alternative views, narrow the pedagogy, and delineate biased research parameters. We believe that recognizing their own biases, especially when there exists evidence suggesting that they could operate through implicit or unconscious modes, is the first step for economists who strive to be objective and ideology-free. This is also consistent with the standard to which most economists in our study hold themselves. To echo the words of Alice Rivlin in her 1987 American Economic Association presidential address, "economists need to be more careful to sort out, for ourselves and others, what we really know from our ideological biases."

Notes

[1] Several scholars have highlighted the connection between ideological views and the lack of plurality in economics and the failure of the profession to predict the 2008 crisis, or to even have an honest and in-depth retrospective explanation that would help develop accountable counter-measures against future crises (e.g. Barry 2017 ; Cassidy 2009 ; Dow 2012 ; Freeman 2010 ; Heise 2016 ; Lawson 2009 ; Stilwell 2019 ). There are also those who believe the 2008 crisis was not predictable, but fault the profession, as Colander (2010) puts it, "for failing to develop and analyze models that, at least, had the possibility of such a failure occurring" (e.g. Cabalerro 2010 ; Colander et al. 2013 ).

[2] Even if this relationship is not strictly casual, it suggests that there exists something about economic education that leads to a disproportionate self-selection of such students into economics.

[3] See Bertrand and Duflo (2017) and Riach and Rich (2002) for a review. Also see Currie et al. (2014) as another example of experimental audit studies with deception.

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Cripes , August 14, 2019 at 4:49 am

20 years ago Dr Sam Tsemberis conducted a double-blind trial of chronically homeless mentally ill people in an effort to learn whether being housed first led to better medical outcomes then placing barriers of compliance before getting housed would produce.

Happily, the common sense proposition that having a secure roof improves people's health or medication adherence was proven, and the concept of Housing First as a best practice is accepted today.

Economics is always political economy no matter how hard they try to pretend its algebra.

Paul O , August 14, 2019 at 5:43 am

+1

I read this elsewhere yesterday. Seems Econ mags were not keen to publish or link to it :-)

The Rev Kev , August 14, 2019 at 6:15 am

If ideology is dead then good riddance to it. I have seen and read about too many ideologues that have caused massive damage and deaths over the centuries and economics is no different. Personally I am of the school of thought of doing things in an empirical way and ignoring labels but just seeing what works. If it works, adopt it. If it does not, try something else. The economics of today does not do that. It does not work. It never saw the 2008 crisis coming and it has never proposed and backed reforms so that it will not happen again. It is used to justify a world economy that is causing climate change as it refuses to include most factors into their equations. I find it fascinating too how modern economics makes use of labels to stop discussions of possible paths to explore. Ideological labels has itself proven a huge hindrance. Here is what I mean.

"We should have health care for all."
"That is socialism that!"
"Well I guess that we can't do that then!

I think that Blair Fix's article "No, Productivity Does Not Explain Income" ( https://www.nakedcapitalism.com/2019/08/no-productivity-does-not-explain-income.html ) shows you how modern economists work. You juggle around processes like you do mathematical formulas and expect that it still reflects the real world. In scientific discussion you throw out a theory in a journal. Ideally it should be reproducible in the real world and should be picked apart for any flaws in data or reasoning. But like in Blair Fix's article. the outcome is designated first and then you work you way back to justify it. It fails blind tests like mentioned here which shows it's flawed processes. In Washington DC there is the Victims of Communism Memorial but I do think that there should also be a Victims of Neoliberalism Memorial to reflect current economic thought. In the former there is the Goddess of Democracy statue as a centerpiece. For a statue for the Victims of Neoliberalism I would suggest another statue but based on the acronym BOHICA.

@pe , August 14, 2019 at 7:09 am

The more you see yourself as beyond ideology, the more likely it is that you are a victim of ideology. That's what the post shows: it's the very fields such as business management that see themselves as non-ideological, "common sense" and empirical which are the most ideological, least common sense and least empirical.

If you are aware of your bias, you can minimize (but not eliminate) those affects. But if you believe that you have *perfect* vision, no measurement can show you that you have an astigmatism.

Remember, Obama and Merkel see themselves as pragmatists -- but an objective observer can be assured of finding deep ideological biases and assumption underlying their thought process.

Amfortas the hippie , August 14, 2019 at 8:54 am

aye.
the position of Ignorance .Socratic Perplexity is hard.
but i reckon it' the only way to avoid the mental traps this talks about.
I'm the only one i know in meatspace that even attempts to begin an investigation there("I know that i don't know").
the idea that economics is just like Physics was always suspect, and i think it's pretty amazing that it's taken this long and this many economic disasters to get to the point that the idea of econ=hard science is challenged more or less in the open.
I'd add to this that i figure that the break in Philosophy, early in the last century, between Anglo-American and "Continental" probably precedes and enables this strange phenomena in economics(logical positivism, etc avoiding all that messy humanity attempting to shoehorn everything into a neat equation)
there's a similar phenomenon in a lot of the Humanities anthropology, for instance: taking into account the inherent and largely unconscious bias of the anthropologist embedded with the "savages" he's studying.
"Orthodoxy is Unconsciousness"-Orwell

Mark , August 14, 2019 at 7:33 am

A general observation: Economics without ideology or politics is only a rather peculiar way of using math. Without a reference what positive or negative actually means it is impossible to render jugdement or make policy. While economic outcomes are at the same time always political outcomes and vice versa. That is why the discipline used to call itself political economy.

About the experiment: If I understand it correctly all participants receive the questions only once. How then is it possible to attribute a specific answer towards bias regarding the source? Given that the questions are not of a clear 2+2=4 varietiy but at least somewhat open. Intuitively it seems far more likely that the specific answer is determined by the respondents own beliefs than by their bias regarding the source.

Bobby Gladd , August 14, 2019 at 8:18 am

"The willingness to indulge in ideological thinking -- that is, in thinking that by definition is not one's own, which is blind to experience and to the contradictions that arise when broader fields of knowledge are consulted -- is a capitulation no one should ever make. It is a betrayal of our magnificent minds and of all the splendid resources our culture has prepared for their use."

Robinson, Marilynne. What Are We Doing Here? (p. 2). Farrar, Straus and Giroux. Kindle Edition.

diptherio , August 14, 2019 at 8:39 am

Towards the end of my final year of econ education I pointed out to a professor that the claim that economics should be a positive science, as opposed to a normative one, was itself a normative claim and hence self-contradictory. He looked at me like I was a crazy person and he was one of the 'leftists' in the department.

a different chris , August 14, 2019 at 9:30 am

Haha are you sure that the source of "crazy person" look was your view itself, or rather was it that in your young naivete you spoke what anybody who needs to put food on the table as a working economist would not dare?

m sam , August 14, 2019 at 11:56 am

Huh. So ideology influences our thinking even when we think it doesn't. So in other words water really is wet after all.

m sam , August 14, 2019 at 11:58 am

(Apologies, this was meant as a top level post)

Eclair , August 14, 2019 at 12:16 pm

I had a similar experience, diptherio. It was at the beginning of semester picnic, and one of the profs was holding forth on how the mathematical and analytical methodology would allow us to find the solutions to business questions. Probably because I had drunk too much wine, I piped up, but don't we first have to define what are the critical questions? Deafening silence.

diptherio , August 14, 2019 at 12:48 pm

Yes, questions like "how do we squeeze more out of our workers?" and "how can we crappify our product while simultaneously raising the price?"

diptherio , August 14, 2019 at 9:07 am

It is crazy, is it not, that "Life among the Econ" is still locked behind a paywall, despite being written 46 years ago. Thankfully, there is sci-hub .

Carey , August 14, 2019 at 3:46 pm

Maybe this is it?

http://www.ibiblio.org/philecon/life-econ-crop.pdf

T.town Tom , August 14, 2019 at 10:22 am

Reminds me of my counselor journey when therapist became aware of the blinders and prejudices that one's theories of behavior imposed (good & bad) on clients. The admonition became, "don't marry your theory" which another fellow revised that to "it's best only to flirt with your theory."

A friend of mine was an IT Director for a large Insurance company. After the crash in '08, he said in one meeting an executive said "you know why we employ Economists, to lend credibility to the Astrologers"

funemployed , August 14, 2019 at 10:25 am

The fact that this article has a reason to exist at all shows how poorly educated our highly trained economists are. It's not just that they reject the better portion of the core concepts and practices of the humanities and social sciences as being somewhere between useless and harmful. It's also that, as this article illustrates without quite saying, pretenses aside, most economists are worse than clueless with regards to the basics of conducting research in the "hard" sciences.

For family blog's sake, they don't even know how to pretend to be scientists. I'm not practicing researcher, but I know enough about research methods and questions to be pretty sure that robust empirical positivist economic research should look a lot more like something from the medical sciences than like something out of a cut rate theoretical physics or math journal. That would have serious epistemological problems of it's own, but sheesh, at least it might be mildly convincing to people with a modicum of a liberal arts education who couldn't be bothered to look under the hood.

The only thing that shocks me more than the shoddyness of work from "superstar" economists is their undying faith that their methods make them experts not just on economics, but on basically anything that you can slap a mathematical model on.

Steve Ruis , August 14, 2019 at 10:43 am

What economics lacks is an arbiter. In the physical sciences, nature will bitch slap anyone getting out of line. Economists need to come up with an agreed-upon set of test or natural experiments or something that constitutes independent feedback on the merit of an idea. There is nothing more important for the future of the discipline than this.

diptherio , August 14, 2019 at 12:53 pm

Well, the historical data refutes the Phillip's Curve but I bet they still teach that. 2008 was a natural experiment that refuted the Efficient Market Hypothesis, as well as the idea that the Federal Reserve could stop a major economic catastrophe through monkeying with interest rates but I'm sure those things are still being taught. Which is to say that economics does not lack an arbiter -- rather, most economists simply refuse to give it any credence.

Synoia , August 14, 2019 at 11:37 am

Given that theories in economics are not testable, an application of group think would result in "everybody was predicting that," and the consequent "who could have know" blame avoidance, coupled with the economist selecting the analytic method that best confirmed the answers the management wanted.

The only thing missing is a display of the set of Chrystal Balls.

Do Economists speak truth to power, or just confirm what power wants?

PKMKII , August 14, 2019 at 1:04 pm

Ideology is like accents, it's easy to fall into thinking that other people have them, but your voice/worldview is just "normal".

nothing but the truth , August 14, 2019 at 6:49 pm

in the real world, not saying what the client/boss/thesis advisor expects you to say is a severely career and bank account limiting move.

more so in humanities like law, economics which are closely tied to advising the powerful.

anon y'mouse , August 14, 2019 at 6:53 pm

i'm just going to leave this here, shall i?

http://changingminds.org/explanations/research/design/types_validity.htm

the rest of the social scientists at least test their theories against these standards (or make an appearance of doing so). econ seems to get around them by use of "definitions" so specific that in the end they are describing tautologies.

John Rose , August 14, 2019 at 10:07 pm

An interesting study to supplement this one is of funding sources for economics departments and the extent to which the funding is tied to hiring and model building. Then reanalize the date in this study for correlations with the influence of funding sources.

[Aug 15, 2019] One of the many purposes of Russiagate was to misdirect people away from the fact that Trump's election represents (among other things) a huge split in the ruling class, which can roughly be described as one between extractive industries (energy, agriculture, mining, etc.) and finance, media and tech.

Aug 15, 2019 | www.nakedcapitalism.com

Michael Fiorillo , , August 14, 2019 at 11:53 am

" (the) factional struggle evident in the rise of Trump "

Thank you.

One of the many purposes of Russiagate was to misdirect people away from the fact that Trump's election represents (among other things) a huge split in the ruling class, which can roughly be described as one between extractive industries (energy, agriculture, mining, etc.) and finance, media and tech. A map of the 2016 election results strongly supports this analysis. Thus, Comcast was more than happy to give free reign to Rachel Maddow's two+ years of disinfotainment

This split in the ruling class would provide an immense opportunity if the US had a real functioning Left, rather than lumpen bourgeois and childish virtue signalling about open borders and reparations.

[Aug 15, 2019] Trump's trade war with China can't be the cause/catalyst of the next recession.

Aug 15, 2019 | economistsview.typepad.com

anne -> anne... , August 14, 2019 at 09:14 AM

https://www.nytimes.com/2018/09/19/opinion/a-smorgasbord-recession-wonkish.html

September 19, 2018

A Smorgasbord Recession? (Wonkish)
The next slump may have multiple causes.
By Paul Krugman

The 2008 financial crisis is (duh) a decade in the past; employment has been growing steadily since early 2010. Since nothing is forever, and proclamations that the business cycle is over have always ended in embarrassment, lots of people are looking for the sources of the next recession. *

The thing is, there's nothing out there as obvious as the housing bubble of the mid-2000s, or even the tech bubble of the late 1990s. So here's my thought: maybe the next recession won't be caused by one big shock but instead by the combined impact of several smaller shocks. There are arguably several mid-sized bubbles out there, from private equity debt to emerging markets. Stocks are priced as if there's no risk despite omens of trade war, consumer confidence similarly seems to discount dangers. There's probably other stuff I'm missing.

The point, anyway, is that we might be looking at a smorgasbord recession, one that involves a mix of smallish things rather than a single dominant item. And there's a model for that kind of recession: the slump of the early 1990s.

Most modern recessions have had clear narratives, at least after the fact. The 79-82 double dip was about the Federal Reserve tightening to bring inflation down; 2001 was about the tech bubble; 2007-2009 about the housing bust and the financial crisis it triggered. But I've been reading various accounts of 1990-91, and they're kind of amorphous.

One piece was a boom and bust in commercial real estate, partly connected with the savings-and-loan crisis and aftermath, which led to a sharp drop in nonresidential construction:

Figure 1

Another piece was a drop in consumer confidence, brought on by oil price hikes and Gulf War jitters:

Figure 2

Yet another piece was the post-Cold War drawdown in defense spending:

Figure 3

So, no one overarching narrative, but the combination was enough to cause a recession. It was a fairly brief, shallow recession compared with the big slumps of 79-82 and 2007-9:

Figure 4

But recovery was sluggish and for a long time jobless, with unemployment continuing to rise long after the official end of the recession:

Figure 5

So here's my hypothesis: the next slump won't be a big bang like 2008, it will be a smorgasbord recession like 1990-1, the cumulation of a bunch of medium-sized issues.

You might ask why multiple issues should strike at the same time. The answer, in two words, is Hyman Minsky: after a long period of stable growth, lenders and investors get complacent, and the private sector overreaches.

If that is what happens, we should expect another sluggish, jobless recovery like that after the 1990-1 and 2001 recessions, except probably worse. Why? Because monetary policy is much less effective in reversing recessions brought on by private overreach than it is in reversing slumps brought on by previous tight money.

And we're likely to have a big problem with the zero lower bound. The Fed cut rates by around 5 percentage points in the face of the 1990 recession, and still got a jobless recovery:

Figure 6

This time around the Fed doesn't have 5 percentage points to cut -- it only has 2. And no, that's not a reason to raise rates faster, to make room for later cuts; it's a reason to not raise rates until inflation is significantly higher, and hope that we've gotten to 3 or 4 percent before the smorgasbord attacks.

So those are my current thoughts on the next recession. When will it happen? (Looks at watch.) Actually, I have no idea. But it would be really strange if it doesn't happen within a few years at most.

* https://www.nytimes.com/2018/09/18/opinion/economy-debt-markets-crash.html

likbez -> anne... , August 14, 2019 at 09:36 PM
I do not understand why Krugman thinks that Trump's trade war with China can't be the cause/catalyst of the next recession.

It is pretty harsh blow to classic neoliberalism to be frank. Because it repudiates the classic neoliberalism mode of globalization and as such further undermine neoliberal ideology and the Imperial power of the USA.

Disillusionment of population in key neoliberal manta that rising tide lifts all the boats and thus redistribution of wealth up does not matter will only increase, as Trump was unable to stem slide of the standard of living of lower 80% of population.

The USA economy remains is secular stagnation mode.

The level of hate toward FIRE sector, media and tech giants is clearly visible in resurgence of hate toward financial oligarchy.

Look at Epstein "revelations" and growing accusations of Wall Street moguls, "tech titans" (and US neoliberal elite in general) in abuse of narcotics, pedophilia and sexual perversion.

That's obvious signs of de-legitimization of neoliberal elite.

IMHO trade war with China might well end the dominance of Clinton wing of Democratic Party ("soft-neoliberals") here and Blairites in Labor Party in UK.


Fred C. Dobbs , August 14, 2019 at 07:52 PM
Markets Are Shaken by New Signs of Global
Economic Trouble https://nyti.ms/2OSipBB
NYT - Nelson D. Schwartz, Jack Ewing,
Matt Phillips and Stephen Grocer - August 14

The global economy is under increasing stress as growth cools and trade tensions take a mounting toll. On Wednesday, the tremors were felt worldwide.

Shares on Wall Street were off sharply, only a day after they had rallied as President Trump narrowed the scope of his next round of tariffs. The S&P 500 was down 2.9 percent. And bond markets offered an ominous warning on American growth prospects, with yields falling to levels not seen in years.

The financial jitters, which continued Thursday as markets in Asia were down in early trading, came after new data showed the German economy hurtling toward a recession and factory output in China growing at its slowest pace in 17 years.

The trouble in two of the world's manufacturing powerhouses indicated, in part, how hard both have been hit by Mr. Trump's tariffs. And it increased concern that the United States, too, is headed for an economic reckoning.

"The global backdrop has slowed more than anticipated," said Kathy Bostjancic, chief United States financial economist at Oxford Economics. "We're not immune to the slowdown."

Bank of America Merrill Lynch has put the odds of a recession in the United States in the coming year at one in three, citing factors like weaker industrial production and auto sales.

"Economic data have softened and are increasingly sending recession signals, particularly from the industrial side," said Michelle Meyer, head of United States economics at Bank of America Merrill Lynch. "Trade is a huge part of it."

The shock waves not only are a measure of the trade war's impact, but also could complicate Mr. Trump's ability to wage it.

Since the beginning of his trade battle with Beijing, the president has had a powerful ally: the United States economy. The first tariffs aimed solely at China, in the spring of 2018, coincided with the best economic showing of his presidency, with quarterly growth running at a 3.5 percent pace.

But growth is slowing, hitting 2.1 percent in the most recent quarter, and estimates for the current quarter are even lower. The president's decision Tuesday to delay some duties on Chinese imports was meant to soften the blow to American consumers, easing the economic headwinds.

The Federal Reserve cut interest rates in July for the first time in more than a decade, a move that its chair, Jerome H. Powell, said was "intended to ensure against downside risks from weak global growth and trade tensions." Another rate cut next month looks likely.

Hours after the markets closed Wednesday, Mr. Trump took to Twitter, suggesting there was room for compromise in the escalating trade war. "Of course China wants to make a deal," he wrote. "Let them work humanely with Hong Kong first!" In a subsequent tweet, after praising China's president, Xi Jinping, he wrote "Personal meeting?"

Mr. Trump has pointed to the economy's performance as a benchmark of his success and an argument for his re-election in 2020. And many indicators remain vibrant. At 3.7 percent, unemployment is low by historical standards, while consumer confidence is high. Even with Wall Street's recent volatility, major stock indexes are close to record levels.

The United States is also more cushioned against economic turmoil than other big countries because exports account for just 12 percent of its gross domestic product. Germany, with its automaking prowess, and China, with its vast factories for consumer goods, are more dependent on international trade.

Exports are responsible for nearly half of Germany's economic output and almost a fifth of China's.

Still, there are nagging warning signs that the resilient American economic expansion that began a decade ago is running out of steam.

When investors are confident in the economy, they demand higher bond rates, partly to offset the risk that sustained growth could produce inflation and dilute the bonds' effective returns. For that reason, rates on long-term bonds are typically higher.

But on Wednesday, for the first time since 2007, yields on two-year Treasury notes briefly exceeded the interest rate on the benchmark 10-year note. This pattern, called an inverted yield curve, is frequently cited as a harbinger of recession, although it can take quite some
time to be proved right.

Earnings growth, which has helped drive Wall Street's remarkable gains in recent years, is also showing signs of petering out.

Second-quarter profits for companies in the S&P 500 are coming in 0.7 percent lower than a year ago, according to data from John Butters, the senior earnings analyst at FactSet. If that figure holds -- and more than 90 percent of the companies in the index have reported -- it will mark the second straight quarter in which profits have declined, something often referred to as an earnings recession.

The slide was most pronounced among companies with the greatest exposure to the global economy and trade. Earnings at American semiconductor manufacturers, which rely on production networks in China and generate much of their sales there, fell about 25 percent.

More troubling for investors, profits seem likely to remain lackluster for at least the rest of 2019. Stocks bounced back strongly this year, in part, on optimism that the United States and China would inch closer to a trade deal and that earnings would rebound in the second half. That hope has faded as the trade tensions have ratcheted up with no end in sight.

Although China's economy is growing more quickly than that of many Western competitors, it has slowed measurably since the start of the trade conflict. Wednesday's reading on Chinese industrial production was weaker than expected, with July's growth rate at 4.8 percent, the lowest since 2002.

United States tariffs have mostly been directed at China, but the Trump administration has also imposed levies on European steel and aluminum. Mr. Trump has often threatened to impose tariffs on German cars.

There is evidence that the German auto industry is hurting plenty already. The German carmakers Volkswagen, Daimler and BMW all earn at least a third of their revenue in China, where auto sales have been slipping after years of explosive growth. One major factor in the slide is the barrage of trade threats that have unsettled Chinese consumers, discouraging them from buying big-ticket goods.

On Wednesday, the German statistics agency said the country's economy shrank 0.1 percent from April through June after treading water for a year. Deutsche Bank analysts predicted that the contraction would extend to a second straight quarter, meeting the technical definition of a recession.

Germany's economic performance in the second quarter was the worst among the countries using the common European currency, the euro, separate data from the European Union statistics agency indicated. Even Italy, long a weak link, did slightly better than Germany -- its growth in the quarter was zero.

That is a humbling experience for Germany, which has lectured other countries on how to manage their economies and scolded them for having too much debt.

Germany was among the first European countries to bounce back from the debt crisis that struck the region in 2010, and its unemployment rate, at 3.1 percent, is still the lowest in the eurozone.

When Siemens, the German industrial conglomerate, missed analysts' expectations for quarterly profits this month, its executives noted that "geopolitical and macroeconomic risks" -- including the trade war -- had "led to a clear slowdown in the global economic activity and deteriorating industrial sentiment."

China and Germany have large trade surpluses with the United States, but they are also important customers for American products. Germany bought goods and services worth $72 billion from the United States last year.

"If this continues, it will eventually mean less demand for U.S. goods," said Carsten Brzeski, chief economist at ING Germany.

Closely watched surveys of activity among industrial purchasing managers suggest that manufacturing is declining in China, Japan, Germany and Britain -- the largest economies after the United States.

And prices for important industrial commodities like aluminum, copper and steel have fallen, confirming deep weakness in the industrial sector and crimping the profits of the companies that produce them. ThyssenKrupp, Nippon Steel, and ArcelorMittal -- the world's largest steel producer -- have all reported losses or shrinking profits in recent weeks.

A decline in manufacturing doesn't necessarily mean the broader economy is doomed to follow. Manufacturing endured a similar slump in 2016, tied in part to a sharp drop in oil prices and an investment slowdown in China, after a currency devaluation by Beijing in 2015 spooked global investors.

That industrial downturn weighed on growth, in the United States and around the world. But a full-blown recession never materialized, in part because oil prices recovered and major central banks worked to resuscitate growth.


Fred C. Dobbs said in reply to Fred C. Dobbs... , August 14, 2019 at 08:28 PM
The Dobbs Index took a big hit today,
is now back to where it was on April 1,
but had been at a high for the year as
recently as last week. Still up for
the year, but just barely. This
could change tomorrow.
Fred C. Dobbs , August 14, 2019 at 08:12 PM
Stock Markets, Jolted by Economic Worry, Suffer
2nd Worst Drop of 2019 https://nyti.ms/2MiQzwi
NYT - Matt Phillips - August 14

(graph at link)

Trade-war worries hammered financial markets again on Wednesday as data from Germany and China showed trouble for manufacturing-reliant economies, while the bond market renewed fears of an American recession.

Stocks and commodities tumbled in Europe, the United States and Asia as risk-averse investors raced to the safety of government bonds, pushing bond prices sharply higher and yields -- which move in the opposite direction -- to low levels not seen in years.

On Wall Street, the S&P 500 fell 2.93 percent, led by a steep drop in the energy sector. Retail shares also fell sharply after Macy's posted lower quarterly results. Shares of large technology companies, sensitive to the outlook for the trade war, also fell. Stock benchmarks in Europe also dropped, and on Thursday, markets in Hong Kong, Shanghai and Tokyo were down between 0.7 and 1.7 percent in early trading.

The drop in the S&P 500 reflected a rapid shift in sentiment just a day after a 1.5 percent gain, which had been driven by the White House decision to narrow the scope of the next round of tariffs on China to spare American consumers during the holiday shopping season.

But there is increasing evidence that the fight between the two largest economies over trade, technology and economic dominance has already done significant damage to the world economy.

Earlier Wednesday, the German government reported that the country's economy shrank in the quarter that ended in June. The German economy, the eurozone's largest, has been particularly vulnerable to the trade war between the United States and China because of Germany's dependence on manufacturing and exports. A second consecutive quarter of decline would mean Germany was in a recession.

In China, a variety of macroeconomic indicators published overnight showed that its economy continues to lose steam as the trade war drags on. Chinese industrial production slowed more than expected, falling to 4.8 percent in July, the lowest level since 2002. Investment growth and retail sales also slowed.

The economic updates added to the increasingly ugly conditions in the global industrial economy. Closely watched surveys of activity among industrial purchasing managers now suggest that manufacturing economies in China, Japan, Germany and Britain -- the second-, third-, fourth- and fifth-largest economies in the world -- are all contracting.

And prices for important industrial raw materials such as aluminum, copper and steel have fallen, confirming deep weakness in the industrial sector and crimping the profits of the companies that produce them.

Major industrial firms around the world have likewise reported a consistent story of softening demand, stressed that they are taking a cautious approach to the rest of the year.

In recent weeks, signs of the global industrial slowdown have also arrived in corporate earnings reports in the United States. Second-quarter profits for companies in the S&P 500 are set to contract 0.7 percent from a year earlier, according to the data provider FactSet. If that figure holds -- and more than 90 percent of the companies in the index have reported -- it will mark the second straight quarter that earnings have declined.

The industrial sector of the S&P fared poorly, with earnings falling 10 percent from last year. The slide in profits was also most pronounced among those companies with the greatest exposure to the global economy and trade.

Investors were intensely attuned Wednesday to downbeat economic signals from the bond market. Yields on long-term United States Treasury securities continue to plumb lows not seen in recent years. The yield on the benchmark 10-year Treasury note fell to 1.58 percent, a level it last reached in late 2016. The yield on the 30-year bond fell to 2.03 percent, the lowest level on record.

Bond yields are typically determined by investors' expectations for economic growth and inflation, making their recent precipitous drop worrisome in themselves. But the drop in long-term yields also briefly pushed the yield on the 10-year note below that of the two-year Treasury note, an unusual situation known as an inversion of the yield curve. Yield-curve inversions are considered one of the most reliable leading indicators of recession in the United States, having preceded every economic decline in the past 60 years.

That phenomenon, when yields on long-term bonds fall below those on short-term bonds, had already occurred with some Treasury securities this year. But the inversion between
two-year and 10-year notes, which last occurred in 2007 as the American economy began to sputter into a severe recession, seemed to worry investors anew.

Signs of economic weakness hit commodities markets as well. Prices for copper, often tightly tied to the outlook for Chinese economic growth, fell more than 1 percent in New York trading. Futures prices for American crude oil fell more than 3 percent.

The tumble in crude oil prices weighed heavily on share prices of American energy companies, pushing the energy sector down more than 4 percent. Exxon Mobil, Chevron and ConocoPhillips all fell more than 3.5 percent.

Stocks of large tech firms also weighed on the markets, with Amazon dropping more than 3 percent and Apple and Microsoft more than 2.5 percent.

The recent return of market volatility has cut the gains enjoyed by investors this year. But those gains are still significant. The S&P 500 remains up more than 13 percent in 2019.

[Aug 15, 2019] amateurs talk about stocks, but professionals study bond markets

Aug 15, 2019 | economistsview.typepad.com

anne , August 14, 2019 at 06:03 AM

https://twitter.com/paulkrugman/status/1161620761276235776

Paul Krugman @paulkrugman

As I wrote in yesterday's newsletter (to which you should subscribe!), amateurs talk about stocks, but professionals study bond markets. As of this morning the bond market is basically begging governments to borrow: the US 10-year real rate just 0.02 percent 1/

[Graph]

5:49 AM - 14 Aug 2019

These low, low rates are telling us several things: (a) private investment demand is really weak despite tax cuts (b) recession risks are pretty high (c) infrastructure! I mean, with borrowing virtually free, why not fix all those falling-down bridges? 2/

But not going to happen. One of my better takes early on was that the Trump infrastructure thing was never going to happen; sure enough, "infrastructure week" became a punchline, and now isn't even that 3/

http://www.nytimes.com/2016/11/21/opinion/build-he-wont.html

Build He Won't

But why isn't the obvious thing happening? If Trump proposed a serious infrastructure plan, Democrats would have a hard time saying no even though it would help him politically. But no such plan has been or will be offered, for a couple of reasons 4/

One is that Mitch McConnell and his wing of the party oppose any kind of government program, no matter how much good it might do -- actually especially oppose programs that might work, and make people think better of government 5/

Another is that Trump and co just can't bring themselves to advocate anything that doesn't include scams on behalf of their cronies; so their vague suggestions for infrastructure always look more like stealth privatization than public investment 6/

So we're left, as I said, with markets basically begging the government to do some investment, but this plea falling on deaf ears 7/

anne -> anne... , August 14, 2019 at 06:06 AM
https://fred.stlouisfed.org/graph/?g=oBb8

January 15, 2018

Interest Rates on 10-Year Treasury Inflation-Indexed Bonds, 2015-2018

anne -> anne... , August 14, 2019 at 06:10 AM
FRED is being worked on right now, but will be available shortly. The graph I constructed will extend through August 13, when FRED is available.
Plp -> anne... , August 14, 2019 at 06:25 AM
Anne you need a web site for all your graphs and data sets

Then you could simply link here

And have you considered travelling the blog circuit

Other sites could surely benefit from your extensive constructions

[Aug 15, 2019] Given prior inversions of other curves . . . the fact that the 2-year note and the 10-year note has now inverted isn't 'fake news,'

Aug 15, 2019 | economistsview.typepad.com

"Given prior inversions of other curves . . . the fact that the 2-year note and the 10-year note has now inverted isn't 'fake news,' wrote Justin Walters, co-head of research and investments at Bespoke Investment Group, wrote in a Wednesday note to clients. "Inversions are not a good sign for the economic outlook, having preceded prior recessions with frightening regularity."

The action in the bond market followed data showing that Chinese industrial production growth in the world's second-largest economy slowed to 4.8% year-over-year, its lowest level since 2002, while retail sales growth came in at 7.6%, down from 9.8% the month prior and well below the 8.6% consensus, according to FactSet."

https://www.marketwatch.com/story/dow-futures-down-over-300-points-on-global-growth-concerns-yield-curve-inversion-2019-08-14?mod=newsviewer_click Reply Wednesday, August 14, 2019 at 08:34 AM


anne -> EMichael... , August 14, 2019 at 09:31 AM

Goes farther than just Germany.

[ I think so, surely the United Kingdom, France, Italy, Korea and Singapore... but this growth decline is unclear to me and what fiscal policy will be driving growth from here is unclear.

China? There is an industrial slowing while domestic consumption and exports are strong. There will be added government spending as necessary, taxes are being lowered and credit lines for smaller businesses are increasing. I expect growth will continue above 6% for the year. ]

EMichael -> anne... , August 14, 2019 at 09:47 AM
I don't doubt that China can react far better than those other countries, but that does not take away the facts that there is damage being done.
Industry slowed and domestic consumption declined 20%.

That is not nothing.

anne -> EMichael... , August 14, 2019 at 10:53 AM
Industry slowed and domestic consumption declined 20%.

[ This is incorrect. Domestic consumption is up 8.3% for the years through July and up 7.6% in July. Exports are up 6.7% for the year through July.

Industrial output grew 5.8% for the year through July, while industrial output growth slowed in July to 4.8%. The July decline in industrial output "growth," should be readily made up just by increased vehicle sales. Incentives on sales of electric vehicles expired in June, as had been long planned. *

* https://news.cgtn.com/news/2019-08-14/China-maintains-steady-economic-performance-in-July-J90DBSGF4Q/index.html ]

anne -> EMichael... , August 14, 2019 at 10:58 AM
I always try to be conservative in reading economic performance data, and will be so in days ahead, but as of now China appears on course for 6.1 to 6.3% growth for the year and the growth so far this year has been high quality as in the environmental emphasis which is everywhere...

[Aug 14, 2019] Charge of anti-Semitism as a sign of a bitter factional struggle in UK Labor Party between neoliberal and alternatives to neoliberalism wings

Highly recommended!
It attests inventiveness and vicious amorality of neoliberals, who now promote the idea that criticizing neoliberalism and removing Democratic party in the USA and Labor Party in the UK from clutches of Clintonism//Brairism is inherently Anti-Semitic ;-)
Israel lobby wants to extent the anti-Semitism smear to any critique of Israel. which is of course standard dirty trick in witch hunts like neo-McCarthyism.
Notable quotes:
"... This, of course, is compounded by the over-amplifying of anti-Semitism by the media and the alacrity with which it has been taken up by Corbyn opponents, including hypocrites who floated "rootless cosmopolitan" criticisms of Ed Miliband when it suited just a few years ago. ..."
"... The resolution of the anti-Semitism crisis then is not a matter of compromise -- for each side the issue will only go away with the complete crushing and driving out of the party of the other. ..."
"... A good analysis. But, it emphasizes the point I made in the previous post, which is that, the right are currently engaged in an all out push to remove Corbyn and crush the left with the same old bureaucratic means. Whatever else Williamson may or may not be guilty of, his point that the leadership have facilitated this situation by their continual appeasement of the right is absolutely valid. Its that he is being attacked for, not anti-Semitism. ..."
"... Coming on the day when the FT have a column seriously positing that criticizing capitalism is inherently anti-Semitic, it seems to me that dancing on the head of a pin ..."
"... As many of the comments on your blog on Williamson attest, the salient feature of this - well, call it witch-hunt for the sake of argument - is the double standards where we have to be whiter than white, whilst no account whatsoever is taken of the most egregious racism elsewhere. ..."
"... The other nonsense that has grown up is that it is only those that suffer any form of discrimination who can define what that discrimination is, i.e. only Jews can define anti-Semitism, only black people can define racism against them, only women can define discrimination against women. ..."
"... That then assumes that the members of each of these groups are themselves homogeneous, and agreed in such definitions. In reality, it means that dominant elements, i.e. those connected to the ruling class and ruling ideas get to make those determinations. ..."
"... If we look at anti-Semitism, for example, it is quite clear that there is no agreement amongst Jews on what constitutes anti-Semitism. The JVL, certainly have a different definition than the JLM. ..."
"... Secker wrote a piece in the Morning Star last year comparing claims of anti-Semitism within Labour to the story of the emperor's new clothes. ..."
"... Given that the actual data, even allowing for all of the spurious and mischievous accusations of anti-Semitism in the party, made by right-wing enemies of the the party, and particularly of Corbyn and his supporters, amounts to only 0.1% of the membership, and given that of these, 40% were straight away found to be accusations against people who were not even LP members, with a further 20%, being found to have absolutely no evidence to back them, its quite possible that individual members of the LP, have never seen any instance of it. ..."
"... Take out all those mischievous and malicious allegations made in order to whip up the hysteria, so as to to damage the party, by its enemies, and you arrive at a figure of only 400 potential cases, out of a membership of 600,000, which is 1 member in 1500. ..."
"... In fact, based upon the actual facts, as opposed to the fiction and factional hysteria that is being whipped up by right-wing opponents of Corbyn and the party, and by supporters of Zionism for their own narrow political reasons, the chances are about 14: that you will never see any even potential instance of anti-Semitism, even on the narrow definition that the party has now imposed upon itself, which comes pretty close if not entirely to identifying anti-Semitism with anti-Zionism, or even just criticism of the current Bonapartist regime of Netanyahu. ..."
"... In the US, Jewish groups that have long been ardent defenders of Israel have more recently come out to criticize the regime of Netanyahu, and the actions of the Israeli state. The main defenders of Zionism, besides the actual Zionists themselves, appear to be people like the AWL, who for whatever reason hitched their wagon to Zionist ideology some time ago, ..."
"... Just because the only case of stabbing I have witnessed was more than 50 years ago, does not, and should not lead me to think that knife crime was worse 50 years ago than it is today. The actual data would seem to suggest that cases of anti-Semitism were greater in the LP in previous times than they are currently, contrary to what the media and those with factional motives would have us believe. ..."
"... The apparent level of anti-semitism in Labour is a modern phenomenon turbo-charged and amplified by social media. People have their views reinforced within their bunkers where anti-Israeli memes become anti-Zionist and then become anti-Semitic. It is much easier to send an anonymous email than a letter. ..."
"... I wouldn't trust Lansman on this issue, any more than on many others. Lansman abolished democracy, to the extent it existed to begin with, by turning it into his personal fiefdom, reminiscent of the activities of Hyndman and the SDF. His position on anti-Semitism, and fighting the witch-hunt, and of appeasing the Blair-right's as they attacked Corbyn, has been appalling throughout. ..."
"... Having abolished any democracy in Momentum, which he now runs as its CEO, he also appears to want Corbyn to do the same thing with the Labour Party, abolishing its internal democratic procedures, and putting himself personally in charge of those disciplinary measures ..."
"... Its notable that, yesterday, when the Welsh Labour Grass Roots organisation came out to call for Williamson's suspension to be reversed, Kinnock and other Blair-rights immediately called for an investigation into them, ..."
"... This truly is reaching into the realms of McCarthyism, where you are found guilty not just of witchcraft, but of consorting with witches, or even having an opinion as to whether an individual charged with witchcraft is guilty, or even the extent to which the number of witches amongst might be exaggerated. ..."
"... It's not a factually accurate description of global political realities, because Israel does not control the US, if that is what the image is intended to imply. But, the message, is thereby anti-Israeli state, not anti-Semitic. It could only be considered anti-Semitic, if in fact you are a Zionist and claim that Israel and Jews are are interchangeable terms, which they are not. ..."
"... If we replace Zionism with Toryism, and Jew with British, the situation becomes fairly clear. If the we show the British state as being controlled by Tories, who implement their ideology of Toryism, in what way would criticism of the British state, under the control of such Tories, or criticism of Tories be the equivalent of British people as a whole? ..."
"... The hope of a Two-State Solution disappeared long ago, and was never credible. It simply allows Zionists to proclaim they are in favour of it, whilst doing everything to make it practically impossible, such as extending West Bank Settlements. The solution must flow from a struggle for democratic rights for Israeli Arabs, and for a right for all Arabs in occupied territories to be extended the same rights as any other Israeli, including the right to vote, and send representatives to the Knesset. As I argued thirty years ago, the longer-term solution is a Federal Republic of Israel and Palestine, guaranteeing democratic rights to all, as part of building a wider Federal Republic of MENA. ..."
"... Jim Denham: imperialist lackey and sycophant turned Witch hunter in chief ..."
"... Let us be very clear about what this witch hunt is about, it is about purging from public life any credible and effective opposition to Israel in particular and more generally opposition to the imperialist barbarians of the imperialist core. It is about driving from universities, social media and intellectual life any form of opposition to the interests of the imperialists. ..."
"... A UN report has concluded that Israel deliberately targeted and killed hundreds of protesting civilians, including children and disabled people and it shot 20,000+ people (yes 20,000+!). The UN says this likely a war crime. Why are the noble defenders of the Palestinian cause in the dock and not notorious Palestinian haters like Jim Denham? ..."
"... These attacks on Corbyn and his supporters, repeated in all of the most aggressive imperialist countries, are simply a proxy attack on the Palestinian people themselves. ..."
"... Jim Denham's comment here illustrates the problem entirely. The picture he has linked to shows an alien symbiote having attached itself to the face of the statue of liberty. The statue of liberty here represents the US. The symbiote has on its back the Israeli Flag, and likewise, thereby represents the state of Israel. The picture therefore, represents the well-worn, and clearly factually wrong meme that Israel controls the US. ..."
"... But, as a Zionist organisation, the AWL and its members cannot distinguish between the state of Israel and Jews, so they cannot distinguish between criticism of the state of Israel, and criticism if Jews. For them, as for the Zionist ideology of the state of Israel, which is most clearly manifest in the ideology of its current political leadership, in the form of the Bonapartist regime of Netanyahu, with the recent introduction of blatantly racist laws that discriminate even more openly against not Jewish Israeli citizens, and with his willingness to try to keep his corrupt regime in office by going into coalition with an avowedly Neo-Nazi party that until recent times was considered beyond the pale, even by most Zionists, the term Zionism is synonymous with the term Jew. So, any criticism of Zionism, or of Israel is for them immediately equated with anti-Semitism. ..."
"... Once again Jim Denham reefuses to engage in rational debate, and again resorts instead to his assumption that Israel = Jews, as well as his crude attempts at a typical Stalinist amalgam, to conflate the views of his opponents with some hate figure. ..."
"... Again Jim Denham makes the conflation of Israel and Jews explicit when he says, "This image also plays on the tired and disgraceful antisemitic 'conspiracy theory' trope of undue Israeli (Jewish) influence on world affairs." ..."
"... The way that the right are using anti-Zionism as the equivalent for anti-Semitism, and the appeasement of that attack has led them to widen the scope of that attack. As Labour List reports , right-wing Labour MP Siobhan McDonagh, is now claiming that to be anti-capitalist is also to be "anti-Semitic". The idea was put forward also by former Blair-right spin doctor, John McTernan, who wrote an article in the FT to that same effect ..."
"... As the right-wing extend their witch-hunt against socialists in the LP to claim that Marxists are necessarily misogynist, as well as anti-Semitic – and the same logic presented by McDonagh, McTernon, and Phillips would presumably mean that the Left must also be xenophobic, homophobic, anti- Green, and many other charges they want to throw into the mix – it will be interesting to see whether and to what extent the AWL, join them in that assault, in the same way they have done in their promotion of Zionism. ..."
Aug 14, 2019 | averypublicsociologist.blogspot.com

... ... ...

The problem, however, is because this is overlaid by factional struggle ...

This, of course, is compounded by the over-amplifying of anti-Semitism by the media and the alacrity with which it has been taken up by Corbyn opponents, including hypocrites who floated "rootless cosmopolitan" criticisms of Ed Miliband when it suited just a few years ago.

Here's the thing. Just because your opponents take up an issue, some times cynically and in bad faith. and use it to inflict as much damage as they can does not mean the problem is fictitious.

Precisely because they can point to Facebook groups full of useful fools, and Twitter accounts with Corbyn-supporting hashtags acting as if the Israel lobby and "Zionists" are the only active force in British politics, this is the stuff that makes the attacks effective and trashes the standing of the party in the eyes of many Jews and the community's allies and friends.

The institutional anti-Semitism in the Labour Party is, therefore, somewhat different to the kind you find in other institutions. It is sustained by the battle for the party, a grim battlefront in a zero sum game of entrenched position vs entrenched position. As such, whatever the leadership do, whatever new processes the General Secretary introduces for one side it will never be enough because, as far as many of them concerned, the leadership are politically illegitimate; and for the other it's a sop and capitulation.

The resolution of the anti-Semitism crisis then is not a matter of compromise -- for each side the issue will only go away with the complete crushing and driving out of the party of the other. A situation that can only poison the well further, and guarantee anti-Semitism won't honestly and comprehensively be confronted.


Boffy said... 3 March 2019 at 16:42
A good analysis. But, it emphasizes the point I made in the previous post, which is that, the right are currently engaged in an all out push to remove Corbyn and crush the left with the same old bureaucratic means. Whatever else Williamson may or may not be guilty of, his point that the leadership have facilitated this situation by their continual appeasement of the right is absolutely valid. Its that he is being attacked for, not anti-Semitism.

It is first necessary to close ranks, and defeat the assault of the Right. As Marr said to Blair this morning, had Prescott announced he was forming a separate group, and was establishing his own witch-hunting bureaucratic apparatus in the party, Blair would have sacked him immediately - actually not so easy as the Deputy is elected. But the thrust is valid. Unless Corbyn deals with Watson, the Right will roll over the Left, despite the huge disparity in numbers.

Again it comes down to whether Corbyn is up for that task, or whether we need a leadership of the left with a bit more backbone to see it through.

asquith said... 3 March 2019 at 18:54
I'm afraid this IS due to the "intersectionality" cult, whereby certain groups are always privileged and wrong, and some are always oppressed and right. Jews are, according to this "analysis", the uber-privileged and uber-white.

We've heard several times that according to "intersectionality" that it's impossible to be racist against white people because racism requires both prejudice and power, and white people are by definition powerful. Therefore, anti-Semitism is dismissed because it can't be a thing because Jews are all-powerful and even more oppressive than other whites.

Those who don't subscribe to all of these beliefs are nevertheless tinged with them, which is why people who aren't staunch antisemites will nevertheless fail to take anti-Semitism seriously.

https://www.youtube.com/watch?v=66qe76gkCxo&t=166s

Ian Gibson said... 4 March 2019 at 05:30
Coming on the day when the FT have a column seriously positing that criticizing capitalism is inherently anti-Semitic, it seems to me that dancing on the head of a pin about whether the 'careless' anti-Semitism you've described means the party is institutionally anti-Semitic is rather missing the point. (OK, the column is by John McTernan, but the FT gave him column inches to argue that case, and I guess they didn't mean it as the satire it most certainly is.)

As many of the comments on your blog on Williamson attest, the salient feature of this - well, call it witch-hunt for the sake of argument - is the double standards where we have to be whiter than white, whilst no account whatsoever is taken of the most egregious racism elsewhere. We live in society: we can never, ever be that whiter than white - especially when it comes to Israel/Palestine, which is so full of contradictions and traps for the unwary (e.g. the position of the Israeli state claiming to speak for all Jewry around the world, in the way that the Board of Deputies position themselves as speaking for all British Jews - neither close to being true, but small wonder that opponents of what they do and stand for take that universality at face value.)

The fight we need to take up is to compare and contrast just how pro-active the current party is against anti-Semitism in its constitution and machinery with the glaring absence of such elsewhere, and to present a positive picture of what we are doing, rather than mumbling apologetically into our beards. We need to take the fight to the rigged system at the same time as being unstinting in rooting out the troubling stuff.

Boffy said... 4 March 2019 at 09:47
The other nonsense that has grown up is that it is only those that suffer any form of discrimination who can define what that discrimination is, i.e. only Jews can define anti-Semitism, only black people can define racism against them, only women can define discrimination against women.

That then assumes that the members of each of these groups are themselves homogeneous, and agreed in such definitions. In reality, it means that dominant elements, i.e. those connected to the ruling class and ruling ideas get to make those determinations.

If we look at anti-Semitism, for example, it is quite clear that there is no agreement amongst Jews on what constitutes anti-Semitism. The JVL, certainly have a different definition than the JLM.

But, just rationally, the concept that only those discriminated against get to define the discrimination is bonkers. Suppose you come from Somalia or some ot