|May the source be with you, but remember the KISS principle ;-)|
|Contents||Bulletin||Scripting in shell and Perl||Network troubleshooting||History||Humor|
|News||Neoliberalism as a New Form of Corporatism||Recommended Links||Peak cheap Energy and Oil Price Slump||Secular Stagnation under Neoliberalism||Rational Fools vs. Efficient Crooks: The efficient m hypothesis||Casino Capitalism|
|Insufficient Retirement Funds as Immanent Problem of Neoliberal Regime||Neoliberal Attacks on Social Security||Unemployment||Inflation vs. Deflation||Coming Bond Squeeze||Notes on 401K plans||Vanguard|
|401K Investing Webliography||Retirement scams||Stock Market as a Ponzy scheme||Financial Sector Induced Systemic Instability||Neoclassical Pseudo Theories||The Great Stagnation||Investing in Vanguard Mutual Funds and ETFs|
|OIL ETNs||Peak Cheap Energy and Oil Price Slump||Notes on 100-your age investment strategy behavior in rigged markets||Chasing a trade||The Possibility Of No Mean Reversion||Junk Bonds For 401K Investors||Tax policies|
|John Kenneth Galbraith||The Roads We Take||Economics Bookshelf||Who Rules America||Financial Quotes||Financial Humor||Etc|
“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."
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.
Still I hope it plays a small but important role: to warn about excessive risk taking by 401K investors in neoliberal economic system. It designed to serve as a warning sign and inject a skeptical note into MSM coverage. There are not many such sites, so a warning about danger of taking excessive risk in 401K accounts under neoliberalism has definite value. The following cartoon from 2008 illustrated this point nicely
As far as I know lot of 401K investors are 100% or almost 100% invested at stocks. Including many of my friends. I came across a very relevant to this situation joke which nicely illustrated the ideas of this page:
Seven habits that help produce the anything-but-efficient markets that rule the world by Paul Krugman in Fortune.
1. Think short term.
2. Be greedy.
3. Believe in the greater fool
4. Run with the herd.
6. Be trendy
7. Play with other people's money
I would like to stress again that it is very difficult to "guess" when the next wave of crisis stikes us: "A thing long expected takes the form of the unexpected when at last it comes".
But mispricing of risk in 401K accounts is systemic for "overbullish" 401 investors, who expect that they will be able to jusp of the train in time, before the crash. Usually such expectations are false. And to sell in the market that can lose 10% in one day is not easy psychologically. I remember my feelings in 2001-2002 and again 2008-2009. That's why many people who planned to "jump" stay put and can temporarily lose 30 to 50% of value of their 401k account in a very short period of time (and if you think that S&P500 can't return to 1000, think again; its all depends on FED). At this point some freak out and sell their holdings making paper losses permanent.
Even for those who weathered the storm and held to their stock holdings, it is important to understand that paper losses were eliminated mostly by Fed money printing. As such risks remains as at one point FED might find itself out of ammunition. The fact that S&P500 recovered very nicely it does not diminish the risk of such behavior. There is no guarantee that the third crisis will behave like previous two.
Next crash will have a new key determinant: the attitude toward the US government (and here I mean the current government of Barack Obama) and Wall Street after 2008 is the lack of trust. That means that you need to hope for the best but prepare for the worst. Injection on so much money into financial system was a novel experiment which is not ended yet. So how it will end is anybody's guess. We are now in uncharted waters. I think when Putin called Bernanke a hooligan, he meant exactly this. Since Bernanke was printing money out of thin air to buy financial paper, his action were tantamount to shoplifting. In some way this probably is more similar to running meth labs inside Fed building. The system was injected with narcotics. Everybody felt better, but the mechanism behind it was not healthy.
The complexity of modern financial system is tremendous and how all those new financial instruments will behave under a new stress is unknown. At the same time in the Internet age we, the great unwashed masses, can't be keep in complete obscurity like in good old time. Many now know ( or at least suspect ) that the neoliberal "show must goes on" after 2008 is actually going strongly at their expense. And while open rebellion is impossible, that results in lack of trust which represents a problem for financial oligarchy which rules the country. The poor working slobs are told be grateful for Walmart's low (poverty-subsidized) prices. Middle class is told that their declining standard of living is a natural result of their lack of competitiveness in the market place. Classic "bread and circuses" policy still works but for how long it will continue to work it is unclear.
But nothing is really new under the sun. To more and more people it is now clear that today the US is trying to stave off the inevitable decline by resorting to all kinds of financial manipulations like previous empires; yesterday, it was the British Empire and if you go further back, you get the USSR, Hapsburg empire, Imperial Russia, Spanish empire, Venetian empire, Byzantium and Roman empire. The current "Secretary of Imperial Wars" (aka Secretary of Defense) Ashton Baldwin Carter is pretty open about this:
“We already see countries in the region trying to carve up these markets…forging many separate trade agreements in recent years, some based on pressure and special arrangements…. Agreements that…..leave us on the sidelines. That risks America’s access to these growing markets. We must all decide if we are going to let that happen. If we’re going to help boost our exports and our economy…and cement our influence and leadership in the fastest-growing region in the world; or if, instead, we’re going to take ourselves out of the game.”
For the US elite it might be a time to rethink its neocon stance due to which the US is exposing ourselves to the enmity of the rising economic powers, and blowing serious cash to maintain it hegemony via maintaining huge military budget, financing wars and color revolutions in distant countries. In a way the US foreign policy became a financial racket, and racket can't last forever because it incite strong opposition from other countries.
Neoliberalism (aka casino capitalism) as a social system entered the state of decline after 2008. Like communism before it stopped to be attractive to people. But unlike communism it proved to have greater staying power, surviving in zombie state as finanfial institutions preserved political power and in some cases even enhanced it. It is unclear how long it will say in this state. Much depends on the availability of "cheap oil" on which neoliberal globalization is based.
But the plausible hypothesis is that this social system like socialism in xUSSR space before entered down slope and might well be on its way to the cliff. Attempts to neo-colonize other states by the West became less successful and more costly (Compare Ukraine, Libya and Iraq with previous instances of color revolutions). Some became close to XIX century colonial conquests with a lot of bloodshed (from half million to over a million of Iraqis, by different estimates, died ). As always this is mainly the blood of locals, which is cheap.
Libya and Ukraine are two recent examples. Both countries are now destroyed (which might be the plan). In Ukraine population is thrown in object poverty with income of less that $5 a day for the majority of population. And there is no other way to expand markets but to try to "neo-colonize" new countries by putting them into ominous level of debt while exporting goods to the population on credit. That is not a long term strategy as Greece, Bulgaria, and now Spain and Portugal had shown. With shrinking markets stability of capitalism in general and neoliberalism in particular might decrease.
Several researchers points to increased importance Central banks now play in maintaining of the stability of the banking system. That's already a reversal of neoliberal dogma about free (read "unregulated") markets. Actually the tale about "free markets", as far as the USA is concerned, actually was from the very beginning mainly the product designed for export (read about Washington consensus).
For the list of top articles see Recommended Links section
Feb 14, 2018 | angrybearblog.com
Drastically Changing the Rules On Infrastructure Spending
Most observers have figured out that the Trump infrastructure spending plan seems to be weirdly lopsided in an unrealistic way, with $200 billion in federal spending somehow supposed to inspire a total of $1.5 trillion in spending by state and local sources along with private ones. What has not been made all that clear publicly is how this plan upends decades of established practice in fiscal relations between the federal and the state and local governments. The long-established formula has been 8 to 2, that is $8 in federal money for $2 in state or local money in infrastructure construction projects. Trump's plan proposes to completely reverse this to a 2 to 8 formula, $2 in federal money for $8 in state or local money. Anyone who thinks this is going to provide any actual infrastructure activity that would not have otherwise is simply completely delusional.
Of course it is well known that the private sector input will involve tolls or other payment methods to make sure the private interests make a positive rate of return. One important area many want to see work done is on fixing bridges. The American Society of Engineers has identified about 50,000 bridges in the nation that need repair. However they also estimate that only about 100 of those are reasonably suitable for private tolling. This is another not-going-anywhere part of the proposal.
However, Trump is apparently hoping to raise money by outright selling off some publicly owned infrastructure assets. The Washington Post reports today that in the Washington area this includes the two main airports, Dulles and Reagan National, as well as the George Washington Memorial Parkway (currently not tolled). I can hardly wait and am curious what else around the country is going to be put on the block for a grand fire sale leading to all kinds of tolls and other nonsense.
sammy , February 14, 2018 7:42 pmBarkley Rosser , February 14, 2018 9:18 pm
A good example of an underutilized government asset sale is here in Portland OR. The Post Office had a large hub facility (about 4 square blocks) located in a formerly light industrial area just north of downtown. Well the light industrial failed and the area became a wasteland ripe for redevelopment.
Well redevelop it did. Now known as the "Pearl District" the area is now packed with luxury apartments, multi million dollar condos, leading edge companies, and all the accoutrements. The Post Office built another hub in a much less congested, more suitable location. The entire 4 block former Post Office was virtually empty for 10+ years, maybe a dozen people worked there.
Recently the was parcel was sold, I would guess about $25 million per block. So that's $100 million in money to the Federal government (thru the Post Office), picked up off the ground, to be used for infrastructure, reduce debt, cut taxes, preserve benefits, whatever, in return for a passport office and truck storage. What is there to possibly criticize?Longtooth , February 14, 2018 10:01 pm
Yeah, putting a toll on the GW would be just ridiculous.
Yes, apparently Trump did OK with a small skating rink in NYC. Do you want to have the Trump Org do all of this? I do note they have numerous bankruptcies.
Your example of the P.O.in Portland is hilarious. What that shows is that in fact the feds are selling off unused assets right now, in some cases making money doing so. I think you overstate what can be made from this. The issue of this plavn is to have private sector taking over running stuff, but most of the highways they have tried to do so have ended up being either financial or practical or both messes, such as the mess regarding the Indiana Toll Road. In the 1800s there were 254 private companies running roads. They all went bust, all, and those roads were taken over by one level of government.
Sorry, that data does not show what you think it does. The formula involves joint projects and has been 8 to 2 feds locals on joint projects. But the vast majority of that state and local spending is not on joint projects. I hope you understand that state and local governments spend lots of money on transportation and other infrastructure with no fed in put. It is clearly inadequate. But now we have Trump coming in with this screwball proposal. Sorry, you are out to lunch on this one.Longtooth , February 14, 2018 10:25 pm
Your Portland, Or. example sounds to me like the Fed's investing in property at low property prices and selling at high prices, no? Several major private enterprises in Silicon Valley have been doing that for years. It's a pretty standard way of investment letting time and population growth do it's thing on limited land.
The company I worked for bought a ranch 100 or 200 acres at the furthest outreaches of San Jose in the South (then county property). opposite direction of where the growth was going in 1950's. Most of it was orchards leased to farmers and a huge spread of small buildings (individual little rooms) and park with a large lake used occasionally for high spending client sales and "education" on using our products.
They sold it for multiple millions now a huge area of high rise apts, and retail at the cross-roads of the only southbound State Highway, a a major cross-town freeway and light rail intersection.
A major Health Care (not-for-profit) bought a large portion of it rom the company in the late 1960's, and built a huge hospital complex on it before there was much else around. The company made millions of profit off that sale as well.
They also bought part of another ranch even further south out in the boonies and 20 years later built their western Research facility in a swale at the top of the hills, unseen from anywhere -- nobody even knew it was there. A little winding ranch road led to it. They still own that ranchland it will be worth millions upon millions in profits when the sell that land.
You can ask why the company did this? The company had a real-estate division the sole job of which was to identify long term future population growth into virtually uninhabited ranch land and buy it up on the cheap at any possible future location where the company might eventually want to build more facilities -- pure speculation on land prices .. then either just hold it (leased back to ranchers) or eventually build on it for the company's own growth.
You try to make it sound like the Fed intended on losing money or didn't have a clue. Of course that's the standard anti-federalist's claim by the laissez-fair set isn't it?sammy , February 14, 2018 10:30 pm
I'll add this too. When the military decides it no longer has good use for military land the close the bases (after Congress finally lets them) and sells the land to cities or private developers for huge profits, even after taking out old military buildings, finding and eliminating old unexploded munitions, and soil contamination.
In the bay area that includes the
– SF Presidio (prime land now developing million dollar homes, shops, and city park in the toney (sp?) Marina district,
– Fort Baker right across the bay at the Golden Gate doing the same, – Coast Guard Air base in Alameda,
– Treasure Island in the middle of the Bay between SF and Oakland, and
– Monterey's Fort Ord, now housing a new State University and the rest being developed by private enterprises.
These were real – estate profits just like the PO in Portland not necessary fro defense since the end of the Vietnam war mid-1970's.
Absolutely I agree. There are a lot of federal assets just begging to be monetized. If only we had a real estate guy in charge . oh wait ..
Feb 15, 2018 | www.nakedcapitalism.com
Posted on February 14, 2018 by Yves Smith Yves here. Get a cup of coffee. This is an important, one-stop treatment of how financialization has harmed the real economy and increased inequality.
By Servaas Storm, Professor, Department of Economics, Faculty TPM, Delft University of Technology and co-author, with C.W. M. Naastepad, of Macroeconomics Beyond the NAIRU (Cambridge, MA: Harvard University Press), which has just won the Myrdal Prize of the European Association for Evolutionary Political Economy. Originally published at the Institute for New Economic Thinking website
Banks have long had undue influence in society. But with the rapid expansion of a financial sector that transforms all debts and assets into tradable commodities, we are faced with something far worse: financial markets with an only abstract, inflated, and destabilizing relationship with the real economy. To prevent another crisis, finance must be domesticated and turned into a useful servant of society.
The Financialization of Everything
Ours is, without a doubt, the age of finance -- of the supremacy of financial actors, institutions, markets, and motives in the global capitalist economy. Working people in the advanced economies, for instance, increasingly have their (pension) savings invested in mutual funds and stock markets, while their mortgages and other debts are turned into securities and sold to global financial investors (Krippner 2011; Epstein 2018). At the same time, the 'under-banked' poor in the developing world have become entangled, or if one wishes, 'financially included', in the 'web' of global finance through their growing reliance on micro-loans, micro-insurance and M-Pesa-like 'correspondent banking' (Keucheyan 2018; Mader 2018). More generally, individual citizens everywhere are invited to "live by finance", in Martin's (2002, p. 17) evocative words, that is: to organize their daily lives around 'investor logic', active individual risk management, and involvement in global financial markets. Citizenship and rights are being re-conceptualized in terms of universal access to 'safe' and affordable financial products (Kear 2012) -- redefining Descartes' philosophical proof of existence as: 'I am indebted, therefore I am' (Graeber 2011). Financial markets are opening 'new enclosures' everywhere, deeply penetrating social space -- as in the case of so-called 'viaticals', the third-party purchase of the rights to future payoffs of life insurance contracts from the terminally ill (Quinn 2008); or of 'health care bonds' issued by insurance companies to fund health-care interventions; the payoff to private investors in these bonds depends on the cost-savings arising from the health-care intervention for the insurers. Or what to think of 'humanitarian impact bonds' used to profitably finance physical rehabilitation services in countries affected by violence and conflict (Lavinas 2018); this latter instrument was created in 2017 by the International Red Cross in cooperation with insurer Munich Re and Bank Lombard Odier.
Conglomerate corporate entities, which used to provide long-term employment and stable retirement benefits, were broken up under pressure of financial markets and replaced by disaggregated global commodity-chain structures (Wade 2018), operating according to the principles of 'shareholder value maximization' (Lazonick 2014) -- with the result that today real decision-making power is often to be found no longer in corporate boardrooms, but in global financial markets. As a result, accumulation -- real capital formation which increases overall economic output -- has slowed down in the U.S., the E.U. and India, as profit-owners, looking for the highest returns, reallocated their investments to more profitable financial markets (Jayadev, Mason and Schröder 2018).
An overabundance of (cash) finance is used primarily to fund a proliferation of short-term, high-risk (potentially high-return) investments in newly developed financial instruments, such as derivatives -- Warren Buffet's 'financial weapons of mass destruction' that blew up the global financial system in 2007-8. Financial actors (ranging from banks, bond investors, and pension funds to big insurers and speculative hedge funds) have taken much bigger roles on much larger geographic scales in markets of items essential to development such as food (Clapp and Isakson 2018), primary commodities, health care (insurance), education, and energy. These same actors hunt the globe for 'passive' unearthed assets which they can re-use as collateral for various purposes in the 'shadow banking system' -- the complex global chains of credit, liquidity and leverage with no systemic regulatory oversight that has become as large as the regulated 'normal' banking system (Pozsar and Singh 2011; Gabor 2018) and enjoys implicit state guarantees (Kane 2013, 2015).
Pressed by the international financial institutions and their own elites, states around the world have embraced finance-friendly policies which included reducing cross-border capital controls, promoting liquid domestic stock markets, reducing the taxation of wealth and capital gains, and rendering their central banks independent from political oversight (Bortz and Kaltenbrunner 2018; Wade 2018; Chandrasekhar and Ghosh 2018). What is most distinctive about the present era of finance, however, is the shift in financial intermediation from banks and other institutions to financial markets -- a shift from the 'visible hand' of (often-times relationship) regulated banking to the axiomatic 'invisible hand' of supposedly anonymous, self-regulating, financial markets. This displacement of financial institutions by financial markets has had a pervasive influence on the motivations, choices and decisions made by households, firms and states as well as fundamental quantitative impacts on growth, inequality and poverty -- far-reaching consequences which we are only beginning to understand.
Setting the Stage
Joseph Alois Schumpeter (1934, p. 74), the Austrian-American theorist of capitalist development and its eventual demise, called the banker "the ephor of the exchange economy"  -- someone who by creating credit ( ex nihilo ) to finance new investments and innovation, "makes possible the carrying out of new combinations, authorizes people, in the name of society as it were, to form them." This same banker has, in Schumpeter's vision, "either replaced private capitalists or become their agent; he has himself become the capitalist par excellence. He stands between those who wish to form new combinations and the possessors of productive means." This way, the banker becomes "essentially a phenomenon of development", as Schumpeter (1934, p. 74) argued -- fostering the process of accumulation and directing the pace and nature of economic growth and technological progress (Festré and Nasica 2009; Mazzucato and Wray 2015). Alexander Gerschenkron (1968) concurred, comparing the importance of investment banks in 19th-century Germany's industrialization drive to that of the steam engine in Britain's Industrial Revolution:
" the German investment banks -- a powerful invention, comparable in its economic effects to that of the steam engine -- were in their capital-supplying functions a substitute for the insufficiency of the previously created wealth willingly placed at the disposal of entrepreneurs. [ ] From their central vantage point of control, the banks participated actively in shaping the major [ ] decisions of individual enterprises. It was they who very often mapped out a firm's path of growth, conceived farsighted plans, decided on major technological and locational innovations, and arranged for mergers and capital increases."
Schumpeter and Gerschenkron celebrated the developmental role played by bank-based financial systems, in which banks form long-run (often personal) relationships with firms, have insider knowledge and (as they are large creditors) are in a position to exert strategic pressure on firms, impose market rationality on their decisions and prioritize the repayment of their debts. However, what Schumpeter left unmentioned is that the absolute power of the 'ephors' could terribly fail: When the wrong people were elected to the 'ephorate', their leadership and guidance did ruin the Spartan state.  Likewise, the -- personalized relationship-based -- banking system could ruin the development process: it could fatally weaken the corporate governance of firms, because bank managers would be more reluctant to bankrupt firms with which they have had long-term ties, and lead to cronyism and corruption, as it is relatively easy for bank insiders to exploit other creditors or taxpayers (Levine 2005). Schumpeter's relationship-banker may be fallible, weak (when it comes to disciplining firms), prone to mistakes and errors of judgment and not necessarily immune to corruptible influences -- in short: there are reasons to believe that a bank-based financial system is inferior to an alternative, market-based, financial system (Levine 2005; Demirgüc-Kunt, Feyen and Levine 2012).
This view of the superiority of a 'market-based' financial system rests on Friedrich von Hayek's grotesque epistemological claim that 'the market' is an omniscient way of knowing, one that radically exceeds the capacity of any individual mind or even the state. For Hayek, "the market constitutes the only legitimate form of knowledge, next to which all other modes of reflection are partial, in both senses of the word: they comprehend only a fragment of a whole and they plead on behalf of a special interest. Individually, our values are personal ones, or mere opinions; collectively, the market converts them into prices, or objective facts" (Metcalf 2017). After his 'sudden illumination' in 1936 that the market is the best possible and only legitimate form of social organisation, Hayek had to find an answer to the dilemma of how to reformulate the political and the social in a way compatible with the 'rationality' of the (unregulated) market economy. Hayek's answer was that the 'market' should be applied to all domains of life. Homo œconomicus -- the narrowly self-interested subject who, according to Foucault (2008, pp. 270-271), "is eminently governable ." as he/she "accepts reality and responds systematically to systematic modifications artificially introduced into the environment -- had to be universalized. This, in turn, could be achieved by the financialization of 'everything in everyday life', because financial logic and constraints would help to impose 'market discipline and rationality' on economic decision-makers. After all, borrowers compete with another for funds -- and it is commercial (profit-oriented) banks and financial institutions which do the screening and selection of who gets funded.
Hayek proved to be extremely successful in hiding his reactionary political agenda behind the pretense of scientific neutrality -- by elevating the verdict of the market to the status of a natural fact, while putting any value that cannot be expressed as a price "on an equally unsure footing, as nothing more than opinion, preference, folklore or superstition" (Metcalf 2017). Hayek's impact on economics was transformative, as can be seen from how Lawrence Summers sums up 'Hayek's legacy':
"What's the single most important thing to learn from an economics course today? What I tried to leave my students with is the view that the invisible hand is more powerful than the [un]hidden hand. Things will happen in well-organized efforts without direction, controls, plans. That's the consensus among economists. That's the Hayek legacy." (quoted in Yergin and Stanislaw (1998, pp. 150–51))
This Hayekian legacy underwrites, and quietly promotes, neoliberal narratives and discourses which advocate that authority -- even sovereignty -- be conceded to (in our case: financial) 'markets' which act as an 'impartial and transparent judge', collecting and processing information relevant to economic decision-making and coordinating these decisions, and as a 'guardian', impartially imposing 'market discipline and market rationality' on economic decision-makers -- thus bringing about not just 'socially efficient outcomes' but social stability as well. This way, financialization constitutes progress -- bringing "the advantages enjoyed by the clients of Wall Street to the customers of Wal-Mart", as Nobel-Prize winning financial economist Robert Shiller (2003, p. x) writes. "We need to extend finance beyond our major financial capitals to the rest of the world. We need to extend the domain of finance beyond that of physical capital to human capital, and to cover the risks that really matter in our lives. Fortunately, the principles of financial management can now be expanded to include society as a whole."
Attentive readers might argue that faith in the social efficiency of financial markets has waned -- after all, Hayek's grand epistemological claim was falsified, in a completely unambiguous manner, by the Great Financial Crisis of 2007-8 which brought the world economy to the brink of a systemic meltdown. Even staunch believers in the (social) efficiency of self-regulating financial markets, including most notably former Federal Reserve chair Alan Greenspan, had to admit a fundamental 'flaw in their ideology'.
And yet, I beg to disagree. The economic ideology that created the crash remains intact and unchallenged. There has been no reckoning and no lessons were learned, as the banks and their shareholders were rescued, at the cost of about everyone else in society, by massive public bail-outs, zero interest rates and unprecedented liquidity creation by central banks. Finance staged a major come-back -- profits, dividends, salaries and bonuses in the financial industry have rebounded to where they were before, while the re-regulation of finance became stuck in endless political negotiations. Stock markets, meanwhile, notched record highs (before the downward 'correction' of February 2018), derivative markets have been doing rather well and under-priced risk-taking in financial markets has gathered steam (again), this time especially so in the largest emerging economies of China, India and Brazil (BIS 2017; Gabor 2018). In the process, global finance has become more concentrated and even more integral to capitalist production and accumulation. The reason why even the Great Financial Crisis left the supremacy of financial interests and logic unchallenged, is simple: there is no acceptable alternative mode of social regulation to replace our financialized mode of co-ordination and decision-making.
Accordingly, instead of a long overdue rethinking of Hayek's legacy, the economics profession has gone, with renewed vigour, for an even broader push for 'financial inclusion' (Mader 2018; Chandrasekhar and Ghosh 2018). Backed by the international financial institutions, 'social business' promotors (such as the World Economic Forum) and FinTech corporations, it proposes to extend financial markets into new areas including social protection and poverty alleviation (Lavinas 2018; Chandrasekhar and Ghosh 2018) and climate change mitigation (Arsel and Büscher 2015; Keuchyan 2018). Most economists were already persuaded, by a voluminous empirical literature (reviewed by Levine (2005)), to believe, with ample qualification and due caution, that finance and financial markets do contribute to economic growth -- a proposition that Nobel Laureate financial economist Merton Miller (1998, p. 14) found "almost too obvious for serious discussion". But now greater financialization is argued to be integral to not just 'growth' but 'inclusive growth', as World-Bank economists Demirgüc-Kunt, Klapper and Singer (2017) conclude in a recent review article: "financial inclusion allows people to make many everyday financial transactions more efficiently and safely and expand their investment and financial risk management options by using the formal financial system. This is especially relevant for people living in the poorest 40 percent of households." The way to extend the good life to more people is not to shrink finance nor restrain financial innovation, writes Robert Shiller (2012) in a book titled Finance and the Good Society , but instead to release it. Shiller's book celebrates finance's 'genuine beauty' and exhorts idealistic (sic) young students to pursue careers in derivatives, insurance and related fields.
'Really-Existing' Finance Capitalism
Financialization underwrites neoliberal narratives and discourses which emphasize individual responsibility, risk-taking and active investment for the benefit of the individual him-/herself -- within the 'neutral' or even 'natural' constraints imposed by financial markets and financial norms of creditworthiness (Palma 2009; Kear 2012). This way, financialization morphs into a 'technique of power' to maintain a particular social order (Palma 2009; Saith 2011), in which the delicate task of balancing competing social claims and distributive outcomes is offloaded to the 'invisible hand' which operates through anonymous, 'blind' financial markets (Krippner 2005, 2011). This is perhaps illustrated clearest by Michael Hudson (2012, p. 223):
"Rising mortgage debt has made employees afraid to go on strike or even to complain about working conditions. Employees became more docile in a world where they are only one paycheck or so away from homelessness or, what threatens to become almost the same thing, missing a mortgage payment. This is the point at which they find themselves hooked on debt dependency."
Paul Krugman (2005) has called this a 'debt-peonage society' -- while J. Gabriel Palma (2009, p. 833) labelled it a 'rentiers' delight' in which financialization sustains the rent-seeking practices of oligopolistic capital -- as a system of discipline as well as exploitation, which is "difficult to reconcile with any acceptable definition of democracy" (Mann 2010, p. 18).
In this regime of social regulation, income and wealth became more concentrated in the hands of the rentier class (Saith 2011; Goda, Onaran and Stockhammer 2017) , and as a result, productive capital accumulation gave way before the increased speculative use of the 'economic surplus of society' in pursuit of 'financial-capital' gains through asset speculation (Davis and Kim 2015). This took the wind out of the sails of the 'real' economy, and firms responded by holding back investment, using their profits to pay out dividends to their shareholders and to buy back their own shares (Lazonick 2014). Because the rich own most financial assets, anything that causes the value of financial assets to rise rapidly made the rich richer (Taylor, Ömer and Rezai 2015).
In the U.S., arguably the most financialized economy in the world, the result of this was extreme income polarization, unseen after WWII (Piketty 2014; Palma 2011). The 'American Dream', writes Gabriel Palma (2009, p. 842), was "high jacked by a rather tiny minority -- for the rest, it has only been available on credit!" Because that is what happened: lower- and middle-income groups took on more debt to finance spending on health care, education or housing, spurred by the deregulation of financial markets and changes in the tax code which made it easier and more attractive for households with modest incomes to borrow in order to spend. This debt-financed spending stimulated an otherwise almost comatose U.S. economy by spurring consumption (Cynamon and Fazzari 2015). In the twenty years before the Great Financial Crash, debts and 'financial excess' -- in the form of the asset price bubbles in 'New Economy' stocks, real estate markets and commodity (futures) markets -- propped up aggregate demand and kept the U.S. and global economy growing. "We have," Paul Krugman (2013) concludes, "an economy whose normal condition is one of inadequate demand -- of at least mild depression -- and which only gets anywhere close to full employment when it is being buoyed by bubbles."
But it is not just the U.S. economy: the whole world has become addicted to debt. The borrowings of global households, governments and firms have risen from 246% of GDP in 2000 to 327%, or $ 217 trillion, today -- which is $70 trillion higher than 10 years ago.  It means that for every extra dollar of output, the world economy cranks out more than almost 10 extra dollars of debt. Forget about the synthetic opioid crisis, the world's more dangerous addiction is to debt. China, which has been the engine of the global economy during most of the post-2008 period, has been piling up debt to keep its growth process going -- the IMF (2017) expects China's non-financial sector debt to exceed 290% of its GDP in 2022, up from around 140% (of GDP) in 2008, warning that China's current credit trajectory is "dangerous with increasing risks of a disruptive adjustment." China's insatiable demand for debt fueled growth, but also led to a property bubble and a rapidly growing shadow banking system (Gabor 2018) -- raising concerns that the economy may face a hard landing and send shockwaves through the world's financial markets. The next global financial catastrophe may be just around the corner.
How Finance Is Reshaping the 'Rules of the Game'
To understand this debt explosion we must comprehend what is driving the financial hyper-activity -- and how this is changing the way our economies work. For a start, the growth of the financial industry, in terms of its size and power, its incomprehensible complexity and its penetration into the real economy, is inseparably connected to the structural increase in income and wealth inequalities (Foster and McChesney 2012; Storm and Naastepad 2015; Cynamon and Fazzari 2015; Goda, Onaran and Stockhammer 2017). Richer households have a higher propensity to save and are more likely to hold financial wealth in risky assets (such as mutual funds, shares and bonds) and hence, more money ends up in the management of institutional investors or 'asset managers' (Epstein 2018; Gabor 2018). As a result, a small core of the global population, the so-called High Net Worth Individuals (Lysandrou 2011; Goda 2017), controls an increasingly larger share of incomes and wealth (Palma 2011; Saith 2011; Piketty 2014; Taylor, Ömer and Rezai 2015). This trend was strengthened by the shift towards capital-based pension schemes (Krippner 2011) and the structural increase in the liquidity preference of big shareholder-dominated corporations, which came about under pressure from activist shareholders wanting to 'disgorge the cash' within these firms (Lazonick 2014; Epstein 2018; Jayadev et al. 2018). However, with few sufficiently profitable investment opportunities in the "real economy", cash wealth -- originating out of a higher profit share, dividends, shareholder payouts and capital gains on earlier financial investments -- began to accumulate in global centrally managed 'institutional cash pools', the volume of which grew from an insignificant $100 billion in 1990 to a systemic $6 trillion at the end of 2013 (Pozsar 2011, 2015). 
OTC derivative trading requires the availability of cheap liquidity on demand (Mehrling 2012) and this means that the 'asset management complex' cannot invest the cash pools into long-term assets, but has to keep the liquidity available -- ready to use when the possibility for a profitable deal arises. But doing so poses enormous risks, because the global cash pools are basically uninsured: they are far too big to fall under the coverage of normal deposit-insurance schemes offered by the traditional banking system (Pozsar 2011). Securing 'principal safety' for the cash pools under their management thus became the main headache of the asset managers -- which proved to be a far greater challenge than generating adequate rates of return for the cash-owners. The reason was that the traditional way of securing principal safety of one's cash was by putting it in very short-term government bonds which were credit-rated as being 'safe' ( e.g. U.S. T-Bills or German Bunds ). This way, the cash pool became 'collateralized' -- backed up by sovereign bonds. But as inequality increased and global institutional cash pools expanded, the demand for safe collateral began to permanently exceed the availability of 'safe' government bonds (Pozsar 2011; Lysandrou and Nesvetailova 2017).
The only way out was by putting the cash into newly developed privately guaranteed instruments: asset-backed securities . These instruments were secured by collateral (Lysandrou and Nesvetailova 2017) -- that is, the cash pools were lent, on a very short term basis (often over-night), to securitization trusts, banks and other asset owners in exchange for safe and secure collateral -- on the agreement that the borrower would repurchase the collateral some time later (often the next day). This is called a repurchase or 'repo' transaction (Gorton and Metrick 2009) or an 'asset-backed commercial paper' deal (Covitz, Lang and Suarez 2013). Normally, the cash loan would be over-collateralized, with the cash provider receiving collateral of a higher value than the value of the cash; the basic workings of the 'repo' market are further explained in Storm (2018). These (short-term) deals are generally done within the shadow banking system, the mostly 'self-regulated' sphere of the financial sector which arose in response to the growing demand for risk intermediation on behalf of -- and the prioritization of a 'safe parking place' for -- the global institutional cash pools (Pozsar 2011; Pozsar and Singh 2011). The repo lender and the securities borrower -- each lends cash and gets back securities -- can re-use those securities as collateral to get repo loans for themselves. And the next cash lender, which gets the same securities as collateral, can re-use them again as collateral to get a repo loan for itself. And so on. This creates a 'chain' in which one set of securities gets re-used several times as collateral for several loans. This so-called re-hypothecation (Pozsar and Singh 2011) means that these securities were increasingly used as 'money', a means of payment in inter-bank deals, within the shadow banking system.
It should be clear that 'securities', which are privately 'manufactured' and guaranteed money market instruments, form the feedstock of this complex and opaque 'profit-generating machine' of inter-bank wheeling and dealing -- both by providing 'insurance' to the global cash pools and by acting as an (privately guaranteed) means of payment in OTC trading. 'Securitization' is the most critical, yet under-appreciated, enabler of financialization (Davis and Kim 2015). What then is securitization? It is the process of taking 'passive' assets with cash flows, such as mortgages held by commercial banks, and commodifying them into tradable securities. Securities are 'manufactured' using a portfolio of hundreds or thousands of underlying assets, all yielding a particular return (in the form of cash flow) and carrying a particular risk of default to their buyers. Due to the law of large numbers, the payoff from the portfolio becomes predictable and suitable for being sliced up in different 'tranches', each having a different risk profile. Storm (2018) provides a simple but illustrative numerical example of how a security is manufactured using a two-asset example. As Davis and Kim (2015) argue, securitization represents a fundamental shift in how finance is done. In the old days of 'originate-and-hold' (before the 1980s), (regulated) commercial banks would originate mortgage loans and keep them on their balance sheets for the duration of the loan period. But now in our era of 'originate-and-distribute', (de-regulated) commercial banks originate mortgages, but then sell them off to securitization trusts which turn these mortgages into 'securities' and vend them to financial investors. Securitization thus turns a concrete long-term relationship between a bank ( i.e. Schumpeter's 'ephor') and the loan-taker into an abstract relationship between anonymous financial markets and the loan-taker (in line with Hayek's legacy). Commercial banks are now mere 'underwriters' of the mortgage (which is quickly sold and securitized), while households which took the mortgage, are now de facto 'issuers of securities' on (global) financial markets. This is the essence of the shift in financial intermediation from banks to financial markets (Lysandrou and Nesvetailova 2017). Kane (2013, 2015) explains how this system is enjoying the implicit back-up of central banks and states and how it is leading to predatory risk-taking by mega-banks.
This securitization fundamentally transformed the 'rules of the capitalist game', often in rather perverse directions. For one, as finance expanded, the demand for 'investment-grade' (AAA-rated) securities grew -- and the result was a hunt for additional collateral akin to earlier gold rushes, write Pozsar and Singh (2011, p. 5): "Obtaining collateral is similar to mining. It involves both exploration (looking for deposits of collateral) and extraction (the "unearthing" of passive securities so they can be re-used as collateral for various purposes in the shadow banking system)." Collateral is the new gold -- and this explains why banks (before the Great Financial Crisis) gave loans to non-creditworthy (sub-prime) customers (Epstein 2018) and why these same banks are now eager to include the poor in the financial system (Mader 2018) and to enclose ever new spaces for profit-making (Arsel and Büscher 2012; Sathyamala 2017; Keucheyan 2018). Mortgage loans (sub-prime or prime) or micro-credit deals derive their systemic importance from the access they provide to the underlying collateral -- either in the form of residential property or of high-return cash flows on micro-loans, made low-risk by peer pressure.
This systemic importance (to the financial system, that is) by far exceeds the value of these loans to the actual borrowers and it has led to and is still leading to an overdose of finance -- with ruinous consequences. Likewise, one cannot understand what is going in commodity and food markets unless one appreciates that trading in 'commodities' and 'food' is not so much related to (present and future) consumption needs, but is increasingly dictated by the market's alternative collateral, store-of-value, and safe-asset role in the global economy (Clapp and Isakson 2018). That is, the commodity option or futures contract derives its value more from its usefulness as 'collateralized securities' to back-up speculative shadow-banking transactions than from its capacity to meet food demand or smoothen output prices for farmers. We can add a fourth law to Zuboff's Laws (2013), namely that anything which can be collateralized, will be collateralized. This even includes 'social policies', because the present value of future streams of cash benefits for the poor can serve as collateral (see Lavinas 2018). And because the major OTC markets require price volatility and spreads, exchange rate volatility and uncertainty, which are 'bad' for the economic development of countries attempting to industrialize (Bortz and Kaltenbrunner 2018), constitute a sine qua non for the profitability of major OTC instruments including forex swaps and credit default swaps (to 'hedge' the risks of the forex swaps).  Perverse incentives, excessive risk-taking, fictitious financial instruments -- it appears finance capitalism has reached its nadir. "In the way that even an accumulation of debts can appear as an accumulation of capital," as Marx (1981, pp. 607-08) insightfully observed, "we see the distortion involved in the credit system reach its culmination."
A 'One-Foot' Conclusion
The shift in financial intermediation from banks to financial markets, and the introduction of financial market logic into areas and domains where it was previously absent, have not just led to negative developmental impacts, but also changed the 'rules of the game', conduct and outcomes -- to the detriment of 'inclusive' economic development and in ways that have helped to legitimize -- what Palma (2009) has appositely called -- a 'rentiers' delight', a financialized mode of social regulation which facilitated rent-seeking practices of a self-serving global financial elite and at the same time enabled a sickening rise in inequality. Establishment (financial) economics has helped to de-politicize and legitimize this financialized mode of social regulation by invoking Hayek's epistemological claim that (financial) markets are the only legitimate, reliably welfare-enhancing foundation for a stable social order and economic progress.
It is this complacency of establishment economics which led to the global financial crash of 2008 and ten dire years of economic stagnation, high and rising inequalities in income and wealth, historically unprecedented levels of indebtedness, and mounting uncertainty about jobs and incomes in most nations. The crisis conditions crystalized into a steadily increasing popular dissatisfaction of those supposedly 'left behind by (financial) globalization' with the political and economic status quo; a dissatisfaction which amplified into a 'groundswell of discontent' -- to use the words of the IMF's Managing Director Christine Lagarde (2016). Angry and anxious electorates were transformed by demagogues into election-winning forces, as the British 'Brexit' vote, Trump's (2016) and Erdogan's (2017) election victories in the U.S. and Turkey, and recent political changes (toward authoritarianism) in Brazil, Egypt, the Philippines and India all attest (see Becker, Fetzer and Novy (2017) for an analysis of the Brexit vote; and Ferguson, Jorgenson and Chen (2018) for an assessment of the Trump vote).
We have to confront the Panglossian logic and arguments of (financial) economists, used to legitimize the current financialized global order as the 'best of all possible worlds". We must lay to rest the Hayekian claim that unregulated market-based finance is socially efficient -- as the macro- and micro-economic impacts of the rise to dominance of financial markets on capital accumulation, growth and distribution have overwhelmingly been deleterious (Epstein 2018). Market-based finance is no longer funding the real economy (Epstein 2018; Jayadev, Mason and Schröder 2018), but rather engages in self-serving strategy of rent-seeking (Chandrasekhar and Ghosh 2018; Mader 2018), looting the 'fisc' (Chandrasekhar and Ghosh 2018; Mader 2018), exchange rate and global stock market speculation (Bortz and Kaltenbrunner 2018), OTC derivatives speculation (Keucheyan 2018; Clapp and Isakson 2018) and collateral mining (Gabor 2018; Lavinas 2018) -- asphyxiating economic development.
This does not mean, however, that Schumpeter and Gerschenkron were wrong in calling the banker the 'ephor' of capitalism and a 'phenomenon of development'. Finance can positively contribute to economic development, something which indeed is "almost too obvious for serious discussion" as Miller wrote, but only when the 'ephor' is 'governed' and 'directed' by state regulation to structure accumulation and distribution into socially useful directions (Epstein 2018; Jayadev, Mason and Schröder 2018). The East Asian miracle economies prove the point that finance can be socially efficient if bankers can be made to work within the 'developmental mindset', the institutional arrangements and political compulsions of a 'developmental state', as argued by Wade (2018) -- China's recent move to (securities) market-based finance may be the beginning of unravelling of its growth miracle (Gabor 2018; BIS 2017).
Rather than letting financial markets discipline the rest of the economy and the whole of society, finance itself has to be disciplined by a countervailing social authority which governs it to act in socially desirable directions. One famous account in the Talmud tells about Rabbi Hillel, a great sage, who when he was asked to explain the Torah in the time that he could stand on one foot, replied: "Do not do unto others that which is repugnant to you. Everything else is commentary." If there is a one-foot summary of the literature reviewed in this introduction, it is this: "Finance is a terrible 'ephor', but, if and when domesticated, can be turned into a useful servant. Everything else is commentary."
Feb 06, 2018 | failedevolution.blogspot.gr
How Russiagate fiasco destroys Kremlin moderates, accelerating danger for a hot war with Russia globinfo freexchange
Corporate Democrats can't stop pushing for war through the Russiagate fiasco.
The party has been completely taken over by the neocon/neoliberal establishment and has nothing to do with the Left. The pro-Hillary warmongering media, the ones that pushed for war in Iraq and elsewhere, through big lies and false evidence, are the vanguard of this ugly machine that supports the most terrible Trump administration bills, yet, this machine can't stop accusing him for 'colluding' with Russia that 'interfered' in the 2016 US election. Of course, no evidence presented for such an accusation and no one really can explain what that 'interference' means.
But things are probably much worse, because this completely absurd persistence on Russiagate fiasco that feeds an evident anti-Russian hysteria, destroys all the influence of the Kremlin moderates who struggle to keep open channels between Russia and the United States.
Stephen Cohen, professor emeritus of Russian studies, history, and politics at NY University and Princeton University, explained to Aaron Maté and the Real News the terrible consequences:
They're accusing the President of the United States of being a Russian agent, this has never happened in American history. However much you may loathe Trump, this is a whole new realm of defamation. For a number of years, there's been a steady degradation of American political culture and discourse, generally. There was a time when I hoped or thought that it would be the Democratic Party that would push against that degradation.
Now, however, though I'm kind of only nominally, a Democrat, it's the Democratic Party that's degrading our political culture and our discourse. So, this is MSNBC, which purports to be not only the network of the Democratic Party, but the network of the progressive wing of the Democratic Party, is now actually because this guy was a semi-anchor was asking the question to an American senator, " Do you think that Representative Nunes, because he wants the memo released, has been compromised by the Kremlin? "
I think all of us need to focus on what's happened in this country when in the very mainstream, at the highest, most influential levels of the political establishment, this kind of discourse is no longer considered an exception. It is the norm. We hear it daily from MSNBC and CNN, from the New York Times and the Washington Post, that people who doubt the narrative of what's loosely called Russiagate are somehow acting on behalf of or under the spell of the Kremlin, that we aren't Americans any longer. And by the way, if people will say, " Well, it's a weak capitulation of McCarthyism, " I say no, it's much more than that because McCarthy was obsessed with Communist. That was a much narrower concept than being obsessed with anybody who might be under Russian influence of any kind. The so-called affinity for Russia. Well, I have a profound affinity for Russian culture and for Russian history. I study it all the time. This is something new. And so, when you accuse a Republican or any Congressman of being a Kremlin agent, this has become a commonplace. We are degraded.
The new Cold War is unfolding not far away from Russia, like the last in Berlin, but on Russia's borders in the Baltic and in Ukraine. We are building up our military presence there, so the Russians are counter-building up, though within their territory. That means the chances of hot war are now much greater than they were before. Meanwhile, not only do we not have a discussion of these real dangers in the United States but anyone who wants to incite a discussion, including the President of the United States, is called treasonous. Every time Trump has tried with Putin to reach a cooperative arrangement, for example, on fighting terrorism in Syria, which is a necessary purpose, literally, the New York Times and the others call him treasonous. Whereas, in the old days, the old Cold War, we had a robust discussion. There is none here. We have no alert system that's warning the American people and its representatives how dangerous this is. And as we mentioned before, it's not only Nunes, it's a lot of people who are being called Kremlin agents because they want to digress from the basic narrative.
Meanwhile, people in Moscow who formed their political establishment, who surround Putin and the Kremlin, I mean, the big brains who are formed policy tankers, and who have always tended to be kind of pro-American, and very moderate, have simply come to the conclusion that war is coming. They can't think of a single thing to tell the Kremlin to offset hawkish views in the Kremlin. Every day, there's something new. And these were the people in Moscow who are daytime peacekeeping interlockers. They have been destroyed by Russiagate. Their influence as Russia is zilch. And the McCarthyites in Russia, they have various terms, now called the pro-American lobby in Russia 'fifth columnists'. This is the damage that's been done. There's never been anything like this in my lifetime.
https://www.youtube.com/embed/CpVBA4OIfb8The Democrats couldn't had downgrade their party further. This disgusting spectacle would make FDR totally ashamed of what this party has become. Not only they are voting for every pro-plutocracy GOP bill under Trump administration, but they have become champions in bringing back a much worse and unpredictable Cold War that is dangerously escalating tension with Russia.
And, unfortunately, even the most progressives of the Democrats are adopting the Russiagate bogus, like Bernie Sanders, because they know that if they don't obey to the narratives, the DNC establishment will crush them politically in no time.
Feb 11, 2018 | theduran.com
Seventy five year old Wall Street investor and financial analyst Jim Rogers says he's expecting another harsh bear market to come our way – and soon.
His reasoning for anticipating that it will be of catastrophic proportions lies in the fact that the global economy has accumulated such a large amount of debt since the 2007-2008 financial crisis. The recent correction in the stock market, with the Dow Jones industrial average posting its worst week in two years. Earlier in the session, the index was on track for its worst week since October 2008, during the financial crisis. As Bloomberg reports :
While Rogers isn't saying that stocks are poised to enter bear territory now -- or making any claim to know when they will -- he says he's not surprised that U.S. equities resumed their selloff Thursday and he expects the rout to continue.
"When we have a bear market again, and we are going to have a bear market again, it will be the worst in our lifetime ," Rogers, the chairman of Rogers Holdings Inc., said in a phone interview. " Debt is everywhere, and it's much, much higher now ."
The plunge in equity markets resumed Thursday, as the S&P 500 Index sank 3.8 percent, taking its rout since a Jan. 26 record past 10 percent and meeting the accepted definition of a correction. The Dow Jones Industrial Average plunged more than 1,000 points, while the losses continued in early Asian trading Friday as the Nikkei 225 Stock Average dropped as much as 3.5 percent.
Rogers has seen severe bear markets before. Even this century, the Dow plunged more than 50 percent during the financial crisis, from a peak in October 2007 through a low in March 2009. It sank 38 percent from its high during the IT bubble in 2000 through a low in 2002.
"Jim has been talking about severe corrections since I started in business over 30 years ago," said Alibaba Group Holding Ltd. President Mike Evans, a former Goldman Sachs Group Inc. banker. "So I'm sure he'll be right at some point."
Rogers predicts the stock market will experience jitters until the Federal Reserve increases borrowing costs. That, he says, will be the point when stocks go up again. He said he'll buy an agriculture index today, reiterating his view that prices of such commodities have been depressed for some time.
"I'm very bad in market timing," Rogers said. "But maybe there will be continued sloppiness until March when they raise interest rates, and it looks like the market will rally."
Feb 11, 2018 | finance.yahoo.com
Turbulence is rocking the U.S. stock market as investors fear a strong economy will send interest rates higher. However Yale economics professor Robert Shiller said Thursday, while higher rates could tip the housing market the real issue is inflation.
"Obviously interest rates it's the price of time. It's a fundamental factor in our economy. And people watch it. A lot of people think the stock market is overpriced, but what's the alternative?" Shiller asked. "If you go into debt, it has not been a very good return either. But that's all changing now and maybe that's the new narrative."
The Federal Reserve in January during its' first policy meeting of 2018 left its benchmark interest rate unchanged in a range of 1.25 percent to 1.5 percent -- citing continued job growth an stronger inflation and setting the stage for a rate hike in March.
Despite acclimation for a low interest rates, Shiller pointed out how homebuyers have gotten used to a no-inflation environment.
According to the latest employment report, wage growth rose 2.9% compared to the same period a year earlier. Investors fear the Federal Reserve might raise interest rates faster than anticipated due to stronger-than-expected wage growth data, which has caused the 10-year Treasury yield to rise to 2.85%. Increasing bond yields impact the housing market, as mortgage rates tend to follow the same path.
But in Shiller's opinion, the latest data isn't "alarming."
"That's not necessarily inflationary," Shiller said. "But if the economy stays full tilt as it has been, a pickup of inflation would not be a surprise and some people wouldn't mind it so much."
Feb 11, 2018 | www.zerohedge.com
Element -> Catullus Feb 10, 2018 8:52 PM Permalinkebworthen Feb 10, 2018 1:38 PM Permalink
One of the more prescient remarks Hussman has been making in the past few months is the tendency for the speculatively frenzied mindset, to fail to recognise the synergistic effects of its own speculation on the resulting market valuations, but instead wants to presume that some other deep integral factor must be responsible for the rising valuation levels, the miracle of the grassy uplands, which they keep seeing, and which keeps them speculating all the more.
"This could go on ... and on ... and on ...", and then it doesn't.
Hence the classic tendency to sharp rises and even sharper falls near the top of the cycle.
Same occurred in China in 2015/2016, but almost no one ever seems to remember this, it's always "different this time".
And never is.
And you're currently thinking that it just ain't so ... this time around ... this could go on ... and on ...
S&P 666 again! That low had a lot of meaning.
No such thing as money or markets anymore, all perception.
Feb 11, 2018 | finance.yahoo.com
Legendary macro trader Paul Tudor Jones predicted that tax reform would have huge implications on the markets.
Jones, who rarely makes public comments on the markets, sent an investor update on February 2 just ahead of this week's wild swings in the market with the S&P 500 moving into correction territory.
In the letter, he highlighted how President Trump's State of the Union address on Jan. 30 touting "the biggest tax reforms in American history" should frighten investors who've amassed more than $3 trillion in bonds into mutual funds and exchange-traded funds since 2008.
"This statement probably brought the loudest cheer of the night this week as all the Republicans jumped to their feet and offered a chorus of huzzahs. No doubt the tax cut has had a profound impact on the economy in the short-term and that will continue," Jones wrote. "But I wonder if they would have remained cheering if President Trump had followed with, 'By the way, Treasury auctions will increase this year from the current projection of $583 billion to almost $1 trillion. Relative to recent auction sizes, Treasury auctions will be higher by $500 billion next year and by $545 billion in 2020. And, secondly, the Congressional Budget Office's long-term projection for our debt/GDP will eclipse that of Japan at its peak, possibly making us the most indebted country in the world by 2033.'"
Feb 11, 2018 | www.theguardian.com
Revolving door in actionBrand attracted interest because of her potential to assume a key role in the Trump-Russia investigation. The official overseeing the special counsel Robert Mueller's investigation, the deputy attorney general Rod Rosenstein, has been repeatedly criticized by Trump. If Rosenstein had been fired or quit, oversight would have fallen to Brand. That job would now fall to the solicitor general, Noel Francisco.
"She felt this was an opportunity she couldn't turn down," her friend and former colleague Jamie Gorelick said. Walmart sought Brand to be head of global corporate governance at the retail giant, a position Gorelick said has legal and policy responsibilities that will cater to her strengths.
"It really seems to have her name on it," Gorelick said.
Feb 10, 2018 | turcopolier.typepad.com
The Borgist foreign policy of the administration has little to do with the generals.
To comprehend the generals one must understand their collective mentality and the process that raised them on high as a collective of their own. The post WW2 promotion process in the armed forces has produced a group at the top with a mentality that typically thinks rigorously but not imaginatively or creatively.
These men got to their present ranks and positions by being conformist group thinkers who do not stray outside the "box" of their guidance from on high. They actually have scheduled conference calls among themselves to make sure everyone is "on board."
If asked at the top, where military command and political interaction intersect, what policy should be they always ask for more money and to be allowed to pursue outcomes that they can understand as victory and self fulfilling with regard to their collective self image as warrior chieftains.
In Obama's time they were asked what policy should be in Afghanistan and persuaded him to reinforce their dreams in Afghanistan no matter how unlikely it always was that a unified Western oriented nation could be made out of a collection of disparate mutually alien peoples.
In Trump's time his essential disinterest in foreign policy has led to a massive delegation of authority to Mattis and the leadership of the empire's forces. Their reaction to that is to look at their dimwitted guidance from on high (defeat IS, depose Assad and the SAG, triumph in Afghanistan) and to seek to impose their considerable available force to seek accomplishment as they see fit of this guidance in the absence of the kind of restrictions that Obama placed on them.
Like the brass, I, too, am a graduate of all those service schools that attend success from the Basic Course to the Army War College. I will tell you again that the people at the top are not good at "the vision thing." They are not stupid at all but they are a collective of narrow thinkers. pl
Jack , 09 February 2018 at 05:42 PMSirFredw , 09 February 2018 at 06:26 PM
IMO, this conformism pervades all institutions. I saw when I worked in banking and finance many moons ago how moving up the ranks in any large organization meant you didn't rock the boat and you conformed to the prevailing groupthink. Even nutty ideas became respectable because they were expedient.
Academia reinforces the groupthink. The mavericks are shunned or ostracized. The only ones I have seen with some degree of going against the grain are technology entrepreneurs.You remind me of an old rumination by Thomas Ricks:Peter AU , 09 February 2018 at 06:37 PM
Take the example of General George Casey. According to David Cloud and Greg Jaffe's book Four Stars, General Casey, upon learning of his assignment to command U.S. forces in Iraq, received a book from the Army Chief of Staff. The book Counterinsurgency Lessons Learned from Malaya and Vietnam was the first book he ever read about guerilla warfare." This is a damning indictment of the degree of mental preparation for combat by a general. The Army's reward for such lack of preparation: two more four star assignments.
http://foreignpolicy.com/2012/02/07/cmon-man-meathead-generals-and-some-other-things-that-are-driving-me-crazy-about-life-in-this-mans-post-911-army/"They are not stupid at all but they are a collective of narrow thinkers." I have found this to be the case with 80 to 90% of most professions. A good memory and able to perform meticulously what they have been taught, but little thinking outside that narrow box. Often annoying, but very dangerous in this case.Anna , 09 February 2018 at 06:48 PMSince Afghanistan and the brass were mentioned in the editorial statement, here is an immodest question -- Where the brass have been while the opium production has been risen dramatically in Afghanistan under the US occupation? "Heroin Addiction in America Spearheaded by the US-led War on Afghanistan" by Paul Craig Roberts: https://www.paulcraigroberts.org/2018/02/06/heroin-addiction-america-spearheaded-us-led-war-afghanistan/J , 09 February 2018 at 07:05 PM
" in 2000-2001 the Taliban government –with the support of the United Nations (UNODC) – implemented a successful ban on poppy cultivation. Opium production which is used to produce grade 4 heroin and its derivatives declined by more than 90 per cent in 2001. The production of opium in 2001 was of the order of a meager 185 tons. It is worth noting that the UNODC congratulated the Taliban Government for its successful opium eradication program. The Taliban government had contributed to literally destabilizing the multibillion dollar Worldwide trade in heroin.
In 2017, the production of opium in Afghanistan under US military occupation reached 9000 metric tons. The production of opium in Afghanistan registered a 49 fold increase since Washington's invasion. Afghanistan under US military occupation produces approximately 90% of the World's illegal supply of opium which is used to produce heroin. Who owns the airplanes and ships that transport heroin from Afghanistan to the US? Who gets the profits?"
---A simple Q: What has been the role of the CENTCOM re the racket? Who has arranged the protection for the opium production and for drug dealers? Roberts suggests that the production of opium in Afghanistan "finances the black operations of the CIA and Western intelligence agencies." -- All while Awan brothers, Alperovitch and such tinker with the US national security?Colonel,divadab , 09 February 2018 at 07:16 PM
There needs to be a 're-education' of the top, all of them need to be required to attend Green Beret think-school, in other words they need to be forced to think outside the box, and to to think on their feet. They need to understand fluid situations where things change at the drop of a hat, be able to dance the two-step and waltz at the same time. In other words they need to be able to walk and chew gum and not trip over their shoe-laces.
By no means are they stupid, but you hit the nail on the head when you said 'narrow thinkers'. Their collective hive mentality that has developed is not a good thing.God help the poor people of Syria.james , 09 February 2018 at 07:30 PMthanks pat... it seems like the usa has had a steady group of leaders that have no interest in the world outside of the usa, or only in so far as they can exploit it for their own interest... maybe that sums up the foreign policy of the usa at this point... you say trump is disinterested.. so all the blather from trump about 'why are we even in syria?', or 'why can't we be friends with the russia?' is just smoke up everyone's ass...David E. Solomon , 09 February 2018 at 07:50 PM
i like what you said here "conformist group thinkers who do not stray outside the "box" of their guidance from on high. They actually have scheduled conference calls among themselves to make sure everyone is "on board." - that strikes me as very true - conformist group thinkers... the world needs less of these types and more actual leaders who have a vision for something out of the box and not always on board... i thought for a while trump might fill this bill, but no such luck by the looks of it now..Colonel Lang,DianaLC , 09 February 2018 at 07:56 PM
Your description of these guys sounds like what we have heard about Soviet era planners. Am I correct in my understanding, or am I missing something?
As a young person in eighth grade, I learned about the "domino theory" in regard to attempts to slow the spread of communism. Then my generation was, in a sense, fractured around the raging battles for and against our involvement in Vietnam.Bill Herschel , 09 February 2018 at 09:11 PM
I won't express my own opinion on that. But I mention it because it seems to be a type of "vision thing."
So, now I ask, what would be your vision for the Syrian situation?This has been going on for a long time has it not? Westmoreland? MacArthur?turcopolier , 09 February 2018 at 09:40 PM
How did this happen?Bill Herschelturcopolier , 09 February 2018 at 09:48 PM
Westmoreland certainly, Macarthur certainly not. This all started with the "industrialization" of the armed forces in WW2. we never recovered the sense of profession as opposed to occupation after the massive expansion and retention of so many placeholders. a whole new race of Walmart manager arose and persists. plDianaCturcopolier , 09 February 2018 at 09:55 PM
The idea of the Domino Theory came from academia, not the generals of that time. They resisted the idea of a war in east Asia until simply ordered into it by LBJ. After that their instinct for acting according to guidance kicked in and they became committed to the task. Syria? Do you think I should write you an essay on that? SST has a large archive and a search machine. plDavid E. Solomonturcopolier , 09 February 2018 at 10:08 PM
I am talking about flag officers at present, not those beneath them from the mass of whom they emerge. There are exceptions. Martin Dempsey may have been one such. The system creates such people at the top. plelaine,turcopolier , 09 February 2018 at 10:12 PM
Your usual animosity for non-left wing authority is showing. A commander like the CENTCOM theater commander (look it up) operates within guidance from Washington, broad guidance. Normally this is the president's guidance as developed in the NSC process. Some presidents like Obama and LBJ intervene selectively and directly in the execution of that guidance. Obama had a "kill list" of jihadis suggested by the IC and condemned by him to die in the GWOT. He approved individual missions against them. LBJ picked individual air targets in NVN. Commanders in the field do not like that . They think that freedom of action within their guidance should be accorded them. This CinC has not been interested thus far in the details and have given the whole military chain of command wide discretion to carry out their guidance. plJturcopolier , 09 February 2018 at 10:24 PM
Thank you, but it is real GBs that you like, not the Delta and SEAL door kickers. plGaikomainakuturcopolier , 09 February 2018 at 10:27 PM
"I am not sure that I understand what makes a Borgist different from a military conformist." The Borg and the military leaders are not of the same tribe. they are two different collectives who in the main dislike and distrust each other. plAnna. Their guidance does not include a high priority for eradicating the opium trade. Their guidance has to do with defeating the jihadis and building up the central government. plturcopolier , 09 February 2018 at 10:30 PMPeter AUturcopolier , 09 February 2018 at 10:44 PM
Predictably there is always someone who says that this group is not different from all others. Unfortunately the military function demands more than the level of mediocrity found in most groups. pljamesPeter AU , 09 February 2018 at 11:01 PM
Trump would like to better relations with Russia but that is pretty much the limit of his attention to foreign affairs at any level more sophisticated than expecting deference. He is firmly focused on the economy and base solidifying issues like immigration. plThe medical profession comes to mind. GP's and specialists. Many of those working at the leading edge of research seem much wider thinking and are not locked into the small box of what they have been taught.turcopolier , 09 February 2018 at 11:16 PMPeter AUJ -> turcopolier ... , 09 February 2018 at 11:22 PM
The GPs do not rule over a hierarchy of doctors. plCombat Applications Group and SEALS don't even begin to compare, they're not in the same league as 'real deal' GBs. The GBs are thinkers as well as doers, whereas Combat Applications Group and SEALs all they know is breach and clear, breach and clear.kao_hsien_chih -> Jack... , 09 February 2018 at 11:22 PM
There is more to life than breach and clear. Having worked with all in one manner or another, I'll take GBs any day hands down. It makes a difference when the brain is engaged instead of just the heel.A lot of technology entrepreneurs--especially those active today--are stuck in their own groupthink, inflated by their sense that they are born for greatness and can do no wrong.FB Ali , 09 February 2018 at 11:23 PM
The kind of grand schemes that the top people at Google, Uber, and Facebook think up to remake the universe in their own idea of "good society" are frightening. That they are cleverer (but not necessarily wiser) than the academics, borgists, or generals, I think, makes them even more dangerous.Col Lang,turcopolier , 10 February 2018 at 01:03 AM
They are indeed "narrow thinkers", but I think the problem runs deeper. They seem to be stuck in the rut of a past era. When the US was indeed the paramount military power on the globe, and the US military reigned supreme. They can't seem to accept the reality of the world as it is now.
Of course, these policies ensure that they continue to be well-funded, even if the US is bankrupting itself in the process.dogearLondonBob , 10 February 2018 at 06:59 AM
He is still the Saudi Mukhtar for the US and most of the generals are still narrow minded. plThey [the generals] seem to have deliberately completely ignored the issues and policy positions Trump ran on as President. It isn't a case of ignorance but of wilful disregard.turcopolier , 10 February 2018 at 07:55 AMLondonBobDianaLC said in reply to turcopolier ... , 10 February 2018 at 09:23 AM
I think that is true but, they were able to talk him into that, thus far. plI've been reading this blog for some time. My question was facetious and written with the understanding of your statement about the generals not having a good grasp of "the vision thing" on their own.Terry , 10 February 2018 at 09:25 AMSo true and as others commented this is a sad feature of the human race and all human organizations. Herd mentality ties into social learning. Chimps are on average more creative and have better short term memory than humans. We gave up some short term memory in order to be able to learn quickly by mimicking. If shown how to open a puzzle box but also shown unnecessary extra steps a chimp will ignore the empty steps and open the box with only the required steps. A human will copy what they saw exactly performing the extra steps as if they have some unknown value to the process. Our massive cultural heritages are learned by observing and taken in as a whole. This process works within organizations as well.TV , 10 February 2018 at 10:18 AM
I suspect a small percentage of the human race functions differently than the majority and retains creative thinking and openness along with more emphasis on cognitive thinking than social learning but generally they always face a battle when working to change the group "consensus", i.e. Fulton's folly, scepticism on whether man would ever fly, etc.
One nice feature of the internet allows creative thinkers to connect and watch the idiocy of the world unfold around us.
"A natural desire to be part of the 'in crowd' could damage our ability to make the right decisions, a new study has shown."
https://www.sciencedaily.com/releases/2014/12/141216212049.htmThe military by definition is a rigid hierarchical structure. It could not function as a collection of individuals. This society can only breed conforming narrow leaders as an "individual" would leave or be forced out.Barbara Ann , 10 February 2018 at 10:22 AM
That part of our brain responsible for the desire to be part of the 'in crowd' may affect our decision-making process, but it is also the reason we keep chimps in zoos and not the other way around. Or, to put it another way; if chimps had invented Facebook, I might consider them more creative than us.Babak Makkinejad -> Terry... , 10 February 2018 at 10:30 AMDo you think chimps are, per the Christian Docrine, in a State of Fall or in a State of Grace?Adrestia , 10 February 2018 at 10:32 AMThis is an interesting discussion. The top in organisations (civil and military) are increasingly technocrats and thinking like systems managers. They are unable to innovate because they lack the ability to think out of the box. Usually there is a leader who depends on specialists. Others (including laymen) are often excluding from the decision-making-proces. John Ralston Saul's Voltaires Bastards describes this very well.Generalfeldmarschall von Hindenburg -> gaikokumaniakku... , 10 February 2018 at 11:58 AM
Because of natural selection (conformist people tend to choose similar people who resemble their own values and ways-of-thinking) organizations have a tendency to become homogeneous (especially the higher management/ranks).
In combination with the "dumbing" of people (also of people who have a so-called good education (as described in Richard Sale's Sterile Chit-Chat ) this is a disastrous mix.
Homogeneity is the main culprit. A specialists tends to try to solve problems with the same knowledge-set that created these.
Not all (parts of) organizations and people suffer this fate. Innovations are usually done by laymen and not by specialists. The organizations are often heterogeneous and the people a-typical and/or eccentric.
(mainly the analytical parts of ) intelligence organizations and investment banks are like that if they are worth anything. Very heterogeneous with a lot of a-typical people. I think Green Berets are also like that. An open mind and genuine interest in others (cultures, way of thinking, religion etc) is essential to understand and to perform and also to prevent costly mistakes (in silver and/or blood).
It is possible to create firewalls against tunnel-vision. The Jester performed such a role. Also think of the Emperors New Clothes . The current trend of people with limited vision and creativity prevents this. Criticism is punished with a lack of promotion, job-loss or even jail (whistle-blowers)
IMO this is why up to a certain rank (colonel or middle management) a certain amount of creativity or alternative thinking is allowed, but conformity is essential to rise higher.
I was very interested in the Colonel's remark on the foreign background of the GB in Vietnam. If you would like to expand on this I would be much obliged? IMO GB are an example of a smart, learning, organization (in deed and not only in word as so many say of themselves, but who usually are at best mediocre)Isn't the "Borg" really The Atlantic Council?ISL , 10 February 2018 at 12:58 PMDear Colonel,ex-PFC Chuck said in reply to FB Ali ... , 10 February 2018 at 01:08 PM
Would you then say that a rising military officer who does have the vision thing faces career impediments? If so, would you say that the vision thing is lost (if it ever was there) at the highest ranks? In any case, the existence of even a few at the top, like Matthis or Shinseki is a blessing.FB Ali:Adrestia , 10 February 2018 at 02:03 PM"When the US was indeed the paramount military power on the globe, and the US military reigned supreme. They can't seem to accept the reality of the world as it is now."That's true not only of the US military but of US elites in general across all of the spectra. And because that reality is at odds with the group-think of those within the various elements that make up the spectra it doesn't a hearing. Anyone who tries to bring it up risks being ejected from the group.I forget an important part. I really miss an edit-button. Comment-boxes are like looking at something through a straw. Its easy to miss the overview.kooshy , 10 February 2018 at 02:19 PM
Innovations and significant new developments are usually made by laymen. IMO mainly because they have a fresh perspective without being bothered by the (mainstream) knowledge that dominates an area of expertise.
By excluding the laymen errors will continue to be repeated. This can be avoided by using development/decision-making frameworks, but these tend to become dogma (and thus become part of the problem)
Much better is allowing laymen and allowing a-typical people. Then listen to them carefully. Less rigid flexible and very valuable.
Apparently, according to the last US ambassador to Syria Mr. Ford, from 2014-17 US has spent 12 Billion on Regime change in Syria. IMO, combinedly Iran and Russia so far, have spent far less in Syria than 12 billion by US alone, not considering the rest of her so called coalition. This is a war of attrition, and US operations in wars, are usually far more expensive and longer than anybody else's.J , 10 February 2018 at 02:49 PM
"The United States spent at least $12 billion in Syria-related military and civilian expenses in the four years from 2014 through 2017, according to the former U.S. ambassador to the country. This $12 billion is in addition to the billions more spent to pursue regime change in Syria in the previous three years, after war broke out in 2011." https://goo.gl/8pj5cDColonel, TTG, PT,Richardstevenhack -> turcopolier ... , 10 February 2018 at 02:56 PM
FYI regarding Syria
https://www.nbcnews.com/politics/donald-trump/sen-tim-kaine-demands-release-secret-trump-war-powers-memo-n846176It may "demand" it - but does it get it? Soldiers are just as human as everyone else.dogear said in reply to Terry... , 10 February 2018 at 02:59 PM
I'm reminded of the staff sergeant with the sagging beer belly who informed me, "Stand up straight and look like a soldier..." Or the First Sergeant who was so hung over one morning at inspection that he couldn't remember which direction he was going down the hall to the next room to be inspected. I'm sure you have your own stories of less than competence.
It's a question of intelligence and imagination. And frankly, I don't see the military in any country receiving the "best and brightest" of that country's population, by definition. The fact that someone is patriotic enough to enter the military over a civilian occupation doesn't make them more intelligent or imaginative than the people who decided on the civilian occupation.
Granted, if you fail at accounting, you don't usually die. Death tends to focus the mind, as they say. Nonetheless, we're not talking about the grunts at the level who actually die, still less the relatively limited number of Special Forces. We're talking about the officers and staff at the levels who don't usually die in war - except maybe at their defeat - i.e., most officers over the level of captain.
One can hardly look at this officer crowd in the Pentagon and CENTCOM and say that their personal death concentrates their mind. They are in virtually no danger of that. Only career death faces them - with a nice transition to the board of General Dynamics at ten times the salary.
All in all, I'd have to agree that the military isn't much better at being competent - at many levels above the obvious group of hyper-trained Special Forces - any more than any other profession.
That is well put.most important is the grading system that is designed to fix a person to a particular slot thereby limiting his ability to think "outside the box" and consider the many variables that exist in one particular instant.Mark Logan said in reply to Peter AU... , 10 February 2018 at 03:30 PM
Creative thinking allows you to see beyond the storm clouds ahead and realize that the connectedness of different realities both the visible and invisible. For instance the picture of the 2 pairs of korean skaters in the news tells an interesting story on many levels. Some will judge them on their grade of proffiency, while others will see a dance of strategy between 2 foes and a few will know the results in advance and plan accordingly
https://www.google.com.au/amp/www.nbcolympics.com/news/north-south-korean-figure-skating-teams-practice-side-side%3famp?espv=1Peter AUturcopolier , 10 February 2018 at 05:03 PM
"They are not stupid at all but they are a collective of narrow thinkers." I've often pondered that concept. Notice how many of radical extremist leaders were doctors, engineers and such? Narrow and deep. STEM is enormously useful to us but seems to be a risky when implanted in shallow earth.Mark Loganturcopolier , 10 February 2018 at 05:13 PM
These narrow "but deep" thinkers were unable to grasp the nature of the Iraq War for the first couple of years. They thought of it as a rear area security problem, a combat in cities problem, anything but a popular rebellion based on xenophobia and anti-colonialism The IED problem? They spent several billion dollars on trying to find a technology fix and never succeeded. I know because they kept asking me to explain the war to them and then could not understand the answers which were outside their narrow thought. plISLoutthere , 10 February 2018 at 05:19 PM
War College selectees, the national board selected creme de la creme test out as 50% SJs (conformists lacking vision) in Myers-Briggs terms and about 15% NTs (intellectuals). To survive and move upward in a system dominated by SJs, the NTs must pretend to be what they are not. A few succeed. I do not think Mattis is an intellectual merely because he has read a lot. plLong ago when I was a professor, I advised my students that "the law is like a pencil sharpener, it sharpens the mind by narrowing it." I tried to encourage them to "think backwards".turcopolier , 10 February 2018 at 05:24 PM
My favorite example was a Japanese fisherman who recovered valuable ancient Chinese pottery. Everyone knew where an ancient ship had sunk, but the water was too deep to dive down to the wreck. And everyone knew the cargo included these valuable vases. And the fisherman was the first to figure out how to recover them. He attached a line to an octopus, and lowered it in the area, waited awhile, and pulled it up. Low and behold, the octopus had hidden in an ancient Chinese vase. The fisherman was familiar with trapping octopuses, by lowering a ceramic pot (called "takosubo") into the ocean, waiting awhile, then raising the vase with octopus inside. His brilliance was to think backwards, and use an octopus to catch a vase.TVturcopolier , 10 February 2018 at 05:31 PM
By your calculation people like Joe Stilwell and George Patton should not have existed. plAdrestiaked , 10 February 2018 at 05:56 PM
the original GBS were recruited in the 50s to serve in the OSS role with foreign guerrillas behind Soviet lines in th event of war in Europe. Aaron Bank, the founder, recruited several hundred experienced foreign soldiers from the likely countries who wanted to become American. By the time we were in VN these men were a small fraction of GBs but important for their expertise and professionalism. plCol, I think it might help people to think of "the Borg" - as you have defined & applied it - in a broader context. It struck me particularly as you ID'd the launching of our modern military group-think / careerism behavior coming from the watershed of industrialized scale & processes that came out of WWII.turcopolier , 10 February 2018 at 06:00 PM
We note parallel themes in all significant sectors of our civilization. The ever-expanding security state, the many men in Gray Flannel Suits that inhabit corporate culture, Finance & Banking & Big Health scaling ever larger - all processes aimed to slice the salami thinner & quicker, to the point where meat is moot ... and so it goes.
I note many Borgs... Borgism if you will. An organizational behavior that has emerged out of human nature having difficulty adapting to rapidly accelerating complexity that is just too hard to apprehend in a few generations. If (as many commenters on STT seem to...) one wishes to view this in an ideological or spiritual framework only, they may overlook an important truth - that what we are experiencing is a Battle Among Borgs for control over their own space & domination over the other Borgs. How else would we expect any competitive, powerful interest group to act?
In gov & industry these days, we observe some pretty wild outliers... attached to some wild outcomes. Thus the boring behavior of our political industries bringing forth Trump, our promethean technology sector yielding a Musk (& yes, a Zuckerberg).
I find it hard to take very seriously analysts that define their perspective based primarily upon their superior ideals & opposition to others. Isn't every person, every tribe, team or enterprise a borglet-in-becoming? Everybody Wants to Rule the World ... & Everybody Must Get Stoned... messages about how we are grappling with complexity in our times. I just finished reading Command & Control (about nuclear weapons policy, systems design & accidents). I am amazed we've made it this far.
Unfortunately, I would not be amazed if reckless, feckless leaders changed the status quo. I was particularly alarmed hearing Trump in his projection mode; "I would love to be able to bring back our country into a great form of unity, without a major event where people pull together, that's hard to do.
But I would like to do it without that major event because usually that major event is not a good thing." It strikes me that he could be exceptionally willing to risk a Major Event if he felt a form of unity, or self-preservation, was in the offing. I pray (& I do not pray often or easily) that the Generals you have described have enough heart & guts to honor their oath at its most profound level in the event of an Event.babakBarbara Ann -> outthere... , 10 February 2018 at 06:00 PM
As a time traveler from another age, I can only say that for me it means devotion to a set of mores peculiar to a particular profession as opposed to an occupation. plGreat example outthere.
Another springs to mind: James Lovelock (of Gaia hypothesis fame) was once part of the NASA team building the first probe to go to Mars to look for signs of life. Lovelock didn't make any friends when he told NASA they were wasting their time, there was none. When asked how he could be so sure, he explained that the composition of the Martian atmosphere made it impossible. "But Martian life may be able to survive under different conditions" was the retort. Lovelock then went on to explain his view that the evolution of microbial life determined the atmospheric composition on Earth, so should be expected to do the same if life had evolved on Mars. Brilliant backwards thinking which ought to have earned him the Nobel prize IMHO (for Gaia). Lovelock, a classic cross-disciplinary scientist, can't be rewarded with such a box-categorized honor, as his idea doesn't fit well into any one.
Another example of cross-disciplinary brilliance was Bitcoin, which has as much to do with its creator's deep knowledge of Anthropology (why people invented & use money) as his expertise in both Economics and Computer Science.
This is they key to creative thinking in my view - familiarity with different fields yields deeper insights.
Feb 10, 2018 | turcopolier.typepad.com
outthere -> turcopolier ... , 10 February 2018 at 10:31 AM"he provided a "very rough first guess" that the over-all effect of the tax bill and the spending deal would be about 1.25 per cent of G.D.P. for this calendar year, and two per cent for the next.
> That would be a substantial stimulus. It would be larger, for example, than the Economic Stimulus Act of 2008, which George W. Bush's Administration introduced to try to head off a slump following a big fall in the real-estate market. That stimulus, which came in the form of a tax rebate, amounted to about one per cent of G.D.P. (It wasn't enough to head off a recession. In fact, the National Bureau of Economic Research subsequently said that the recession had already begun in December, 2007.)
> The Trump stimulus isn't as big as the Obama stimulus of 2009 through 2011, which most Republican senators and congressmen vigorously opposed. That package, which consisted of a mix of spending and tax cuts, totalled about two per cent of G.D.P. each year. But, in February, 2009, when it was enacted, the economy was suffering through the deepest recession since the nineteen-thirties. The unemployment rate was 7.8 per cent, and G.D.P. was plummeting. If ever there was a textbook case of an economy crying out for a stimulus, that was it.
>> Today, by contrast, the economy is in the ninth year of an economic recovery that began in 2009. G.D.P. is growing at an annual rate of close to three per cent, and the unemployment rate stands at 4.1 per cent. Many economics textbooks say this is the sort of environment in which the government should be balancing its books, and perhaps even paying down debt, like a family salting away money for a rainy day. That's what the Clinton Administration did during the late nineteen-nineties, when the national debt was much smaller than it is today.
> The Republicans and Trump are embarked on the opposite course -- confirming that the G.O.P.'s devotion to deficit reduction, which in 2011 prompted members of the Party to refuse to raise the debt ceiling, is purely cynical. Of course, we already knew this. The Reagan Administration and the George W. Bush Administration both raided the public purse to finance big tax cuts, and left the deficit much higher than they found it. The Trump Administration is merely following suit."
Feb 09, 2018 | economistsview.typepad.com
llisa2u2 , February 06, 2018 at 11:01 AMI am posting this info. to this site, as part of personal approach as a US citizen to try to get some REAL FACTS out into the supposedly professional platforms of economists. This platforms are woefully lacking in good, factual information to communicate to anyone, even amongst themselves, and especially to Joe living on an street, or hopefully any house on any street in the US.llisa2u2 said in reply to llisa2u2... , February 06, 2018 at 11:08 AM
Now, what am I posting? The information that I am posting is an example of confusing information that is extremely invalid and should NOT be posted by so-called reliable sources, of professional, or "expertise" information. The reason I am posting an article that is confusing is because this article by Krugman is also confusing, and just as unreliable as the "confusing article" that was written by Alan Harkin at INVESTOPEDIA.
If you can't believe Investopedia's information, then who can you believe? I am posting the article as an article that the reader can NOT believe. The linked article is absolutely mis-stating IRS facts. This article is one of many that confuse the message about corporate taxation.
Personally, I think it is deliberate. The title of the article: http://bit.ly/2Eof6eM
basically leads the reader "to believe" the article is about how much US corporations such as APPLE, GOOGLE etc. "actually" bottomline- deliver to IRS. BUT, wait, when the reader "really reads" the reader then notes, that the "charts" ONLY reflect the "tax rate". Now, that's a whole different story. Tax rate is not bottomline taxes paid.
So, now if my "logic" and conclusion is "faulty", please enlighten me. The IRS data and this article don't jive in the real world of statistical data. Here is link to STATISTA that is THE data base that is used by top researchers worldwide.
This link shows the REAL data and percentage of corporate TAX PAID, AND FUTURE projections for US etc. etc. I have selected the most obvious and easy to read chart.
The following link presents reliable fact VS The article from INVESTOPEDIA as garbage.
I am writing that the article in Investopedia by Aaron Hankin is BS. The content of the article also attempts to establish correlations to S/P action that has absolutely NO plausible fact to make any correlation about anything. I am also writing that most of the media reports about "corporate tax" is BS. I also am writing that this article by Krugman is a fluff, nonsense piece that is also BS. If Krugman were an economist that had any concern about the US economy, he would have, and would be posting this link everywhere on earth.
All that I definitely am trying to do is to get "reasonable data" out there to influence the public mindset to counter BS and try to present FACTS, just like a lot of other intelligent readers are trying to do.Please ignore the "typos", I did not hit preview first in this posted version on economists view.llisa2u2 said in reply to llisa2u2... , February 06, 2018 at 11:15 AMBasically, I am saying that the political posturing, and propaganda strategies of so many different monied groups is demanding that any "serf" needs to present any comment as if the "serf" is writing some sort of thesis. Really, all the "Talking Faces" are the ones who should be doing that as they present messages to the public"serfs". Otherwise, there should be public disclaimers as to who is paying the "Talking Faces" for delivering their "propaganda". The "sponsored message" dynamics is so convoluted, that any viewer sure can't presume anything. Basically, It just looks like a lot of "Talking Faces" are just making themselves into asses, based on their assumption, and presumptions.mulp said in reply to llisa2u2... , February 06, 2018 at 01:26 PMWhy do you think anyone associated with investors is an economist rather than a snake oil salesman in the medicine show that is extremely boring?
What to understand economics? Pay attention to Elon Musk, Jeff Bezos.
They pay US workers to build productive assets like factories, transportation products, energy harvesting products, information you want products, all of which can be matched only by competitors paying hundreds of billions to millions of US workers just to catch up in a decade.
Or you can read Keynes.
Feb 08, 2018 | economistsview.typepad.comBut should we be worried about something worse than a mere downshift in growth?
Well, asset prices do look high: A widely used gauge of stock valuations puts them at a 15-year high , while a conceptually similar measure says that housing prices have retraced a bit less than half the rise that culminated in the great housing bust.Individually, these numbers aren't that alarming: Stocks, as I said, don't look nearly as overvalued as they did in 2000, housing not nearly as overvalued as it was in 2006. On the other hand, this time both markets look overvalued at the same time, at least raising the possibility of a double-bubble burst like the one that hit Japan at the end of the 1980s.
And if asset prices take a hit, we might expect consumers -- who have been spending heavily and saving very little -- to pull back.Still, all of this would be manageable if key policymakers could be counted on to act effectively. Which is where I get worried.
Feb 06, 2018 | economistsview.typepad.com
Fred C. Dobbs , February 06, 2018 at 12:24 PMI certainly noticed that the market incurred an enormous rise in the first month of 2018, and anyone would have expected a correction, perhaps one less spectacular. So be it.RC AKA Darryl, Ron said in reply to Fred C. Dobbs... , February 07, 2018 at 06:22 AM
Lets hope buying (& selling) will be a lot less frantic, now that tax-cut euphoria is behind us.Bulls are not exactly known as even tempered beasts.Fred C. Dobbs , February 06, 2018 at 07:40 PMIgnore the Stock Market. The Economy Looks Fine. https://www.nytimes.com/2018/02/06/upshot/ignore-the-stock-market-the-economy-looks-fine.htmlRC AKA Darryl, Ron said in reply to Fred C. Dobbs... , February 07, 2018 at 05:24 AM
NYT - Neil Irwin - Feb 6
What is the stock market telling us with its precipitous drop over the last several days? In all likelihood, not much of anything.
That's because the stock market, though crucial in the long run for individuals accumulating wealth and companies raising capital, is so erratic as to be useless in providing information about the short run. The 8.5 percent drop in the S.&P. 500 through Monday's close (before a 1.7 percent rebound on Tuesday) could signify the onset of a global recession. But it could just as well mean only that some trading algorithms at a big hedge fund collided in weird ways.
For what really matters -- the well-being of the economy and the ability for individuals and companies to prosper in the years ahead -- look first to fundamental economic data, especially those that tend to be leading indicators. Second, look to the bond market and other financial market indicators that are more reliable measures of investors' expectations than stock prices.
There is good news on both fronts, as both point to a global economy that will continue growing steadily in the months and years ahead, perhaps with inflation that is a bit higher than in the recent past. That contrasts this market sell-off with drops in 2011, 2015 and 2016, which coincided with pessimistic signals in both economic data
and the bond market.
The stock market can, when looked at in concert with these other indicators, provide some useful insight. Right now it appears to be more noise than signal.
The economic data has been solid in recent weeks. Just Friday, the Labor Department reported that the United States added a robust 200,000 jobs in January. The Federal Reserve Bank of Atlanta tracks incoming economic data to estimate current growth of gross domestic product, and its indicator is pointing toward robust economic expansion -- a 4 percent annual rate.
Of course, there is plenty of statistical error built into those numbers, and they may turn out to be incorrect. But even many of the real-time indicators that tend to work as early warnings of an economic slump are looking just fine. The Conference Board's index of leading economic indicators ticked up in its most recent release, and weekly claims for unemployment insurance benefits have hovered near record lows in recent weeks.
Just Monday, the Institute for Supply Management said its index of activity at service companies rose sharply in January, which made it one of those curious days when good economic news coincided with a steep market sell-off.
The bond market is also looking optimistic about the future, with prices suggesting that continued growth -- without inflationary overheating -- is the most likely future.
The stock market has lost ground since the start of the year, thanks to the sharp sell-off Monday. But the yield on 10-year Treasury bonds is up in that span, from 2.4 percent to 2.8 percent at Tuesday's close. That suggests bond investors think that continued steady recovery will allow the Federal Reserve to raise interest rates gradually.
Bond investors are pricing in higher inflation than the United States has experienced in recent years, but roughly in line with the 2 percent the Federal Reserve aims for. Prices for inflation-protected bonds imply 2.09 percent annual inflation over the coming decade, up from 1.98 percent at the start of the year.
Other market indicators that might signal global economic troubles, like the price of oil, instead point to a steady-as-she-goes global economy.
None of this makes a case for economic complacency. There are plenty of things that could go wrong in the world, from conflict on the Korean Peninsula or in the Middle East to destructive trade wars. But if the stock market was actually giving us any insight into the likelihood of those outcomes, we would expect to see moves in bond and commodity markets that just aren't happening.
Think of it this way. The economy is like a horse race -- and what we really care about is which horse wins, places or shows. The bond market is the equivalent of the people betting directly on the race. And while of course gamblers get it wrong sometimes, the market is efficient enough that there's a fairly direct relationship between the odds a horse pays and its probability of victory.
The stock market, by contrast, is like a weird side game in which people bet one another on which gambler is going to have the best day. It's erratic, volatile and a couple of degrees removed from the underlying horse race on which it is all based.
And that's why the best way to make sense of the drop in the stock market is to think of it as a sideshow to the broader trajectory of the United States and global economy, which for now look perfectly fine.[Although I immediately agreed with this article that you posted, I took the time to do a little background research on its author before replying. Neil Irwin authored the book "The Alchemists: Three Central Bankers and a World on Fire" devoted to the subject of central bankers role in dealing with the 2008 financial crisis. The review of this book linked with conclusion excerpted below says that it is "a squarely centrist account, echoing conventional wisdom" and that Irwin had done his homework thoroughly. For the topic at hand, the meaning of this week's stock market dip, then that is a glowing testimonial to his relevant abilities. It's not like we are picking the chairman of the CEA here.]
When the Global Economy Was on the Brink
Off the Shelf
By FRED ANDREWS MAY 4, 2013
...So, Mr. Irwin writes, their triumph is what didn't happen: "As ugly as the global economy looked five years after the onset of crisis, no war had broken out among the great global powers. Europe remained united. There had been no confidence-shattering hyperinflation or, outside of perhaps Greece and Spain, economic depression. None of this was a certainty." As he puts it: "It may seem like damning with faint praise, but a catastrophe averted is no small thing."
Feb 08, 2018 | economistsview.typepad.com
mulp , February 06, 2018 at 12:10 PM"When talking about stock markets, there are three rules you have to remember. "
Krugman is brain damaged by free lunch economics.
The most important three things to remember:
- Market cap is not wealth.
- Wealth can be created only by paying workers.
- Wealth will always be less than labor costs.
If wealth is not created by paying workers, then wealth can be created by everyone selling and reselling their old cars to each other at twice the price paid a week earlier.
Feb 06, 2018 | www.zerohedge.comI've been asked to comment on the most recent market decline. My initial reaction was, markets go up and they go down. America is a great country but the US Constitution doesn't guarantee always-rising markets. I sat down and I wanted to write a reassuring message. I wanted to express my empathy. Somehow, I found that my reservoir of empathy was empty: After recent decline the market is still up twenty-something percent from the beginning of 2017.
And then I stumbled on Dalio and Wilson predicting what the market will do next, and I have to confess, I started writing and could not stop. (I apologize ahead of time for the rantiness of this message.)
- Ray Dalio : Cash on the sidelines will pour in to stem the bleeding in this market.
- Morgan Stanley's Wilson warns investors not to buy the dip.
Two contradictory headlines on the MarketWatch home page, right next to each other.
Do you listen to Dalio or Wilson? I want to let you in on a small Wall Street secret: Neither Dalio nor Wilson knows what the stock market will do next. Don't be fooled by their fancy pedigrees, the gazillions of dollars they manage, the eloquence of their logic, the myriad of data points they marshall. Nobody but nobody knows what the stock market will do tomorrow, next week or next year. Stock market behavior in the short term is completely random. Completely! You'll have a better luck predicting the next card at a black jack table than guessing what the stock market will do next.
The media of course needs to fill pages and rack up views, and so there are gazillions of explanations (I'm trying to use the word gazillion at least three times in this article) for why the stock market does this or that. The explanations always sound rational, but for the most part they are worthless because they have zero forecasting power. A strong jobs report sent stocks up. Explanation: The economy is doing great. A strong jobs report sent stocks down. Explanation: Investors are worried about higher interest rates. I can give dual spin to any news, maybe only short of nuclear war.
My biggest problem with "The stock market will do this" headlines is that they turn investors into degenerate gamblers. I see people trying to treat the stock market like a casino. They get lucky at times and catch the wave of randomness (especially if the market marches higher every single day). Success goes to their heads, the feel like they've got this whole stock market thing figured out. Stocks are just bits of data that are priced on the exchanges gazillions of times a day. This is not investing – I don't even want to insult gambling by calling it gambling. At least gamblers don't gamble with their life savings and 401k's (unless they are degenerate gamblers).
What will the stock market do next?
It's the wrong question. It's the question that should never be asked, and if asked should never be answered. Asking this question shows that you believe there is some kind of order to this random madness. There is not. And if you answer with any answer other than "I don't know," you're a liar.
How do you deal with market declines? Stop looking at the market as if it were a casino and start treating stocks as businesses that you are trying to buy at a discount to fair value. Stock price is an opinion of what the market is willing to pay for this business right now. Yes, it's an opinion, not a final judgement. The stock market is going to be a miserable place for you in the long run if you take market opinions on any given day seriously and treat them as final judgements.
If you start treating stocks as businesses and you start analyzing them and valuing them as such, then market drops stop being a source of pain and turn into a source of pleasure. I read somewhere that most money is made during bear markets (when you buy stocks on the cheap) – it just doesn't feel that way at the time. Even if you are fully invested (we are not) why does it really matter that the market decided to price your stocks lower today (unless you believe the market is right)? Will it matter three, five years from now? If you own undervalued companies, they may get more undervalued before they become fully valued. As long as you've got the valuation right, you'll eventually be proven right.
Let me tell you what we did when the market took a dive. We looked at stocks we owned and asked ourselves a question: Had their values changed? They had not. Then we asked if we wanted to increase our positions in any of them. Then we looked through our long watch list to see if any stocks had hit our buy-price targets. That was it. That is the only rational way to invest. Anything else is
So, how does one invest in this overvalued market? Our strategy is spelled out in this fairly in-depth article.
Vitaliy Katsenelson is the CIO at Investment Management Associates , which is anything but your average investment firm. (Seriously, take a look .)
Smitten by this article? Don't let your love remain unrequited. Sign up here to get my latest articles in your inbox. Tags Business Finance Marine Freight & Logistics - NEC Investment Banking & Brokerage Services - NEC
eclectic syncretist -> Osmium Feb 7, 2018 8:29 AM PermalinkWhoa Dammit Feb 6, 2018 10:00 PM Permalink
The long-term general uptrend in stocks is primarily just a reflection of the Fed's degradation of the value of the dollar/inflation. Physically holding gold and silver keeps you at least even with that trend, over the long-term, in a way that can't easily be taken from you. It also provides great peace of mind for those who value that.
Wonderful article with the only caveat being it neglects to accept how much power the Fed wields over the markets. Guessing what the Fed will or won't do has become too important to ignore. To me personally, it's hard to believe that the Fed will really be able to increase interest rates another percentage point this year, while simultaneously selling hundreds of billions of US treasuries off its balance sheet, and issuing a trillion or so in new bonds to finance the national debt, without popping the stock market bubble. On the other hand, these humongous issues of new debt are not positive for the value of the dollar, and coupled with the ongoing international move away from the dollar, it seems likely that the Fed will need to keep interest rates rising in order to make sure the dollar doesn't fall too fast, so they are in a very difficult situation and are probably hoping to make sure this a managed pop, something like Japan had in 1990.
Of course, the Fed totally flubbed it in 2007-2008, so God only knows how this one will shake out. One thing's for sure, the dollar as we know it will not last. It was designed to fail, after all.The Real Tony Feb 6, 2018 10:07 PM Permalink
"Start treating stocks as businesses and start analyzing them and valuing them as such."
Wow, it's refreshing to hear statements like this about stocks from an Investment Manager. Most fund runners these days are just into the latest tricked out vehicle that will take their customers for a ride.Fed-up with be Feb 7, 2018 2:01 AM Permalink
If you treated stocks like a business every business would be out of business gone chapter 11. Paying 6 times fair market value for stocks and stock indexes is a great business model... to avoid.Fed-up with be Feb 7, 2018 2:05 AM Permalink
Well, allow me to "argue" that this is BULLSHIT. First, let's examine what "value" means. OH, is it this BULLSHIT that the companies report, and I mean HEADLINE REPORT, called, NON-GAAP.
Some of us here might be smarter than others and will spend the time to read the NON-SPUN bullshit. That will MAYBE give us an edge.
However, take it from a Guy who WAS ON THE INSIDE of Corporate THINK. WE ALL LIED about our forecasts to create a sense of value and ALL COMPANIES LIE.
Remember, guys and gals, ALL Of the value is in FUTURE earnings, and PRE-ANNOUNCEMENTS and the trick is to KNOW the market in which you might want to invest in....and that means you must be, by definition, an INSIDER.
OH, and only CONGRESS gets to "invest as insiders" legally---right? THEY PUT MARTHA in jail for the very thing that they do daily. If this Country ain't a stinking asshole of a shit hole, then I am not understanding those terms.
I have said it here over over:
1. THEY WANT US to argue over shit they do not care about.
2. They want us to NOT DO THE MOST LUCRATIVE things which are outlawed, only to then turn around and do those things themselves, and:
3. THEY GET OFF THE HOOK.
If this ain't a crock of shit, I am not sure what is. WE ARE FUCKED.
Mar 29, 2017 | www.project-syndicate.org
After a long and slow recovery from the recession that began a decade ago, the US economy is poised for robust growth this year. But, although the economy currently is healthy, it is also fragile, owing to a decade of excessively low interest rates, which have caused investors and lenders to bid up asset prices and make risky loans.
Feb 07, 2018 | www.youtube.com
ABOUT THE JIMMY DORE SHOW:
The Jimmy Dore Show is a hilarious and irreverent take on news, politics and culture featuring Jimmy Dore, a professional stand up comedian, author and podcaster. With over 5 million downloads on iTunes, the show is also broadcast on KPFK stations throughout the country. It is part of the Young Turks Network-- the largest online news show in the world.
Drake Santiago , 1 day ago (edited)Gunsmoke Blackfinger , 1 day ago
As Hegel so rightful said: "We learn from history that we do NOT learn from history." No where is this more true than in the financial sector. Every steep rise in the market is always followed by any equally sharp fall. This is why it amazes me when people, even those seasoned veterans of the stock market, get giddy when they see such a dramatic uptick in the market. They should see such a rapid increase as a harbinger of bad things to come, and not persist in a delusion that things will be smooth sailing for a long time. This happens time and time again, and people still just don't seem to get it. In fact, in almost any area of life, an uncharacteristically rapid change, leads to predicable failure. If you see someone lose weight faster than they should, on some fad diet, chances are they will fail and gain it back, with additional weight, just as quickly. We have so many people who have the knowledge to make short term gains, but lack the wisdom to see the folly in such a approach.cheezemonkeyeater , 1 day ago
It's almost like wall street is anti-poor people.John O'Malley , 1 day ago
I'm not an economist either, but here's basically what my economy professor said when I took the class a couple of years ago: "The stock market is entirely arbitrary. The numbers put up are determined by a bunch of men in suits who randomly decide what the value is based on whatever they feel might in some way affect it. It bounces up and down completely at the whim of people making what they believe are educated guesses." The example I gave in class was Pixar. The stock for Pixar dropped dramatically when Up was announced because the stock market investors looked at it and said, "How can this make money? It can't be merchandised and an animated feature that can't be merchandised can't succeed. Tell all the investors to sell." And then Up turned out to be Pixar's most successful film up to that point and immediately all those investors who sold off decided to buy back in. The stock market is completely guesswork.cherokee charlie , 1 day ago
Market success and the success of the working class are not aligned with one another. We are heading towards a crash similar to the great recession because these corporate tools WON'T LEARN THEIR LESSON.Slew One , 1 day ago
Wall Street is a shell game for investors ran by corporations.Moloch , 1 day ago
THe stock market is a giant Ponzi scheme. The stock market original was made for us to make money from interest, but people now try to make money off of speculation. Really, in the end, if you make money in stocks, someone else loses. The money from stock value does not come from the company, with exceptions, other than the IPO, it is from someone else buying the stocks from you. The reason the rich has gotten so rich, is they are making money from us being forced to invest in 401k. Before CLinton, we were told to put our retirement in the bank, and teh bank has to find safe investments, but Clinton dropped the interest rate so banks don't want our money.Christina Kirschner , 1 day ago
This is not like a casino... There is nothing random... Traders work in groups and pump/dump stocks to take the middle-man moneybigike1313 , 1 day ago
Take a look at the M2, velocity of money. It has been falling off a cliff for a decade. The last Fed report showed a sharp uptick. While in order to have a robust economy where the 99% are doing well we NEED a much higher velocity, too much of a rise too quickly could cause rapid inflation and all that money has been horded to be spent. this would cause hyper inflation if the US dollar's future value is ever perceived as lower than its present value. Wiemar USA, because that is pretty much what happened in Germany. People hoarded money and velocity dropped off a cliff. Once inflation happened, the dam broke and everyone wanted to spend their hoarded money. It is a myth that Germany devalued its money to pay off war reparations. What happened was rapid inflation set in once velocity of money took off like a rocket. People scrabbled to buy gold, art, luxuries other tangible assets to store value. This made the value of gold skyrocket in German marks. Adding to this inflationary pressure was the Allies demanding gold for payment of reparations. It was a spiral after that, that could not possible be stopped.Bijou Smith , 1 day ago
Fundamentals are excellent. Interest rates still low. This is a normal correction. SM went up too high too fast. Smart investors buy the bottom of this correction. The smartest investors already took some profits and have cash on the sideline, waiting for the correction.Verum bellator , 1 day ago
By your logic Jimmy, if jobs and wages are up and are causing this slump in most listed companies, then the outliers should be stocks in consumer goods companies which should be sky-rocketing against the Dow trend, like P&G and Unilever, because they will reap a huge benefit from higher wages and more jobs. If not, then the fall in confidence has other deeper origins. Maybe someone has done their research and knows lower taxation shrinks an economy that is still in recession.James Pyle , 1 day ago
Buying those retirement plans only feeds the big corporations and elite and holds you at ransom. Keep your money in the local bank and buy locally.plantsinspace , 1 day ago
Who should I blame if everything goes to shit in the next month Obama or Trump because the Dems and MSM keep saying the economy has been doing great because of Obama.Michael Sieger , 1 day ago
the market literally went straight up for 10,000 points. no one said anything about that being unusual. we corrected a tiny bit and everyone that doesnt watch the market freaks out because they dont question anything if it goes up. totally right though, the market has nothing to do with the economy.Deschutes Maple , 1 day ago
The stock market has been bloated for half a decade. A correction was coming.Martin Screeton , 1 day ago
Basically what is good for the stock market is bad for workers, and vice versa. Think about it: publicly traded corporations make stock market growth by: merging (and laying off workers) with other companies; keeping wages down (so more profit can go into the companies profits, which raises their stock value); cutting benefits for workers (so the company can post higher profits which then raises their stock value). If a company gives workers pay raises, then their stock will be degraded because they are making less of a profit. Etc.Sage & Fool , 1 day ago
Most good economists (Joseph Stiglitz, Richard Wolff) have been predicting this for at least year or more... Inflation adjusted wages have not gone up for 40 years...James Cloud , 1 day ago (edited)
So if you're on a realistic retirement plan ...which is next to nothing...should you support the whole wall street crap shoot - or - put a down payment on property and rent it out to someone who is willing to pay your mortgage but risk being called a 'rent seeker' or say fuck it and go off grid and live in a van down by the river?drewkre , 1 day ago
It's just a correction people. Not really a big deal like some people are making it out to be. Happens all the time.darcy leclair , 1 day ago
The answer to the question 'Where else to put your retirement beside Wall Street' is Gold & Silver. No Gold & Silver won't make you rich, but it will keep up with inflation and keep you out of the Wall Street Casino. And do not put all your money in Gold & Silver, but 10% is my target. Everyone else has a different target that meets their needs based on their situation.Raymond Caylor , 1 day ago
Jimmy it doesn't make sense because its all lies! Ask the workers if they have had any type of increase. They haven't. There hasn't been 200 000 jobs created, more like lost. The rich are pulling out because they know the truth. Not to mention the stock market that has been manipulated for so long its a fraud like the rest of it.Nick Name , 1 day ago
The news is the FED handed Wells Fargo the first of many more to come sanctions and has put all Wall Street Banks on notice that the Fed has every intention of leveling the playing field between them and smaller regional banks who are more community based. Our side (Progressives) will be the benefactors of Wall Street reforms that are coming because the Politicians who are in the pocket of Wall Street will show their stripes trying to defend their donors interests. Hopefully, voices like Jimmy's will show both Parties hypocrisy to the true interests of the American workers. Yes, it's true American business got the best deal with the new tax law and are already taking advantage of cash on hand to buy back their debt which reduces their dependency on Wall Street. This is a fight we can win but it's going to take the voice of the people to carry on the fight that's coming.Kenneth G , 1 day ago
Jimmy, what you have inadvertently stumbled upon is Marx's conception class interest as it relates to surplus value. What does this mean? An employer only hires a worker because that worker will make more money for the employer then the employer will pay the worker. The difference between value that the employee generates(more) and the amount that the employee receives in wages(less) is referred to as surplus value. Workers and capitalists fight over this surplus - they both want more of it. When a workers wage goes up, the worker gets more of the surplus and the capitalist gets less and visa versa. Marx uses this as one example to explain that the class dichotomy is capitalism is between the worker and the capitalist. Their interests are diametrically opposed in relation to the surplus.S C , 1 day ago
Jimmie's exactly right, as usual: "it's a perverted system".
The investor class is disciplining the working class even more. They wanted them tax cuts so they could control even more of our economy and tip the scales for another recession (which is a double to triple dip recession for the rest of us). They used our government to force us to give them all of our tax dollars, placing the burden of the government they have captured squarely on us. Now they have even more money and more power and can crash their crazy casino which screws us, even though they reap all the benefits of the casino and we always bail them out. Hold on to your panties everyone, here they go!
Feb 07, 2018 | www.zerohedge.com
Yes, fundamentally, a lot of flaws are built in to how the markets operate in a "financially engineered" manner, but it blew for the simple reason that interest rates nudged upward at the end of January as soon as the Federal Reserve got serious about its quantitative squeezing. That strongly supports my central thesis of this blog that this economy, built on caverns of debt and riddled with market design flaws, is too fragile to absorb any reduction in the Fed's balance sheet.
And that's why I was able to time when the first crash would be likely to hit. It's simple: When is the Fed scheduled to start getting serious in its Great Unwind? January. What week did they actually do it in? The last week of January. Kaboom!
The Fed cannot ever unwind. It will try because it believes it can, but kaboom! We'll find ways to recover from this first shock over what happens to interest when they stop rolling over government debt. The government will adapt. It will find other buyers. But the cost will go up. And the kabooms will keep happening. I've always maintained that the failure of the recovery is baked in by design and will show when the Fed's artificial life support is actually withdrawn. (Whether it is there by intentional design or design flaw, I'll leave up to one's conspiratorial imagination, as it doesn't matter to me; both get you to the same place: kaboom!)
Some bigger voices than mine are saying the same thing:
Carl Icahn says he expects stock markets to bounce back after the massive sell-off Friday and Monday, while warning that current market volatility is a harbinger of things to come . The volatility of recent weeks is cause for concern, Icahn said, adding that he doesn't remember a two-week period as turbulent as this one. He said the problem is that too much money is flowing into the index funds, where investors don't know what they're actually investing in.
"Passive investing is the bubble right now, and that's a great danger," he said. Eventually, that will implode and could lead to a crisis bigger than in 2009, he added.
"When you start using the market as a casino, that's a huge mistake," Icahn said. (" Carl Icahn Says Market Turn Is 'Rumbling' of Earthquake Ahead ")
The fact that the market has completed its de-evolution into a casino, rather than a place to buy ownership in a company, is part of the rickety framework I've described for our economy -- part of what makes it easy to shove over with a nudge in interest because the entire economy has been made utterly dependent on low interest.
... ... ...The mechanized meltdown -- machines rule and drool
"Dow Drops 900 Points in 10 Minutes as Machines Run Amok on Wall Street"
Risk parity funds. Volatility-targeting programs. Statistical arbitrage. Sometimes the U.S. stock market seems like a giant science project, one that can quickly turn hazardous for its human inhabitants.
You didn't need an engineering degree to tell something was amiss Monday. While it's impossible to say for sure what was at work when the Dow Jones Industrial Average fell as much as 1,597 points, the worst part of the downdraft felt to many like the machines run amok. For 15 harrowing minutes just after 3 p.m. in New York a deluge of sell orders came so fast that it seemed like nothing breathing could've been responsible.
The result was a gut check of epic proportion for investors . "We are proactively calling up our clients and discussing that a 1,600-point intraday drop is due more to algorithms and high-frequency quant trading than macro events or humans running swiftly to the nearest fire exit ."
"What was frightening was the speed at which the market tanked," said Walter "Bucky" Hellwig, Birmingham, Alabama-based senior vice president at BB&T Wealth Management . " The drop in the morning was caused by humans, but the free-fall in the afternoon was caused by the machines. It brought back the same reaction that we had in 2010, which was 'What the heck is going on here?"
It may never be clear what accelerated the tumble -- people still aren't sure what caused the flash crash on May 6, 2010. Unlike then, most of the theorizing about today's events centered not on the market's plumbing or infrastructure, but on the automated quant strategies that gained popularity with the advent of electronic markets last decade. Particular suspicion landed on trading programs tied to volatility , mathematical measures of which exploded as the day progressed . ( Newsmax )
There is some basis for saying, "this looks like a technically driven selloff," but this is another problem for which there is no solution, and one I've written about here in the past. No solution because they cannot even identify the problem back in 2010! You cannot solve what you cannot identify.
The machines that now run the stock market are out of control. They do the bidding for us, but their algorithms have been designed by college sprouts who have never seen a falling market. They try to trick each other, and try to bid the market up. They're an accelerant. Most dangerous of all, they're self-programming. They rewrite their own algorithms based on their successes and failures so that even their programmers no longer know why the machines are doing what they are doing. Even if one group of programmers does know exactly what its own algorithms are doing, they certainly don't know what is in all the others and, therefore, how they might interact to self-reinforce wrong actions.
They don't exist in one room where you can pull a circuit breaker and disconnect them from the market. They exist in office buildings by the hundreds of thousands all over the world. Even the decisions and bids that are made by humans doing their own thinking are placed through the machines, so there is usually no way to know if a single bid coming through is by a human or is machine generated. Therefore, there is not really any way to shut the machines entirely off if they get out of control because their disjointed, convoluted, false-bidding, intentionally tricking, interacting and over-reacting zillions of intercommunications per second all around the world add up to a sum that is far more evil than its innumerable mischievously and deviously conceived parts. The system is built from the core out factious parts intended to trick each other upward, but what happens if this amalgamated beast starts tricking itself downward? Who has the authority or the controls to stop the collapse in the microseconds in which it may originate and climax?
So, FUNDAMENTALLY, the market system, itself, is deeply and inexorably flawed by intentional human design. It wasn't designed to destroy the world. It was merely designed with its own sinful machinations because of the flaws of its designers. The whole beastly thing is of a corrupted nature because of all the people who hoped to use their machines to out-game all the other people's machines. It is a network of sparks and tricks. However, because it can multiply its devilish intentions millions of times per nanosecond, we have no idea how much market carnage it might create if all the algos one day just happen to line up in the wrong direction (wrong direction for humans, anyway).
The fifteen-minute, 900-point drop on Friday was a mere foreshock of that, too. We've already had a few flash-crash foreshocks that none of the experts can understand, but it hasn't slowed us from moving deeper and deeper into the machines' labyrinth. Nor have we even begun to try to work out some of the design flaws that caused those initial flash crashes.
Other problems with the machines emerged when trading became so frantic that the sheer volume was frying the brains of many computer networks, causing the financial services of several trading companies to go offline.
Investment firms T. Rowe Price Group Inc. and Vanguard Group apologized to customers for sporadic outages on their websites during the Dow industrials' 1600-point downturn . Online brokerages TD Ameritrade and Charles Schwab also experienced issues. ( Newsmax )
The computers couldn't handle all the other computers.
If the market technowizards have actually managed to get all the robo-traders unplugged or quickly reprogrammed, maybe the slide will stabilize before it becomes an all-out crash. They attempted that with some success today by stopping all volatility trading before the market opened, which I'll get into below. But, even if they've gotten the ill-programmed robots off to the side or have fixed their sizzling little heads, the market that opens tomorrow will be a whole new market -- no longer one that hyperventilates on the fumes of hope, but one that has relearned how to fear risk.
Iconoclast421 Feb 7, 2018 1:26 PM PermalinkEman Laer -> Iconoclast421 Feb 7, 2018 2:51 PM Permalink
All this talk about crashes when the DOW is still up YTD...Son of Loki Feb 7, 2018 1:36 PM Permalink
Right. Who would find it interesting or useful to discuss a market crash because the market is up for the year? *wipes drool*taketheredpill Feb 7, 2018 2:11 PM Permalink
At some point when things actually do correct (or crash as some call it), bond yields will soar.Bemused Observer Feb 7, 2018 2:48 PM Permalink
me feelings on how this ends....
So far haven't seen anything that makes me expect US 10's to break the top of the 30-year yield downtrend channel (driven by 30+ dis-inflationary years of borrowing growth from the future).
So if no break-out on US 10s, then what happened in previous years when US 10s touched the top of the channel?
Equities break down, slowly at first then OMG faster. Bonds rally.
The Fed makes noises about cutting rates but markets ignore.
Fed cuts rates and markets ignore. US 10s test previous yield lows again.
Fed goes "all in" with Helicopter money. End of $ and US Treasury market.
Bye!Haitian Snackout Feb 7, 2018 3:16 PM Permalink
Everything will hit the wall. Try to 'time' it if you must, but just be aware that those last few yards come up on you real quick...that's why people always get nailed by these events. (I'm always amused by the ones who seem to think that they can and will time it right...do they really believe all the folks who got nailed in the past were just stupid?...What kind of over-inflated ego would even entertain that idea?)
If it WERE possible to do that, there would BE no downturns, ever. These things do the damage they do because you CAN'T time them. Predict, yes, but not time.Wild tree -> Haitian Snackout Feb 7, 2018 4:47 PM Permalink
Regardless of what marky is doing, Dave's quite correct. The longtime flooring of interest rates has created a world dependent on it continuing. Maybe if it had something more going for it things would be different. The unwinding of the fed balance sheet was always just a theory. No one knew if or when it would happen. Or more important if it was even possible. But the car has no reverse gear and many people have spoken about this. That we will only hear a grinding noise if they try to shift into reverse. For myself, I'm certainly no expert, but I know enough about the housing market to know that somewhere around 2.80 on the ten year the increase will certainly be felt. And that once margin interest rates reaches parity with dividend yields, or sooner, that one goes pear shaped as well. The engine that has propelled housing prices to several times their real value ( granted, not everywhere ) is now in reverse. And that, as Dave has noted, is only the tip of the iceberg of total debt. And even if they reverse course, the debt saturation is so widespread the patient would only barely limp forward from here. There also are likely pension funds and others in the ICU. We won't know about everything right away.
Yes HS, Dave called it out correctly IMHO. Here is what he wrote in three sentences that is the sum of the whole article, and why the seeds of our destruction as a country, and world have been fervently watered since 2008.
"No, the fundamentals do not provide reason for optimism. They provide reason for grave concern. As I've been writing all along, the greatest fundamental that is exerting pressure right now is the massive debt that the entire global economy is built on."
The steam train is on the track, clickety-clack, clickety-clack,
Picking up speed as it heads down the mountain, clickety-clack, clickety-clack.
People are hanging on for dear life, clickety-clack, clickety-clack,
Won't matter none when the train runs out of track, clickety-clack, clickety-clack.
Feb 07, 2018 | www.project-syndicate.org
Market participants could easily be forgiven for their early-year euphoria. After a solid 2017, key macroeconomic data – on unemployment, inflation, and consumer and business sentiment – as well as GDP forecasts all indicated that strong growth would continue in 2018.
The result – in the United States and across most major economies – has been a rare moment of optimism in the context of the last decade. For starters, the macro data are positively synchronized and inflation remains tame. Moreover, the International Monetary Fund's recent upward revision of global growth data came at precisely the point in the cycle when the economy should be showing signs of slowing.
Moreover, stock markets' record highs are no longer relying so much on loose monetary policy for support. Bullishness is underpinned by evidence of a notable uptick in capital investment. In the US, gross domestic private investment rose 5.1% year on year in the fourth quarter of 2017 and is nearly 90% higher than at the trough of the Great Recession, in the third quarter of 2009.
This is emblematic of a deeper resurgence in corporate spending – as witnessed in durable goods orders. New orders for US manufactured durable goods beat expectations, climbing 2.9% month on month to December 2017 and 1.7% in November.
Other data tell a similar story. In 2017, the US Federal Reserve's Industrial Production and Capacity Utilization index recorded its largest calendar year gain since 2010, increasing 3.6%. In addition, US President Donald Trump's reiteration of his pledge to seek $1.5 trillion in spending on infrastructure and public capital programs will further bolster market sentiment.
All of this bullishness will continue to stand in stark contrast to warnings by many world leaders. In just the last few weeks, German Chancellor Angela Merkel cautioned that the current international order is under threat. French President Emmanuel Macron noted that globalization is in the midst of a major crisis, and Canadian Prime Minister Justin Trudeau has stated that the unrest we see around the world is palpable and "isn't going away."
Whether or not the current correction reflects their fears, the politicians ultimately could be proved right. For one thing, geopolitical risk remains considerable. Bridgewater Associates' Developed World Populism index surged to its highest point since the 1930s in 2017, factoring in populist movements in the US, the United Kingdom, Spain, France and Italy. So long as populism lingers as a political threat, the risk of reactionary protectionist trade policies and higher capital controls will remain heightened, and this could derail economic growth.
Meanwhile the market is mispricing perennial structural challenges, in particular mounting and unsustainable global debt and a dim fiscal outlook, particularly in the US, where the price of this recovery is a growing deficit. In other words, short-term economic gain is being supported by policies that threaten to sink the economy in the longer term.
The Congressional Budget Office, for example, has forecast that the US deficit is on course to triple over the next 30 years, from 2.9% of GDP in 2017 to 9.8% in 2047, "The prospect of such large and growing debt," the CBO cautioned, "poses substantial risks for the nation and presents policymakers with significant challenges."
The schism in outlook between business and political leaders is largely rooted in different time horizons. For the most part, CEOs, hemmed in by the short termism of stock markets, are focused on the next 12 months, whereas politicians are focusing on a more medium-term outlook.
As 2018 progresses, business leaders and market participants should – and undoubtedly will – bear in mind that we are moving ever closer to the date when payment for today's recovery will fall due. The capital market gyrations of recent days suggest that awareness of that inevitable reckoning is already beginning to dawn.
Dambisa Moyo, an economist and author, sits on the board of directors of a number of global corporations. She is the author of Dead Aid , Winner Take All , and How the West Was Lost .
Feb 07, 2018 | www.zerohedge.comOriginally written at RT, outspoken Aussie economist Steve Keen points out
Everyone who's asking "why did the stock market crash Monday?" is asking the wrong question; the real question, Keen exclaims, is "why did it take so long for this crash to happen? "
The crash itself was significant - Donald Trump's favorite index, the Dow Jones Industrial (DJIA) fell 4.6 percent in one day. This is about four times the standard range of the index - and so according to conventional economics, it should almost never happen.
Of course, mainstream economists are wildly wrong about this, as they have been about almost everything else for some time now. In fact, a four percent fall in the market is unusual, but far from rare: there are well over 100 days in the last century that the Dow Jones tumbled by this much.
Crashes this big tend to happen when the market is massively overvalued, and on that front this crash is no different.
It's like a long-overdue earthquake. Though everyone from Donald Trump down (or should that be "up"?) had regarded Monday's level and the previous day's tranquillity as normal, these were in fact the truly unprecedented events. In particular, the ratio of stock prices to corporate earnings is almost higher than it has ever been.More To Come?
There is only one time that it's been higher: during the DotCom Bubble, when Robert Shiller's "cyclically adjusted price to earnings" ratio hit the all-time record of 44 to one. That means that the average price of a share on the S&P500 was 44 times the average earnings per share over the previous 10 years (Shiller uses this long time-lag to minimize the effect of Ponzi Scheme firms like Enron). The S&P500 fell more than 11 percent that day, so Monday's fall is minor by comparison. And the market remains seriously overvalued: even if shares fell by 50 percent from today's level, they'd still be twice as expensive as they have been, on average, for the last 140 years.
After the 2000 crash, standard market dynamics led to stocks falling by 50 percent over the following two years, until the rise of the Subprime Bubble pushed them up about 25 percent (from 22 times earnings to 28 times). Then the Subprime Bubble burst in 2007, and shares fell another 50 percent, from 28 times earnings to 14 times.
This was when central banks thought The End of the World Is Nigh, and that they'd be blamed for it. But in fact, when the market bottomed in early 2009, it was only just below the pre-1990 average of 14.5 times earnings.Safe Havens
That valuation level, before central banks (staffed and run by people with PhDs in mainstream economics) decided that they knew how to manage capitalism, is where the market really should be. It implies a dividend yield of about six percent in real terms, which is about twice what you used to get on a safe asset like government bonds -- which are safe, not because the governments and the politicians and the bureaucrats that run them are saints, but because a government issuing bonds in its own currency can always pay whatever interest level it promises. There's no risk that it can't pay, and it can't go bankrupt, whereas a company might not pay dividends, and it can go bankrupt.
Now shares are trading at a valuation that implies a three percent return, as if they're as safe as government bonds issued by a government which owns the bank that pays interest on those bonds. That's nonsense.
And it's a nonsense for which, ironically, central banks are responsible. The smooth rise in stock market prices which led to the levels that preceded Monday's crash began when central banks decided to rescue the economy by "Quantitative Easing (QE)." They promised to do "whatever it takes" to drive shares up from the entirely reasonable values they reached in late 2009, and did so by buying huge amounts of government bonds back from private banks and other financial institutions (pension funds, insurance companies, etc.). In the USA's case, this amounted to $1 trillion per year -- equal to about seven percent of America's annual output of goods and services (GDP or "gross domestic product"). The Bank of England brought about £200 billion worth, which was an even larger percentage of GDP.
With central banks buying that volume of bonds, private financial institutions found themselves awash with money, and spent it buying other assets to get yields - which meant that QE drove up share prices as banks, pension funds and the like bought them with money created by QE.Blind Oversight
So this is the first central bank-created stock market bubble in history, and central banks have just had the first stock market crash where the blame is entirely theirs.
Were this a standard, private hysteria and leverage driven bubble, we could well be facing a further 50 percent fall in the market -- like what happened after the DotCom crash. This would bring shares back to the long-term average of 17 times earnings.
Instead, what I believe will happen is that central banks, having recently announced that they intend to end QE, will restart it and try to drive shares back to what think are "normal" levels, but which are at least twice what they should be.
As I said in my last book 'Can we avoid another financial crisis ?' QE was like Faust's pact with the Devil: once you signed the contract, you could never get out of it. They'll turn on their infinite money printing machine, buy bonds off financial institutions once more, and give them liquidity to pour back into the markets, pushing them once more to levels that they should never rightly have reached.
This, of course, will help to make the rich richer and the poor poorer by further increasing inequality. Which is arguably the biggest social problem of the modern era. So, as well as being incompetent economists these mainstreamers are today's Marie Antoinette. Let them eat cake, indeed.
DennisR Feb 7, 2018 6:57 PM PermalinkArrowflinger Feb 7, 2018 6:59 PM Permalink
What crash? Every 3% dip is met with money printing, secret QE, etc. You can't expect to have a free market in 2018...Dilluminati Feb 7, 2018 7:01 PM Permalink
It is too low on the scale to be a "crash"
Nov 11, 2017 | www.strategic-culture.org
New figures published this week on obscene inequality show how the capitalist economic system has become more than ever deeply dysfunctional. Surely, the depraved workings of the system pose the greatest threat to societies and international security. Yet, Western leaders are preoccupied instead with other non-existent threats – like Russia.
Take British prime minister Theresa May who this week was speaking at a posh banquet in London. She told the assembled hobnobs, as they were sipping expensive wines, that "Russia is threatening the international order upon which we depend". Without providing one scrap of evidence, the British leader went to assert that Russia was interfering in Western democracies to "sow discord".
May's grandstanding is a classic case study of what behavioral scientists call "displacement activity" – that is, when animals find themselves in a state of danger they often react by displaying unusual behavior or making strange noises.
For indeed May and other Western political leaders are facing danger to their world order, even if they don't openly admit it as such. That danger is from the exploding levels of social inequality and poverty within Western societies, leading to anger, resentment, discontent and disillusionment among increasing masses of citizens. In the face of the inherent, imminent collapse of their systems of governance, Western leaders like May seek some relief by prattling on about Russia as a threat.
This week European bank Credit Suisse published figures showing that the wealth gap between rich and poor has reached even more grotesque and absurdist levels. According to the bank, the world's richest 1% now own as much wealth as half the population of the entire planet. The United States and Britain are among the top countries for residing multi-millionaires, while these two nations have also emerged as among the most unequal in the world.
The data calling out how dysfunctional the capitalist system has become keeps on coming. It is impossible to ignore the reality of a system in deep disrepair, yet British and American politicians in particular – apart from notable exceptions like Jeremy Corbyn and Bernie Sanders – have the audacity to block out this reality and to chase after risible phantoms. (The exercise makes perfect sense in a way.)
Last week, a report from the US-based Institute of Policy Studies found that just three of America's wealthiest men – Bill Gates, Jeff Bezos and Warren Buffett – own the same level of wealth as the poorest half of the entire US population. That is, the combined monetary worth of these three individuals – reckoned to be $250 billion – is equivalent to that possessed by 160 million citizens.
What's more, the study also estimates that if the Trump administration pushes through its proposed tax plans, the gap between rich elite and the vast majority will widen even further. This and other studies have found that over 80% of the tax benefits from Trump's budget will go to enrich the top 1% in society.
All Western governments, not just May's or Trump's, have over the past decades overseen an historic trend of siphoning wealth from the majority of society to a tiny elite few. The tax burden has relentlessly shifted from the wealthy to the ordinary workers, who in addition have had to contend with decreasing wages, as well as deteriorating public serves and social welfare.
To refer to the United States or Britain as "democracies" is a preposterous misnomer. They are for all practical purposes plutocracies; societies run by and for a top strata of obscenely wealthy.
Intelligent economists, like the authors at the IPS cited above, realize that the state of affairs is unsustainable. Morally, and even from an empirical economics point of view, the distortion of wealth within Western societies and internationally is leading to social and political disaster.
On this observation, we must acknowledge the pioneering work of Karl Marx and Friedrich Engels who more than 150 years ago identified the chief failing of capitalism as being the polarization of wealth between a tiny few and the vast majority. The lack of consumption power among the masses owing to chronic poverty induced by capitalism would result in the system's eventual collapse. Surely, we have reached that point in history now, when a handful of individuals own as much wealth as half the planet.
Inequality, poverty and the denial of decent existence to the majority of people stands out as the clarion condemnation of capitalism and its organization of society under private profit. The human suffering, hardships, austerity and crippled potential that flow from this condition represent the crisis of our time. Yet instead of an earnest public debate and struggle to overcome this crisis, we are forced by our elites to focus on false, even surreal problems.
American politics has become paralyzed by an endless elite squabble over whether Russia meddled in the presidential elections and claims that Russian news media continue to interfere in American democracy. Of course, the US corporate-controlled news media, who are an integral part of the plutocracy, lend credibility to this circus. Ditto European corporate-controlled media.
Then we have President Donald Trump on a world tour berating and bullying other nations to spend more money on buying American goods and to stop cheating supposed American generosity over trade. Trump also is prepared to start a nuclear war with North Korea because the latter is accused of being a threat to global peace – on the basis that the country is building military defenses. The same for Iran. Trump castigates Iran as a threat to Middle East peace and warns of a confrontation.
This is the same quality of ludicrous distraction as Britain's premier Theresa May this week lambasting Russia for "threatening the world order upon which we all depend". By "we" she is really referring to the elites, not the mass of suffering workers and their families.
May and Trump are indulging in "perception management" taken to absurdity. Or more crudely, brainwashing.
How can North Korea or Iran be credibly presented as global threats when the American and British are supporting a genocidal blockade and aerial slaughter in Yemen? The complete disconnect in reality is testimony to the pernicious system of thought-control that the vast majority of citizens are enforced to live under.
The biggest disconnect is the obscene inequality of wealth and resources that capitalism has engendered in the 21 st century. That monstrous dysfunction is also causally related to why the US and its Western allies like Britain are pushing belligerence and wars around the planet. It is all part of their elitist denial of reality. The reality that capitalism is the biggest threat to humanity's future.
Do we let these mentally deficient, deceptive political elites and their media dictate the nonsense? Or will the mass of people do the right thing and sweep them aside?
Feb 07, 2018 | www.nakedcapitalism.com
cojo , February 6, 2018 at 10:57 amSynoia , February 6, 2018 at 11:19 am
Two interesting points in this nice synopsis full of nuggets;
" much of what looks like inflation occurs in selected sectors (health care, broadband prices, higher education) as a result of aggressive use of pricing power."
I would argue all three inflated sectors have different origins. Escalating healthcare costs are largely due to the perverted incentives for healthcare cost control. When there is no real incentives for patients (through utilization) or insurance companies to control costs (they themelves would actually make less money if they significantly controlled costs) but rather to pass on the costs through higher premiums, you get the year over year increases there.
Escalating cable/broadband prices are most likely due to monopolies or duopolies in service areas which allow for pricing power.
Out of control tuition costs in higher education are a combination of student loans, acting as the fuel, to allow for students to be less price sensitive to rising tuition which goes to pay for everything but education such as excess administrative costs, fancy dining and athletic/gym facilities, etc.
People have been wondering for so long about how long China can keep its debt-fuelled growth going that the worry-warts look a lot like the boy who cried "wolf".
I wonder if there is a parallel with what happened in the US were deregulation in lending (credit card and mortgage) in the late sixties and early seventies (after we fully went off the gold standard) created the greatest debt bubble known. That took about 40 years to finally pop with the Global Financial Crisis.Angie Neer , February 6, 2018 at 1:01 pm
The US stock market selling was largely algo-driven as the market dropped through technically important levels, triggering more selling.
Ah, do Algos = Robots? It seem algos have a herd mentality.
What collective noun will we use for Algos?
A street of Algos?
A panic of Algos?Travis , February 6, 2018 at 7:43 pm
Algos incorporate the biases of their creators, so the herd mentality is baked in. Algos just enable us to make our bad decisions much, much faster.Chauncey Gardiner , February 6, 2018 at 12:39 pm
Algorithma?L , February 6, 2018 at 1:09 pm
Appreciated your final sentence and paragraph in this post before the Update, as well as your observations on the Fed's obsession with suppressing wage growth beginning with Volcker, which you have mentioned before. But I expect the QE-ZIRP Welfare Queens will soon enough have their way with their former capo and new Fed Chair, if they haven't already. They will make every effort to restore order and keep market prices elevated. Gotta have those stock buybacks that make CEO stock options so lucrative and have fueled political contributions by the One Percent under their Orwellian-named Citizens United decision. Too bad this has been so mismanaged and gotten so frothy. As usual, I expect the wrong people will get hurt.Wisdom Seeker , February 6, 2018 at 3:54 pm
As an additional piece of news. Beijing did just announce an end to bitcoin in the PRC. They had previously chosen to block domestic exchanges and as of this week they plan to block access to all foreign exchanges as well. While that is not a direct assault on the shadow banking system it will tighten one mechanism by which those banks route their money out of the country or otherwise conceal it. Whether that counts as a serious cleanup or just eliminating competition is another matter. Either way it isn't good for the price of a BTC.Francois , February 6, 2018 at 4:46 pm
The FRED weekly earnings data don't show even the raise that the hourly data purport to show. Average weekly hours down, more than enough to wipe out the small rise in hourly wages. Hourly wage growth for production workers is actually near a low point for the post-2009 expansion.
This wailing about wage inflation looks like certain policymakers and media types deliberately amplifying statistical noise to serve their own agendas.
But average weekly hours is also a potential recession-watch indicator , so it'll be interesting to keep an eye on it for the next few months.Rates , February 6, 2018 at 4:59 pm
the real danger is that the neoliberal model is increasingly under stress, as the consequences of rising inequality and unheard-of low levels of the benefits of growth going to laborers undermines the legitimacy of the system and is producing bad outcomes ranging from political fracture to falling life expectancy and an opioid crisis that is in large measure the result of the collapse of typically rural communities. The last thing the US needed was more transfers to the rich in the form of the Trump tax bill. So while Mr. Market may recover his sunny mood, the foundations of the economy continue to rot.
For news in the same vein, this soon to be published book should be quite interesting
https://smile.amazon.com/s/ref=nb_sb_ss_i_1_15?url=search-alias%3Dstripbooks&field-keywords=dying+for+a+paycheck+by+jeffrey+pfeffer&sprefix=dying+for+a+pay%2Cstripbooks%2C288&crid=SR2G798OK4LRPunxsutawney , February 6, 2018 at 6:02 pm
As Wolf pointed out, the Dow is only down 1.5% for the year with yesterday's drop.
People like to abuse the usage of the following words: "crisis", "meltdown", etc, etc.
Nothing to see.knowbuddhau , February 6, 2018 at 7:20 pm
"But another way to read it is that this particular downdraft is a symptom of how much owners of securities think that what is good for workers is bad for them."
The logical conclusion is that Corporate Profits will be maximized when Wages hit zero.
Uh..yeah .can someone explain how that will work please.Punxsutawney , February 6, 2018 at 8:13 pm
Sure, I'll have a go. Logical doesn't necessarily mean maximal. The lines intersect at a nonzero point. If they took wages to zero, who would cook and clean and mow and so on for them? They're damn near helpless without us.
Pretty revealing curves, too. How much human can we be at a given wage level? Starvation level, subsistence level, on up through housing wage to, dare I dream? Living wage.
Pity the poor PTB, terrified that we might get up from our knees.
ISTM us "modern" workers work way more than our Stone Age ancestors likely did. I doubt they had only 2 days off a month, like I do. It's my understanding that, in "primitive" cultures, people spent most of their time being people. And still spend, since they're not all dead yet.
If work we must, I wish everyone had a livelihood, not just a job. The difference is, the more you give a livelihood, the more it gives you back.
Wouldn't that be nice?economicator , February 6, 2018 at 6:44 pm
It would be nice.
And my understanding is that as long as food was relatively plentiful, "Primitive" cultures actually had a fair amount of free time on their hands as one's daily nutritional needs could be met with a few hours of effort.
No wonder so many Westeners went "Native" at times. Whether it was living with Native American's or British sailors in the South Pacific. Frankly hanging out on the beach in Tahiti seems preferable to me.
And most natives who were not turned into slaves reverted back to thier roots when they got home. Fitzroy, of the Beagle and Darwin had brought some of the residents of Tierra del Fuego home to England with him. When returned they tried to teach them to farm, but upon their return, years later. The natives had abandoned the hard work of farming to become hunter gatherers again. When found one of them replied, "why do that when there is Plenty Fishies, Plenty Birdies?, etc" -Probably not an exact quote, but along those lines.
As to zero wages, that would be slavery, the base of one of those curves perhaps, but today's base is better, because their is no responsibility that comes with being a slave owner, or a feudal lord I suppose. People can be left to die, preferably quietly.The Rev Kev , February 6, 2018 at 8:08 pm
>> So this is pretty rich. The Fed and the investor classes are getting worried that the labor markets might be getting too tight
Didn't Marx say that after a boom the rate of profits starts to fall and capitalism experiences a contraction (apology to Marx for the very rough paraphrase but I think that was the gist)? Labor costs eat into profits. The party of record profitability and record share prices is threatened by the first clouds on the labor horizon so there. Mr Market is very finely attuned to any whiff or rising labor costs.. Marx explained it all, what – 170 years ago
Jimmy Dore has an interesting take on this meltdown at https://www.youtube.com/watch?v=aUmjZVwvYnQ and ties in the growing signs of wage growth to Wall Street's reaction to this trend.
Feb 07, 2018 | www.nakedcapitalism.com
Steak , February 6, 2018 at 7:11 amewmayer , February 6, 2018 at 11:13 pm
From September, but the last 1/3 of the article talks about a what-if scenario that seems to be happening now
Interestingly the article predicts a flat VIX term structure in advance of the short vol trade blowing up, as that takes away the easy money from the trade, and verily last week the VIX curve from what I saw on the interwebs, was flatabynormal , February 6, 2018 at 7:25 am
That's a great article, Steak – thanks for posting –
The bottom line is that the Big (Volatility) Short is an excellent trade that takes advantage of an upward sloping term structure in the $VIX futures. If that term structure, however, flattens or begins to slope downward, bad things happen to the Big (Volatility) Short trade. The rapidity with which the term structure makes that change will have a lot to do with just how bad the losses are that are incurred by the volatility shorts. Most smart players – hedge funds, family offices, etc. – are quite leery of the short volatility trading strategy right now, because of the extremely low levels of $VIX and because it's such a crowded trade. However, it seems that "everyone" is warning against the trade right now, so it will probably continue to work for quite some time before – unexpectedly – a problem explodes on the scene.
So a doubling in one trading session – yesterday – of a VIX which has been long-term depressed by the same monetary policies which blew the MoAB, Bubble 3.0, would seem to have qualified as 'unexpectedly'. And 'some time' in this case turned out to be a mere 5 months, pretty damn good in "the market can stay irrational longer " terms.Louis Fyne , February 6, 2018 at 8:36 am
What's the 'new' average until main street feels this? http://www.businessinsider.com/wall-street-says-expect-more-mega-mergers-in-2018-2017-12William Neil , February 6, 2018 at 9:16 am
the top 1% own >40% of the nation's wealth (v. 25% in 1980). >70% of their wealth is in stocks/bonds v. 13% for the middle class. https://www.bloomberg.com/view/articles/2017-08-28/how-the-top-1-keeps-getting-richer
1/2 of Americans own $0.00 stocks.
thanks to income inequality the wealthy and the death of the traditional pension plan, the wealthy don't have a chump to unload their overvalued ZIRP-inflated assets unto.
And paper wealth is meaningless without a liquid market to convert that stock ledger line item into cash when the central banks take away the punch bowl.Croatoan , February 6, 2018 at 9:54 am
Good coverage Yves. I think you covered all the major strands of explanation. My open question is this: will the strains of falling markets reveal structural fault lines in the shadow banking system that have not been apparent? So far, no, but we are in the early downhill phase.
My posting on the stock market was dated January 2, 2018, and I cited Robert Shiller's CASE index flashing red, from his September warning article at Project Syndicate. Here https://www.dailykos.com/stories/2018/1/2/1729269/-Capitalist-Ethics-the-Stock-Market-and-Trump and here: https://www.project-syndicate.org/commentary/us-stock-volatility-bear-market-by-robert-j–shiller-2017-09
Trying to get to underlying causality in the real economy and its relations to the great stock market run-up is a humbling, daunting assignment. Thanks for making the effort.
Dow up 350 points. Nothing to see here, move along, algos just needed to drop and profit.
Feb 06, 2018 | discussion.theguardian.com
irisbjones , 4 Feb 2018 11:42This article talks of the economic "boom" before the crash of '87 and keeps perpetrating the right wing propaganda of the "good old days of Reagan." Maybe for those who were working in the stock market. But my memories of that time before the crash were of massive unemployment in the midwest, union jobs being lost to "right to work" schemes in the south, cities boarded up with no business in their downtown areas, people struggling to put food on the table and no prospects for the younger generation. (Remember, the 80's of Reagan is when we Gen X'ers were teenagers.) You've created a lovely story - but it is the story of the 1%. Because honestly, the crash of '87 didn't affect anyone beyond the stock market as we were already suffering at the bottom. The thing I find hilarious is that everyone was shocked that Trump got elected and we talk endlessly of how do people vote against their interests. But to me, Trump is just Reagan in another form. Same propaganda - different suit. History does repeat itself - particularly in how people still believe the same old lies told by those who adore the stock market.
Feb 06, 2018 | discussion.theguardian.com
JumpingSpider -> theredmenace , 4 Feb 2018 11:07
the banks had been given the free loans
Yeah, that was just phase one, though.
Couple of articles worth reading:
NYT review of "Confidence Men" by Ron Suskind in 2011
Gary Younge's Guardian piece from last year
Hallatt , 4 Feb 2018 15:12
Feb 06, 2018 | discussion.theguardian.com
Hallatt -> suddenoakdeath , 4 Feb 2018 15:32The US Savings and Loan deregulation mess the 2007/8 melt down and the many Madoff ponzi scams have taught most people especially politicians little or nothing.champagnehockey -> whitehorsehill , 4 Feb 2018 15:29
The huge US deficits from this tax gift just like the three Trillion Obama gave Wall Street shows Democrats and Republicans think and act the same, selfishly feeding friends and family and peeing on the idle masses of Falling Rome.
As AI continues to eliminate millions of jobs and increasing problems for a growing population, the next Boston Tea Party may make the Vegas shooting by one derranged individual look like a pac man game ...............................eating up the financial aristocrats"Unregulated capitalism = boom and bust"Hallatt -> sayitall
"If Keynes, the governments of the 40s and the public after WW2 worked this out, why can't we?"
Associated with the switch to worshipping the false gods of the monetarism and unfettered capitalism we have globalisation accompanied by free flowing capital. This makes it more difficult for the UK government to pursue any economic policy that is much different from other major trading countries and our trading partners. Furthermore, the multiplier effect is now much lower than it was in Keynes' time. (Whether that trend has reversed with less progressive taxation I don't know.)
I still think the obsession with *unfettered* free markets and disregard for basic truths underlined by Keynes is wretchedly short sighted, but it's not as simple as turning back the clock.
The massive growing US debt is a major world concern that eventually will force a further devaluation of the US currency and increased pressure on China to convert huge bond holdings into 100% ownership of real hard assets, like mines, agricultural processing, real estate, transportation and technology.
The US will need to push up fed interest rates to 3% in the next twenty-four months to slow the conversion and asset buy up of the Chinese. Many US multi national corporations will sell overseas assets to the Chinese who would prefer them over Mainland US based assets that can be politically control by Washington.
The New York stock market is very over priced relative to returns and a lot of the artificial assets are the Googles, Amazons ,Facebooks that are easily copied by big pocket China.
Feb 05, 2018 | discussion.theguardian.com
ISeeTea , 4 Feb 2018 08:38What was most worrying about the crash of ten years ago was how we, the people who would end up paying for it, never even heard about the it until we were at the cliff edge and Bush was telling everyone the 'sucker's going down'. When it happens again, we'll only find out in the seconds before it happens.
Yet there must be literally THOUSANDS of people closer to the bubble who can see where it's going.
Feb 05, 2018 | discussion.theguardian.com
Perry Weiner -> Okio Yonio , 4 Feb 2018 14:07600,000 homeless in the wealthiest country in history. More on the way: stats show that not one country in the US has sufficient # of affordable housing. 43 Million of us live on below 15,000 per annum. 48.8 million Americans , including 16.2 million children, live in households that lack the means to get enough nutritious food on a regular basis. I puke from that, actually.dontscamme -> BangtoRights , 4 Feb 2018 12:36and no health insurance.
Poverty in the USA means living in a trailer park with no running water and no proper sewerage system.
Feb 05, 2018 | discussion.theguardian.com
Freedomsong -> Resist Fight Back , 4 Feb 2018 14:54I suspect that in the end the Democrats will lose heart when they really cannot find any Russians under the bed.
The investigation has been going on for over a year and so far the only criminal charges seem to be one person telling a few lies to Congress. The worst case, so far is one person may serve a year or two
Bill Clinton had more people go to jail from associates dealing with a number of shady investment deals during his time in office and so far I don't think any Presidential aids have been found under Trump's desk.
Feb 05, 2018 | discussion.theguardian.com
Katikam , 4 Feb 2018 14:05"What goes up must come down"
Particularly when regulations are dismantled..... The thing about the stock market is that the financial elite makes loads of money during busts as well as booms. Do you remember how big those golden parachutes were in 2008?
Incidentally the way employment stats are compiled in the US if you work 6 hours a week you're considered employed. No wonder footnotes to stats on rise in employment do mention rise in inequality. So many people work at 2 or 3 part time jobs without any benefits and paid day off and overtime. The system is so totally exploitative.....
Feb 05, 2018 | discussion.theguardian.com
suddenoakdeath , 4 Feb 2018 14:18Nice article and perhaps another plug for Janet Yellen. The 1987 crash followed the Savings and Loan Crisis which also was the result not only of deregulation, but a change in tax law. The change in accounting for passive losses in real estate was the final straw. At this point I would like to restate the obvious, the tax law that has just been passed is far more reaching.
I am not an economist, but the current environment reminds me more of the dotcom. bubble. It began in 2001 and the market tanked in the latter part of 2002 and 2003. This was also a time of not only financial deregulation, the Financial Modernization Act, but also a time of high expectation for the technology sector. Many of the dotcom start-ups failed and technological innovation sometimes takes years to come to fruition.
We did not seem to learn anything from this over speculation and deregulation and we experienced the financial melt down of 2007-2008.
Many baby boomers want this last bit of "exuberance" to pad their portfolios for retirement. As the past shows us, these frenzied times are hard to control. Hopefully, the new FED chair will not feed the monster.
Another financial crash like the one in 2008 will be even more catastrophic because many invertors are nearing retirement, if not already retired. I believe that the demographics will greatly compound another crash.
Finally, I don't know why big business doesn't worry more about the disappearing engine of consumption.
Feb 05, 2018 | discussion.theguardian.com
Freedomsong , 4 Feb 2018 14:25US GDP is predicted to show growth of 5.4% in Q1 2018 (see link to Atlanta Federal Reserve report).
IMF and World Bank forecast plus 3% growth for US in 2018 and perhaps more in 2019 (both are usually very conservative).
The EU has not seen these growth rates ever. The US has not seen these growth rates since Ronald Reagan
Real wages rose 2.9% in the latest US Jobs data.
The stock market is due a 15% correction so people can take profits (many have to do so to pay their record taxes from 2017).
Sorry I do not see doom and gloom. For me I have put my money where my mouth is and approximately 70% of my investments are in stocks and most are US stocks. I have adjusted my portfolio to reflect a more defensive position,but I think the next three years are going to be really good for me and perhaps beyond.
Big risk would be going back to Obama policies and another crash, but that is at least three years away. During that time I hope to increase my wealth at least 50%.
Feb 05, 2018 | discussion.theguardian.com
nick kelly -> JumpingSpider , 4 Feb 2018 17:17Vanity Fair has a great write up on the 2008 situation: The Week Goldman Almost Died
I suggest all you guys opining about what Obama should have done, read it.
Obama took over a sinking ship, a basket case.
It was Bush not Obama who 'said this sucker could go down and began the bail outs of GM etc.
To paraphrase that ole line: 'It's hard to drain the swamp when you are up to your ass in alligators'
BTW: it's a bit ironic if anyone in the UK thinks Obama and the Fed should have taken a hard line and let banks go to the wall. It was the UK that had the first run on a major bank. It was, and arguably is. much less prepared for a really tough Paul Volcker style Fed than the US.
Look in this space in the rest of 2018 for whining about a heartless Fed.
Feb 05, 2018 | discussion.theguardian.com
Byron Delaney, 4 Feb 2018 12:01Historic CD rates (yes, actual money actually used to make actual money):
1988: 7.57 (thing were much different, 2018 is not 1987)
2003: 1.05 (Bush)
2010 to Present: well below 1 percent, almost zero.
Feb 05, 2018 | www.theguardian.com
Principleagentprob , 4 Feb 2018 21:39I see some parallels with 1989, but I think the real parallel is with the Vlocker shock from 1979. During the 70s the US $ weakened after the collapse of Bretton Woods when the $ was pegged to the price of gold and other countries pegged to the $. The exorbitant cost of the Vietnam and cold war and the great society to quell popular discontent at home and a crisis of over-production as other countries (such as Germany and Japan) caught up with the US after WW2, led other countries to doubt the soundness of the $ and doubt whether the US could or would covert their $ denominated assets into gold. The French sent a destroyer to demand payment in gold for their $ denominated assets. This led Nixon to come off the gold standard, this and the two oil crisis led to inflation and a weakening $. The overproduction and the crisis of profit led to an increasingly zero sum game as growth and profit internally and externally could only be at another's expense. Paul Vlocker appointed treasury secretary in 1979 implemented eye watering interest rate rises to control inflation. The problem with this as well as destroying US manufacturing was that 3rd world countries had borrowed in $ to industrialise, this was initially affordable debt but the oil crisis and the jacking up of US rates made these $ debts unaffordable, particularly as the $ appreciated making these debts even more unaffordable, leading to the south American debt crisis with other countries affected.ID7731327 -> occamtherazor , 4 Feb 2018 20:42
This would make 1979 a better parallel than 1989, a weakened $ leading to premature tightening of US interest rates to counter inflation and counter the fall of the $. Countries still not recovered from the financial crisis with large levels of $ denominated public and private debt could be tipped over into full default with increasing US interest rates and an appreciating $. Given that most countries have not recovered from the crisis with high levels of public and private debt, this could be the trigger to the next world economic crisis as their has been no serious attempt at financial regulation and another serious 3rd world default would make the banks insolvent again.
Time for another banking bailout/bail in and some more austerity?
This has some interesting points, but do not agree with the description of Keynesian
https://www.jacobinmag.com/2016/08/paul-volcker-ronald-reagan-fed-shock-inflation-unions /But you do have plenty of real poverty in the UK. Most young people being underpaid, unable to buy houses and barely hanging on while the rich gets richer and richer, causing asset bubbles everywhere in the UK.UpperLeftEdge -> prematureoptimsim , 4 Feb 2018 19:40
Is that not the classic definition of a 3rd world economy?They are reborn as a new Empire.OB1Cannoli , 4 Feb 2018 19:14
Rome=>Britain=>USA for example.
Each founded on new technology that produced better ways to destroy the natural environment for the benefit of the ruling classOB1Cannoli , 4 Feb 2018 19:01
Central banks did enough in 2008-09 to prevent the collapse of capitalism.
Central banks didn't do anything to prevent the collapse of capitalism. It was fiscal stimulus (government spending) that prevented it. The countries that spent the most recovered the most. This is why the eurozone, with its arbitrary and economically illiterate constraints on member states' fiscal policy-making, languished behind countries like the US and UK, who don't needlessly (and stupidly) subject their governments to credit markets.GrumpyOldPhart -> Jack Harrison , 4 Feb 2018 18:56
Speculation has thrived in recent years because central banks pumped money into the financial system through record-low interest rates and quantitative easing. This prevented the banks from going bust and ensured that the recession of 2008-09 was not as severe as the Great Depression of the 1930s, but at a cost.
I don't think so. First, central banks didn't really pump money into the financial system. They swapped interest-bearing treasury bonds that banks held for reserves. This didn't prevent banks from going bust. It couldn't have. It just changed the asset portfolio of banks.
Nor did it ensure that the recession was not as severe as the Great Depression. The central bank's making borrowing cheap didn't affect much of anything, because nobody wanted to borrow. The financial crisis was caused by over-leveraging in the private sector. With corporations and households de-leveraging after the crisis hit, the price of money didn't matter much.
What helped make the crisis less severe (in both the UK and US) was fiscal stimulus (treasury spending) that both countries engaged in after the crash. What made the recover needlessly long and underwhelming is that both country stopped their fiscal stimulus, and even reversed course way too soon, and never spent enough in the first place.America is two countries in one due to income inequality. One the one hand, the rich are getting richer and the so-called middle class is, at best, treading water. On the other hand, as the Guardian reported some weeks ago, the US has crushing poverty equal to or worse than most any third-world country. That assessment came from an Australian doing a study on behalf the UN. He was particularly horrified by Alabama.john ayres -> johnf1 , 4 Feb 2018 18:53
In the meantime, the economy seems to be doing well, but it's as much illusion as anything given the staggering levels of debt the Republican governments--plural--have imposed on the country. This will all come back to bite the US and the Doddering Dotard in the ass and when it does, it'll likely crash most everyone else's economy as well...just like 2008/2009.We know for sure no one in finance knows anything. Infinite resources flow into the business of predicting the future value of assets. And yet 2000 Swiss gnomes can not do better than 50/50 with their recommendations.Byron Delaney -> occamtherazor , 4 Feb 2018 18:39
If anyone could do a bit better the casino would have to close. But they cant. QED.Poverty is hidden in the UK and US, or simply looks like business as usual. We have much better infrastructur. But that is deceptive. We have poverty hidden away behind walls. Although some US cities are wastelands, and were so under Obama, but we ignore that.OXIOXI20 , 4 Feb 2018 18:32Well, Dow futures are down a few hundred points at the current time, should be an interesting couple of days considering the US Government might be shut down before next Friday because the Republicans cannot write and pass a budget. They simply want blank checks.consumerx -> George Williams , 4 Feb 2018 18:31The Greatest Economic Disasters ARE ALL GOP !!!
Savings & Loan Disaster--GOP--Reagan
Financial Crises--GOP--Bush---( costing the average worker OVER 100K in lost home values & 401K's )
Tax Plan----GOP-----Moron Trump ( adding 1.5 TRILLION to a 20 TRILLION natinal debt, making sure our Great, Great,Great, Great Grandkids will still be paying this bill for the rich )
Who spends out tax dollars? Congress does.
Who has controlled Congress the last 20 of 26 years and spent most of our tax dollars leading to a 21.5 TRILLION DOLLAR DEBT ? That would be the GOP !!!!
Trump says he has got ridden of regulations faster than anyone,
how many regulations are in the 1100 pages of the tax bill,
he and moron GOP members passed ???
Feb 05, 2018 | discussion.theguardian.com
ThirdEye -> UpperLeftEdge , 4 Feb 2018 22:10Empires are built on plunder. When there is nothing more to plunder, or it becomes difficult to do so, they decline and collapse. The American empire has plundered all it could, native peoples' land, slave labor, resources everywhere, and last oil. Now you can give it some of these things for free and still it will not manage to remain standing. Plunder as a national business model has been waning.ThirdEye -> deucelow , 4 Feb 2018 22:05No sense of proportion. After 9/11, they were comparing individuals who pricked other individuals with umbrella tip points to the mass killers, and alarming people with threats of terrorism. It is the same here.
Feb 05, 2018 | discussion.theguardian.com
purplesurfer -> Jack Harrison, 4 Feb 2018 17:23Is this the same America where the national minimum wage will remain stuck at shithole levels , due to a President who is part of , paid for and acts in the interests of the 1% ?
Where is the evidence for the rise in working class wages ? Is it the $ 1.50 per week pay rise which Paul Ryan remarked upon this week ? ( just wait until their health care is further stripped away .. that rise will be more than stripped away )
Trump also despises trade unions ( so much for the blue collar billionaire bullshit peddled by Trump ) , and will do nothing to address the declining membership of trade unions .
According to the well qualified economist Robert Reich ( as opposed to the bellicose buffoon Donald Trump ) economic crashes are historically preceded by low levels of trade Union involvement .
Feb 05, 2018 | profile.theguardian.com
Jympton 5 Feb 2018 00:25The market is overvalued due to all that free money that had to go somewhere. Asset inflation is what these higher stock markets indicate, its not a sign of increasing real wealth being produced. The tax give away to the rich is only adding fuel to the fireCivilityPlease -> Michael Bifano , 5 Feb 2018 00:19Bailouts WILL be required just as 2008, to prevent a total collapse. When they didn't require the firm's to retire the consumer debt they held it left the domestic market in an unprecedented position with debt at higher levels than yearly earnings. Now the credit driving consumer spending is going to evaporate. The next bubble will hurt worse and still nothing has been done to fix the problems that caused the last crash. Wall Street expects a bailout so will not try to avoid overextending. The rules are setup to encourage catastrophe. Congress and the White House are criminally negligent and must be held to account or we will be well and truly fucked people.Aseoria -> Byron Delaney , 5 Feb 2018 00:13Presidents are selected to play their parts(We get a choice between "Pepsi" or "Coke" to vote for).
Obama seems to be cast as the progressive,in that time way back when before Trump destroyed the country, but he wasn't. He is affable and articulate, and has a lovely family, and his genes go back to the slaves that were stolen from Africa.These characteristics made him a good choice in his time, when people were getting mildly restive during the Bush the Lesser administration. Obama's chief legacy is that he normalized endless war. He continued to reveal to the people of the country how close the association between corporations and the US government, normalizing that arrangement The people were made quiet again, and became even more easily distracted by the ubiquitous use of smartphones and such, in everyone over the age of one.
Now, the jack boot is starting to be visible for middle-class white Americans. But we unsee it. We are accustomed to these ideas now. We have, after all, a Department of Homeland Security( I mean, how Stasi can you get?) These days, people are entertained and outraged and frothing and throwing slippers at their teevees about a reckless, take-no-prisoners, out-mafioso casino owner, a reality star, completely intertwined with transnational corporations.
This arrangement has already been normalized by the last three administrations. The goal is the same--increase US military hegemony(best business ever, war), exploit natural resources as much as the people will tolerate, reduce civil liberties and civil rights to every person, not just 'minorities", and now, so obviously, taking away the remaining legal opportunities Americans have to redress their government.
Feb 05, 2018 | www.theguardian.com
soundofthesuburbs , 4 Feb 2018 13:48Neoliberalism has never produced a stable economic model and only appears to work as its neoclassical economists don't consider debt.Byron Delaney -> icebjorn , 4 Feb 2018 13:46
The great champions of neoliberalism never really knew what they were doing.
Adair Turner has looked at the situation prior to the crisis where advanced economies were growing by 4 - 5%, but the debt was rising at 10 – 15%.
This always was an unsustainable growth model; it had no long term future.Both sides of Congress serve the wealthy with the intention of gaining wealth for themselves. Trump is not much different than the dems (that's why Obama told Bernie to leave). The US is purely capitalistic. Money is everything. People without money are nothing, but if you toss them in prison you can make money (and make them work for free). After eight years of Obama the US is still the world's top prison state and there's more poverty than ever. Trump, Obama, Hillary. All very similar. I just see dollar signs.RecantedYank -> icebjorn , 4 Feb 2018 13:44Consider those who in their late forties got hit by the last bank-owned/Wall Street crash. They lost a good chunk of their 401ks...and had to cash out the remainder to just cover former obligations. Then they were told to go back to school (again involving, at least here in the US, major debt to do so). Who benefited.. the same bank and Wall Street loan sharks. So now in their early fifties and competing against much younger people, they struggled to pay off their incurred re-training/education loans, with nary a penny to spare to invest for what they had after years of saving lost. It's a mugs game, with the only ones winning are the top 1-2% who are able to bet against their own investments.
Feb 05, 2018 | www.theguardian.com
is August 1987 and the US economy is humming along. Memories of the deep recession earlier in the decade are fading fast. Tom Wolfe is about to publish The Bonfire of the Vanities , which captures perfectly Wall Street's greedy bullishness.
The financial markets have Paul Volcker to thank for rising share prices. As chairman of America's central bank, the Federal Reserve , Volcker had given the US economy shock treatment to rid it of its inflationary excesses. Record-high interest rates triggered the worst recession in the US since the 1930s, but once inflation started to come down borrowing costs were cut sharply and the economy recovered.
The president at the time, Ronald Reagan, showed little gratitude for the boom that won him a second term with a landslide victory in 1984. Volcker, who had been appointed by Reagan's predecessor, the Democrat Jimmy Carter, was seen as insufficiently keen on Reagan's plans for financial deregulation, so he was replaced by someone deemed to be more on message: Alan Greenspan. Two months later, in October 1987, there was a market meltdown.Facebook Twitter Pinterest Ronald Reagan. Photograph: Marcy Nighswander/AP
Sound familiar? As in 1987, the US economy has been growing at a fair lick. Unemployment is low and signs of inflation are starting to appear. As in 1987, the dollar is weak and share prices have been on a sustained upward run. And as in 1987, a Republican president has just replaced an old hand at the Federal Reserve with someone new. Janet Yellen presided over her last meeting as chair in the middle of a week that saw wobbles in both the stock and bond markets. Trump got rid of her for the same reasons that Reagan got rid of Volcker, She was a Democrat and not wild about deregulation.
As it happens, Yellen may just have got out in time after helping to give Trump the dream start to his presidency , a year in the Oval office that has seen solid growth, more people in work and Wall Street breaking records on a regular basis. Jerome Powell, her replacement, has been put there by the White House to provide more of the same, something that is going to be a lot more difficult than Trump appears to think.
For a start, Wall Street is starting to worry about rising inflation. Last week's jobs report showed unemployment at 4.1%, its lowest for 17 years, and average hourly earnings rising at an annual rate of 2.9%, the highest in eight years. The weakness of the dollar makes imports dearer, while Trump's tax cuts will kick in at the worst possible moment, toward the end of a long cyclical upswing when there is a danger of the economy overheating.
Up until now, the Fed has been acting with extreme caution. Interest rates have been raised in baby steps and with ample warning. Wall Street thought Yellen had got her strategy just about right. Stimulus was being removed in order to forestall any pickup in inflation, but not so rapidly as to choke off growth.
nauseausa , 5 Feb 2018 02:01The Republican short term goal is to get through the mid term election with intact majorities. The illusory tax cut for the middle class is targeted to appear to be a boost for the middle class in the short term, but will turn very sour after the election. The Euro is 20% higher against the dollar stimulating exports. Even Sterling is higher. El Presidente and his minions have been shoveling money into the military industrial complex, deregulating oil and gas, deregulating anything that appears rule governed in fact, and making military equipment deals with foreign powers at record levels.. HIs upcoming infrastructure scam should further stimulate the economy until it too is revealed as just another scam. Its all smoke and mirrors, and bluff and bluster, targeted at winning votes in the short term.curiouswes -> consumerx , 5 Feb 2018 03:19THE all time great disaster was caused by Wilson, but the pain wasn't felt until Hoover. Another major fuckup happened under Clinton (putting control on trade regulation under the WTO and the repeal of Glass-Steadgall) but not felt until W's term in the form of GFC. This is not the imply that had HW Bush been reelected that he wouldn't have passed NAFTA and GATT.undercoverguyzer -> consumerx , 5 Feb 2018 03:17
The point being, until we address Charles A Lindbergh's concerns , nothing will change the overall trajectory and to think electing democrats instead of republicans is a cure is like assuming methadone is a cure for heroin. Both Dodd-Frank and Barney Frank were a joke.Yes. Keynesianism and decent social and work conditions underpin really good growing economies. Unfortunately the rich have turned all that on its head just to increase their share - while paying billions to think tanks to convince us it was all in our interests. Ah, neoliberalism.
Feb 03, 2018 | www.nakedcapitalism.com
Posted on February 2, 2018 by Yves Smith As we've said, Jeff Bezos clearly hates people, except as appendages to bank accounts. All you need to do is observe how he treats his workers.
In a scoop, Business Insider reports on how Amazon is creating massive turnover and pointless misery at Whole Food by imposing
a reign of terrorimpossible and misguided productivity targets.
Anyone who has paid the slightest attention to Amazon will see its abuse of out of Whole Foods workers as confirmation of an established pattern. And even more tellingly, despite Whole Foods supposedly being a retail business that Bezos would understand, the unrealistic Whole Foods metrics aren't making the shopping experience better.
As we'll discuss below, we'd already expressed doubts about how relevant Bezos' hyped Amazon model would be to Whole Foods. Proof is surfacing even faster than we expected.
But first to Bezos' general pattern of employee mistreatment.
It's bad enough that Bezos engages in the worst sort of class warfare and treats warehouse workers worse than the ASPCA would allow livery drivers to use horses. Not only do horses at least get fed an adequate ration, while Amazon warehouse workers regularly earn less than a local living wage, but even after pressure to end literal sweatshop conditions (no air conditioning so inside temperatures could hit 100 degrees; Amazon preferred to have ambulances at ready for the inevitable heatstroke victims rather than pay to cool air ), Amazon warehouse workers are, thanks to intensive monitoring, pressed to work at such a brutal pace that most can't handle it physically and quit by the six month mark. For instance, from a 2017 Gizmodo story, Reminder: Amazon Treats Its Employees Like Shit :
Amazon, like most tech companies, is skilled at getting stories about whatever bullshit it decides to feed the press. Amazon would very much prefer to have reporters writing some drivel about a discount code than reminding people that its tens of thousands of engineers and warehouse workers are fucking miserable. How do I know they're miserable? Because (as the testimony below demonstrates) they've told every writer who's bothered to ask for years.
Gawker, May 2014 – "I Do Not Know One Person Who Is Happy at Amazon"
The New York Times, August 2015- " Inside Amazon: Wrestling Big Ideas in a Bruising Workplace "
The Huffington Post, October 2015 – " The Life and Death of an Amazon Warehouse Temp "
For a good overview of the how Amazon goes about making its warehouse workers' lives hell, see Salon's Worse than Wal-Mart: Amazon's sick brutality and secret history of ruthlessly intimidating workers .
Mind you, Amazon's institutionalized sadism isn't limited to its sweatshops. Amazon is also cruel to its office workers. The New York Times story that Gizmodo selected, based on over 100 employee interviews, included:
Bo Olson lasted less than two years in a book marketing role and said that his enduring image was watching people weep in the office, a sight other workers described as well. "You walk out of a conference room and you'll see a grown man covering his face," he said. "Nearly every person I worked with, I saw cry at their desk."
While that paragraph was the most widely quoted from that story, some reporters reacted strongly to other bits. For instance, from The Verge :
Perhaps worst of all is Amazon's apparent approach when its employees need help. The Times has uncovered several cases where workers who were sick, grieving, or otherwise encumbered by the realities of life were pushed out of the company. A woman who had a miscarriage was told to travel on a business trip the day after both her twins were stillborn. Another woman recovering from breast cancer was given poor performance rankings and was warned that she was in danger of losing her job.
The Business Insider story on Amazon, 'Seeing someone cry at work is becoming normal': Employees say Whole Foods is using 'scorecards' to punish them , is another window on how Bezos thinks whipping his workers is the best way to get results from them:
voteforno6 , February 2, 2018 at 6:21 amCollapsar , February 2, 2018 at 7:45 am
I have yet to hear of anyone who has actually enjoyed working for Amazon. I know several people who have worked on building out their data centers, and it's the same type of experience – demanding, long hours, must be responsive to calls and emails 24×7. Even people who are otherwise highly skilled, highly competent workers are treated as disposable items. It's no surprise that they treat grocery workers the same.David Carl Grimes , February 2, 2018 at 7:54 am
According to this Business Insider article the OTS inventory management system was something brought in by whole foods management; not amazon. Employees are actually hoping amazon fixes the issues created by OTS.
Things are definitely bad when workers are hoping things will get better with Bezos in charge.
I can't remember where I read an article in which an amazon employee said people at the company joked that amazon is where overachievers go to feel bad about themselves.Left in Wisconsin , February 2, 2018 at 10:37 am
If working conditions are so bad at the warehouses (heatstrokes from lack of air conditioning), then why hasn't the Department of Labor gone after them? Surely the DoL or some local labor bureau most have gotten hundreds if not thousands of complaints?Ransom Headweight , February 2, 2018 at 1:05 pm
Where are the unions? The Teamsters or UFCW should be all over this. Their complete absence from the story is telling. When the first three conclusions to be drawn from this story are:
1. That boss (and company culture) are awful
2. Why doesn't the government do something?
3. Maybe the workers can do a class action
then it's really not surprising that things are this bad.jrs , February 2, 2018 at 1:35 pm
Where are the unions? They've been systematic eradicated or are being led by "pro-business" stooges. About the only union worth a damn and bucking the system is the Nurses Union led by Rose Ann DeMoro. If you have the inclunation, take a look at labor during the first Gilded Age (late 1800s early 1900s) to see what it took to get the modest reforms of the New Deal enacted -- the very policies that are almost extinct now.Anon , February 2, 2018 at 1:53 pm
Well even trying to unionize fast food failed badly is my impression. So often the laws make it hard but the workers also have to *WANT* to unionize.flora , February 2, 2018 at 11:21 am
An article in The Atlantic provides an explanation for the absence of unions:
Efforts to get Amazon to change its labor practices have been unsuccessful thus far. Randy Korgan, the business representative and director of the Teamsters Local 63, which represents the Stater Brothers employees, told me that his office frequently gets calls from Amazon employees wanting to organize. But organizing is difficult because there's so much turnover at Amazon facilities and because people fear losing their jobs if they speak up. Burgett, the Indiana Amazon worker, repeatedly tried to organize his facility, he told me. The turnover was so high that it was difficult to get people to commit to a union campaign. The temps at Amazon are too focused on getting a full-time job to join a union, he said, and the full-time employees don't stick around long enough to join. He worked with both the local SEIU and then the Teamsters to start an organizing drive, but could never get any traction. He told me that whenever Amazon hears rumors of a union drive, the company calls a special "all hands" meeting to explain why a union wouldn't be good for the facility. (Lindsey said that Amazon has an open-door policy that encourages associates to bring concerns directly to the management team. "We firmly believe this direct connection is the most effective way to understand and respond to the needs of our workforce," she wrote, in an email.)
This is a common anti-union trick among low-wage jobs these days -- intentionally abuse your workers as much as possible to ensure the highest possible turnover (and even better, turnover in the form of voluntary quits, which do not qualify for unemployment benefits or impact the employer's UI tax). Workers who have zero investment in their jobs and who intend to quit at the earliest possible opportunity are less likely to go through the trouble and risk of supporting a union effort.
As a bonus, the high turnover results in many of the workers not ever becoming eligible for benefits. Most common tax-advantaged benefit plans, like health insurance and 401(k), are required to be offered to all employees with only a few limited exceptions. The permitted exceptions differ depending on the benefit type, but usually include criteria like length of service (often no more than 12 months or so) and in some cases, minimum work hours. The plan will lose its tax-advantaged status if it excludes more employees than the law permits, which can cost the employer back taxes and penalties. Firing employees for the purpose of interfering with their ERISA-regulated benefits is illegal , but treating them so poorly from day 1 that they are unlikely to last long enough to qualify for benefits is not.
From a policy perspective, we need to realize the instability created by high-turnover and fissured work environments and penalize it accordingly. A beneficial side effect of this is that it would likely incentivize employers to train and promote low-level workers upwards; low-level jobs like warehouse workers probably inherently have higher turnover than average, just because most workers don't want to do that for the rest of their lives (and some are successful in finding a way out), but when there's a path for the janitor to become CTO you can reduce that turnover.Fraibert , February 2, 2018 at 9:09 am
When you own the politicians' trade newspaper – WaPo – why would the politicians attack you?Pespi , February 2, 2018 at 4:02 pm
Pretty sure, at least at the federal level, it would be OSHA jurisdiction issues. With that said, OSHA has received complaints, and done investigations: e.g., https://www.osha.gov/news/newsreleases/region3/01122016 ; https://www.recode.net/2017/11/9/16629412/amazon-warehouse-worker-killed-deaths-osha-fines-penalties
I found these just by Googling "OSHA amazon". Keep in mind, the low amounts of the fines doesn't necessarily reflect the severity of the underlying issues–my understanding is that OSHA has relatively weak abilities to fine violators in the first place.maria gostrey , February 2, 2018 at 9:38 am
OSHA has been neutered. If you're lucky enough to get someone to come without also being fired, they'll fine the business an ant's eyelid and be gone.Adam , February 2, 2018 at 2:07 pm
the salon article referenced above perhaps is indicative of regulators' attitude toward those we expect them to regulate:
june 2, june 10 & july 25 – the days OSHA received complaints about the 100+ weather in the Allentown warehouse.
nothing about any sort of OSHA response.Big River Bandido , February 2, 2018 at 10:00 am
Cooks at restaurants routinely work in similar heat with similar levels of exertion. I know, because I was a cook at multiple restaurants.
Now I am a machinist, and temps like this are routine during the summer in most shops I worked.
The reason OSHA doesn't care is because working people in extreme heat is SOP for scores of industries that you may not even realize.EoH , February 2, 2018 at 11:27 am
The regulatory agencies were captured decades ago by the industries they purport to regulate.Elizabeth Burton , February 2, 2018 at 2:54 pm
Government regulation and enforcement? In an earlier generation, that would be an excellent question. But since then, we've seen the distribution and adoption of the neoliberal memo that such things are always and everywhere bad. Nor would they be high on the current administration's to do list.Mikerw , February 2, 2018 at 8:18 am
Amazon doesn't employ the workers. It employs temp agencies who supply the workers. This is a standard procedure these days for high-turnover workplaces, because in the end no one is responsible for what happens to the workers.visitor , February 2, 2018 at 8:34 am
To quote: "the beatings will continue until morale improves"
A service business that gives crappy service will not prosper. There is a high touch rate between customers and employees in this industry. Also, this is an industry with many options and competition; unlike airlines for example. We shop at WF from time to time, partly due to the experience being more pleasant. We have no issue moving (and no love of Amazon).Fraibert , February 2, 2018 at 9:24 am
A service business that gives crappy service will not prosper.
if and only if there are preferable alternatives. If that business is cheaper, a monopoly, or if all other businesses deliver crappy service too, then it may well prosper. Case in point: the telecommunications market in the USA.EoH , February 2, 2018 at 11:41 am
This is an important reason why the notion that market competition will increase social welfare isn't inherently true. It's long been understood that in concentrated markets (oligopolies) the market actors might implicitly coordinate their prices without a price increase. For example, Companies A, B, and C sell widgets; Company A announces a price increase via press release; B and C follow with similar increases a week later.
But companies can also implicitly coordinate on the quality of goods. If Company A pursues crapification, that can cover B and C for doing the same.
It's akin the the Greesham's Dyamic that Professor Black has written about extensively on this blog and in other places in connection with finance creating a criminogenic environment. Under the right circumstances, cheap bad quality can drive out good quality, leaving only bad.Wisdom Seeker , February 2, 2018 at 2:03 pm
Indeed. A "market" focusing solely on profitability would consider human values an inefficiency. It would remove them, along with what produced them, from the system, using routine failure modes and effects analysis. (An interesting point for promoters of AI.)
California witnessed considerable consolidation in its grocery business ten years or so ago. Similar, if somewhat less draconian conditions, resulted. I don't believe the "market" will generate a different result this time.
In addition, there's the question of Jeff Bezos's purposes in buying WF. It would not be to learn from another industry; I don't imagine Bezos values that concept. It would more likely be to expand his own methodologies and priorities to another industry, one that gives him access to a human activity outside the already extensive reach of his current business.
WF may be an experiment, whose survival might not be dictated by immediate notional profitability. Besides, the utility and profitability of the data flow from this experiment might never be visible.jrs , February 2, 2018 at 2:10 pm
This is an important reason why the notion that market competition will increase social welfare isn't inherently true. It's long been understood that in concentrated markets (oligopolies) the market actors might implicitly coordinate their prices without a price increase.
I agree, except that the situations you describe are not "market competition". Any marketplace with fewer than about 7 truly independent competitors is not a competitive market.
But as you say, when there are few participants there is a lot of implicit signaling and coordination, which work to benefit the few participants at the expense of the general welfare.
We have a lot of faux markets, and a lot of faux competition. This is not helped by the prevalence of multiple "brands" owned by the same small number of large conglomerates. You could shut down just 2 or 3 companies in each product line and the supermarket shelves would lose 90% of their items. That ain't a competitive marketplace, even though the proliferation of brands provides the illusion of freedom of choice.
We need a populist wave to take back our democracy.Dave , February 2, 2018 at 8:22 am
Yes it's not textbook competition, but while textbook competition with many small players may be good for the consumer, there is no evidence that it is good for the worker. In fact I suspect it's bad for the worker as super competitive industries will nearly kill their employees just to stay in business. I'd rather work for an oligopoly (but it all depends on which one) as the freedom from relentless competition enables better working conditions in theory (again does not always materialize).hemeantwell , February 2, 2018 at 8:42 am
I spent 25 years in the grocery business with 20 of them in management. The expectations stated above were industry standards (except the minutiae of sales goals). Only in Whole Foods was this model ignored. When the industry wide profit margin of grocers is less the 3cents on the dollar you have to be a TIGHT operator to turn a profit or you are doomed. As a department manager my entire job depended on how I managed my P&L report on a quarterly basis .. if I was over on payroll hours I DAMN well better be cutting back on other areas such as shrink, supplies or payroll mix (high paid FT vs low paid PT)
I guess the Whole Foods employees are learning this now.pretzelattack , February 2, 2018 at 8:48 am
Thanks for bringing up the industry baseline! Bezos' intense exploitation of labor merits a spotlight, but what's happening off in the shadows in other corporations? I recall seeing Costco held up as a + example, but what about others?Fraibert , February 2, 2018 at 9:15 am
if the industry standards decimate the work force and make customers unhappy, maybe it's the standards that are at fault.PlutoniumKun , February 2, 2018 at 9:36 am
To me, it doesn't make sense to penny pinch if you're a quasi-monopolistic supplier due to a special brand position. Whole Foods was associated with high quality goods, and was clearly able to charge a substantial price premium. Changing its operations as described above appears to reduce the justification for the price premium and destroy the company's unique market position.
It is almost like McDonald's deciding that beef patties cost too much, and that it would only serve chicken going forward.EoH , February 2, 2018 at 11:45 am
It seems to me that in the grocery business (like many), you either make money by being more efficient and cheaper than your competitors, or by having a unique selling point that allows you charge a premium (high quality, great service, etc).
If you look at the car industry, when mass market brands have bought high value brands (for example, Ford buying Jaguar), the sensible companies have been very cautious about ensuring that the brand aura (and hence high profit margin per car) is not tarnished by crudely cutting costs. Mercedes made that mistake in the 1980's with excessive cost cutting and it took them more than a decade, and billions of DM in investment, to win back their brand value when it became apparent that their cars were often less reliable than cheap Asian compacts.
It seems to me that Amazon are a one trick company (albeit, a very good trick), and they are likely to get burned very badly if they extend their predatory model to high value brands..bob , February 2, 2018 at 9:19 am
In scale, WF is a hobby business for Bezos, little more than a personal tax deduction. If it does not go as Bezos intends, it is not likely to have an effect on his primary business.Chuck W , February 2, 2018 at 11:12 am
"When the industry wide profit margin of grocers is less the 3cents on the dollar" This figure is complete nonsense. It means nothing. It's the "profit margin" after paying themselves rent, which is where the profits in grocery stores end up.. No one is in business for a 3% return. It does make good for PR though.bob , February 2, 2018 at 11:44 am
A 3% margin isn't the same thing as a 3% return. Maybe think about it this way, 26 turns on a 3% margin (once every 2 weeks). Without compounding that's a 78% return on average inventory level, before fixed and variable costs, interest expense and equity returns. You're right nobody is in the business for a 3% return!Chuck W , February 2, 2018 at 12:31 pm
"A 3% margin isn't the same thing as a 3% return." I know this. But the way that figure is trotted out, relentlessly, is to leave the masses, and employees, with the idea that they only 'make' 3%, which is nonsense. Whatever they "make" is carefully chosen in accounting fairytale land.
The point about rents still stands. Most grocery stores/chains are REITs with captive retailers. No one ever sees the REIT side of things. Rite Aid is well know for being the captive retailer in this practice. Rite Aid doesn't 'make' any money (118M 'income' over 25 billion in sales = .004 Less that half a percent).. They 'make' the landlord LOTS of money. Tax dodge or money laundering, which does it better fit the definition of?Mel , February 2, 2018 at 12:40 pm
Agreed. I think they trot out the 3% meme so nobody pushes them too hard on their "providing a public good" nature.
And on rent and landlord's, I absolutely agree. Regrettably it seems most of us are making our commercial landlords a lot of money (before we ever get to equity returns). So many small business owner's would loose their minds if they thought about that thoroughly. And to answer your last question, "I'll take Tax Dodge for $500, Alex"Jean , February 2, 2018 at 9:46 pm
The way I read it way back when was that that 3% markup is on fresh produce and what not. So the turnover is necessarily high. So their return on invested capital might get as high as 3%/day, if they're lucky.cnchal , February 3, 2018 at 12:26 am
Chuck W, please explain the "26 turns comment", don't assume people understand business jargon.Dave , February 2, 2018 at 10:41 pm
Assumes stock turns over every two weeks, so 26 times per year.rd , February 2, 2018 at 3:43 pm
bob, can you direct me to an article and/or site which backs your claims. I would be most interested to read it. Perhaps my information is incorrect, but multiple Google searches have articles in which independent grocery business analysts confirm my number.Kurtismayfield , February 2, 2018 at 3:44 pm
Its not clear to me that OTS originated with Amazon. Amazon only completed the Whole Foods purchase around Labor Day in 2017. It usually takes more than a month or two to come up with an entire computer-based software system and roll it out company-wide.
My guess is that Whole Foods was able to conceive of this all by themselves and since it fits into the Amazon way of doing things, they didn't stop them.
Corporate America is capable of coming up with bone-headed implementations of what could be good ideas without the need to get Amazon, Google, Facebook, or Apple to push them to it. Wells Fargo was able to come up with "Eight is Great" for new account generation even with the guidance of Warren Buffet instead of Jeff Bezos.Whiteylockmandoubled , February 2, 2018 at 4:57 pm
Does this 3% margin count the rent that is extracted from manufacturers for prime real estate in the stores? ( End caps for example). Slotting fees are rent extraction. Customers pay for this with higher prices for the items.Tony Wikrent , February 2, 2018 at 8:29 am
Oh please. I shop at two of the major branded grocery chains, and while the staff is generally good and competent, they exhibit none of the hyper-awareness expected under OTS.
If you run into an employee and ask them where certain items can be found, they'll usually know and usually direct you to an aisle that has the item. But they will generally not know the exact location in the aisle, shelf, blah blah.
And the stupidity of corporate management is beyond belief. Due to niche marketing, items can be found in 3, 4 or even 5 different places. (My favorite is canned beans – organic and other high-end brands in the specialty fancy food aisle, a bunch in the Mexican/international/Spanish aisle, run of the mill murican brands and the same Goya brands that are in the international aisle in the general canned vegetable aisle, sale displays at the end of any random aisle. And dont even get me started on gluten-freeness).
At stop and shop they replaced the end of the checkout counters with a carousel for bagging, meaning a) that checkers had to bag each item as they went, b) no more baggers c) customers couldn't help bag stuff, and, my favorite, d) making it nearly impossible to use reusable bags. Talking to workers about it is simultaneously hilarious and enraging. "They said it was supposed to make it easier for us, but *shrug*". Everyone understands that it's designed to fail, slow things to a crawl, and piss customers off so they'll use the self-check line.
So spare us the tight-ship, low margin Whole-Foods-and-Amazon-are-just-just-learning-how-intense-the-business-really-is-and-too-bad-for-those-whiney-workers old school macho bullshit. Yes, it's not the most profitable industry in the world. But amazon is a whole other level of abusive monitoring of workers everywhere it goes.Huey Long , February 2, 2018 at 8:29 am
Makes me wonder what's happening at Washington Post. Quick search results are that Post has been "revived." Note that Bezos stays out of editorial process, but is heavily involved in tech ops.SufferinSuccotash , February 2, 2018 at 8:37 am
I happened to stop by the Whole Foods in Columbus Circle, NYC yesterday for some produce and something is definitely different there.
It was around 4 pm, the store was packed, and apparently management had people out there with brooms and dustpans sweeping up what appeared to be clean floors. Between the crowds, the sweeping employees, and the boxes of stock on the floor it was much harder to move in there.
After navigating the aisles, I grabbed a bottle of cold beer for my subway ride home, and then proceeded to the in-house ramen/draft beer spot. The employees there seemed absolutely miserable and kept wandering away to talk in hushed voices about what was clearly some sort of work problem in the store from what I could gather. To the employees' credit however, they treated me with courtesy and respect even though their body language and demeanor screamed misery.
Following my mediocre Ramen and yummy draft beers, I wandered back over to the beer aisle to exchange my now warm subway subs for a cold bottle. I was shocked to find that the entire cold reach-in beer shelves had been re-stocked while I was in the ramen bar. After several moments of digging through freshly stocked warm beer I found a cold one, paid, and departed Whole Foods.
Thanks for this article, as it ties together all the oddities I observed today. It is really sad what happened to Whole Foods, particularly that location. I used to work on the Time Warner Center maintenance staff and frequently interacted with employees in that particular store and they used to be a jolly bunch.
At any rate, I won't be frequenting Whole Foods any longer as I find worker abuse nauseating.The Rev Kev , February 2, 2018 at 8:56 am
So much paperwork that there's no time to deliver the food, hence empty shelves. A situation instantly recognizable to anyone who ever lived in the USSR.Wyoming , February 2, 2018 at 9:56 am
Funny that. It was only a coupla months ago that a big story making the rounds was that Walmart shelves ( http://theweek.com/articles/466144/why-walmarts-shelves-are-empty ) were constantly empty. I suppose you have to be a mega-corporation to make blunders like this but still get away with it for a few months running.Carolinian , February 2, 2018 at 1:23 pm
Interesting you mention Wallmart. I live in central AZ and our local Wallmarts (3 ea) for several years had empty shelves, few workers – and they did not know where anything was, the greeters were gone, literally 1-2 actual cashiers – they were trying to force you to the self-checkout. Recently the stores are almost like they used to be with more workers, greeters back, still not enough cashiers though, and better stocking.
Has anyone else noticed this. It does seem to coincide with the Amazon purchase of WF. Correlation is not causation and all that but it might be a reaction to some extent.Pespi , February 2, 2018 at 4:07 pm
I'm probably one of the few people around here that shops at Walmart and yes they have cleaned up their act although it depends on the store. I'd say the thing people don't get about Walmart is that they are responsive to public opinion and customer gripes even if they supposedly treat their employees like disposable parts, easily replaced (but then they have lots of company in that department). For example a few years ago they took the clutter out of the aisles and did away with the craft/sewing section–trying to be more like Target -- and then reversed all those changes because their customers hated it.
Seems to me Bezos is taking on a much bigger challenge trying to reinvent brick and mortar than he did by innovating mail order. Here's betting he's not up to it. Perhaps his top honchos–meditating in their new waterfall equipped Seattle biosphere–will prove me wrong.diptherio , February 2, 2018 at 10:01 am
You didn't hear it from me, but from a friend who was a cashier at a grocery store, a small way to fight back against self checkout is to be creative in naming your produce to get a 95% discountThe Rev Kev , February 2, 2018 at 7:52 pm
Just FYI, that article is 5 years old. I remember discussing it here on NC. Unfortunately, it didn't portend the end of Wally World.Eureka Springs , February 2, 2018 at 8:47 am
Yeah, that one was 5 year old but I chose it because it gave a bit more info in it. There are plenty more from last year. Just go to Google and punch in the search term Wal-Mart shelves empty and see what come back, especially Google images. This means that this problem is not a one-off but has been a running theme for at least a four year period. Amazing.Fraibert , February 2, 2018 at 9:18 am
People who shop at Whole Foods want to look at employees with that NPR vegan faux-hippy gaze. Not a lot of difference from the evangelical gaze, imo. Some sort of self hypnosis involved? Now that gaze will be replaced with the look of a desperate near homeless employee all Wal-Mart shoppers have grown accustomed to ignoring, Wal-Mart can man-up with a new ad campaign – Our Employees Don't Cry, they get food stamps.
If I were a rich man I would give everyone of these people a T-shirt which says – I am not a robot.SufferinSuccotash , February 2, 2018 at 10:06 am
I wonder if Wal-Mart will discover increasing in-store staff, as well as an upgraded store experience, will actually improve its competitive position versus online retailers. That's pretty much what Best Buy has to do.Marco , February 2, 2018 at 10:32 am
Or maybe pay the help more. falls out of chair laughingoh , February 2, 2018 at 1:43 pm
Is this just an Amazon/WF issue or something larger for grocer chains? I find myself shopping at a Meijers (big Midwest chain) superstore whilst visiting my mother and noticed the same kind of strangeness with not just employee morale (they are clearly miserable) but stocking issues. Items that were ALWAYS available are no longer there. I needed pasta shells the other day. They had none. How can a super grocer NOT have pasta shells. Larger than normal sections of shelves are bare. Pallets haphazardly placed. Meijors used to be a somewhat pleasant and orderly experience with happy workers now approaching a WalMart experience.Adar , February 2, 2018 at 3:34 pm
Vegan faux-hippy-Hillary Obamba-gaze?lakecabs , February 2, 2018 at 9:16 am
Re the NPR vegan faux-hippy gaze, The WF near me in suburban Philadelphia, has a very upscale clientele. Once, in the produce section, they had set up a booth where a Hispanic woman would mix guacamole using just the ingredients the customers wished, without any extraneous chatter on her part. Wow! Your guac would be mixed by an ACTUAL MEXICAN PERSON! Just gotta be good, eh? Conservatives might say she was happy to have such a nice job. I thought it was downright creepy, like those catalogues where people beam as they demonstrate expensive vacuum cleaners. Yuk.McWoot , February 2, 2018 at 9:47 am
Our Soviet style master planners hard at work. At least the Soviets had 5 year plans that they would abandon after 5 years. How many years of failure can we tolerate? What ever happened to profit?diptherio , February 2, 2018 at 10:04 am
Not a fan of Bezos, Amazon, or their practices, but strict planogram scorecarding is not uncommon in grocery, auto parts and similar retail orgs. The only part of that section of the article that strikes me as out of the ordinary is the employee's reaction to it.McWoot , February 2, 2018 at 10:16 am
Translation: "Employee abuse is the norm, so I don't see what everyone is complaining about. Back to work, peasants!"diptherio , February 2, 2018 at 1:54 pm
The framing of the article suggests this is Amazon-ian behavior. Just pointing out that I don't believe that's accurate because the practice is commonplace in the industry.Harry , February 2, 2018 at 10:00 am
I've got more than a few friends who have worked in grocery stores recently, and while they had many complaints, having to know last week's best selling item or this week's sales goals weren't among them. Just sayin' .Chuck , February 2, 2018 at 10:05 am
DE shaw culture spread by its alumniBukko Boomeranger , February 2, 2018 at 6:12 pm
Thank you for highlighting Amazon's continued abuse of its employees. I'm amazed at how many people choose to simply ignore the fate of Amazon's employees in order to receive free shipping. My favorite people are the type that by books on late stage capitalism and plutocracy through their Amazon prime accounts.J-Mann , February 2, 2018 at 7:41 pm
"I'm amazed at how many people choose to simply ignore the fate of Amazon's employees in order to receive free shipping."
Sad but true, Chuck. My daughter, who's a total Social Justice Warrior type (speaking as a progessive, I'm proud of her for that) and her long-time boyfriend are proud Amazon customers. They have Amazon technobuttons on the walls of the house they bought so that all they have to do to re-order toilet paper and kitty litter is touch the device. (Suggesting that AMZ is a sh*t business.) A day or two later, it's delivered, for free, because they are Primes! Daughter's BF, who luuuuuvs him some tech, revels in this because it's so futuristic. When I suggest going to the store to buy some -- it's quicker -- or simply thinking ahead and purchasing stuff before they run out, I get the eye-roll given to Olds who old-splain oldways. They're Jellbylically concerned about the plight of abused North Koreans and the like. When I mentioned why I was buying their Christmas book gifts via Barnes & Noble rather than Amazon due to its mistreatment of workers, their ears glazed over. I'll forward this post to her, but I doubt it will get read, since it wasn't on her Fakebook feed.Simple Life , February 2, 2018 at 10:35 am
I like the cut of your jib: " to Olds who old-splain oldways."
Grampa Simpson classic – One trick is to tell 'em stories that don't go anywhere – like the time I caught the ferry over to Shelbyville. I needed a new heel for my shoe, so, I decided to go to Morganville, which is what they called Shelbyville in those days. So I tied an onion to my belt, which was the style at the time. Now, to take the ferry cost a nickel, and in those days, nickels had pictures of bumblebees on 'em. "Give me five bees for a quarter," you'd say.
Now where were we? Oh yeah: the important thing was I had an onion on my belt, which was the style at the time. They didn't have white onions because of the war. The only thing you could get was those big yellow onesLouis Fyne , February 2, 2018 at 12:13 pm
Find a local co-op market. if you can't find one, start one!Arizona Slim , February 2, 2018 at 12:14 pm
Local co-ops are a great idea but (sorry for the but) in much of the country wholesale food distribution has been decimated or wiped out over the years due to competition from Wal-Mart, Target, Whole Foods, the legacy grocers or Sysco (on the restaurant side).
Geographically, few areas in the US are fortunate enough to have an independent and thriving food/produce wholesale market which helps bring down price and bring up quality to be competitive with the vertically integrated big boys.diptherio , February 2, 2018 at 3:32 pm
Well, here's Slim from drought-stricken AZ. And I'm about to rain on that co-op parade. When I lived in Pittsburgh, I worked at a food co-op that was the lone survivor after its main competitor went under. And we got REAL busy. We also had a bit of a management problem. Ours was a drunk who often came to work hungover. All the better way to abuse the rest of us. After a staff revolt (yes, I took part in it), he left and took a job as manager of the regional co-op warehouse in Columbus, Ohio. Where he treated the warehouse gals as his harem and got one of them pregnant.
To our utter and total amazement back in Pittsburgh, he took responsibility for his son and tried to be the best father he could. I have no idea what happened with the drinking problem.
The manager who succeeded him was even worse. He even called himself a martinet, and he was. After less than a year of his BS, I bailed out of the co-op and got a sit-down job in an office. Yeah, there was another lousy boss there, and I've talked about her on other threads.
But there was further fun and merriment back at the co-op. I was still friendly with the people who worked there, and guess what? Another staff revolt! They ran Mr. Martinet outta there too! Go staff! Mr. Martinet went to a yuppie grocery store in North Carolina. From there, he went on to become one of the original senior executives in Whole Foods.Pespi , February 2, 2018 at 4:13 pm
Bummer about the food co-op, Slim. Some of us "in the movement" are trying to work out how to provide accountability for guys like the drunk manager you mention, so that they don't end up doing like he did, and just sliding around from one co-op to another. Open to suggestions
Unfortunately, the co-op name doesn't necessarily imply that everything is groovy for the workers. Hence, REI workers in Seattle trying to unionize, and why UFCW has had such success in organizing every single food co-op in Minneapolis-St. Paul (and there are quite a few). The history of consumer co-ops seems pretty clear – workers in them need union representation just as much as workers in regular businesses.jrs , February 2, 2018 at 1:54 pm
Hahaha, an excellent story, well told. I have fond memories of the little local co-op from when I was a kid.rd , February 2, 2018 at 3:46 pm
it failed.EoH , February 2, 2018 at 4:00 pm
Or a Wegmans. https://www.wegmans.com/
https://www.democratandchronicle.com/story/money/business/2010/05/14/alec-baldwins-mom-really-really-likes-wegmans/2195927/EoH , February 2, 2018 at 10:35 am
For those who need examples, there is an excellent co-op in Ocean Beach, San Diego. Its customer/members are devoutly loyal. By design, each is small and adapted to its local culture and food ecosystem. Michael Pollan is a good resource for ideas on this topic and on real food in general.
American businesses might prefer home runs, but singles and bunts are more common and sustainable. Besides, co-ops are harder to buy up or put out of business in the manner reputed to be practiced by, say, some retail coffee companies.Louis Fyne , February 2, 2018 at 12:58 pm
Jeff Bezos. John Galt. No difference.HotFlash , February 2, 2018 at 1:05 pm
Except Jeff Bezos has sold the Ayn Rand way of life to the 'progressive' intelligensia who would happily rant over John Galt if you gave them your ear and a glass of Bordeaux.cnchal , February 2, 2018 at 4:18 pm
Didn't John Galt go away?Jeff N , February 2, 2018 at 10:38 am
I don't know, did he?. I didn't finish the stupid book to find out.Croatoan , February 2, 2018 at 10:42 am
Not just at Amazon, but I'm seeing an anecdotal trend of "get people to quit within a year or two of starting". Not just with ridiculous requests from above, but even with good ol' passive-aggressiveness. I can't remember if this article was tipped off to me by NC but here it is anyway:
(paywall, or websearch for "how employers manage out unwanted staff")The Rev Kev , February 2, 2018 at 7:59 pm
Don't you all get it? First they took away their freedom to form unions with others. Now they want to take away your freedom to form a union with you own bodies actions. This will crush the idea of sabotage and work slowdowns as an expression of labor power.Jeff Z , February 2, 2018 at 10:57 am
Of course there is always this simple WW2 manual-https://www.cia.gov/news-information/featured-story-archive/2012-featured-story-archive/simple-sabotage.htmlEoH , February 2, 2018 at 11:04 am
OSHA is a part of the DOL. https://www.dol.gov/general/topic/safety-healthrd , February 2, 2018 at 3:52 pm
Waste is inherent to selling fresh food. Trimmings, dry, damaged meats, fish, fruits, vegetables, breads, prepared foods. That's especially true of anything organic and not engineered to be harder, more colorful, durable and less tasty than their natural analogs. Whole Paycheck's intended customers – really, most shoppers anywhere – do not want to buy adulterated, processed versions of eggs, beakless turkeys, caged hens, and drugged industrially raised cows and pigs.
Fresh food, especially organic, does not last as long as industrial bread, fruits and vegetables or highly sugared packaged foods. It is the antithesis of such foods. The reason chicken soup made the way it was c.1940 is tastier and nutritionally better than soup made from a caged, medicated, neurotic fowl today is not great Grandma's recipe: it's the chicken.
Local sourcing, environmentally safe, animal friendly methods of raising require a wider supplier net. What Michael Pollan would call real food costs more. It should. But real food and real people are ripe for the cruel "more efficient" methods of production, distribution and sale that seem part of Jeff Bezos's DNA. Besides, what he really wants is probably the data flow. WF is simply a way to get it.Trey N , February 2, 2018 at 11:19 am
https://www.democratandchronicle.com/story/money/business/2017/03/03/wegmans-looks-cut-food-waste-with-new-state-regulations-coming/98049694/Jeff N , February 2, 2018 at 4:41 pm
Typical uber-"capitalist" idiocy -- seen this happen in a lot of different industries over the years (esp techs):
CEO: "Our product sucks. We've grown too big, lost our innovative edge, we need to get back to our roots!"
Toady: "Uh, tried that already, boss. No can do. Too much bureaucracy now."
CEO: "Shit! Any ideas?"
Toady: "Actually, yes! We can buy out and take over one of the smaller competitors that's eating our lunch now, and steal their latest ideas and projects."
CEO: "Brilliant! Make it so!"
fast forward 1-2 years
CEO: "How's that takeover working out?"
Toady: "Well, it's taken a while, but we've fully integrated the company in with ours -- all of our corporate policies and procedures etc etc are in place there now."
fast forward 1-2 more years .
CEO: "Our product sucks! What happened to all those great ideas coming from that company we took over?"
Toady: "Well, most everyone working there when we bought it out are gone now. The founders and senior management cashed out the takeover premium and bailed immediately, and everybody else got frustrated with our corporate style and policies and eventually quit. Our people took over their projects, and promptly fucked them up beyond all belief. Instead of a cash cow, we got a dead cow on our hands now."
CEO: "Shit! Any ideas?"
Toady: "Yeah. We can either spin it off to the public again or just shut the whole fucking thing down and take a huge earnings write-off."
CEO: "Hmmm,..decisions, decisions . By the way, are there any other small competitors out there that we can buy out to rejuvenate our stale product line, toady?
Rinse. Repeat. Ad nauseum, ad infinitum .Sean , February 2, 2018 at 11:20 am
haha that's my place!JBird , February 2, 2018 at 12:35 pm
Amazon corporate sounds like a sweatshop. Their treatment of warehouse staff is nothing short of an abomination. But I can't help feeling that some of the employee comments at WholeFoods are less about bad management and work conditions and more about Millenials and a lack of ability handle criticism and work pressure. (The average age of a Whole Food employee at my store is easily 28yo.)
To call working on an inventory system "punitive". It's called business, and yes, it is difficult and takes a lot of effort. Punitive, though. To use an inventory system. Sorry. Not buying the whole story.Yves Smith Post author , February 2, 2018 at 3:11 pm
If it's common for people to actually cry at work, and to have nightmares, with massive turnover, decreasing quality of service, product, and cleanliness blaming millennials is an inadequate response. Apparently Amazon wants to run Whole Foods with inadequate staff, fails to reward good good work, unfailingly punish not only poor work, but honest mistakes, and makes no allowance within the system for reality. If you did animal training this way, you would see the same results, I promise. The management "techniques" described will destroy any company, or at least reduce productivity massively.RMO , February 3, 2018 at 12:11 am
You are straw manning the post and the underlying article. The staff is grilled very frequently and graded, and much of what they are graded on isn't relevant to customer service. The shelves are supposed to be "leveled" all day, which is a ridiculous standard. The testing and insane shelf appearance standards are not normal to the industry and minor deviations are the basis for firing.Anarcissie , February 2, 2018 at 11:54 am
I have yet to met a single "Millennial" that fits that ridiculous stereotype – and I know a lot of people in that age bracket even though I was born in 1970. The very few who even seem to have tendencies in those directions seem more influenced by being from wealthy families than by their year of birth and I can think of at least as many Boomers and Gen X'ers that are like that too.
When I think of the high-school age or university age jobs the people I grew up with had and compare them to the jobs I've seen my "Millennial" friends doing the younger people have had it substantially worse over all.Jonathan Holland Becnel , February 2, 2018 at 12:40 pm
According to my browser, the word 'union' does not exist in this article.Arizona Slim , February 2, 2018 at 1:09 pm
Also theres an Ad for the 'United States Secret Service' that wants to recruit me. Lol Not with my Reenlistment Code (RE4)!!!!!Eclair , February 2, 2018 at 12:41 pm
A college friend of my mother went on to run the Secret Service detail for the White House. Very demanding position, but one that Mom's friend was quite proud of.Chauncey Gardiner , February 2, 2018 at 3:32 pm
Lordy, Yves, please put a warning sign on that video! It's still breakfast time here in Seattle, and I clicked on it. No, it didn't offend my 'sensibilities.' But it encapsulated all the frustration and anger and helplessness I feel against our system. As well as being a powerful metaphor for 'late stage capitalism.'Pelham , February 2, 2018 at 1:16 pm
Share your sentiments, Eclair. Having breakfast? The observations about employee abuse also pair well with a video of a 10 minute bike ride through the homeless encampments along the Santa Ana River near Angels Stadium and Disneyland in Anaheim:
Fear is part of their toolkit.Oregoncharles , February 2, 2018 at 1:59 pm
Whole Foods employees still outnumber these Amazon creatures checking up on them, I presume. If the WF workers and others at Amazon are so universally tormented and humiliated, shouldn't they be taking some kind of collective action?
Twice during WWII German officers tried to get rid of Hitler. I guess American workers don't measure up to even that standard.EoH , February 2, 2018 at 3:37 pm
Those places are begging for union organizers – but are likely to fight back ruthlessly.Petter , February 2, 2018 at 1:31 pm
I suspect Jeff Bezos would view unions at WF or Amazon the way Reagan viewed unionized Air Traffic Controllers. Or Wal-Mart, which has abandoned markets whose employment laws provide for unions or simply too many protections for employees.
Bezos is extracting resources from his employees with the same thought and in the same manner that early California hard rock miners used massive water hoses (monitors) to liquidate mountains in search for a few gold nuggets. (h/t Gray Brechin)Arizona Slim , February 2, 2018 at 1:53 pm
Why don't they quit? If you allow yourself to be treated as and act as a slave, you become complicit in your own slavery.Oregoncharles , February 2, 2018 at 1:58 pm
Which is why I Q-U-I-T the food co-op job mentioned above. Did the same in that office job, which was my second-to-last full-time job.
Have I ever had a good job? Yup. Working in a hot, dark, and greasy bike shop. Place closed in 2000 and I still miss the camaraderie with my fellow mechanics -- and the pride of accomplishment that came with fixing the customers' bikes.Yves Smith Post author , February 2, 2018 at 3:13 pm
Because, like most Americans, they have no savings and no fallback if they lose their job.Craig H. , February 2, 2018 at 2:16 pm
The article said many are quitting. Of course, the better employees will probably have the best options and be able to leave faster.Punxsutawney , February 2, 2018 at 2:51 pm
From The Atlantic:
What Amazon Does to Poor Cities
Mostly about their warehouse in San Bernardino. The employees describe working there as The Hunger Games.JBird , February 2, 2018 at 7:06 pm
Decades ago I worked in retail,
When arguing with my boss about crap we were required to do, he finally got frustrated and told me "Shit flows downhill", "DEAL WITH IT!". To which my response was "Yep, right onto the customer!"
It made him so angry I was lucky I wasn't fired on the spot, though in hindsight it would have been a blessing. Looks like nothing has changed 30 years later.Synoia , February 2, 2018 at 6:42 pm
I think it's gotten worse as the whole retail industry specifically and perhaps most industries gradually, have had the slowly MBA'd management reorganized, streamlined, outsourced and efficiencied it into a monetized Hades.
I was lucky to work in a couple of well run, or at competently run, businesses. So I know one can be profitable without brutalizing people. It's depressing to see what has happened.Jean , February 2, 2018 at 10:03 pm
I imaging the quickest route to being fired is:
Hi, my name is Jeff Bezos, and I'm a union organizer!
Well maybe not the Bezos part.Yves Smith Post author , February 2, 2018 at 10:29 pm
Wonder what would happen if a customer started handing out union brochures to Whole Foods employees in one of their stores. What are they going to do? Kick you, a customer, out of the store?Dongo , February 2, 2018 at 8:51 pm
They probably would. It's private space. But it would make for good news stories. You would need to actually shop in fact handing them out to all the cashiers when you are checking out would be the best move, since you'd be out the store before management would catch on.Jean , February 2, 2018 at 9:37 pm
As the articles in the Business Insider series explicitly point out, this hated new system preceded the acquisition by Amazon.
Amazon is terrible. The way Whole Foods is now treating its workers is terrible. But Amazon simply did not develop or implement the policies at Whole Foods that this article is ascribing to it.Yves Smith Post author , February 2, 2018 at 10:39 pm
OTS, What is that?
I know two Whole Foods employees who have quit in the last week.
The new name for the store is "Asswhole Foods".
The game is to sabotage as much as possible and give away and undercharge customers for as much as possible in the weeks before you quit.
A walkout strike on a busy Saturday would be a beautiful thing to see and would really get the public's attention.lentilsoup , February 2, 2018 at 10:40 pm
Good for your saboteurs! Amazon is trying to stop shrinkage but they'll lose more through deliberately missed scans. Oh, and a freezer door left open or temperature mysteriously reset would wreak even more havoc.
I was in a Whole Foods last night, where I shop a few times per month, here in central California. Lots of unfamiliar faces working there. Produce section definitely looking worse than usual -- empty shelves, low quality items. At checkout, the cashier was a young woman I'd never seen before, who looked tired and dispirited. I asked how she was doing that evening. Smirking wearily, she said, "Hangin' in there " (Which is about how I feel these days, too.) When it came time to pay, it was the first time in my life that the total at Whole Foods was less than I was expecting. Wow, I thought, I didn't think Amazon changed the prices that much? After I got home and looked at the receipt, I realized why -- she hadn't charged me for all the items! Bless her.
I don't believe Amazon and Whole Foods were ever a good match for each other, and with unhappy employees and other problems, I expect this particular branch of WF to be gone in a few years. And I really couldn't care less. There are other good places to shop.
Feb 02, 2018 | www.unz.com
Amid a roaring stock market and a planet of upbeat CEOs , few are even thinking about the havoc that a multi-trillion-dollar financial system gone rogue could inflict upon global stability. But watch out. Even in the seemingly best of times, neglecting Wall Street is a dangerous idea. With a rag-tag Trumpian crew of ex-bankers and Goldman Sachs alumni as the only watchdogs in town, it's time to focus, because one thing is clear: Donald Trump's economic team is in the process of making the financial system combustible again.
Collectively, the biggest U.S. banks already have their get-out-out-of-jail-free cards and are now sitting on record profits after, not so long ago, triggering sweeping unemployment, wrecking countless lives, and elevating global instability. (Not a single major bank CEO was given jail time for such acts.) Still, let's not blame the dangers lurking at the heart of the financial system solely on the Trump doctrine of leaving banks alone. They should be shared by the Democrats who, under President Barack Obama, believed, and still believe, in the perfection of the Dodd-Frank Act of 2010 .
While Dodd-Frank created important financial safeguards like the Consumer Financial Protection Bureau, even stronger long-term banking reforms were left on the sidelines. Crucially, that law didn't force banks to separate the deposits of everyday Americans from Wall Street's complex derivatives transactions. In other words, it didn't resurrect the Glass-Steagall Act of 1933 (axed in the Clinton era).
Wall Street is now thoroughly emboldened as the financial elite follows the mantra of Kelly Clarkston's hit song: "What doesn't kill you makes you stronger." Since the crisis of 2007-2008, the Big Six U.S. banks -- JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley -- have seen the share price of their stocks significantly outpace those of the S&P 500 index as a whole.
Jamie Dimon, chairman and CEO of JPMorgan Chase, the nation's largest bank (that's paid $13 billion in settlements for various fraudulent acts), recently even pooh-poohed the chances of the Democratic Party in 2020, suggesting that it was about time its leaders let banks do whatever they wanted. As he told Maria Bartiromo, host of Fox Business's Wall Street Week , "The thing about the Democrats is they will not have a chance, in my opinion. They don't have a strong centrist, pro-business, pro-free enterprise person."
This is a man who was basically gifted two banks, Bear Stearns and Washington Mutual , by the U.S government during the financial crisis. That present came as his own company got cheap loans from the Federal Reserve, while clamoring for billions in bailout money that he swore it didn't need .
Dimon can afford to be brazen. JPMorgan Chase is now the second most profitable company in the country. Why should he be worried about what might happen in another crisis, given that the Trump administration is in charge? With pro-business and pro-bailout thinking reigning supreme, what could go wrong?
Protect or Destroy?
There are, of course, supposed to be safeguards against freewheeling types like Dimon. In Washington, key regulatory bodies are tasked with keeping too-big-to-fail banks from wrecking the economy and committing financial crimes against the public. They include the Federal Reserve, the Securities and Exchange Commission, the Treasury Department, the Office of the Comptroller of the Currency (an independent bureau of the Treasury), and most recently, under the Dodd-Frank Act of 2010, the Consumer Financial Protection Bureau (an independent agency funded by the Federal Reserve).
These entities are now run by men whose only desire is to give Wall Street more latitude. Former Goldman Sachs partner, now treasury secretary, Steven Mnuchin caught the spirit of the moment with a selfie of his wife and him holding reams of newly printed money "like a couple of James Bond villains." (After all, he was a Hollywood producer and even appeared in the Warren Beatty flick Rules Don't Apply .) He's making his mark on us, however, not by producing economic security, but by cheerleading for financial deregulation.
Despite the fact that the Republican platform in election 2016 endorsed reinstating the Glass-Steagall Act, Mnuchin made it clear that he has no intention of letting that happen. In a signal to every too-big-not-to-fail financial outfit around, he also released AIG from its regulatory chains. That's the insurance company that was at the epicenter of the last financial crisis. By freeing AIG from being monitored by the Financial Services Oversight Board that he chairs, he's left it and others like it free to repeat the same mistakes.
Elsewhere, having successfully spun through the revolving door from banking to Washington, Joseph Otting, a former colleague of Mnuchin's, is now running the Office of the Comptroller of the Currency (OCC). While he's no household name, he was the CEO of OneWest (formerly, the failed California-based bank IndyMac) . That's the bank Mnuchin and his billionaire posse picked up on the cheap in 2009 before carrying out a vast set of foreclosures on the homes of ordinary Americans (including active-duty servicemen and -women) and reselling it for hundreds of millions of dollars in personal profits .
At the Federal Reserve, Trump's selection for chairman, Jerome Powell (another Mnuchin pick ), has repeatedly expressed his disinterest in bank regulations. To him, too-big-to-fail banks are a thing of the past. And to round out this heady crew, there's Office of Management and Budget (OMB) head Mick Mulvaney now also at the helm of the Consumer Financial Protection Bureau (CFPB), whose very existence he's mocked.
In time, we'll come to a reckoning with this era of Trumpian finance. Meanwhile, however, the agenda of these men (and they are all men) could lead to a financial crisis of the first order. So here's a little rundown on them: what drives them and how they are blindly taking the economy onto distinctly treacherous ground.
Joseph Otting , Office of the Comptroller of the Currency
The Office of the Comptroller is responsible for ensuring that banks operate in a secure and reasonable manner, provide equal access to their services, treat customers properly, and adhere to the laws of the land as well as federal regulations.
As for Joseph Otting, though the Senate confirmed him as the new head of the OCC in November, four key senators called him "highly unqualified for [the] job." He will run an agency whose history snakes back to the Civil War. Established by President Abraham Lincoln in 1863 , it was meant to safeguard the solidity and viability of the banking system. Its leader remains charged with preventing bank-caused financial crashes, not enabling them.
Fast forward to the 1990s when Otting held a ranking position at Union Bank NA, overseeing its lending practices to medium-sized companies. From there he transitioned to U.S. Bancorp, where he was tasked with building its middle-market business (covering companies with $50 million to $1 billion in annual revenues) as part of that lender's expansion in California.
In 2010, Otting was hired as CEO of OneWest (now owned by CIT Group). During his time there with Mnuchin, OneWest foreclosed on about 36,000 people and was faced with sweeping allegations of abusive foreclosure practices for which it was fined $89 million . Otting received $10.5 million in an employment contract payout when terminated by CIT in 2015. As Senator Sherrod Brown tweeted all too accurately during his confirmation hearings in the Senate, "Joseph Otting is yet another bank exec who profited off the financial crisis who is being rewarded by the Trump Administration with a powerful job overseeing our nation's banking system."
Like Trump and Mnuchin, Otting has never held public office. He is, however, an enthusiastic proponent of loosening lending regulations . Not only is he against reinstating Glass-Steagall, but he also wants to weaken the "Volcker Rule," a part of the Dodd-Frank Act that was meant to place restrictions on various kinds of speculative transactions by banks that might not benefit their customers.
Jay Clayton, the Securities and Exchange Commission
The Securities and Exchange Commission (SEC) was established by President Franklin Delano Roosevelt in 1934, in the wake of the crash of 1929 and in the midst of the Great Depression. Its intention was to protect investors by certifying that the securities business operated in a fair, transparent, and legal manner. Admittedly, its first head, Joseph Kennedy (President John F. Kennedy's father), wasn't exactly a beacon of virtue. He had helped raise contributions for Roosevelt's election campaign even while under suspicion for alleged bootlegging and other illicit activities.
Since May 2017, the SEC has been run by Jay Clayton, a top Wall Street lawyer . Following law school, he eventually made partner at the elite legal firm Sullivan & Cromwell. After the 2008 financial crisis, Clayton was deeply involved in dealing with the companies that tanked as that crisis began. He advised Barclays during its acquisition of Lehman Brothers' assets and then represented Bear Stearns when JPMorgan Chase acquired it.
In the three years before he became head of the SEC, Clayton represented eight of the 10 largest Wall Street banks, institutions that were then regularly being investigated and charged with securities violations by the very agency Clayton now heads. He and his wife happen to hold assets valued at between $12 million and $47 million in some of those very institutions.
Not surprisingly in this administration (or any other recent one), Clayton also has solid Goldman Sachs ties. On at least seven occasions between 2007 and 2014, he advised Goldman directly or represented its corporate clients in their initial public offerings. Recently, Goldman Sachs requested that the SEC release it from having to report its lobbying activities or payments because, it claimed, they didn't make up a large enough percentage of its assets to be worth the bother. (Don't be surprised when the agency agrees.)
Clayton's main accomplishment so far has been to significantly reduce oversight activities. SEC penalties, for instance, fell by 15.5% to $3.5 billion during the first year of the Trump administration. The SEC also issued enforcement actions against only 62 public companies in 2017, a 33% decline from the previous year. Perhaps you won't then be surprised to learn that its enforcement division has an estimated 100 unfilled investigative and supervisory positions, while it has also trimmed its wish list for new regulatory provisions. As for Dodd-Frank, Clayton insists he won't " attack " it, but thinks it should be "looked" at.
Mick Mulvaney, the Consumer Financial Protection Bureau and the Office of Management and Budget
As a congressman from South Carolina, ultra-conservative Republican Mick Mulvaney, dubbed " Mick the Knife ," once even labeled himself a " right-wing nut job ." Chosen by President Trump in November 2016 to run the Office of Management and Budget, he was confirmed by Congress last February .
As he said during his confirmation hearings, "Each day, families across our nation make disciplined choices about how to spend their hard-earned money, and the federal government should exercise the same discretion that hard-working Americans do every day." As soon as he was at the OMB, he took an axe to social programs that help everyday Americans. He was instrumental in creating the GOP tax plan that will add up to $1.5 trillion to the country's debt in order to provide major tax breaks to corporations and wealthy individuals. He was also a key figure in selling the plan to the media.
When Richard Cordray resigned as head of the Consumer Financial Protection Bureau in November, Trump promptly selected Mick the Knife for that role, undercutting the deputy director Cordray had appointed to the post. After much debate and a court order in his favor, Mulvaney grabbed a box of Dunkin' Donuts and headed over from his OMB office adjacent to the White House. So even though he's got a new job, Mulvaney is never far from Trump's reach.
The problem for the rest of us: Mulvaney loathes the CFPB, an agency he once called "a joke." While he can't unilaterally demolish it, he's already obstructed its ability to enforce its government mandates. Soon after Trump appointed him, he imposed a 30-day freeze on hiring and similarly froze all further rule-making and regulatory actions.
In his latest effort to undermine American consumers, he's working to defund the CFPB. He just sent the Federal Reserve a letter stating that, "for the second quarter of fiscal year 2018, the Bureau is requesting $0." That doesn't bode well for American consumers.
Jerome "Jay" Powell, Federal Reserve
Thanks to the Senate confirmation of his selection for chairman of the board, Donald Trump now owns the Fed, too. The former number two man under Janet Yellen, Jerome Powell will be running the Fed, come Monday morning, February 5th.
Established in 1913 during President Woodrow Wilson's administration, the Fed's official mission is to "promote a safe, sound, competitive, and accessible banking system." In reality, it's acted more like that system's main drug dealer in recent years. In the wake of the 2007-2008 financial crisis, in addition to buying trillions of dollars in bonds (a strategy called "quantitative easing," or QE), the Fed supplied four of the biggest Wall Street banks with an injection of $7.8 trillion in secret loans. The move was meant to stimulate the economy, but really, it coddled the banks.
Powell's monetary policy undoubtedly won't represent a startling change from that of previous head Janet Yellen, or her predecessor, Ben Bernanke. History shows that Powell has repeatedly voted for pumping financial markets with Federal Reserve funds and, despite displaying reservations about the practice of quantitative easing, he always voted in favor of it, too. What makes his nomination out of the ordinary, though, is that he's a trained lawyer, not an economist.
Powell is assuming the helm at a time when deregulation is central to the White House's economic and financial strategy. Keep in mind that he will also have a role in choosing and guiding future Fed appointments. (At present, the Fed has the smallest number of sitting governors in its history .) The first such appointee, private equity investor Randal Quarles, already approved as the Fed's vice chairman for supervision, is another major deregulator .
Powell will be able to steer banking system decisions in other ways. In recent Senate testimony, he confirmed his deregulatory predisposition. In that vein, the Fed has already announced that it seeks to loosen the capital requirements big banks need to put behind their riskier assets and activities. This will, it claims, allow them to more freely make loans to Main Street, in case a decade of cheap money wasn't enough of an incentive.
The Emperor Has No Rules
Nearly every regulatory institution in Trumpville tasked with monitoring the financial system is now run by someone who once profited from bending or breaking its rules. Historically, severe financial crises tend to erupt after periods of lax oversight and loose banking regulations. By filling America's key institutions with representatives of just such negligence, Trump has effectively hired a team of financial arsonists.
Naturally, Wall Street views Trump's chosen ones with glee. Amid the present financial euphoria of the stock market, big bank stock prices have soared. But one thing is certain: when the next crisis comes, it will leave the last meltdown in the shade because our financial system is, at its core, unreformed and without adult supervision. Banks not only remain too big to fail but are still growing , while this government pushes policies guaranteed to put us all at risk again.
There's a pattern to this: first, there's a crash; then comes a period of remorse and talk of reform; and eventually comes the great forgetting. As time passes, markets rise, greed becomes good, and Wall Street begins to champion more deregulation. The government attracts deregulatory enthusiasts and then, of course, there's another crash, millions suffer, and remorse returns.
Ominously, we're now in the deregulation stage following the bull run. We know what comes next, just not when. Count on one thing: it won't be pretty.
Nomi Prins is a TomDispatch regular . Her new book, Collusion: How Central Bankers Rigged the World (Nation Books), will be published this May. Of her six other books, the most recent is All the Presidents' Bankers: The Hidden Alliances That Drive American Power . She is a former Wall Street executive. Special thanks go to researcher Craig Wilson for his superb work on this piece.
Jan 29, 2018 | angrybearblog.com
Via Bloomberg Obsession for the Perfect Worker Fading in Tight U.S. Job Market points to an issue in hiring that has been discussed here at AB:
This is a problem because, at 4.1 percent last month, U.S. unemployment is at the lowest level since 2000 and companies from Dallas to Denver are struggling to find the right workers. In some cases this is constraining growth, the Federal Reserve reported last week.
Corporate America's search for an exact match is "the number-one problem with hiring in our country," said Daniel Morgan, a recruiter in Birmingham, Alabama, who owns an Express Employment Professionals franchise. "Most companies get caught up on precise experience to a specific job," he said, adding: "Companies fail to see a person for their abilities and transferable skills."
U.S. employers got used to abundant and cheap labor following the 2007-2009 recession. Unemployment peaked at 10 percent in October 2009, and didn't return to the lows of the previous business cycle until last year. Firms still remain reluctant to boost pay or train employees with less-than-perfect credentials, though recruiters say that may have to change amid a jobless rate that's set to dip further.
Bill H , January 29, 2018 9:53 amJ.Goodwin , January 29, 2018 11:39 am
The way the article is cut off with the wage gains chart makes it seem that the article is on the Dean Baker theme of "pay higher wages and they will come," in which he argues that there is no shortage because you can hire workers away from your competitor, thereby merely moving the deficit from one place to another without eliminating it and unintentionally suggesting that there is actually is a shortage after all.
Immediately after that chart, however, the article segues into a pretty intelligent discussion of employers learning to ascertain "how can your experience be used in my application," making it unclear why the wage chart is even there.
The "lack of trained workers" complaint has long annoyed me, with its implication that it is the public sector's responsibility to train workers for the private sector. Why? If a company needs welders, why should that company not train its own welders?Mona Williams , January 29, 2018 1:09 pm
Last week we were reviewing a job description we were preparing for a role in Canada. It was basically a super senior description, they wanted everything, specific experience, higher education, what amounts to a black belt project management certification but also accounting and finance background.
At the bottom it says 5 years experience.
I almost fell off my chair. That's an indicator of the pay band they were trying to fill at (let's say 3, and the description was written like a 10-15 years 6).
I tried to explain it to the person who wrote it and I said hey if we put this out there, we will get no hits. There is no one with this experience who will take what you are offering. I'm afraid we're going to end up with another home country expat instead. They're often not up the same standard you could get with a local if you reasonably scoped the job and gave a fair offer.
I think companies have forgotten how to compete for employees, and the recruiters are completely out of touch. Or maybe they are aware of the conditions and HR just won't sign on to fair value.axt113 , January 29, 2018 1:26 pm
Before I retired 12 years ago, on-the-job training was much more common. Borders Books (remember them?) trained me for a week with pay for just a temporary Christmas-season job. Employers have gotten spoiled, and I hope they will figure this out. Some of the training programs I hear about just make me sigh. Nobody can afford to be trained while not being paid.rps , January 29, 2018 3:58 pm
My Wife works as a junior recruiter, the problem she says is with the employers, they want a particular set of traits, and if there is even a slight deviation they balk
She says that one recent employer she worked with wanted so many particulars for not enough pay that even well experienced and well educated candidates she could find were either unwilling to accept the offer, or were missing one or two traits that made them unacceptable to the company.
This is exciting news for many of us who've been waiting for the pendulum to swing in favor of potential employees after a decade of reading employers help wanted Santa wish list criteria for a minimum wage job of 40+ hours. I'd argue the unemployment rate is not 4.1%; rather, I know of many intelligent/educated/experienced versatile people who've been cut out of the job market and/or chose not to work for breadcrumbs.
HR's 6 second resume review rule of potential candidates was a massive failure by eliminating candidates whose skills, experience and critical thinking abilities could've cultivated innovation across many disciplines. Instead companies looked for drone replacement at slave wages. HR's narrow candidate searches often focused on resume typos or perceived grammatical errors (highly unlikely HR recruiters have an English Ph.D), thus trashing the resume. Perhaps, HR will be refitted with critical thinking people who see a candidate's potential beyond the forgotten comma or period.
Jan 30, 2018 | peakoilbarrel.com
Boomer II x Ignored says: 01/27/2018 at 5:20 pmI continue to read about the coverage of Davos. Most stories say everything is doing great and the CEOs are happy. But when I follow stories about individual industries, I see lots of concern about the future. The one organization at Davos warning about 2019 and beyond is the IMF.Boomer II x Ignored says: 01/27/2018 at 9:17 pm
Also, there is this.
"And while the short-term growth picture looks rosy, the prognosis for the long term -- as defined by the prospects for potential growth -- is sobering."
https://www.brookings.edu/blog/up-front/2018/01/22/davos-attendees-should-beware-the-slowing-of-potential-growth/"Many economists are skeptical that the benefits of growth will reach beyond the educated, affluent, politically connected class that has captured most of the spoils in many countries and left behind working people whose wages have stagnated even as jobless rates have plunged."Boomer II x Ignored says: 01/28/2018 at 2:09 am
"As the World Economic Forum this past week released an assessment of risk factors featuring a survey of 1,000 experts, it found that 93 percent of respondents saw increased threat of political or economic confrontations. Some 79 percent fretted about heightened likelihood of military conflict and 73 percent saw rising risks of an erosion of world trading rules."
https://www.nytimes.com/2018/01/27/business/its-not-a-roar-but-the-global-economy-is-finally-making-noise.htmlMore about the possible risks in 2018.Boomer II x Ignored says: 01/28/2018 at 3:24 am
https://www.cnbc.com/2018/01/17/world-entering-critical-period-of-intensified-risks-in-2018-wef-says.htmlThis has a good chart showing how global indebtedness has been rising when comparing 1997 to 2007 to 2017.George Kaplan x Ignored says: 01/28/2018 at 4:53 am
I understand the argument that debt is not a problem if you can pay it back, but I fear that debt has been used to further consumption rather than to improve productivity and fund new scientific and technological advancements. In other words, the world has been borrowing to finance a sugar high that won't serve us well.
I am also not concerned that world civilization will collapse if debt isn't paid back. What does concern me, however, is that the current cheery global growth figures might be masking an unsustainable global economy.
http://www.independent.co.uk/news/business/analysis-and-features/global-debt-crisis-explained-all-time-high-world-economy-causes-solutions-definition-a8143516.htmlBelow is the World Bank numbers for GDP growth – ten year trailing average. The World Bank uses dollars and I realise there are lots of arguments about per capita, local currencies, GDP being meaningless for many real life purposes, etc. but the overall trend is really unremittingly down except for the jump in the early 80s and the China pump earlier this century, with the OECD hitting zero somewhere in the mid twenties, possibly earlier if there is a big energy price spike on the way. Debt has gone from about one for one to six for one in terms of debt to growth (I think since about when Reagan and Thatcher took over). At zero growth it will be infinity and then negative, at which point, or a bit earlier, some different sort of economic theory surely has to take over. Maybe it already has, currently it doesn't seem like proper capitalism to me as markets are being set by government and central bank policy for the benefit of the rentiers, not by intrinsic asset value.twocats x Ignored says: 01/28/2018 at 10:11 am
There's different sort of debt – financial institution debt doesn't seem a big deal as they just owe each other the money, government debt not so much either as they can just create what they want, but private debt seems the thing that can just destroy a country if it goes wrong.
I don't know much about it though – I've tried reading some macro economic books and most seem to start with an implicit economic framework which has almost nothing to do with the world I see that is driven primarily from extraction of resources (including space to dump waste), and secondarily by individual equality and property rights. All those things are gradually going from most countries, assuming they originally existed, so it doesn't really surprise me that GDP growth is declining.
Government and financial institution debt is not a problem as long as everyone is doing it. If one single country goes on a debt binge like this they would be punished by international currency and bond markets. If they all do it – where can you go to escape it? Might help explain cryptocurrency rise and (still going!) australia and canada housing bubbles. probably the only two mildly worrying things for the global masters – dollar weakness could create unforeseen currency disruptions; oil price rise could make flow of payments difficult even with infinite money creation.TechGuy x Ignored says: 01/29/2018 at 9:34 amtwocats wrote:
"global capitalism has been untenable since 2009, what makes anyone think it would be more feasible AFTER the popping of the largest bubble ever created in the history of humanity (and that is not at all an exaggeration)?"
The current bubble is much much bigger than the 2008 bubble. You think after creating two bubbles: 2000 dot-com and the 2008 housing bubble that people would have learned about consequences. Nope: Let's shoot for an even bigger bubble!
Quote: "Insanity: doing the same thing over and over again and expecting different results."
"I would like to think the debt bubble has consequences dear enough that it would force them to stop, but no one has given me an argument other than"
Considering that the previous two bubbles (2000 & 2008) had dramatic consequences, I would think it would be self evident by now. But it appears you & most of the world, haven't connected the dots yet. Perhaps the third crisis will provide enlightment?
In the end, its going to lead to another World War, just as it did in the 1930's. This time won't be different.
"to think cryptocurrencies haven't had a massive, accelerated drive is to be blind."
Tulip mania! When people start taking out second mortgages to buy BTC, there is a problem. Ditto for Stocks with Margin debt at an all time high. Cryptos will are the digital version of Ponzi/Pyramid schemes. A few people will become very wealthy while leaving millions of speculators impoverished. Most people are speculating in Cryptos hoping to become wealthy (ie Get Rich quick without doing anything)
"3) your recreational drug use analogy is not convincing ."
re-read your own #3 reponse entirely & carefully. You self answered why the analogy is a perfect fit.
Jan 29, 2018 | www.nytimes.com
The simplest explanation is the necessarily slow but consistent recovery from the crushing financial crisis of 2008 and 2009. After all, a financial crisis of that magnitude leads to lawsuits, bankruptcies, career disruptions and other economic events that muddy a recovery, and they take a long while to clear up.
There is some truth to that explanation, but it is insufficient. It omits a critical yet elusive factor: animal spirits. John Maynard Keynes popularized that term in 1936, referring to a psychological state in which people get a consumerist and entrepreneurial bug that allows them to forget their worries and let their optimism guide their economic decision-making. In homage to Keynes, the economist George Akerlof and I used "Animal Spirits" as the title of a book in 2009 . Flourishing animal spirits involve complacency, a playful mood, a " damn the torpedoes, full speed ahead " feeling of confidence.
That kind of exuberance now seems to be fueling the stock market, where prices have outstripped fundamental valuations. Real (inflation-corrected) corporate earnings per share for the Standard & Poor's 500-stock index were, for the third quarter of 2017, only 6 percent higher than they were in the second quarter of 2007, just before the financial crisis. In contrast, real stock market prices were 39 percent higher. That disproportionate increase is based much more on how earnings are being valued than on how the level of earnings has increased.
Such surges have happened before. The four major confidence indexes took a long ride up between 1990 and 2000, again after a recession. From the bottom of the Michigan index in October 1990 to a peak in February 2000, real S.&P. 500 price per share rose 256 percent while real earnings per share rose only 78 percent.
Why did share prices rise so much in that period? A traditional explanation is that investors had a "rational expectation" of future earnings increases, but it is clear that they were grossly mistaken. The S&P 500 lost just over half its real value from its peak on March 24, 2000, to its trough on Oct. 9, 2002. No concrete event caused this plunge, though we can point to the bursting of the dot-com bubble and a recession. Both were plausibly caused by a drop in overinflated confidence.
The critical question, then: What drives these decade-long swings in confidence, including the upsurge that is still underway?
Take the current confidence cycle. While Donald J. Trump's presidency may have exerted some impact on animal spirits in the last year, it doesn't explain the preceding eight years of slowly improving confidence. And I am skeptical that the upward swing can be entirely explained by standard factors like government and central bank stabilization policy or technological innovation.
Scholars are working on this problem. At the American Economic Association annual meeting in Philadelphia this month, I chaired a session on " Confidence, Animal Spirits and Business Cycles ." All three researchers presented papers describing how animal spirits are helping to drive the economy in the United States and across the world.
Ayhan Kose , director of the World Bank Group's work on global macroeconomic outlook and forecasts, summarized work by the bank's researchers on confidence indexes and the business cycle. They compiled a new database of such survey-based indexes and measures of economic activity in 95 countries. Much of their data goes back before 2000, and in some cases to the early 1960s. The researchers found that consumer and business confidence tended to start declining before the peak of the business cycle, and to start recovering before recessions ended.
In short, confidence indexes are indeed leading indicators in a vast array of countries, and these individual country confidence indexes are driven by a global cycle, though how this cycle is synchronized still isn't clear. Fluctuations in animal spirits remain an essential mystery for economists, though it is encouraging to see that quantitative studies of the issue are underway.
Jan 28, 2018 | www.nytimes.com
The United States, the world's largest economy, is into its ninth year of growth, with the International Monetary Fund lifting expectations for expansion to 2.7 percent this year from 2.3 percent because of the tax cuts.
China has diminished fears of an abrupt halt to its decades-long growth trajectory. Europe, only recently dismissed as anemic and hopelessly vexed by political dysfunction, has emerged as a growth leader. Even Japan , long synonymous with grinding decline, is expanding as well.
Rising oil prices have lifted Russia and Middle East producers , while Mexico has so far transcended fears that menacing trade rhetoric from the Trump administration would dent its economy. Brazil, still suffering the effects of a veritable depression, is flashing tentative signs of recovery.
The result is a hopeful albeit fragile recovery, one vulnerable to the increasingly unpredictable predilections of world leaders.
Jan 15, 2018 | angrybearblog.comVia Marketwatch Jamie Galbraith states his thoughts on a how the current US economy functions. Here are a few snippets:
University of Texas economist Galbraith, the son of the famous Harvard economist John Kenneth Galbraith, believes mainstream economists and the Federal Reserve are too wedded to old ideas to see what is really going on in the economy. Specifically, Galbraith is worried that the consumer is the only game in town -- and that can't last.
Galbraith used his latest book "The End of Normal" to lay out his case that the 2007-08 financial crisis wasn't just a brief interruption in the life of an otherwise healthy economy but instead the latest crisis for an economy that lost its footing back in the 1980s.
At the American Economic Association meeting in Philadelphia, MarketWatch asked Galbraith to share his views on the economic landscape.
(On inflation and labor) There is no Phillips Curve, and there hasn't been for decades. The supply of labor is not a constraint. If you wish to pay people higher wages, you could lure people back out of retirement. Net immigration has basically stopped. If you needed more workers, it would start up again. So we don't have a real labor-force constraint. We are not going to get inflationary pressure from the labor markets. It has been 40 years. Economists are slow learners, and central bankers are a slow-learning subset. They should recognize that things did change in the 1980s.
(Losing ground in global trade) I think that is clearly the case in the wider world. The Chinese have engaged in an extraordinary exercise in engineering in recent years domestically, building 12,000 miles of high-speed rail. They now have vast engineering capacity, and they are applying it to their periphery -- a One Belt One Road network that will orient commerce across Eurasia and into Africa as well that is in the interest of furthering Chinese development. This is on a scale which dwarfs anything that is being conceived of in the United States. (Dan here This statement is before the sh**hole storm)
(On infrastucture)Trump came in with the idea that we should be investing heavily in infrastructure. He got no traction from the Republican Congress. Why is that? Because the immediate beneficiaries of an infrastructure program are people who live in cities, people who live in the expensive coastal areas of the country -- and these people don't vote Republican. So a political obstacle that prevented the one sensible or necessary element of Trump's political framework from getting any traction at all.
(Role of banks) You have to have a situation where banks, which are publicly chartered institutions, serve a public purpose with some common objectives. Some banks blew out the mortgage market, [and] they blew out technology investment two decades ago. What are they doing now? They are financing energy investments, and they are financing consumer debt. This is an almost brainless approach.
Jan 16, 2018 | angrybearblog.com
Denis Drew, January 11, 2018 10:25 amJimH , January 11, 2018 10:39 am
"We all know that that the widely touted unemployment rate overstates the strength of the labor market given so many having dropped out of the labor force, and upward pressure on wages has remained weak, despite some improvement on that front recently."
Barkley, this understates (too typically I'm afraid) the depth of the "Great Wage Depression." Everybody (everybody progressive anyway) eternally points to economic growth benefiting only the upper few percent for decades -- then -- whenever they assess the effect of the economy upon voters (not you here) they skip right over sink hole wage rates and keyhole focus right on the unemployment rate (or if we're lucky the real employment rate) when what voters want is $20/hr jobs plain and simple: high (or at least really livable) wages.
Simply put, if fast food can pay $15/hr at 33% (!) labor costs, then, other retail should be able pay $20/hr at 10-15% labor costs, and, Walmart (God bless it) may be able to pay $25/hr at 7% labor costs. If this means shifting 10% of overall income to the bottom 40%, that means scratching 14% of their income from the "middle" 59% (who get roughly 70% of overall income) -- in higher prices. Which may mean we have been paying the 40% too little for too along. But if the 40% get labor union organized (where this little speech is going) we may find ourselves willing to up if we want them to show up at work.
I have always been willing to tell any gang banger (not that I ever run into any) that side-ways guns and gang signs and all that would look pretty funny in, say, Germany where they pay people to work. And, that if Walmart were paying $25/hr we wouldn't be hearing about any of this here.
As it is, the "middle" 59% can replenish their pockets at the expense of top 1% income whose share has ballooned from 10% to 22.5% over recent (de-unionizing) decades. Just reintroduce confiscatory taxation of the kind existing in the Eisenhower era. Say, 90% over $2 million income -- and this time we really mean it -- very top incomes (CEOs, news anchors, er, quarterbacks) now 20X what they were since per capita income only doubled. I predict any social inertia (it's only human nature) on the part of the 59% to jack upper taxes up will be overcome by the friendly persuasion on the part of the 40% -- who want to jack up the price of that burger just a bit more.
* * * * * *
Super easy way back [ONLY WAY BACK] is restoring healthy labor union density (6% unions outside gov equates to 20/10 bp). When Democrats take over Congress, we must institute mandatory union certification and re-certification elections at every work place (stealing a page from the Republican's anti-union playbook -- see Wisconsin gov workers). I would add the wrinkle of making the cycle one, three or five years -- plurality rules -- take a lot of potential rancor out of first time votes in some workplaces.
Why Not Hold Union Representation Elections on a Regular Schedule?
November 1st, 2017 – Andrew Strom
WHICH IS WHERE I CAME INTO THIS MOVIE
PS. NY Times' Nate Cohn found that Trump won by trading places with Obama. Obama ran as the black guy (presumably working folks oriented -- were we wrong) against Wall Street Romney; Trump ran as blue collar-acting guy against Wall Street Hillary. True progressive Bernie would have stomped Trump. (Bernie hasn't caught on to re-stocking union density as the only real way to help working people yet -- but at least he won't get in the way while waiting to catch on.)Varsovian , January 11, 2018 12:14 pm
First, I agree with your assessment that President Trump is claiming credit for things which he has not caused. But this economy is awful for those at the low end of the income scale. Low pay, high rent, and rising food costs. (Sometimes by subterfuge.)
I remember reading an interview of an older person. The interviewer asked what life was like during the Great Depression. And they replied that it wasn't bad if you had a job.
This is similar to our situation today. It is not bad if you have a good paying full time job. In that case you have almost no understanding of what some others are complaining about. Income inequality is a sterile term for what happens to other people.
- Others like those who have not dropped out of the labor force but who are no longer counted as looking for work because they exhausted their unemployment benefits. (No one contacts them to see if they are still looking for work.)
- Others like those who have full time employment but their wages are low and static.
- Others like those who need a full time job but a part time job is all they can get.
- Others like those who work but only get by because they applied for food stamps. (SNAP)
- Others like those living on Social Security and seeing pitifully tiny COLAs.
- Others like older Americans with savings which pay almost no interest.
And others, like all of the above, who see the prices of the things that they consume going up while the CPI is showing little inflation.
Some of those others live in the rust belt states where they have seen an extended economic decline.
Neither of the two major political parties addresses those 'others' issues. And because they are almost completely disconnected from their voters' issues, they did not perceive the building anger.
Candidate Trump addressed the major concern of those 'others', which was their declining spending power. He did that by addressing the economic threats posed by illegal immigration and free trade treaties which allowed companies to move production overseas.
President Trump lost in the polls and won the election. It doesn't really surprise me that he is continuing to score low in the polls.
Of course, the two major parties can continue on their current paths. And they can blame their losses on flawed voters. And eventually they will do their complaining from their homes.
The businessman Mohamed El-Erian rejects the populist label for the current multi national voter rebellions, he prefers anti-establishment. And so do I.Barkley Rosser , January 11, 2018 3:28 pm
Oh no, not another extrapolation based on the false economic stats Poland pumped out pre-2015!!
No-one takes the drastic choice of emigration lightly – especially if you know you're going to be bottom of the heap in the new country. Can't you find an American to talk about his forbears escaping poverty in Europe only to face hard times in the New World?
Two million Poles fled Poland's much touted "Economic Miracle". Funnily, they stopped emigrating when REAL economic growth, wage growth and the setting up of a welfare state started!
Hard Right crony capitalism with illegal fuel import deals with Putin and falsified public accounting didn't cause happiness. Despite the figures, Poland wasn't a world leader in the export of cellphones, for example.
Rosser continues to bark up the wrong tree! Worse – he's making some sort of social philosophy out of it.
Denis and Jim,
You and I have already been around on this, but I shall point out that the credibility of sources in Poland that you like to cite have collapsed since the Law and Justice Party you shill for took over.
The most believable data is that there has been no major economic change in the state of the Polish economy from before and after the political change, although some minor changes (which you have hyped while ignoring others not fitting your party line). The big bottom line is no noticeable change in overall GDP growth in Poland, basically chugging along unspectacularly in the 1-2% annual range with mild quarterly fluctuations.
So, sorry, I am going to stick with calling this the Poland problem." You folks are the poster boys for this. Tough, and good luck getting any world leader not also an authoritarian liar supporting your embarrassing government.
Jan 14, 2018 | www.nytimes.com
Originally from: How Democracies Perish - The New York Times
Deneen argues that [neo]liberal democracy has betrayed its promises. It was supposed to foster equality, but it has led to great inequality and a new aristocracy. It was supposed to give average people control over government, but average people feel alienated from government. It was supposed to foster liberty, but it creates a degraded popular culture in which consumers become slave to their appetites.
Many young people feel trapped in a system they have no faith in. Deneen quotes one of his students: "Because we view humanity -- and thus its institutions -- as corrupt and selfish, the only person we can rely upon is our self. The only way we can avoid failure, being let down, and ultimately succumbing to the chaotic world around us, therefore, is to have the means (financial security) to rely only upon ourselves."
... ... ...
When communism and fascism failed in the 20th century, this version of [neo]liberalism seemed triumphant. But it was a Pyrrhic victory, Deneen argues.
[Neo]Liberalism claims to be neutral but it's really anti-culture. It detaches people from nature, community, tradition and place. It detaches people from time. "Gratitude to the past and obligations to the future are replaced by a nearly universal pursuit of immediate gratification."
Once family and local community erode and social norms dissolve, individuals are left naked and unprotected. They seek solace in the state. They toggle between impersonal systems: globalized capitalism and the distant state. As the social order decays, people grasp for the security of authoritarianism. " A signal feature of modern totalitarianism was that it arose and came to power through the discontents of people's isolation and loneliness ," he observes.
Jan 14, 2018 | www.unz.com
Kiza , January 13, 2018 at 5:31 am GMT@FB
I appreciate your sentiment and the disappointment (which we all share). Probably the best description of the pre-election promises versus post-inauguration realities was a zero-hedgers joke: yes, Trump has drained The Swamp, but just one little piece of it enough to build a hotel for Jared and Ivanka.
Where you are almost certainly wrong is your conclusion:
"This entire economy is a soap bubble that is about to burst and it's going to happen on Dump's watch "
This is an exaggeration. The moment of US failure (the financial tsunami from the accumulated fixing and rigging of absolutely all "markets") is hard to predict, but I would give it more than three remaining years (yes, a one term president). Trump is for US what Brezhnev was for Soviet Union -- the Dotart in Chief signalling the end. It took nine years after Brezhnev's death for SU to collapse, whilst US is a bigger economic system and thus should be more resilient (although it is also much more rotten).
Regarding Saker, I made exactly the same point to a friend -- the misfortune of US was the terrible choice between evil and stupid, or as someone quipped, the worst candidate in US history lost to the second worst candidate in US history . But unlike Saker, I do think that US people amply deserved it even if not aware of the death, destruction and chaos their compatriots were sowing around the World, for profit and for Israhell.
Jan 12, 2018 | dissidentvoice.org
by Brett Redmayne-Titley / January 11th, 2018So. The US economy is just fine. The post-recession 2010 Dodd-Frank legislation has cured all. Banks have lots of cash. Congress is your friend and that certain-to-pass Tax Cut and Jobs bill will finally allow you, your family and America to MAGA.
... ... ...
Oh, those evil banks! The shadowy corporatist denizens of New York, London, and Brussels, all guilty of a staggering set of every-expanding frauds couched in the beneficent language of greedy short-term materialistic gain. Financial "crimes of the decade," like the Savings and Loan meltdown, the Enron Collapse, and the Great Recession are nowadays reported almost monthly. With metered US justice amounting only to a monetary fine for the offending criminal bank – usually a small fraction of the money it previously stole, hypothecated, leveraged or manipulated – and with criminal prosecution no longer a possibility, these criminals continue to shovel trillions – not billions – into off-shore, non-tax paying accounts of the already uber-rich. There is never enough.
Just in time for Christmas, Americans received the "Tax Cut and Jobs Bill 2017" that, of course, contains not one word about jobs, but sounds so good to the ignorant who are still transfixed on the false mantra of MAGA.
LIBOR, FOREX, COMEX, which used high-speed program securities trading combined with insider manipulation, were the first serious examples of recent bank frauds. Since the Great Recession magically became the Great Recovery, Wachovia and HSBC banks plead guilty to laundering money for Mexican drug cartels, dictators, and terrorists. Wells Fargo and Bank of America were also guilty of defrauding 10's of thousands of homeowners of their properties during the "robo-signing" scandal; that was a scandal until Wells and BA paid the mortdita and all returned to business as usual. Example: In July 2017 it was revealed that more than 800,000 customers who had taken out car loans with Wells Fargo were charged for auto insurance they did not need. Barely a month later, Wells was forced to disclose that the number of bogus accounts that had been created was actually 3.5 million, a nearly 70 percent increase over the bank's initial estimate. Why not? When the predictable result will be a small percentage fine and keep the rest. Now that's MAGA!
If the individual retail – Mom and Pop – investor actually had a choice of where to put their cash money, then no one with better than a fifth-grade education would put a penny into the major stock markets. However, the goal of the many banking manipulations have had one goal: eliminate financial investment choices to one – stocks.
One choice, Gold and silver, the previous historical champion alternative in preserving one's wealth, was deliberately eliminated from short-term, private investment. The banks, issued and sold massive amounts of worthless certificate gold and derivative gold (not bullion), and the same in silver, at a current ratio of 272 paper instruments to one measly ounce of real physical gold. All this has been leveraged against real precious metals, and next used to influence the price of gold-down- by selling huge tranches of these ostensibly worthless gold contracts (1 contract=100 paper ounces) within seconds when the spot price of gold begins to rise. The banks have done this so often that gold has not risen to levels it would likely reach without this manipulation. This has driven massive liquidity that would have gone to precious metals towards stocks. This is likely evidenced by the advent of the meteoric rise in the price of BitCoin, one that-like gold- escapes the bank's control and a super-inflated stock market.
Similarly, thanks to the economic trickery that has been three rounds of Quantitative Easing, the other two conventional options; the bond market and personal bank savings accounts, have been manipulated to also produce a very low rate of return, driving these cash funds to stocks. It is this entire package of criminality – providing no other place for liquidity to go – that has performed as the plot to push a surging world stock market to obscene levels that have no basis in factually-based accounting or economic methods or history.
Banks Are Ready for the Next Crash – You're Not!
The banks know the next crash is coming. Like 2007, they have set in motion the next great(est) recession. Predator banks know that most people, thanks to the aforementioned financial control, media omission and an inferior education system, are "stupid," especially regarding the nuances of financial fraud. As the majority of Americans and Europeans live in the illusion that their financial institutions will protect their savings, they miss their bank's greedy preparations for the next stock market crash slithering through the halls of their Parliament or Congress. This already completed legislation states in plain English, and the language of endemic corruption, that your bank intends to steal your money directly from your savings account. And your government will let them do this to you.
30,000 pages make up the Dodd-Frank post-recession legislation, authored by the banks in the aftermath of the Great Recession. The Dodd-Frank legislation was touted as eliminating the massive bail-outs the US gave virtually every ill-defined too big to fail worldwide bank and US corporation in 2008-9. In reality, Dodd-Frank was as much a fraud against Americans as LIBOR or COMEX manipulation, et al .
Title II of the media-acclaimed 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act provides the Federal Deposit Insurance Corporation (FDIC) with new powers and methods to again guarantee – first and foremost – the massively leveraged derivatives trade once this massive leverage plummets as it did with AIG in 2007-09. However, that collapse was singular. The next will include all banking sectors.
The bank's paid-for politicians made sure a post-crash congress did not regulate derivatives via Dodd-Frank, and thereby encouraged a further increase in this financial casino betting, despite it being the root cause of the original problem. Thanks to Dodd-Frank and its predecessor, the 2005 Bankruptcy Act, Congress made sure these new fraudulent bets on stock market manipulation would surely be paid. But, not to worry; there would be no more "Bail Outs." Next time, these banks would use their depositors' savings, including yours. Meet: the "Bail-In."
All Americans recall the massive "Bail-Outs" of 2007-9 and how their corporately controlled Federal Reserve Bank and an equally controlled US Congress threw several trillions of US taxpayer dollars at US banks, dozens of foreign banks, and any corporation with enough political pull to be defined as "Too Big To Fail" (TBTF). In the aftermath a year later, the banks understood that Americans and European citizens had lost enthusiasm for any future government Bail-Out, most preferring instead that any institution suffering self-inflicted financial duress should enjoy the fruits of their crimes next time, via the reality of formal bankruptcy proceedings.
The will or financial safety of the public is, of course, no concern to criminal corporations, and so easily circumvented via congress and the president. So, the banksters have redefined their criminality using two newly defined methods, both rebranded to be far more palatable to the public.
Currently, "Too Big to Fail," (TBTF) has a very fraudulent and elitist connotation just like, "Bail-Out." To millions across the world who have lost their homes, pension funds, retirement plans, and dreams, this decade-old moniker for financial oppression and fraud has now been conveniently re-branded. The bailed-out TBTF banks now have a far more magnificent definition: TBTFs are now, "Globally Active, Systemically Important, Financial Institutions" (G-SIFI).
This sounds so much better.
But, "Bail-Out"? No No. Would you not prefer a "Bail-In"? Not if you know the details. "Bail-Outs," may have also lost their flavour but in the new world of the G-SIFI, the next one is actually just a "Bail-In," away.
Yes, Bail-Ins, the new "systemically" correct term for publicly guaranteed bank fraud are already named as such in new national policies and laws, appearing in multiple countries. These finance laws, such as Dodd-Frank and its pending UK and European Union version, make upcoming Bail-Ins legal. These Bail-Ins allow failing G-SIFI banks to legally convert the funds of "unsecured creditors" (that's you) into bank capital (that's them). This includes "secured" creditors, like state and local government funds.
With this in mind, I entered the main branch of Wells Fargo. The two checks in hand. On the way in I was greeted warmly, one after the other, by three more fresh-faced and eager proteges, all smartly uniformed to match the Wells décor, and who proffered, "Good morning, Sir!," again, and again and again. Certainly, these little fish were not in possession of authority enough to cash my mammoth checks, so I asked for bigger game, the Branch Manager.
Thus, I explained my plight to a very lovely lass who predicted she "would be glad to help me."
"Cheryl," patiently explained that I had come to the right place and she would be glad to cash both checks. Regarding my previous polite banking experience, she admitted that it was indeed bank policy to have limits on the availability of cash for withdrawals and that different branches had different limits. This was the main branch so my request here was meritorious. Further, she admitted that whatever daily cash coming into the branches in the form of deposits was not available for withdrawal, but was sent from the main branch for daily accounting at a central point common to all area Wells bank branches. Only a prescribed amount of cash was provided with each bank for daily customer cash withdrawals.
"A couple of times your current request," was her cautious response to my question about her branch's limits on check cashing. Not to be put-off, I asked about a hypothetical US$25,000 check. She admitted this would be beyond her branches authority. "But," she smiled, "Today, you've come to the right place."
The financial law firm Davis Polk estimates the final length of Dodd-Frank, the single longest bill ever passed by the US government, is over 30,000 pages. Before passage, the six largest banks in the US spent $29.4 million lobbying Congress in 2010 and flooded Capitol Hill with about 3,000 lobbyists prior to Obama predictably signing its final unread version. No US congressman or senator had read it. But, the bank's congressional minions were told to vote for it. And dutifully they did.
The major cause of the upcoming financial meltdown, as with the pre-2008 conditions, is globally systemic gambling against national economies, called derivatives. Derivatives are sold as a kind of betting insurance for managing fraudulent banking profits and risk. So, why fix systemic banking fraud when the final result allowed these same banks to make even more money in the aftermath of the national and personal financial destruction they originated in the first recession?
Instead, thanks to Dodd-Frank, derivatives suddenly have "super-priority" status in any bankruptcy. The Bank for International Settlements quoted global OTC derivatives at $632 trillion as of December 2012. Naked Capitalism states that $230 trillion in worthless derivatives are on the books of US banks alone. Applied to Dodd-Frank this means that all these bad bank bets on derivatives will be paid-off first before you may have your savings cash. If there's actually any cash left once you get to the teller's counter.
Normally in a capital liquidation or bankruptcy proceeding, secured creditors such as a bank's personal depositors are paid off first because these are hard assets, not investments, and thus normally have a mandated priority. Under these new "Bail-In" Dodd-Frank mandates, your government has re-prioritized your bank's exposure and your cash deposit. Derivatives and other similar banking high-risk ventures are now more highly protected than bank depositor's savings. In the 2013 example of Cyprus, Germany and the ECB also made depositors inferior to other bank holdings leaving depositors with, after many months, a small fraction of their deposits.
And then came Greece.
Selling the lie while using the language of Dodd-Frank, we are told by media whores that banks will not be given taxpayer bailouts next time. True. The preamble to the Dodd-Frank Act claims "to protect the American taxpayer by ending bailouts." But how, then, to Bail-In the G-SIFIs without another taxpayer Bail-Out? No problem.
Enter the FDIC and another new banking term, "cross-border bank resolution." As the sole US agency required to pay back depositors who lose savings up to $250,000, FDIC is armed with a paltry US$25 billion war chest to pay depositors. Under Dodd-Frank, the FDIC will be the mechanism to replace deposits lost or squandered by bank fraud. The public, however, has an estimated total US cash deposits of US$7.36 trillion so, once the banks steal your savings, FDIC will be just a little bit short of funds. How to fix this mathematical shortfall? With, of course, more of your money via emergency taxes or a massive new round of Quantitative Easing (QE). Either way, by the time this happens your money is long gone. And it gets worse.
Say, "Goodbye" to your Savings- Two Greedy Methods
It's [FDIC] already indicated that they will confiscate [savings] funds .
-- US congressman Ron Paul
On December 10, 2012, a joint strategy paper was drafted by the Bank of England (BOE) in conjunction with the Federal Deposit Insurance Corporation (FDIC) titled, "Resolving Globally Active, Systemically Important, Financial Institutions." Here the plot to steal depositor savings is clearly laid out.
The report's "Executive Summary" states:
the authorities in the United States (US) and the United Kingdom (UK) have been working together to develop resolution strategies These strategies have been designed to enable [financial institutions] to be resolved without threatening financial stability and without putting public funds at risk.
Sounds good until you read the fine print; i.e., whose risk are they actually protecting?
While claiming to protect taxpayers, Title II of Dodd-Frank gives the FDIC an enforcement arm, the Orderly Liquidation Authority (OLA) which is similar to its British counterpart the Prudent Regulation Authority (PRA). Both now have the authority to punish the personal depositors of failing banking institutions by arbitrarily making their savings deposits subordinate – actually tertiary – to bank claims for the replacement value of their derivatives. Before Dodd-Frank savings deposits were legally senior and primary to these same claims in a routine bankruptcy.
With the US banks holding only $7 trillion in personal cash savings deposits compared to $230 trillion is US derivative obligations, FDIC's $25 billion will not be enough. The creators of Dodd-Frank knew this before it was signed. As John Butler points out in an April 4, 2012, article in Financial Sense :
Do you see the sleight-of-hand at work here? Under the guise of protecting taxpayers, depositors are to be arbitrary, subordinated when in fact they are legally senior to those claims Remember, its stated purpose [Dodd-Frank] is to solve the problem namely the existence of insolvent TBTF institutions that were "highly leveraged with numerous and dispersed financial operations, extensive off-balance-sheet activities, and opaque financial statements.
Oh, but bank depositors can rest easy in the knowledge that replacing their savings will not come out of their pockets via another bank Bail-Out. Thanks to Dodd-Frank, the first line of defence will allow Congress to instead replace personal savings with a government paid for $7 trillion bail-in to FDIC to "replace" these savings.
But, that's the good choice.
Worse, Dodd-Frank gives new powers to FDIC and its OLA that allow an even more powerful and draconian resolution: any deposited funds in a bank, from $1 to $250,000 (the FDIC limit), and everything above, can instead be converted to bank stock! FDIC has provisions so this can be done, via OLA, quite literally overnight.
An FDIC report released in 2012 ago reads:
An efficient path for returning the sound operations of the G-SIFI to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt from the original creditors of the failed company [meaning the depositor's cash] into equity [or stock].
Additionally, per April 24, 2012 IMF report, conversion of bank debt to stock is an essential element of Bail-Ins included in Dodd-Frank.
The contribution of new capital will come from debt conversion and/or issuance of new equity, with an elimination or significant dilution of the pre-bail in shareholders. Some measures might be necessary to reduce the risk of a 'death spiral' in share prices.
For affected depositors to retrieve the value of what was formerly the depositor's account balance, the stock must next be sold. When Lehman Brothers failed, unsecured creditors (depositors are now unsecured creditors) got eight cents on the dollar.
This type of conversion of deposits into equity already had another test-run during the bankruptcy reorganization of Bankia and four other Spanish banks in 2013. The conditions of a July 2012 Memorandum of Understanding resulted in over 1 million small depositors becoming stockholders in Bankia when they were sold without their permission -- "preferences" (preferred stock) in exchange for their missing deposits. Following the conversion, the preferences were converted into common stock originally valued at EU 2.0 per share, then further devalued to EU 0.1 after the March restructuring of Bankia.
Canada has also stated they are planning a similar "Bail-In" program. The Canadian government released a document titled the Economic Action Plan 2013 which says, "the Government proposes to implement a "Bail-In" regime for systemically important banks."
However, don't be getting cute by hiding your cash, precious metals, or passport in a bank safe deposit box. There are no longer safe either. Dodd-Frank took care of that, too.
Under Dodd-Frank the FDIC, using the auspices of Dept. of Homeland Security (DHS) can legally, without a warrant, enter the bank vault, have the manager secretly open any and/or all safe deposit boxes and inventory, or seize the contents. Further, if the manager is honest enough to inform the depositor of the illegal incursion he is subject to criminal charges and termination from bank employ. Independent reports reveal that all of America's safe deposit boxes have already been invaded and inventoried for future confiscation.
This already happened in Greece. Depositors who removed their jewellery or precious metals were met at the bank's door by security, a metal detector and confiscation.
The power of the now remaining G-SIFI banks and FDIC was further evident when, cash finally in hand, I headed to my bank, JP Morgan Chase, right next door to Wells Fargo. The manager confirmed that the cash withdrawal policy at Chase was in keeping with that at Wells; very little cash available on demand. I posed a slight untruth and inquired as to what I should do about my upcoming need for $50,000 in hard cash. No, her bank would not do that on demand, but arrangements could be made to have the cash transferred to her bank. That would only take "about two days." Of course, I would need to fill out a few forms.
What a Difference a Congress Makes!
With the American and UK public again on the hook by law for the anticipated loss of the banks a distressed depositor might think the plot to defraud them now complete. Au Contraire .
In its rush to transfer further wealth upwards to off-shore bank accounts, US president Trump and his recently re-aligned republican bootlickers have left no stone unturned. First, Trump issued a memorandum that sets in motion his plan to scale back the provisions of Dodd-Frank and repeal the Fiduciary Rule.
It should be noted that the only voice of economic reason at the White House, Former Fed Chairman, Paul Volker, divorced himself from this growing scandal of basic mathematics very publicly. As head of Obama's recession inspired, President's Economic Recovery Advisory Board, Volker ran into the headwinds of fiscal insanity for too long, resigning in January of 2011 in disgust. His departure thus coincided with the renewal of the litany of criminal financial manipulation already discussed here. And now
The House approved legislation on February 2, 2017, to erase a number of core financial regulations put in place by the 2010 Dodd-Frank Act, as Republicans moved a step closer to delivering on their promises to eliminate rules that they claim have strangled small businesses and stagnated the economy. Said Trump:
I have so many people, friends of mine, with nice businesses, they can't borrow money, because the banks just won't let them borrow because of the rules and regulations and Dodd-Frank.
Never mind, of course, that these poor banks are holding derivative exposure thirty-five times the total cash deposits of US savers nor that their ill-gotten riches – such as the UBS, Wells Fargo, Bank of America, RBS multi-billion dollar frauds – were taken off-calendar in Federal court for approximately 15% of the total crime. The banks kept the rest.
And they want more?!
"We expect to be cutting a lot out of Dodd-Frank," Trump said further defining the mantra of MAGA. This will likely see the deterioration of the newly created Financial Stability Oversight Council (FSOC) and the Consumer Financial Protection Bureau (CFPB) since these agencies curb further excessive risk-taking and the existence of too-big-to-fail institutions on Wall Street.
Well, depositors, your extreme caution is required. The wording of these new, bank-inspired sets of legislation is silently waiting to be used by many nations to prioritize banks before their citizen's. When the time comes, the race to the bank will be a short-lived event indeed.
With this in mind, I stepped into the bright sunshine outside the walls of JP Morgan/Chase bank, all but $100.00 of my day's take stuffed deep- and securely- in my pocket, its final outcome no one's business but my own.
However, for almost everyone else? Well when YOUR bank fails, don't walk, run! YOU do not want to be second in line.
Brett Redmayne-Titley is an Independent Journalist, Photographer/ World Citizen. He is a former columnist: PRESS TV/IRAN; writer and contributor to: Earth First! Journal; Zero Hedge; Veterans Today; Activist Post; Off-Guardian; Western Journalism; Intellihub; UK Progressive; Fars News Agency; Russia Insider; Mint Press News; State of the Nation; News of Globe; Blacklisted News; Before It's News; Common Dreams; Shift Frequency; etc
Read other articles by Brett .
This article was posted on Thursday, January 11th, 2018 at 8:01am and is filed under Banks , Barack Obama , Cyprus , Deposits/Depositors , Donald Trump , EU , Greece , Money supply , Wall Street .
Jan 09, 2018 | peakoilbarrel.com
Watcher x Ignored says: 01/05/2018 at 3:02 pmThere has been talk of higher interest rates for 10 yrs.
The US debt is $20 Trillion. 1% rise in rates would be $200 billion that must be serviced. US deficit this year will be almost 500B. 1% rise would be about 50% of the deficit. 2% doubles it.
Seems easier to just not let them rise.
Jan 30, 2017 | economistsview.typepad.comlibezkova -> Fred C. Dobbs... January 29, 2017 at 08:31 AM , 2017 at 08:31 AMNeoliberal MSM want to control the narrative.libezkova -> libezkova... , January 29, 2017 at 09:24 AM
That's why "alternative facts" should be called an "alternative narrative".
== quote ==
Maybe this is the same kind of clinical detachment doctors have to cultivate, a way of distancing oneself from the subject, protecting yourself against a crippling empathy. I won't say that writers or artists are more sensitive than other people, but it may be that they're less able to handle their own emotions.
It may be that art, like drugs, is a way of dulling or controlling pain. Eloquently articulating a feeling is one way to avoid actually experiencing it.
Words are only symbols, noises or marks on paper, and turning the messy, ugly stuff of life into language renders it inert and manageable for the author, even as it intensifies it for the reader.
It's a nerdy, sensitive kid's way of turning suffering into something safely abstract, an object of contemplation.
I suspect most of the people who write all that furious invective on the Internet, professional polemicists and semiliterate commenters alike, are lashing out because they've been hurt -- their sense of fairness or decency has been outraged, or they feel personally wounded or threatened."controlling the narrative" by neoliberal MSM is the key of facilitating the neoliberal "groupthink". Much like was in the USSR with "communist" groupthink. This is a step in the direction of the theocratic society (which the USSR definitely was).
In other words "controlling the narrative" is the major form of neoliberal MSM "war on reality" as the neoliberal ideology is now completely discredited and can be sustained only by cult-style methods.
They want to invoke your emotions in the necessary direction and those emotions serve as a powerful filter, a firewall which will prevents you from seeing any alternative facts which taken as whole form an "alternative narrative".
It also creates certain taboo, such as "don't publish anything from RT", or you automatically become "Putin's stooge." But some incoherent blabbing of a crazy neocon in Boston Globe is OK.
This is an old and a very dirty game, a variation of method used for centuries by high demand cults:
"Why, of course, the people don't want war. Why would some poor slob on a farm want to risk his life in a war when the best that he can get out of it is to come back to his farm in one piece.
Naturally, the common people don't want war; neither in Russia nor in England nor in America, nor for that matter in Germany. That is understood.
But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy or a fascist dictatorship or a Parliament or a Communist dictatorship
Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country."
– Hermann Goering (as told to Gustav Gilbert during the Nuremberg trials)
You need to be able to decipher this "suggested" set of emotions and detach it from the set of facts provided by neoliberal MSM. It might help to view things "Sine ira et studio" ( https://en.wikipedia.org/wiki/Sine_ira_et_studio )
That helps to destroy the official neoliberal narrative.
Here skepticism (whether natural or acquired) can be of great help in fighting groupthink pushed by neoliberal MSM.
We are all guilty of this one sidedness, but I think that we need to put some efforts to move in direction of higher level of skepticism toward our own views and probably provide at least links to alternative views.
Jan 04, 2018 | turcopolier.typepad.comReply 04 January 2018 at 02:41 PM
Farmer Don , 04 January 2018 at 02:41 PMWhere will the economy be at the end of 2018Richardstevenhack , 04 January 2018 at 02:41 PM
I HAVE NO CLUE!
too many variables for me:
Reasons for crash:
Personal debt rising starting to cause problems. Credit card debt up/Car loan defaults up
US debt rising.
US balance of trade continuing
Fed says it will quit increasing QE & may raise interest rates.
China and bricks completing parallel monetary trade and movement systems to stop US financial monopoly. Ie chinese SWIFT replacement system, Chinese credit cards, Russian increasing gold holdings compared to US$
Rents and housing most expensive compared to wages ever.
US health care costs rising
Reasons for good times
Central banks printing money and buying stocks.
Tax laws brings money back to US (more stock buybacks)
US debt ceiling seems to be an illusion
Trump great spokesman for business
Trump may use new tools to fight recession (helicopter money etc.)
Trump says he likes cheap US$
Momentum of stock markets
Trump has started no new wars. Military $$ stay mostly inside the USA
Trump gets huge infrastructure bill passed
Job outsourcing or coming back to USA?
Economic Black Swan from outside USAI tend to agree that the economy is due for a crash to the limited degree I read economics news and opinion (I used to be much more interested but after forty years of waiting for the "Big Depression" which hasn't come, I've become tired.) But hoping it will happen in the next year is clearly speculative.kao_hsien_chih said in reply to tv... , 04 January 2018 at 04:23 PM
Bottom line is Democrats have no plan for 2018 - and therefore are likely to lose big again.Of all the components of the tax bill (many of which are problematic--but that's mostly b/c it's a tax bill, not necessarily for ideological reasons), I thought putting a lot of tax onus on wealthy bicoastals was a stroke of genius. Having said that, things are looking in a lot of mixed directions: many people are uneasy for all sorts of reasons about Trump, but the bottom line (esp on economic matters) does not look too bad, to say the least.Jack , 04 January 2018 at 04:23 PM
In many ways, actually, the overall situation looks like Bill Clinton 2.0: people had all sorts of issues with WJC--Democrats were uneasy with him and Republicans absolutely hated him. But things were looking OK or better in general and voters weren't going to punish him for nothing that was particularly off track. I see the Democrats trying some of the same tricks. Maybe even all the way to impeachment. Unless things come apart at the seams very visibly, none of them will stick on DJT.Sirturcopolier , 04 January 2018 at 05:35 PM
The stock market and financial asset prices in general drive perceptions of the strength of the economy. As long as financial assets prices remain in melt-up mode it will benefit the incumbents. While the Fed and the other major central banks are slowly reducing liquidity by either reducing the rate of growth of their balance sheet or reducing it outright as in the case of the Fed, there's no knowing when speculation peaks. The one thing that bulls should watch is the flattening of the yield curve.Jackturcopolier , 04 January 2018 at 05:37 PM
All that is true but as a supply sider I am inclined to think that this is nothing like a bubble. plGrecoPatrick Armstrong -> Greco... , 04 January 2018 at 05:39 PM
Bannon is an ego mad hubris driven freak. plhttp://www.breitbart.com/radio/2018/01/04/bannon-praises-trump-potus-is-a-great-man-i-support-him-day-in-and-day-out/Jack -> turcopolier ... , 04 January 2018 at 05:39 PM
To which all I can say is ???
and maybe !!!SirVietnamVet , 04 January 2018 at 07:20 PM
Alan Greenspan famously quipped that a bubble can only be recognized after it bursts.
As you note reducing regulatory burdens and reducing taxes stimulates the economy. So we can expect improved economic performance.
Financial asset prices however, don't necessarily need an improving economy. What it needs is the perception that asset prices will increase prospectively. We have seen asset prices rise substantially after the GFC even with the weakest economic recovery since WW II. A partial explanation is the growth in liquidity by expansion of central bank balance sheets and the perception that central banks can always reflate asset prices.
The major central banks now are either contracting their balance sheet or reducing the growth rate. Increased economic activity also puts pressure on interest rates and businesses use more capital for economic activity than financial engineering. These factors will apply brakes on financial speculation. When psychology changes the smart money will start reducing exposure. What we don't know is when psychology changes and when asset prices correct.Colonel,Keith Harbaugh , 04 January 2018 at 07:28 PM
Your ability to see through and clarify the opaque is amazing. If the economy stays the course and if Deplorables' lives get better; yes, Donald Trump will have seven more years in the White House. The bottom of the half full glass for Donald Trump is that he must avoid a war with Iran or North Korea, a cabal of globalists led by the richest man in the world, Jeff Bezos (owner of the Washington Post), is out to get him and his Secretary of State described him as a moron.I wish you were right but believe you are wrong.r whitman said in reply to turcopolier ... , 04 January 2018 at 07:32 PM
1. The disastrous GOP showing in the November 2017 Virginia election.
Not only did the GOP lose all the state-wide contests,
but shockingly their control of the lower house of the VA legislature (the House of Delegates)
was cut from 66-34 to 51-49 (with some ongoing uncertainty due to recounts, etc.).
No one expected/predicted that, and it surely indicates a general dissatisfaction with the GOP brand.
2. This poll:
and similar polls.so is Trump.Matt , 04 January 2018 at 07:58 PMhttps://www.epi.org/productivity-pay-gap/TV -> turcopolier ... , 04 January 2018 at 08:00 PM
George HW Bush was correct when he described Reagan's Supply-side Trickle-Down economic policy as - "Voodoo Economics"
Practically all of the gains in the economy for the last 40 years have gone to the top. It's one of the reasons why Trump was able to appeal to the suffering working-class, much like Bernie Sanders did, to win the Presidency. Unfortunately for them, they got suckered by the flim-flam con-man in the WH.
An unnecessary tax give-away to the already individually wealthy and rich corporations will do nothing to raise wages of working people, especially when the meager "tax-cut" for them expires and they are left holding the debt bag along with Republican Party calls to cut Social Security and Medicare.
Republicans don't give a shit about anything except their donor class.And a drinker.blue peacock said in reply to turcopolier ... , 04 January 2018 at 08:23 PM
I don't know him, but take a good look:
Puffy face, veins in the nose, disheveled overall look.Col. LangLemur , 04 January 2018 at 09:29 PM
The economy can continue to improve and do even better with the recent actions of Trump & the GOP in Congress. The stock market however need not continue to rise at the rate it has over the past years.
You are correct that we don't see public participation in a frenzy as we have at the tail end of other speculative cycles. Crypto-currencies are the only asset class with that type of frenzied activity and price acceleration. We do see however price distortions - like Euro-area junk bonds yielding less than US Treasury bonds - but that can continue for some time.the left is starting to burn out under the constant anticipation 'once X happens, Gronald Grumph will be gone.'Ed S. , 04 January 2018 at 11:42 PM
there's also a systemic tension mounting between the thin line of WASPs and Jews holding off, excuse me, 'representing' the coalition of the ascendant. If those factions of the party base gain control, they'll drive the Dems off the cliff (through alienating the whites the Dems still require to win elections). The agitprop the Dems are pushing through their sympathizers in the media regime are only serving to undermine them long term.Colonel,elev8 said in reply to turcopolier ... , 05 January 2018 at 03:58 AM
I too am perplexed by the expectations of the Democratic Party in the 2018 elections. Wasn't it a mere 18 months ago that we were hearing not only of an overwhelming Presidential victory but also a likely takeover of the Senate and the remote possibility of the House as well?
A few contributing thoughts:
1) You can't beat something with nothing. The Democratic Party believes that the populace so loathes DJT that they will turn out to vote them into power to do -- well I'm not exactly sure WHAT they propose to do. The expectation of the "wave" is solely that they are not DJT. Maybe they take the Senate. But even in the best of circumstances, it's a close race.
2) Gerrymandered House districts. Several years ago I looked up the margin of victory in every Congressional race. Any race with less than a 5 percent spread between candidates was "competitive" (IOW one candidate received 48 percent and the other received 52 percent for a 4 percent spread). Roughly 40 races were "competitive". Most districts are OVERWHELMINGLY drawn to favor one party or the other -- to the degree that one party will receive 65,75, or even 80 percent of the vote. Loathing DJT doesn't change that math
3) Impeachment/25th amendment/etc. Not. Gonna. Happen. The popular media has been at Russia!! Russia!! Russia!! for 14 months but there is NO evidence of any collusion or interference.
4) The economy isn't going to crash anytime soon. The tax bill is HUGELY stimulative. Growth is accelerating. The stock market is at all time highs (maybe only matters to 20 percent -- but they are all voters). If anything, the economy may be STRONGER in 8 months, not weaker. To me, it feels like 1996, not 1999. See, for example, Jeremy Grantham ( https://www.gmo.com/docs/default-source/research-and-commentary/strategies/asset-allocation/viewpoints---bracing-yourself-for-a-possible-near-term-melt-up.pdf?sfvrsn=4.
5) Marginal voters matter and there has to be something to get them to go out of the house on Election Day. "We're not Trump" isn't going to do it. Yes, I've said it twice because as far as I can tell, it's the only Democratic issue.
6) Democratic bench strength. There isn't any. They need to have appealing candidates and are taking the Jones victory in Alabama to be a sign of an impending sweep. But Jones ran against an amazingly unappealing candidate and barely squeaked out a victory. There are NO "young" Democrats in the places that matter for them to take the House.
My apologies for the long comment, Colonel. I think your absolutely right and simply wanted to add a few personal thoughtsThat is something I really disagree with. But if the bubble bursts during the first half of this year or next year, it may still not damage Trump. It's also not clear to me that any damage to Trump would automatically translate into political benefit for the Democrats to the degree they seem to hope for. There is historical precedent for a president not being lethally wounded by a massive stock market downturn on his watch. It's from pretty far back in the past, though (Kennedy).TonyL , 05 January 2018 at 09:33 AMColonel,turcopolier , 05 January 2018 at 09:37 AM
It is a bubble. The market is way overvalued (up there in stratosphere so to speak). Now is the time to start rebalancing your portfolio more often.TonyLDavid E. Solomon said in reply to Matt... , 05 January 2018 at 09:45 AM
Thanks. Our portfolio is well balanced and managed by Burke and Herbert Bank and Trust. nevertheless, I do not think the markets represent a bubble. plMatt,Huckleberry , 05 January 2018 at 10:14 AM
Amen to everything you said, but I might add that the Democrats (as well) "DON'T GIVE A SHIT ABOUT ANYTHING EXCEPT THEIR DONOR CLASS".
THAT IS ESSENTIALLY WHY THE VARIOUS INCOME STRATA IN THIS COUNTRY ARE AT EACH OTHER'S THROATS.The J-left is trying to meme a "blue wave" into existence.rjj , 05 January 2018 at 10:25 AM
White women will be the key to this effort, so watch for a lot of 2nd wave feminism culture war stuff.
Trump, unfortunately, will likely react poorly to this, taking every piece of bait laid out for him.
But so long as he adheres to an Immigration and Infrastructure campaign, this ought to be pretty straightforward.
The Dems may indeed take the House but their chances of taking the Senate are very low this cycle.
Joe Manchin will almost certainly be vaporized in West Virginia and there are many red state Democrats who are going to have to go against the party's coastal owners when it comes to immigration.DES @ #26: "VARIOUS INCOME STRATA IN THIS COUNTRY ... AT EACH OTHER'S THROATS."outthere said in reply to turcopolier ... , 05 January 2018 at 11:01 AM
sounds like received opinion -- CorpsMedia's version of How-Things-Are - possibly reinforced by a personal view from within some department. Everybody else is busy holding the world together and keeping things going locally - at the moment here in the East by the neighborly clearing of snow.I wish you and other investors no ill, so please don't misunderstand what I am saying here.outthere , 05 January 2018 at 11:08 AM
What did you think was happening in 2008?
Were you confident then as you are now?
As for supply side economics, again I recommend reading David Stockman, he is the grandfather of that concept.
And he NOT optimistic today.
Here's a taste of Stockman's latest:
Personally I own no stocks or bonds at all, but that is a personal decision, I make no recommendations.more and better about Stockmanoutthere , 05 January 2018 at 11:24 AM
David Stockman Takes Aim at the 'Washington War Party'
Longtime contrarian continues to be a fly in the establishment's ointment.
best of all his 2013 book,
The Great Deformation: The Corruption of Capitalism in America, a scathing indictment of the twin scourges of crony capitalism and massive governmental debt.
on WaPo and McCain and Trump in Syria:
http://original.antiwar.com/david_stockman/2017/07/30/tweet-shaking-war-party/just published todayValissa said in reply to Ed S.... , 05 January 2018 at 11:37 AM
How did the war on Vietnam, the First Gulf War to save the Emir of Kuwait's oil wealth, the futile 17-year occupation of Afghanistan, the destruction of Iraq, the double-cross of Khadafy after he gave up his nukes, the obliteration of much of civil society and economic life in Syria, the US-supplied Saudi genocide in Yemen and the Washington sponsored coup and civil war on Russia's doorstep in Ukraine, to name just a few instances of Washington's putative "world leadership", have anything to do with preserving "order" on the planet?
And exactly how did the "benefits" of these serial instigations of mayhem outweigh the "burdens" to America's taxpayers – to say nothing of the terminal costs to the dead and maimed citizens in their millions who had the misfortune to be domiciled in these traumatized lands?
Likewise, have the refugees who have been flushed out of Syria, Libya, Yemen, Iraq and elsewhere in the middle east by Washington's wars done anything for the peace and stability of Europe, where Washington's victims have desperately fled in their millions?
. . .
So when candidate Trump said the Iraq invasion was a stupid mistake, that Hillary's war on Khadafy was misbegotten, that he would like to cooperate with Putin on pacifying Syria and that NATO was obsolete, he was actually calling into question the fundamental predicates of the American Imperium.
And that gets us to the Russian threat bogeyman, the War Party's risible demonization of Vladimir Putin and the cocked-up narrative about the Kremlin's meddling in the 2016 election.
. . .
At the end of the day, we are supposed to believe that a country with a puny $1.3 trillion GDP, which is just 7% of the US' $19.5 trillion GDP, and which consists largely of aged hydrocarbon provinces, endless wheat fields, modest industrial capacities and a stagnant Vodka-favoring workforce, is actually a threat to America's security.
And we are also supposed to fear the military capacity of a country that has no blue water Navy to speak of and no conventional airlift and air-attack capacity which could remotely threaten the New Jersey shores, and that spends less in a full year than the Pentagon consumes every 35 days.
http://original.antiwar.com/David_Stockman/2018/01/04/war-partys-desperate-assault-america-first/Great comment Ed! (#22)turcopolier , 05 January 2018 at 11:37 AM
To your item 6 I add the following.
The next generation of Democratic leaders is, um, nonexistent https://www.washingtonpost.com/news/the-fix/wp/2016/11/16/the-next-generation-of-democratic-leaders-is-um-nonexistent/
Retirements shine spotlight on GOP term limits for chairs http://thehill.com/homenews/house/359044-retirements-shines-spotlight-on-gop-term-limits-for-chairs
The surprise retirements of several veteran Republicans are reigniting a debate about the GOP's self-imposed term limits for committee chairs. Some argue that term limits create a brain drain in Congress, with the most experienced committee leaders more inclined to head for the exits once they're done holding a gavel. But while many Republicans acknowledge the potential downsides to limiting chairmanships, they maintain that it's far better than the alternative facing their Democratic colleagues: frustration about not being able to rise in the ranks.
"You can certainly make the argument about keeping people around longer, about the value of institutional knowledge," Rep. Tom Cole (R-Okla.), chairman of a House Appropriations subcommittee, told The Hill. "But the reality is, for most of our members, they're willing to run those kinds of risks in order to have the potential for upward mobility."
The term-limit policy, put in place by former Speaker Newt Gingrich (R-Ga.) in 1994, was designed to keep the party from growing stale by regularly injecting new blood and fresh ideas into the mix. The term limits have offered an opportunity for younger members to climb the leadership ladder far more quickly than if the rules weren't in place. Lawmakers can get a waiver from the rules, though they are rarely granted. The thinking is that if a chairman can't achieve major policy goals within six years, then it's time to let someone else give it a try.
Discontent has been brewing among rank-and-file Democrats, who have been unable to crack the leadership ranks and feel shut out of important decisionmaking. The frustration in the caucus, and concern about the future of the party, has only grown since last year's Election Day drubbing. "If you don't have term limits, people stay forever. That's what you're seeing on the Democratic side," Mackowiak said. "They don't give the young and up-and-coming members that same leadership opportunities. There's nowhere to go." There have been some past efforts by Democrats to impose term limits on committee leaders, but powerful groups like the Congressional Black Caucus (CBC) have remained opposed to the idea, arguing that seniority is the best way to ensure that their members can move up in the ranks.
Looking at the deep structural problems the Dems have, it is clear they have some major reorganizing to do if they want to start winning elections. The Republicans actually have a 50 state plan. They appear to know how to strategize better than their opponents. That's why they have so many governorships and majorities in so many state congresses.
Can't find the article just now, but another problem the Dems have is that the leadership refuses to listen to the red state democrats as to how to win more elections in red states. The arrogance combined with the ineffectiveness of thy Dem leadership never cease to amaze me.
Howard Dean was right (though maybe not the right person for the job) but the party refused to listen to him. Just look at the people who have headed the Democratic party in recent years. In addition, the base has been rendered impotent by the top down authoritarian propagandist fashion by which the Democrat party runs itself now. [Note: I refuse to call them the Democratic party anymore because they aren't.] After all, the Dems are just as much of the plutocratic oligarchy as the Repubs are.
I wish I dared tell my friends (all liberal Dems) that if they took even 50% of the time & energy now spent on hating Trump and put that into improving their party or into volunteering for a cause they care about and can have some impact on, then they might be able to make the world a tiny bit better of a place. One friend did this on her own. She lives in Florida and decided to take up some local Dem issues like getting ex-felons the right to vote. She goes out in grass roots fashion and gets signatures, etc., despite having a 50+ hour a week job.outthere
I am happy that you mean no ill will to me for being an investor. I have always been that while trying to emulate Robert Edward Lee who always required his wealthy wife to live on his army pay and still save money. We rode out the the great wall street disaster with steadfast hearts and would do so again. Do you have a treasure chest full of Golden Grickels buried somewhere? BTW Qathafy had no nuclear weapons program. What he had was a quiescent chemical weapons program with his two plants shut down and a warehouse or two full of still crated equipment that would have been useful in a nuke weapons program if the Libyans had known what to do with it. GWB Bush and his clowns built the image of that up, used him as an example of how well things could go if you surrendered to the US and then the US betrayed him. I loathed Qathafy. pl
Jan 05, 2018 | oilprice.com
In other words, investors are bidding up prices even as the underlying fundamentals point to questions regarding the balancing process. Oil might push higher as inventories fall, but in the near-term there is downside risk to prices. Moody's Investors Service said on January 2 that oil prices will probably bounce around in a range between $40 and $60 per barrel for much of this year.
The risk is that with so much money currently going long, a bit of negative news sparks a sudden selloff. "The expectation is that the rebalance will continue," Gene McGillian, a market research manager at Tradition Energy, told Bloomberg. "We've approached an area where we really need to see a steady diet of positive information."
Jan 05, 2018 | www.unz.com
Trump's campaign to return manufacturing to America and repatriate profits held overseas makes good business sense. The ravaging of America's once mighty industrial base to boost corporate profits was a crime against the nation by unscrupulous Wall Street bankers and short-sighted, greedy CEO's.
The basis of industrial power is the ability to make products people use. Shockingly, US manufacturing has shrunk to only 14% of GDP. Today, America's primary business has become finance, the largely non-productive act of paper-passing that only benefits a tiny big city parasitic elite.
Trump_vs_deep_state is a natural reaction to the self-destruction of America's industrial base. But the president's mania to wreck international trade agreements and impose tariff barriers will result in diminishing America's economic and political influence around the globe.
Access to America's markets is in certain ways a more powerful political tool than deployment of US forces around the globe. Lessening access to the US markets will inevitably have negative repercussions on US exports.
Trump has been on a rampage to undo almost every positive initiative undertaken by the Obama administration, even though many earned the US applause and respect around the civilized world. The president has made trade agreements a prime target. He has targeted trade pacts involving Mexico, Canada, the EU, Japan, China and a host of other nations by claiming they are unfair to American workers. However, a degree of wage unfairness is the price Washington must pay for bringing lower-cost nations into America's economic orbit.
This month, the Trump administration threatened new restrictions against 120 US trade partners who may now face much higher tariffs on their exports to the US.
Trump is in a hurry because he fears he may not be re-elected. He is trying to eradicate all vestiges of the Obama presidency with the ruthlessness and ferocity of Stalinist officials eradicating every trace of liquidated commissars, even from official photos. America now faces its own era of purges as an uneasy world watches.
Jan 05, 2017 | economistsview.typepad.comPeter K. : January 05, 2017 at 07:42 AM , 2017 at 07:42 AM...It's hilarious how cocky and confident the neoliberals were throughout the election. It's amazing how wrong they were. Trump's victory is almost worth it.
Friday, February 26, 2016
by Common Dreams
"We Are Not Denmark": Hillary Clinton and Liberal American Exceptionalism
by Matthew Stanley
Several months removed, it now seems clear that the Democratic debate on October 13 contained an illuminating moment that has come to embody the 2016 Democratic Primary and the key differences between its two candidates. Confronting Bernie Sanders's insistence that the United States has much to learn from more socialized nations, particularly the Nordic Model, Hillary Clinton was direct: "I love Denmark. But we are not Denmark. We are the United States of America."
The implication behind this statement-the reasoning that ideas and institutions (in this case social and economic programs) that are successful in other nations are somehow practically or ideologically inconsistent with Americans and American principles-speaks to a longstanding sociopolitical framework that has justified everything from continental expansion to the Iraq War: American exceptionalism. Rooted in writings of Alexis de Tocqueville and the mythology of John Winthrop's "City Upon a Hill," the notion that the history and mission of the United States and the superiority of its political and economic traditions makes it impervious to same the forces that influence other peoples has coursed through Abraham Lincoln's "Gettysburg Address," the Cold War rhetoric of John F. Kennedy and Lyndon Johnson, and the foreign policy declarations of Barack Obama.
Despite particular historical trends-early and relatively stable political democracy, birthright citizenship, the absence of a feudal tradition, the relative weakness of class consciousness-historians have critiqued this "American exceptionalism" as far more fictive than physical, frequently citing the concept as a form of state mythology. Although different histories lead naturally to historical and perhaps even structural dissimilarities, America's twenty-first century "exceptions" appear as dubious distinctions: gun violence, carbon emissions, mass incarceration, wealth inequality, racial disparities, capital punishment, child poverty, and military spending.
Yet even at a time when American exceptionalism has never been more challenged both by empirically-validated social and economic data and in public conversation, the concept continues to play an elemental role in our two-party political discourse. The Republican Party is, of course, awash with spurious, almost comically stupid dialogue about a mythic American past-"making America great again"-the racial and ethnic undertones of which are unmistakable. Those same Republicans have lambasted Obama and other high profile Democrats for not believing sufficiently in their brand of innate, transhistoric American supremacy.
But this Americentrism is not the sole province of the GOP. We need look no further than bipartisan support for the military-industrial complex and the surveillance state to see that national exceptionalism, and its explicit double-standard toward other nations, resides comfortably within the Democratic Party as well. Russian President Vladimir Putin and Ecuadorean President Rafael Correa censured Obama's use of the term in the fall of 2013, with the latter likening it to the "chosen race" theories of Nazi Germany. Hyperbole notwithstanding, academics often do associate American exceptionalism with military conquest.
It does, after all, have deep roots in the Manifest Destiny ethos that spurred the Mexican War, drove continental and trans-Pacific expansion, and emerged as a paternalistic justification for voluminous military interventions in Latin America, Africa, and the Middle East. As Dick Cheney suggests, "the world needs a powerful America." In this unilateral missionizing zeal Clinton proves most typical. As historian Michael Kazin argues in a recent piece for The Nation: "Hillary Clinton is best described as a liberal. Like every liberal president (and most failed Democratic nominees) since Wilson, she wants the United States to be the dominant power in the world, so she doesn't question the massive sums spent on the military and on the other branches of the national-security state. "
But Clinton's brand of American exceptionalism goes beyond the issue of American military dominion and into the policy potentials of mid-century social liberalism and, more specifically, the neoliberalism that has since replaced it. Indeed, since George McGovern's failed presidential bid of 1972, neoliberals, moving decidedly rightward on economic issues, have consistently employed exceptionalist code to fight off movements, ideas, and challengers from the left.
The victims include leftist efforts toward both American demilitarization and the expansion of a "socialistic" welfare state. Socialist feminist Liza Featherstone and others have denounced Clinton's uncritical praise of the "opportunity" and "freedom" of American capitalism vis-à-vis other developed nations. "With this bit of frankness," Featherstone explains, referring to the former Secretary of State's "Denmark" comments, "Clinton helpfully explained why no socialist-indeed, no non-millionaire-should support her.
She is smart enough to know that women in the United States endure far more poverty, unemployment, and food insecurity than women in Denmark-yet she shamelessly made clear that she was happy to keep it that way." Indeed, Clinton's denunciation of the idea that the United States should look more like Denmark betrayed one of the glaring the fault lines within the Democratic Party, and between Clintonian liberalism and Sandersite leftism. It also revealed a more clandestine strain of American exceptionalism common among liberals and the Democratic Party elite in which "opportunity" serves as a stand-in for wider egalitarian reform. As Elizabeth Bruenig highlighted in The New Republic: "Since getting ahead on one's own grit is such a key part of the American narrative, it's easy to see how voters might be attracted to Clinton's opportunity-based answer to our social and economic woes, though it leaves the problem of inequality vastly under-addressed. Indeed, a kind of American exceptionalism does seem to underpin much opportunity-focused political rhetoric."
This preference for insider politics (rather than mass movements involving direct action) and limited, means-tested social programs speaks to a broader truth about modern liberalism: it functions in a way that not only doesn't challenge the basic tenets of American exceptionalism, it often reinforces them. Whether vindicating war and torture and civil liberties violations, talking past the War on Drugs and the carceral state, or exhibiting coolness toward the type of popular protest seen during of Occupy Wall Street, with its direct attacks on a sort of American Sonderweg, establishment Democrats are adept at using a more "realistic" brand of Americentrism to consolidate power and anchor the party in the status quo. Now the 2016 Democratic Primary has seen progressive ideas including universal health care, tuition-free college, and a living minimum wage, all hallmarks of large swaths of the rest of the developed world, delegitimized through some mutation of liberal exceptionalist thinking. These broadminded reforms are apparently off limits, not because they are not good ideas (though opponents make that appraisal too), but because somehow their unachievability is exceptional to the United States.
All this is not to exclude (despite his "democratic socialist" professions) Sanders's own milder brand of "America first," most evident in his economic nationalism, but to emphasize that American exceptionalism and the logical and practical dangers it poses exist in degrees across a spectrum of American politics. Whatever his nationalistic inclinations, Sanders's constant reiteration of America's need to learn from and adapt to the social, economic, and political models of other nations demonstrates an ethno-flexibility rarely seen in American major party politics. "Every other major country " might as well be his official campaign slogan. This bilateral outlook does not fit nearly as neatly within Clinton's traditional liberal paradigm that, from defenses of American war and empire to the, uses American exceptionalism tactically, dismissing its conservative adherents as nationalist overkill yet quietly exploiting the theory when politically or personally expeditious.
In looking beyond our national shores and domestic origin-sources for fresh and functional policy, Sanders seems to grasp that, from the so-called "foreign influences" of the Republican free soil program or Robert La Follette's Wisconsin Idea or even Lyndon Johnson's Great Society, American high politics have been at their most morally creative and sweepingly influential not only when swayed by direct action and mass movements, but also when they are less impeded by the constraints of ethnocentrism and exceptionalism. The "We are not Denmark" sentiment might appear benign, lacking as it does the bluster of Republican claims to national supremacy and imaginary "golden age" pasts and what economist Thomas Picketty has termed a "mythical capitalism." But it is the "seriousness" and very gentility of liberal Americentrism that underscores the power, omnipresence, and intellectual poverty of cultural dismissal. "I still believe in American exceptionalism," Clinton has proclaimed in pushing for U.S. military escalation in Syria. Indeed she does, and it is by no means relegated to the sphere of foreign policy.
Jan 01, 2018 | www.zerohedge.com
Government nee Dec 31, 2017 10:19 AM
Trump's "tax cuts" are going to accelerate the deficit spending trend that Obama (and Bush before him) initiated. The Fed's machinations over the last 100+ years are utterly irrelevant because all of them are in fact driven by Congress. The Fed is a creature that operates at the behest of Congress, as a creation of Congress, and every single dollar it has "printed" it has "printed" because Congress spent money it did not have.
In other words, Congress ran a deficit.
The Fed has its share of detractors and I'm among them. But those who refuse to place responsibility where it belongs are fraud-running jackasses, and while I'm happy to try to educate folks those who refuse to learn and cling to that which is trivially disproved mathematically wind up on my "ignore" list.
The bottom line: It is Congress, which is elected by you, that has destroyed the purchasing power of the currency and enabled all of the fraud and force in our economy today.
Trump has now publicly acknowledged that McCabe violated several federal laws, not the least of which is the Hatch Act. Yet he now proposes to allow McCabe to retire next year, keeping his federal pension and benefits.
Not only that but Congress has that evidence now too -- but note that the House Judiciary Committee is not issuing a single word about the fact that such actions are violations of several federal laws.
What Trump should do is have Sessions immediately indict him - after firing McCabe for cause, which terminates his right to any sort of federal pension or benefit. If McCabe wants to sue for his pension let him, because that will force into the public record all of the evidence on exactly what he did as he will have to defend the claim that his firing "for cause" wasn't actually for cause.
Good luck with that.
But Trump isn't going to do that. Instead he's going to let McCabe walk off with your money America. Money he will steal from you for the rest of his life after having taken actions that, the President has good reason to believe, were felony violations of the law and abuses of his office, effectively using the FBI as a political weapon in a Presidential contest.
Oct 01, 2002 | www.unz.com
Asked to name the defining attributes of the America we wish to become, many liberals would answer that we must realize our manifest destiny since 1776, by becoming more equal, more diverse and more democratic -- and the model for mankind's future.
Equality, diversity, democracy -- this is the holy trinity of the post-Christian secular state at whose altars Liberal Man worships.
But the congregation worshiping these gods is shrinking. And even Europe seems to be rejecting what America has on offer.
In a retreat from diversity, Catalonia just voted to separate from Spain. The Basque and Galician peoples of Spain are following the Catalan secession crisis with great interest.
The right-wing People's Party and far-right Freedom Party just swept 60 percent of Austria's vote, delivering the nation to 31-year-old Sebastian Kurz, whose anti-immigrant platform was plagiarized from the Freedom Party. Summarized it is: Austria for the Austrians!
Lombardy, whose capital is Milan, and Veneto will vote Sunday for greater autonomy from Rome.
South Tyrol (Alto Adige), severed from Austria and ceded to Italy at Versailles, written off by Hitler to appease Mussolini after his Anschluss, is astir anew with secessionism. Even the Sicilians are talking of separation.
By Sunday, the Czech Republic may have a new leader, billionaire Andrej Babis. Writes The Washington Post, Babis "makes a sport of attacking the European Union and says NATO's mission is outdated."
Platform Promise: Keep the Muslim masses out of the motherland.
To ethnonationalists, their countrymen are not equal to all others, but superior in rights. Many may nod at Thomas Jefferson's line that "All men are created equal," but they no more practice that in their own nations than did Jefferson in his
... ... ...
European peoples and parties are today using democratic means to achieve "illiberal" ends. And it is hard to see what halts the drift away from liberal democracy toward the restrictive right. For in virtually every nation, there is a major party in opposition, or a party in power, that holds deeply nationalist views.
European elites may denounce these new parties as "illiberal" or fascist, but it is becoming apparent that it may be liberalism itself that belongs to yesterday. For more and more Europeans see the invasion of the continent along the routes whence the invaders came centuries ago, not as a manageable problem but an existential crisis.
To many Europeans, it portends an irreversible alteration in the character of the countries their grandchildren will inherit, and possibly an end to their civilization. And they are not going to be deterred from voting their fears by being called names that long ago lost their toxicity from overuse.
And as Europeans decline to celebrate the racial, ethnic, creedal and cultural diversity extolled by American elites, they also seem to reject the idea that foreigners should be treated equally in nations created for their own kind.
Europeans seem to admire more, and model their nations more, along the lines of the less diverse America of the Eisenhower era, than on the polyglot America of 2017.
And Europe seems to be moving toward immigration polices more like the McCarran-Walter Act of 1950 than the open borders bill that Sen. Edward Kennedy shepherded through the Senate in 1965.
Kennedy promised that the racial and ethnic composition of the America of the 1960s would not be overturned, and he questioned the morality and motives of any who implied that it would.Jason Liu , October 20, 2017 at 12:02 pm GMTYes. Fuck yes.TG , October 20, 2017 at 1:10 pm GMT
Liberalism is the naivete of 18th century elites, no different than today. Modernity as you know it is unsustainable, mostly because equality isn't real, identity has value for most humans, pluralism is by definition fractious, and deep down most people wish to follow a wise strongman leader who represents their interests first and not a vague set of universalist values.
Blind devotion to liberal democracy is another one of those times when white people take an abstract concept to weird extremes. It is short-sighted and autistically narrow minded. Just because you have an oppressive king doesn't mean everyone should be equals. Just because there was slavery/genocide doesn't mean diversity is good.
The retreat of [neo]liberalism is very visible in Asia. All Southeast Asian states have turned their backs on liberal democracy, especially Indonesia, the Philippines and Myanmar in the last decade. This NYT article notes that liberalism has essentially died in Japan, and that all political contests are now between what the west would consider conservatives: https://www.nytimes.com/2017/10/15/opinion/liberalism-japan-election.html
Good riddance. The idea that egalitarianism is more advanced than hierarchy has always been false, and flies against the long arc of history. Time for nationalists around the world to smash liberal democracy and build a new modernity based on actual humanism, with respect to hierarchies and the primacy of majorities instead of guilt and pathological compassion dressed up as political ideology."Liberalism" is not dying. "Liberalism" is dead, and has been since at least 1970.Paul's Ghost , October 20, 2017 at 6:08 pm GMT
What is today called "Liberalism" and "Conservatism" both are simply corrupted labels applied to the same top-down corporate-fascistic elite rule that I think Mr. Buchanan once referred to as "two wings of the same bird of prey."
Nobody at the top cares about 'diversity.' They care about the easy profits that come from ever cheaper labor. 'Diversity' is not suicide but rather murder: instigated by a small number of very powerful people who have decided that the long-term health of their nations and civilization is less important than short-term profits and power.Its been dead for nearly 20 years now. Liberalism has long been the Monty Python parrot nailed to its perch. At this point, the term is mainly kept alive in right-wing attacks by people who lack the imagination to change their habitual targets for so long.Miro23 , October 20, 2017 at 6:17 pm GMT
To my eye, the last 'liberal' politician died in a susupicious plane crash in 2000 as the Bush Republicans were taking the White House by their famous 5-4 vote/coup and also needed to claim control of the Senate. So, the last authentic 'liberal' Senator, Paul Wellstone of MN was killed in a suspicious plane crash that was never properly explained.
Hillary and Obama are to the right of the President that Buchanan served in his White House. Richard Nixon was to the Left of both Hillary and Obama. I can't even imagine Hillary accepting and signing into law a 'Clean Water Act' or enacting Price Controls to fight inflation. No way. Heck would freeze over before Hillary would do something so against her Banker Backers.
And, at the root, that is the key. The 'Liberals' that the right now rails against are strongly backed and supported by the Wall Street Banks and other corporate leaders. The 'Liberals' have pushed for a government Of the Bankers, By the Bankers and For the Bankers. The 'Liberals' now are in favor of Endless Unconstitutional War around the world.
Which can only mean that the term 'Liberal' has been so completely morphed away from its original meanings to be completely worthless.
The last true Liberal in American politics was Paul Wellstone. And even by the time he died for his sins, he was calling himself a "progressive" because after the Clintons and the Gores had so distorted the term Liberal it was meaningless. Or it had come to mean a society ruled by bankers, a society at constant war and throwing money constantly at a gigantic war machine, a society of censorship where the government needed to control all music lyrics, the same corrupt government where money could by anything from a night in the Lincoln Bedroom to a Presidential Pardon or any other government favor.
Thus, 'Liberals' were a dead movement even by 2000, when the people who actually believed in the American People over the profits of bankers were calling themselves Progressives in disgust at the misuse of the term Liberal. And now, Obama and Hillary have trashed and distorted even the term Progressive into bombing the world 365 days a year and still constantly throwing money at the military machine and the problems it invents.
So, Liberalism is so long dead that if you exumed the grave you'd only find dust. And Pat must be getting senile and just throwing back out the same lines he once wrote as a speechwriter for the last Great Lefty President Richard Nixon.reiner Tor , October 20, 2017 at 6:39 pm GMT
Is Liberalism a Dying Faith?
Another question is whether this is wishful thinking from Pat or some kind of reality.
I think that he's right, that Liberalism is a dying faith, and it's interesting to check the decline.
It's sure that financial (neo)liberalism was in a growth phase prior to year 2000 (under Greenspan, the "Maestro") with a general belief that the economy could be "fine tuned" with risk eliminated using sophisticated financial instruments, monetary policy etc.
If [neo] Liberalism is a package, then two heavy financial blows that shook the whole foundation were the collapse of the dot.com bubble (2000) and the mortgage bubble (2008).
And, other (self-serving) neoliberal stories are now seen as false. For example, that the US is an "advanced post-industrial service economy", that out-sourcing would "free up Americans for higher skilled/higher wage employment" or that "the US would always gain from tariff free trade".
In fact, the borderless global "world is flat" dogma is now seen as enabling a rootless hyper-rich global elite to draw on a sea of globalized serf labour with little or no identity, while their media and SWJ activists operate a scorched earth defense against any sign of opposition.
The basic divide is surely Nationalism (America First) vs. Globalism (Neo-Liberalism), as shown by the last US Presidential election.@RandalVerymuchalive , October 20, 2017 at 10:10 pm GMT
A useful analogy might be Viktor Orbán. He started out as a leader of a liberal party, Fidesz, but then over time started moving to the right. It is often speculated that he started it for cynical reasons, like seeing how the right was divided and that there was essentially a vacuum there for a strong conservative party, but there's little doubt he totally internalized it. There's also little doubt (and at the time he and a lot of his fellow party leaders talked about it a lot) that as he (they) started a family and having children, they started to realize how conservatism kinda made more sense than liberalism.
With Kurz, there's the possibility for this path. However, he'd need to start a family soon for that to happen. At that age Orbán was already married with children@Paul's GhostKenH , October 21, 2017 at 1:51 pm GMT
Liberalism ( large L) is indeed long dead.
Neoliberalism, of which the Clintons are acolytes, supports Free Trade and Open Borders. Although it claims to support World Government, in actual fact it supports corporatism. This is explicit in the TPPA Trump vetoed. Under the corporate state, the state controls the corporations, as Don Benito did in Italy. Under corporatism, the corporations tell the state what to do, as has been the case in America since at least the Clinton Presidency.
Richard Nixon was a capitalist, not a corporatist. He was a supporter of proper competition laws, unlike any President since Clinton. Socially, he was interventionist, though this may have been to lessen criticism of his Vietnam policies. Anyway, his bussing and desegregation policies were a long-term failure.
Price Control was quickly dropped, as it was in other Western countries. Long term Price Control, as in present day Venezuela, is economically disastrous.Let's hope liberalism is a dying faith and that is passes from the Western world. If not it will destroy the West, so if it doesn't die a natural death then we must euthanize it. For the evidence is in and it has begat feminism, anti-white racism, demographic winter, mass third world immigration and everything else that ails the West and has made it the sick and dying man of the world.
But I recall that Pat B also said neoconservatism was on its way out a few years after Iraq war II and yet it's stronger than ever and its adherents are firmly ensconced in the joint chiefs of staff, the pentagon, Congress and the White House. It's also spawned a close cousin in liberal interventionism.
What Pat refers to as "liberalism" is now left wing totalitarianism and anti-white hatred and it's fanatically trying to remain relevant by lashing out and blacklisting, deplatforming, demonetizing, and physically assaulting all of its enemies on the right who are gaining strength much to their chagrin. They resort to these methods because they can't win an honest debate and in a true free marketplace of ideas they lose.
Dec 28, 2017 | extranewsfeed.com
Working Class w/ No Living Wage: The Absurd Math of US Income
As the stock market gleefully claws its way to more record-breaking highs, Forbes reports a full 56% of US Americans now have less than $1,000 to their names -- and 25% have less than $100 . But the economy, as they say, is booming. Even with 165 million on the breadline and an hourly minimum wage of only $7.25 nationally, surging Amazon share prices have added $13 billion to Jeff Bezos' net-worth since mid-September. For perspective, $13 billion is enough to pay the student-loan debts of 432,000 millennials. It's also plenty to end world hunger for a year, according to the International Institute for Sustainable Development . And Bezos -- now the world's richest man -- smashes a bottle of organic champagne to celebrate his new wind-farm. The question is -- how do markets grow as the wealth of the people shrinks and wages fall? What do the commentariat mean by "economic growth" when the nation's income can hardly keep half of its people's heads above water?The National Income:
How Much Value is Created by the US Economy?
There are a lot of ways to measure economies -- for example, gross domestic product or GDP is the value of everything a country produces ( minus the cost to produce it ) and the employment-rate measures the number of paying jobs. The gross national income or GNI is what you get after adding up all of the income earned by everyone. GNI includes every citizen ( even in other countries ) and every kind of income from wages or salaries to social security and unemployment benefits, investment returns, or the sale of assets like houses and cars.
GNI is basically the total value of all money paid to everyone, minus the expenses of doing the business everyone is getting paid for. According to the macroeconomic accounts on the Federal Reserve's website, the GNI was about $18.7 trillion dollars in 2016 for the US.Gross National Wages:
Every Paycheck Combined
Now, how much of America's multi-trillion-dollar paycheck ends up in the pockets of people who work in the US? Since the "gross national wage" is apparently not as important to US media-outlets as Jeff Bezos' latest earnings or the many triumphs of the Dow Jones, this number is a bit more camouflaged. Luckily, the total number who are employed by all industries and their average wages or salaries can be found in the bowels of the Bureau of Labor Statistics' website. Multiplying these two numbers -- the total employed by all industries and their mean-average yearly wages -- gives the combined wages and salaries of everyone with a job in the US, from the clerks and mechanics to the brain-surgeons and corporate executives.(total employed) × (mean-average wages per-year) =
140,400,040 × $49,630 = $6,968,053,985,200 or ~$7 trillion
$7 trillion dollars to split between all employed people in the United States. Everyone who built everything and provided every service -- managers, janitors, lawyers, nurses, librarians, bartenders, and everyone else who had a job in 2016 -- collectively earned about $7 trillion of the $18.7 trillion national paycheck.
But who gets the remaining $11,781,946,014,800?Federal Benefits & Social Welfare
The national income also includes money received from government benefits, such as disability, retirement, and social security. The Bureau of Labor Statistics lists the 2016 total federal benefits received at $2.0393 trillion.Total US Income = $18,750,000,000,000
Combined Wages & Salaries of All Employed Folks = $6,968,053,985,200
Income from Federal Social Benefits = $2,039,300,000,000Total Income - (Wages & Salaries + Benefits) = $9,763,546,014,800
And about $9.8 trillion is still missing.Literally All Working People Combined
Earn Less Than Half of American Income
According to the BLS data, there are an estimated 146 million people who hold some sort of job in the US. These 146 million workers create every commodity , serve every meal , harvest every last grain , empty every waste bin , teach every student , build every house , and pour milk into every single cappuccino in the nation. And together they take about 37.2% of the American pie. All of the so-called "handouts" from the federal government -- social security, retirement, disability, and other benefits -- only amount to another 10.8% of the GNI.
The combined income from all employment and federal benefits still only adds up to 48% of America's paycheck. And that means that the other 52% must be paid to someone -- or some thing -- without a job.Unearned Income: Landlords, Industrial Capitalists, & Wall Street Investors
Property income -- or, as the classical economists knew it, unearned income -- is earned through ownership ( rather than wages , which are earned by time spent working ). There are three basic types of unearned income. Rent is paid to owners of land or other natural resources, profit is paid to owners of capital ( like factories, equipment, machines, etc. ), and interest is paid to owners of financial assets ( like stocks, securities, debt, etc. ). The $13 billion Jeff Bezos made when Amazon share prices increased, for example, was "earned" by owning something rather than creating something or providing some service.
This type of income is a bit harder to keep track of -- especially considering that the wealthy seem to be in the habit of using offshore tax-havens and shell companies ( like those revealed in the Panama and Paradise Papers ) to stash their fortunes. With that being said, the US Department of Commerce's accounts show nearly $7 trillion -- or about the same as 146 million working people made combined -- paid out for interest, rent, and corporate profits . Another trillion and a half or so was paid to "proprietors" or, more colloquially, the owners.
And now we have a rough sketch of the great American paycheck: Are Workers Worthy of Their Wages?
Not in the United States of America!
There are two basic components to the whole economic activity and wealth of human civilization -- capital and labor . On one hand there is capital -- all of the natural resources, materials, lands, machines, and everything that everything is made of and made with -- and, on the other hand, there are the countless workers whose labor-power transforms that stuff into the societies we live in.
Without the time, energy, creativity, and sacrifices made by the 146 million human beings who make everything and offer every service, the wealth of people like Jeff Bezos would not exist. Business magnates like Jeff Bezos, Warren Buffet, and Bill Gates need working classes -- working classes do not need them . And yet Bezos, Buffet, and Gates now possess more wealth than the bottom 50% of the nation combined. Through the prism of the American economy, people like Bezos, Buffet, and Gates are just as valuable as the poorest 160 million of the working classes who collectively labor billions of hours each week.
And that is unfair -- that doesn't add up. The "American Dream" -- the whole idea about how anyone willing to work hard should be able to prosper or, at the very least, make ends meet -- is objectively untrue . The truth is -- if you want to earn wealth in the US or even if you only want to earn enough to pay the bills on time -- honest work is not a very good strategy.
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Extra NewsfeedMore on Bernie Sanders from Extra Newsfeed The Day the Russians made Donna Brazile expose Hillary Clinton & the Democratic Party CharliePeach🍑 Related reads 7 Effective Communication Techniques That Will Make You Excellent Karim Elsheikh Also tagged Politics Don't Count America Out John McCain Responses Conversation between Martha Menard, PhD and John Laurits . Martha Menard, PhD Dec 6
the same political rants you see on Facebook, but they're well written.
Interesting article, John. I work for a financial tech company that provides personal financial planning to employees as part of their benefits package. A lot of people are struggling -- about 80% of Americans live paycheck to paycheck, 50% of people can't handle a $500 unexpected expense without putting it on a credit card, and about 33% have saved1 response John Laurits Dec 6
Yes! Thank you for mentioning unpaid domestic labor, as well as the roles that racism and patriarchy play in the awful saga of inequality -- these are more than crucial to any real class analysis. My biggest regret about this article is that I was unable to include a discussion of unpaid domestic labor and how it contributes to the greater picture ofConversation with John Laurits . LaMar Going Nov 30
I am weary of half-truths, lies and ignorance from writers like this.3 responses John Laurits Nov 30
1. False dichotomy. Option C: In the haste of your search for some technicality to use in your attempt at attacking the article's credibility, you did not consider that the second half of my casual description of GDP as "value of everything a country produces minus the cost to produce it" refers to the exclusion of the value of intermediate goods2 responses Conversation between Joshua Shepard and John Laurits . Joshua Shepard Dec 1
Great breakdown! This is something I could see myself busting out with some investigative reporting. You took the macro budget and broke it down into the major segments and the makeup of each segment -- wouldn't it be a great college project to have students across the country further breakdown each segment, using tools to find the inefficiencies? We1 response John Laurits Dec 7
Hi! Thanks & I'm glad you found the article useful :)
In response to your question about what I think about using tech to hold them accountable, I say -- : I'm all about it! In my humble (yet frequently accurate) opinion, one of Marx's most important insights about how revolutionary change occurs was his description of newConversation between Joe Psotka and John Laurits . Joe Psotka Dec 5
I would like to see how this comparison of GNI into capital and wages has changed historically, and how it might continue to change with automation overwhelming us.
However, I can't agree completely that the capitalists do nothing to merit their work. They too should be paid wages, just not the obscene one that they get now1 response John Laurits Dec 5
I'll be writing about automation and the US workweek in my next post :) And to clarify my position -- as a Marxist libertarian-socialist, I have zero problems with the idea of people accumulating wealth created by their own efforts/labor (which I'd roughly define as the sacrifice of a person's time to create value). When Bezos or any human being1 response Applause from John Laurits (author) Allyson Saad Nov 29
Substantive piece.Applause from John Laurits (author) Elsie Brown Dec 6 interest is paid to owners of financial assets ( like stocks, securities, debt, etc. ). The $13 billion Jeff Bezos made when Amazon share prices increased, for example, was "earned" ...
Those who own enough money get paid just for holding onto it. That seems deeply wrong. If money could decay in some way no one would hoard it. You'd rather have someone owe you $100 than have $100 in your pocket.3 responses Conversation with John Laurits . Regina Bash-Taqi Dec 6
Good information but I don't agree with your description of 'honest' work. The world is changing, so we all need to change with it. There will always be people who are ahead of the curve such as Gates, Bezos and Buffet, but I believe if all of us change our game -- we'll get our share and things will shift.1 response John Laurits Dec 6
So your solution is for the vast majority of the world's population, the working poor, to just 'change [their] game?'Applause from John Laurits (author) alex carter Dec 2
Great article. This is boiling up to some kind of a head.
In other words, Got Guillotine?Conversation with John Laurits . Rod Ruger Dec 6
If someone has an idea for a product or service and employs members of the working class to implement that idea, what portion of the resulting income does the dude with the idea get? No ideas/innovation means a stone age existence.1 response John Laurits Dec 6
Intellectual labor is totally a thing and people ought to be paid for doing that as well -- and I'm curious as to which part of the post led you to think I might advocate withholding compensation from creatives, inventors, or idea-people? The BLS statistics I use in the post include everyone who sacrifices time from the 24 hours they all have each dayConversation with John Laurits . Sceptical Meerkat Dec 9
Why would somebody me pay more for an American worker if one can hire a Mexican illegal immigrant?1 response John Laurits Dec 9
Yeah, I'm sure the economic system will somehow result in a different and better outcome if we can only find a way to oppress the poorer, browner workers a bit more1 response Sceptical Meerkat Dec 9 Yeah, I'm sure the economic system will somehow result in a different and better outcome if we can only find a way to oppress the poorer, browner workers a bit more
Depends better for whom.
The low qualified qualified workers' wages are undercut by competition from cheaper immigrant workers, so they will win if immigration is controlled while would be immigrant will lose.
Just wishful thinking and empty talk about the need to increase wagers from people who don't pay those wages is meaningless.1 response John Laurits Dec 9
Just wishful thinking and empty talk about the need to increase wagers from people who don't pay those wages is meaningless.
Yep, that's what Czar Nicholas II kept thinking, too1 response Conversation with John Laurits . Rick Fischer Dec 9
Mr. Laurits slips a few things past us in all his details. His "worth it" criterion is a valid one, in my opinion. Income from doing something that is of value to society does make the income "worth it". (I'm really over-simplifying here. Try not to search too hard for some exception or other.)1 response John Laurits Dec 9
You wrote:"His descriptions of the red slice, about half the total income, are skimpy, and his examples leave the reader with the vague feeling that that half is not "worth it". Which I surmise is his intent. But it's not entirely true; mostly not true, in fact."
Dec 26, 2017 | angrybearblog.com
A central selling point of the tax bill is that it will encourage investment. But that assumes that high tax rates were the primary reason why business wasn't investing. Instead, the data says business investment is weak because the U.S. has a ton of spare capacity.
First, let's look total capacity utilization: It has peaked at lower levels in each of the last three expansions.
Let's break the data down into durable and non-durable CU:
Both categories of production have ample spare capacity, with non-durable production having greater capacity.
Finally, let's look at crude, intermediate and final stages of production: All three have plenty of spare capacity to bring online if needed.
So, will we see a huge wave of investment as a result of the changed tax bill? The data says no.
rjs , December 22, 2017 11:59 amspencer , December 22, 2017 1:30 pm
adding capacity hasn't been about need for years companies have been adding plant and equipment that they didn't need for years because of incentives included in the code, such as the investment tax credit and accelerated depreciation, so it's really hard to say when that will stop..Lyle , December 22, 2017 11:46 pm
Rather than using the Fed estimate of capacity maybe it would be better to use a trend line for capacity utilization and compare that to reported capacity utilization. I think that would give a more realistic measure of economic slack as the trend line shows a long run trend of slower capacity growth.
The main investment might be made to automate things, replacing expensive human workers with cheaper automatic workers who don't need benefits and an HR department.
Dec 25, 2017 | angrybearblog.com
I am going to make a fool of myself by suggesting that a cryptocurrency might actually be useful. Bitcoin et al have negative social utility. They are pure speculative assets which enable people to gamble. Also bitcoin miners use as much electricity as Denmark. The problem is exactly the aspect which has made bitcoin famous and which bitcoin enthusiasts consider a strength -- the enormous increase in the dollar price of bitcoin. This increase, and the recent sharp decline, make bitcoin useless as a means of exchange. Most firms don't want to gamble.
So I (semi-seriously this time) propose botcoin which might have a more stable dollar exchange rate. The idea is to link the blockchain verification program to an official exchange.
Backing up, there are two very different sorts of web-servers related to bitcoin. One set, the bitcoin miners, implements the original idea using the Bitcoin shareware. They keep a copy of the ledger of all bitcoin transactions -- the blockchain, race to create new blocks, and evaluate new blocks and add valid new blocks to the chain. The other servers are bitcoin exchanges in which bitcoin is traded for regular currency. They are not part of the original plan in which bitcoin would be traded for goods and services and function as a means of exchange. They have behaved badly with an unstable value of bitcoin (huge unpredictable Bitcoin deflation damages any use of bitcoin as a means of exchange as much as huge inflation would).
I propose linking the blockchain program to an exchange. So there would be an official botcoin exchange (this means it isn't entirely free-entry shareware libertarian anarchism). If anyone were interested in a new cryptocurrency designed so that speculators can't become rich (and pigs fly) there would be other unofficial exchanges.
The bitcoin program regulates the frequency of creation of new blocks to roughly one every six minutes. It does this by adjusting the difficulty of the pointless arithmetic problem which must be solved to make a new valid block. The idea was to limit the total amount of bitcoin which will ever be created (to 21 million for some reason). This was supposed to make bitcoin valuable. So far it has succeeded all too well (I am confident that in the end bitcoin will have price 0).
It is possible to make the supply of botcoin flexible so the dollar price doesn't shoot up. I would aim at a price of, say, 1 botcoin = $1000. The idea is to make the pointless problem which must be solved to add a block easier if the dollar price of botcoin exceeds the target, and harder if it falls below the target. This should stabilize the price.
Now no one is really interested in cryptocurrency except as a way to gamble and take money from fools. But if anyone were, linking the blockchain program to prices on an exchange would make it more nearly possible to use the cryptocurrency as a means of exchange.
The system is vulnerable to a tacit agreement to trade only on unofficial exchanges. It is necessary that the problem is also made easier if daily trading volume on the official exchange is zero. The problem is the price could shoot up on unofficial exchanges, but this would not affect the price on the official exchange if there were no transactions on the official exchange.
Lyle , December 25, 2017 11:22 pmLongtooth , December 26, 2017 5:01 am
Of course Goldman Sachs and its competitors are doing just this building an options and futures exchange. (it is not really that much different than any other futures and options business)likbez , December 26, 2017 5:27 am
then the entire foundation for Bitcoin's purpose disappears entirely, so what advantage remains?
The basis was and remains to remove any and all national gov'ts across he globe from any influences on values of currencies, thus pure laissez-faire in the extreme .. as you say libertarian chaos.
By making crypto-currency values subject to national currency exchange rates they cease to have any reason to exist at all.
We / globally in fact already use crypto exchange via electronic transactions .. adding block chain to it would be a benefit but a separate cryptocurrency is a worthless redundancy if it is subject to valuation by exchange rates of national currencies.
What am I missing?.rick shapiro , December 26, 2017 10:26 am
Great Article !!! I wish I can write about this topic on the same level. Thank you very much. P.S. Happy New Year for everybody !
There is a much more severe problem with bitcoin. As the number mined asymptotically approaches the pre-determined maximum, the cost of mining approaches infinity. As miners are the ones who validate coins, what will happen to the reliability of bitcoin when it becomes uneconomical for anyone to participate in mining?
Apr 28, 2017 | economistsview.typepad.comXXX, April 28, 2017 at 06:29 PMSanjait,
"Hillary Clinton, following a long tradition of mainstream Democrats, had a grab bag of proposals that, if enacted, would collectively make a huge difference in the lives of working people. "
I think you are wrong here.
Hillary was/is a neoliberal, and as such is hostile to the interests of working people and middle class in general. Like most neoliberals she is a Machiavellian elitist. Her election promises are pure demagogy, much like Trump or Obama election promised (immortalized in the slogan "change we can believe in" which now became the synonym of election fraud)
Also she was/is hell-bent of preserving/expanding the US neoliberal empire and the wars for neoliberal dominance (in ME mainly for the benefit of Israel and Saudis). War are pretty costly ventures and they are financed at the expense of working class and lower middle class, never at the expense of "fat cats" from Wall Street.
All-in-all I think the role of POTUS is greatly "misunderestimated" in your line of thinking. As we can see differences between Trump and Hillary in foreign policy are marginal. Why are you assuming that the differences in domestic economic policies would be greater ?
In reality there are other powerful factors in play that diminish the importance of POTUS:
- The US Presidential Elections are no longer an instrument for change. They are completely corrupted and are mostly of "bread and circuses" type of events, where two gladiators preselected by financial elite fight for the coveted position, using all kind of dirty tricks for US public entertainment.
- While the appearance of democracy remains, in reality the current system represents that rule of "deep state". In the classic form of "National security state". In the National Security State, the US people no longer have the any chances to change the policies.
- Political emasculation of US voters has led to frustration, depression and rage. It feeds radical right movement including neo-fascists, which embrace more extreme remedies to the current problems because they correctly feel that the traditional parties no longer represent the will of the people.
- Insulated and partially degenerated US elite have grown more obtuse and is essentially a hostage for neocons. They chose to ignore the seething anger that lies just below the surface of brainwashed Us electorate.
- The "American Dream" is officially dead. People at a and below lower middle class level see little hope for themselves, their children or the country. The chasm between top 1% (or let's say top 20%) and the rest continues to fuel populist anger.
- While Trump proved to be "yet another turncoat" like Barak Obama (who just got his first silver coin in the form of the $400K one hour speech) Trump's election signify a broad rejection of the country's neoliberal elite, including neoliberal MSM, neocon foreign policy as well as neoliberal economic system (and first of all neoliberal globalization).
- The country foreign policy remains hijacked by neocons (this time in the form of fiends of Paul Wolfowitz among the military brass appointed by Trump to top positions in his administration) and that might spell major conflict or even WWIII.
The level of subservience to neocon agenda in Trump administration might well be higher then in previous administration. And "make America first" was already transformed into "full spectrum dominance" == "America uber alles". http://www.newyorker.com/culture/culture-desk/deutschland-uber-alles-and-america-first-in-song
8. We can now talk about the USA as "neocon occupied country" (NOC), because the neocons policies contradict the USA national interests and put heavy burden of taxpayers, especially in lower income categories. Due to neglect in maintaining infrastructure, in some areas the USA already looks like third word country. Still we finance Israel and several other countries to the tune of $40 billion dollars in military aid alone (that that's in case of Israel just the tip of the iceberg; real figure is probably double of that) https://fas.org/sgp/crs/mideast/RL33222.pdf
Since Bill Clinton POTUS is more or less a marionette of financial oligarchy (which Obama -- as a person without the past (or with a very fuzzy past) - symbolizes all too well).
Dec 24, 2017 | www.unz.com
As we move into 2018, I am swinging away from the Republicans. I don't support the Paul Ryan "Better Way" agenda. I don't support neoliberal economics. I think we have been going in the wrong direction since the 1970s and don't want to continue going down this road.
- Opioid Deaths: As we all know, the opioid epidemic has become a national crisis and the White working class has been hit the hardest by it. It is a "sea of despair" out there.
- White Mortality: As the family crumbles, religion recedes in his life, and his job prospects dwindle, the middle aged White working class man is turning to drugs, alcohol and suicide: The White suicide rate has soared since 2000:
- Median Household Income: The average household in the United States is poorer in 2017 than it was in 1997:
- Real GDP: Since the late 1990s, real GDP and real median household income have parted ways:
- Productivity and Real Wages: Since the 1970s, the minimum wage has parted ways with productivity gains in the US economy:
- Stock Market: Since 2000, the stock market has soared, but 10% of Americans own 80% of stocks. The top 1% owns 38% of stocks. In 2007, 3/4th of middle class households were invested in the stock market, but now only 50% are investors. Overall, 52% of Americans now own stocks, which is down from 65%. The average American has less than $1,000 in their combined checking and savings accounts.
Do you know what this tells me?
It tells me that the bottom line is that Christmas has become a harder season for White families. We are worse off because of BOTH social and economic liberalism which has only benefited an elite few. The bottom half of the White population is now in total disarray – drug addiction, demoralization, divorce, suicide, abortion, atomization, stagnant wages, declining household income and investments – and this dysfunction is creeping up the social ladder. The worst thing we can do is step on the accelerator.
Paul Ryan and his fellow conservatives look at this and conclude we need MORE freedom. We need lower taxes, more free trade, more deregulation, weaker unions, more immigration and less social safety net spending. He wants to follow up tax reform with entitlement reform in 2018. I can't but see how this is going to make an already bad situation for the White working class even worse.
I'm not rightwing in the sense that these people are. I think their policies are harmful to the nation. I don't think they feel any sense of duty and obligation to the working class like we do. They believe in liberal abstractions and make an Ayn Rand fetish out of freedom whereas we feel a sense of solidarity with them grounded in race, ethnicity and culture which tempers class division. We recoil at the evisceration of the social fabric whereas conservatives celebrate this blind march toward plutocracy.
Do the wealthy need to own a greater share of the stock market? Do they need to own a greater share of our national wealth? Do we need to loosen up morals and the labor market? Do we need more White children growing up in financially stressed, broken homes on Christmas? Is the greatest problem facing the nation spending on anti-poverty programs? Paul Ryan and the True Cons think so.
Yeah, I don't think so. I also think it is a good thing right now that we aren't associated with the mainstream Right. In the long run, I bet this will pay off for us. I predict this platform they have been standing on for decades now, which they call the conservative base, is going to implode on them. Donald Trump was only the first sign that Atlas is about to shrug.
(Republished from Occidental Dissent by permission of author or representative)
Dec 23, 2017 | www.theamericanconservative.com
Pavlos December 20, 2017 at 11:08 pmTrump won't get dragged into war, although his conniving nature may try to make it look like that if it serves some ulterior motive of his. Trump will race on his own volition (not get dragged by others) to war because he's already been chomping at the bit for war as evident in how he's been baiting Iran and N. Korea alike, just as Bush baited Saddam Huessein, then bait and switched Osama Bin Laden for Saddam. So if not war with one (Iran), then with the other (N. Korea), or with both.Fran Macadam , says: December 20, 2017 at 11:22 pm
Why? Because like all Republican politicians, Trump's a businessman and proud of it, (Pride goeth before destruction and a haughty spirit before a fall.) And because war is good for American business, a lesson that was learned from WWII from which was created the military-industrial-complex and the Permanent War Economy under which we've lived ever since.
That bit's key to understanding the whole unwavering GOP attack on social services and desire to deregulate and privatize everything, not because of evil "socialism" as the Republican constituency is hypnotized with propaganda into believing, but because there's no money to be made in government expenditures otherwise. The whole GOP agenda has been and is about public expense for private gain. All the blather about shrinking the government is smokescreen. The real agenda is about directing all government spending towards private contractors with none wasted on things like social services, medicare, or Social Security.
Economic aspects of politics can't be ignored and separated from social aspects of politics which is how conservatism in America has helped create the current political mess, by turning a blind eye and dittohead to economic matters in order to push the chosen, preferred social agenda.
As Coolidge said, "The business of America is business." So since the US is ruled by money of markets, there can be no getting one's moral back up and all Jesus over social immorality, only to ignore the immorality of the marketplace and thereby fail to push for a moral economy along with a moral society. Such misidentification of the problem will only result in missing the mark, in inappropriate rather than on the mark effective solutions to problems.
Trump is simply a braggart who likes to exaggerate by talking in superlatives, so it's fitting that Trump ran on the GOP ticket, because he's but another child of the Father of Lies, who superlatively lies about his wealth being billions instead of millions to swell his pride in being a mammon worshipper, and going to war is and will be as it certainly has been part and parcel of such hubris.To be fair, the Saudi dictators have always been best friends with America's elites – think Bandar Bush, the grounding of all air traffic in the United States after 9/11, except the Saudi evacuation planes spiriting Saudi royals out of the country so they could not be questioned. And there is the locus of the Likud Israeli party friendship with the Saudis, and Trump is certainly nothing if not onside with his good friend, the Israeli PM.Fran Macadam , says: December 20, 2017 at 11:40 pmI'd like to believe either the Repubs or Dems were the answer, except both are near unanimous in their support for the military industrial complex and its expanding wars. Note the 98-2 vote to make Russia a permanent enemy. I believe the resistors were bipartisan, lonely as they are in either party, in reality separate branches of an imperial War Party.mohammad , says: December 20, 2017 at 11:50 pmMake no mistake: if there is going to be an attack on Iran by Americans, it is not because MbS wants it, it is because the Americans love war.leonard , says: December 21, 2017 at 12:38 am
I am convinced that most (some 90%) Americans are open or closeted Neo-cons/liberal-interventionists/war-hawks. Some are shamelessly and openly so (John Bolton), but many are so without showing it or even being aware of it. The hawk in them is restlessly waiting for an opening, an excuse, to come out and proclaim what they have ever beenDon't worry, w Captain Marmalade at the helm, the US will mess this all up by itself just like it has again and again and again.Kronsteen1963 , says: December 21, 2017 at 1:04 amBush 41 dragged us into a coalition war over Kuwait. Clinton dragged us into a coalition war in the Balkans. Bush 43 dragged us into a war in Iraq. Obama dragged us into a secret war when he destabilized Syria and Lybia, which unleashed ISIS. All for the right reasons, of course (sarcasm).charles cosimano , says: December 21, 2017 at 1:42 am
You might be right, but I fail to see how that would be different than the last 30 years.Finally.Kronsteen1963 , says: December 21, 2017 at 1:47 am
It should have been done 37 years ago.BTW, Politico has a story about how the Obama Administration shot down DEA drug trafficking investigations of Hezbollah to support the Iran nuclear deal. I would like to read your comments about it, particularly in light of the comments you made above about Trump.Pro ivic , says: December 21, 2017 at 2:57 am
https://www.politico.com/interactives/2017/obama-hezbollah-drug-trafficking-investigation/Parents always tell kids to choose their friends carefully. With pals like Netanyahu and the Saudi bogus "crown prince", Trump clearly didn't follow that advice.Nelson , says: December 21, 2017 at 3:12 amThat looked like a promotional video made by defense contractors. Anyway it's crazy. If they go to war I hope we stay out of it.ludo , says: December 21, 2017 at 3:49 amThat video looks like a Nazi's wet dream, I mean the undiluted fascistic element is overwhelming, it's like getting a peek at an alternate dimension, not even a society, of pure militaristic "hathos" festooned by a limitless cloud of lies.Adamant , says: December 21, 2017 at 6:03 am
The worst of humanity is engrafted in that video, by which, I mean the unalloyed lying stupidity of war: imperialist expansionism, nationalist revanchism, and plutocratic supremacism, haloed by the grey mist–the dehumanzing pixelated mist–of the most dehumanizing endeavor man can undertake, for the most dehumanizing of modern causes: fascistic capitalism, the kind that fueled WWII (In this latter case, under the guise of religious supremacism or religious survivalism, but, in any case, only an obvious guise as far as the grotesque House of Saud is characteristically concerned).Echoing Noah above, this doesn't appear to be a production of the Saudi government, but having a contingent of the Saudi population gung-ho for a Sunni/Shi'a Ragnarok is concerning in itself. Both KSA and Iran will fight each other to the last Yemeni before any direct conflict arises.Floridan , says: December 21, 2017 at 6:04 am
This is the scenario that should be keeping us all up at night:
http://www.telegraph.co.uk/news/2017/12/20/exclusive-us-making-plans-bloody-nose-military-attack-north/The greatest myth of warfare -- "Once our forces invade the people will rise up against their government and welcome us a liberators."AB , says: December 21, 2017 at 6:42 amFran Macadam: To be fair, the Saudi dictators have always been best friends with America's elites – think Bandar Bush, the grounding of all air traffic in the United States after 9/11, except the Saudi evacuation planes spiriting Saudi royals out of the country so they could not be questioned.muad'dib , says: December 21, 2017 at 7:17 am
It wasn't the royals -- it was the bin Laden family itself. The people who knew Osama best. I never understood why we didn't insists that, with all airplanes grounded, they had to have a US Air Force pilot -- who then would have flown them to Gitmo for a sit-down on their newly famous relative. Instead the highest levels of government -- how high did you have to go to get permission to fly? -- broke into their busy schedules to be briefed and let them go.
The whole thing still stinks. We really need to have an investigation into the role of Saudi Arabia in American foreign policy; especially the Iraq Wars.
In the meantime, Frack Baby Frack! The less oil we have to import from there, Venezuela, or anyplace crazy the better.Michelle , says: December 21, 2017 at 8:05 am
President Trump's new best friend, MBS, is going to get us dragged into a new war in the region. Watch.
But her E-mails Good Thing the witch from Chappaqua isn't in the White House
If the Saudis are foolish enough to try that they will get their ass so thoroughly kicked that "who were the Al Saud?" will a trivial pursuit question on par with "Who were the Romanov's?" 10 years from now, and if the US is foolish enough to let them do that, watch the Global Economy collapse as the Strait of Hormuz gets closed for a few years.
The best military in the Middle East is Hezbollah (Trained & equipped by the Iranian, blooded and forged by the Israelis) the only thing they don't have is an air force. Let them have a half way decent air wing, and they would be on par or better than the USMC.
All that beautiful hardware has to be put to good use, after all if you don't use it you can't replace it. Think of all that beautiful money to be made in hardware replacement
Trump also declined to support Kurdish independence, which the Israeli right supports and would have undermined Iran (which has a restive Kurdish minority) and Iran ally Iraq.
Supporting the Kurds would have pissed off his best buddy Erdogan, in that Turkey has the largest Kurdish minority population of all the Middle Eastern countries (about 20% of population) and the largest military in the Middle East. Not a good idea, especially if you don't want them to become buddy buddy with their eastern neighbor.
Oh, did I mention that Saudi Arabia has a substantial Shiite minority (10 to 15% of the population) who isn't exactly thrilled to live under Wahhabi rule.
Watching the Saudis (a country that has to import plumbers from South Asia because it's below the dignity of the locals to be plumbers) getting their asses handed to them, watching the Dumpster's poll rating jump up to the 80% mark before cratering down to 15%, watching the Trump recession that would follow would almost be worth it if I didn't have to suffer the consequences of "Real American's(TM)" idiocy. It would be almost as much fun as watching Brexit.And President Ted Cruz or Clinton would be different how?Siarlys Jenkins , says: December 21, 2017 at 9:02 am
It's a pretty safe assumption that a President Clinton would work to uphold the treaty her predecessor signed with Iran. Cruz, like the rest of the GOP hawks, would probably (like Trump) be actively working to undermine it and provoke Iran. She'd want more money for social and infrastrucure spending, less for military.
Pavlos has it right. The GOP (and a lot of Democrats) think war is good for business and are happy to funnel obscene amounts of money to the military-industrial complex under the guise of "national security."Underestimating Iran would be a mistake. Trying this in real life would make Iran, very roughly, into "Saudi Arabia's Vietnam."Alex (the one that likes Ike) , says: December 21, 2017 at 9:44 am
"What is the national anthem of Saudi Arabia?"
"Onward, Christian Soldiers."
Reminds me of 1975, when I said that the Cuban army marching band was going to adopt a new theme song, "We Are Marching to Pretoria."It depends on what you imply when saying that it has lit up Arab social media, Rod. "Damn those Saudis are strong!" type of reaction means that social media are lit up. "LOL, what sorry comedian a-holes those Saudis are!" type of reaction also means that social media are lit up.Ark712 , says: December 21, 2017 at 9:49 amSo we are going to give North Korea a "Bloody nose" and invade Iran where they will welcome us as liberators with flower petals?collin , says: December 21, 2017 at 10:09 am
Is this what it will finally take Trump supporters to realize they made a mistake, or will they once again move the goal posts?
I am sure they will say "hurr-durr Clinton voted for the war", as if Republicans were not calling anyone against it a traitor.I can't decide if this truly 'government' backed or some Saudia wackos let their freak loose. At least the wackos are going after Iran and not the US. It is probably really nothing than an expensive Youtube comment but it does indicate that Saudia Arabia population really desires War somewhere and somehow.SDS , says: December 21, 2017 at 11:15 am
Although this is probably forgotten in 1 month, the Middle East appears to be following similar paths as Europe in the 1900 – 1914. We have lots of secret Allies and treaties with enormous tensions that is hungry for a battle."And President Ted Cruz or Clinton would be different how?" Probably not at all .. Which is what's so tragic, really .Gunner , says: December 21, 2017 at 12:05 pmThe Saudis couldn't invade a Dunkin Doughnuts without the West helping them.TR , says: December 21, 2017 at 12:11 pmPaul: Keep your jokes to yourself. They're too painful.EngineerScotty , says: December 21, 2017 at 12:58 pm
Noah172: Astute analysis and advice.The foreign policy of a President Hillary Clinton would probably be too hawkish for my tastes–and certainly she wouldn't enjoy strong relations with Russia (given evidence, in this hypothetical, that Putin was actively interfering in the election to support her opponent)–but it wouldn't be the amateur hour that we've gotten so far with Trump. Clinton would still have a functioning diplomatic corps, instead of sacking half the State Department. She wouldn't be trading insults with foreign heads of state on Twitter. She'd likely be not trying to undermine the Iran deal. And she'd not be performing fellatio on the likes of Netanyaho, Ergodan, and MbS, as Trump has been eagerly doing.Hound of Ulster , says: December 21, 2017 at 1:24 pm
Really. At what point does the "as bad as Trump's foreign policy has been, Clinton wudda been worse" refrain stop? Trump is already the worst foreign policy president since LBJ–he only needs a Vietnam War to his name to blow past him. And he has none of Johnson's domestic achievements.The last time an Arab dictator tried to attack the Iranians he could only get a draw that bankrupted him and lead, by a series of second-order consequences, to his downfall.George , says: December 21, 2017 at 2:03 pm
The Iranians had just, when they were attacked by Iraq, had thier revolution and had liquidated thier officer corps. Think about that. Iranians as polity may, for the most part, dislike the rule of the clerics, but they are intensely patriotic and will fight to the last man/woman to defend the Persian homeland. Underestimate them at your peril.When Iran's proxies in Yemen -- the Houthis -- are launching missiles at airports and the Royal Palace, I don't think this type video is very surprising and as propaganda goes really a big deal. It is pretty low level saber rattling if it is a Saudi Government produc, or what you would see a million times over among Americans if it is the work of just a bunch of young Saudi yahoos. Oh, and MSAGA -- Make Saudi Arabia Great Again!leonard , says: December 21, 2017 at 2:09 pmSo Charles Cosimano. I'm assuming you'll be the first to sign up?TTT , says: December 21, 2017 at 2:17 pmNoah172 , says: December 21, 2017 at 2:23 pmIsrael has never fought side-by-side with the US in any of the wars it has sent the us to fight [and die for and pay for] at the instigation of the settlers/occupiers.
Since the U.S. has never fought any wars for Israel, that makes the score 0:0 then.muad'dib wrote:Elijah , says: December 21, 2017 at 4:23 pm
But her E-mails Good Thing the witch from Chappaqua isn't in the White House
What ignorant drivel. Clinton is plenty hawkish (she cheered on Trump's April missile strike on Assad, and urged him to go much further). Moreover, as I wrote above, this video seems to be youthful fan fiction, not carrying any Saudi government imprimatur (let alone endorsement from Trump). Rod is speculating that the US will eventually join Saudi Arabia in a war against Iran, but Rod is no seer, whatever his other attributes.
Supporting the Kurds would have pissed off his best buddy Erdogan
Poppycock. Trump is hardly Erdogan's poodle. Trump gave heavy armaments to the Syrian Kurds (O had limited their support to small arms) and wants to move our embassy to Jerusalem, both decisions angering Erdogan. Erdogan would also liked to have seen Assad deposed.I'm not going to offer an opinion on the efficacy of Saudi Arabia's army, and neither should you. Remember how everyone warned us about Iraq's Republican Guard?) Few of us know what we're talking about. On the larger point: are you all taking drugs? Some video "lights up" Arab social media and therefore Trump is taking us to war against Iran?? What?!FoolMeOnce , says: December 21, 2017 at 4:48 pm
Let me be the dink who reminds you: Peak Oil
Merry Christmas!We should warn the Saudis not to choose vain, arrogant, bloodthirsty plutocrats as leaders. Oh .grumpy realist , says: December 21, 2017 at 6:09 pmMuad'dib:james , says: December 21, 2017 at 6:31 pm
(especially the Straits of Hormuz aspect. The Iranians just have to mine it so that one or more cargo ships get holed and got to the bottom at strategic bends and nobody ain't shipping no Saudi Oil nowhere. Have fun with $300/bbl oil economies, guys China will make out like a bandit, considering it's now the world leader in solar power.As a clever newspaper writer said about Jesse Ventura: Jesse is a lot smarter than most folks think he is, but not nearly as smart as he thinks he is. Like Jesse, Trump is smart enough to avoid unnecessary war. However, war may just become "necessary" when the heat of his Russia investigation becomes unbearable, and Trump needs the ultimate distraction. When (not if) that happens, either North Korea or Iran will be in trouble -- perhaps both. Millions will most likely die, billions of dollars will be spent, and the US will create an entirely new generation of terrorists. This will not end well.Noah172 , says: December 21, 2017 at 6:58 pmEngineerScotty wrote: "The foreign policy of a President Hillary Clinton wouldn't be the amateur hour that we've gotten so far with Trump" No, it would be the ruthlessly effective professionalism of the reset with Russia and the ouster of Qaddafi. /sarc She wanted and wants Assad deposed. How well would that have gone?Fran Macadam , says: December 21, 2017 at 10:46 pm
She wouldn't be trading insults with foreign heads of state on Twitter
Clinton has insulted Putin any number of times on social media and in interviews. On the Colbert program just last September, she claimed that he worked against her election because of sexism, and claimed that he "manspread" during a meeting with her.
And she'd not be performing fellatio on the likes of Netanyaho, Ergodan, and MbS
Netanyahu and Erdogan do not get along, so it's pretty hard to please both of them simultaneously. Like muad'dib, Scotty has it in his head that Trump is a poodle of Erdogan, but the latter would disagree. Heavy weapons to Syrian Kurds, Jerusalem -- Erdogan is not fully pleased with Trump.
If Scotty thinks the Clintons are hostile to Saudi Arabia, he hasn't been paying attention (does he ever?).
Trump is already the worst foreign policy president since LBJ -- he only needs a Vietnam War to his name to blow past him
Other than that, Mrs. Lincoln, how was the play?"In the meantime, Frack Baby Frack! The less oil we have to import from there, Venezuela, or anyplace crazy the better." That would be sane. But the elites have decided to export it at a cut rate, to undermine Russia as the supplier in Europe, in order to foment regime change by crashing the Russian economy. Why did you think we had such low fuel prices all of a sudden?Alex (the one that likes Ike) , says: December 22, 2017 at 6:22 am
No, the fuel extracted from American soil does not accrue to the benefit of the American people, but to the profits and plans of elites.Elijah , says: December 22, 2017 at 7:47 am
As a clever newspaper writer said about Jesse Ventura: Jesse is a lot smarter than most folks think he is, but not nearly as smart as he thinks he is. Like Jesse, Trump is smart enough to avoid unnecessary war. However, war may just become "necessary" when the heat of his Russia investigation becomes unbearable, and Trump needs the ultimate distraction. When (not if) that happens, either North Korea or Iran will be in trouble -- perhaps both. Millions will most likely die, billions of dollars will be spent, and the US will create an entirely new generation of terrorists. This will not end well.
Except that "heat" of his investigation is almost extinguished already."Except that "heat" of his investigation is almost extinguished already."Donald ( the left leaning one) , says: December 22, 2017 at 12:48 pm
Exactly.Noah and Engineer Scotty -- There is a reasonable compromise. Both of you are right. Trump is a disaster and we know Clinton was terrible. There is no point in arguing about whether she would be worse. I happen to think In some ways she wouldn't be as bad. She wouldn't be engaged in stupid twitter fights with dictators. But she might be better at leading us into some stupid war in Syria. Trump will stumble into some war with no support. Clinton would have had lots of support for whatever mindlessly stupid bloodbath she wanted to start.EngineerScotty , says: December 22, 2017 at 3:44 pmThat would be sane. But the elites have decided to export it at a cut rate, to undermine Russia as the supplier in Europe, in order to foment regime change by crashing the Russian economy. Why did you think we had such low fuel prices all of a sudden?EngineerScotty , says: December 22, 2017 at 3:57 pm
No, the fuel extracted from American soil does not accrue to the benefit of the American people, but to the profits and plans of elites.
Unless the "elites" you are talking about are the Saudis–who are well-known for flooding the market with cheap crude periodically to undercut the competition (they can still produce oil for far less than anywhere else), and have many reasons to be suspicious of Russia–this makes no sense.
Oil obtained by fracking is far more expensive to produce than oil obtained by simply drilling a well in the Arabian Desert and quickly finding a gusher. The US can meet its domestic needs, but isn't that great of a net exporter -- prices have to be sufficiently high before high-volume production becomes cost-effective.
And if you don't think that either the Saudis or the American oil industry have the ear of Trump, you're smokin' something.
The "elites" that oppose Trump have rather little political power at the present moment. Don't confuse cultural elites (who don't like the Donald one bit) with the gazillionaires who actual control the petroleum industry, and are more than happy to do business with whoever is in charge in Washington.
Trump–ignorant and fatuous and unworldly as he may be–is an "elite" by virtue of the office he holds. Do not forget that.
Noah and Engineer Scotty -- There is a reasonable compromise. Both of you are right. Trump is a disaster and we know Clinton was terrible. There is no point in arguing about whether she would be worse. I happen to think In some ways she wouldn't be as bad. She wouldn't be engaged in stupid twitter fights with dictators. But she might be better at leading us into some stupid war in Syria. Trump will stumble into some war with no support. Clinton would have had lots of support for whatever mindlessly stupid bloodbath she wanted to start.
Fair enough–though I think that Hillary's foreign policy would likely be similar to that of her husband. Far from ideal, but not disastrous. Of course, Bill got to hold office in a time when the Soviet Union (and its constituent parts) was in shambles, China was still a third-world country, North Korea was no threat to anyone but South Korea, Islamic extremism was far less of a problem, and even the Israelis and Palestinians were talking, and on roughly equal terms. Now is a much more dangerous time.
One of my biggest concerns about Trump's foreign policy–and a major difference from how Hillary would have governed–is his utter disdain for diplomacy. As noted, he (and Tillerson) have been busy setting the State Department ablaze, and many, many, many seasoned diplomats (career civil servants, not political appointees) have left Foggy Bottom, some of their own accord, some not. Some Trump defenders claim this is part of "draining the swamp", and many critics claim this is a purge of anyone not loyal to Trump personally–and these two claims may be opposite sides of the same coin.
But there is something else. Trump seems to think that international diplomacy ought to be conducted like real-estate deals: Two high-rollers (CEOs or heads of state) meet on the golf course, hash out a deal, and the lawyers work out the details; and that having a large staff of people trained in understanding a potentially-hostile foreign country is simply unnecessary. In short, he acts as though he believes the entire system of international diplomatic protocol, is a racket. Perhaps he has a point here; and perhaps he does not–as the old saying goes, don't knock down a wall unless you know what loads it is bearing.
But you'll notice that neither Russia, nor China, nor Israel, nor Iran, or Germany, nor any other player on the world stage, have been engaging in similar purges of their diplomatic services.
Dec 12, 2017 | www.theamericanconservative.com
On America's 'long emergency' of recession, globalization, and identity politics.
Can a people recover from an excursion into unreality? The USA's sojourn into an alternative universe of the mind accelerated sharply after Wall Street nearly detonated the global financial system in 2008. That debacle was only one manifestation of an array of accumulating threats to the postmodern order, which include the burdens of empire, onerous debt, population overshoot, fracturing globalism, worries about energy, disruptive technologies, ecological havoc, and the specter of climate change.
A sense of gathering crisis, which I call the long emergency , persists. It is systemic and existential. It calls into question our ability to carry on "normal" life much farther into this century, and all the anxiety that attends it is hard for the public to process. It manifested itself first in finance because that was the most abstract and fragile of all the major activities we depend on for daily life, and therefore the one most easily tampered with and shoved into criticality by a cadre of irresponsible opportunists on Wall Street. Indeed, a lot of households were permanently wrecked after the so-called Great Financial Crisis of 2008, despite official trumpet blasts heralding "recovery" and the dishonestly engineered pump-up of capital markets since then.
With the election of 2016, symptoms of the long emergency seeped into the political system. Disinformation rules. There is no coherent consensus about what is happening and no coherent proposals to do anything about it. The two parties are mired in paralysis and dysfunction and the public's trust in them is at epic lows. Donald Trump is viewed as a sort of pirate president, a freebooting freak elected by accident, "a disrupter" of the status quo at best and at worst a dangerous incompetent playing with nuclear fire. A state of war exists between the White House, the permanent D.C. bureaucracy, and the traditional news media. Authentic leadership is otherwise AWOL. Institutions falter. The FBI and the CIA behave like enemies of the people.
Bad ideas flourish in this nutrient medium of unresolved crisis. Lately, they actually dominate the scene on every side. A species of wishful thinking that resembles a primitive cargo cult grips the technocratic class, awaiting magical rescue remedies that promise to extend the regime of Happy Motoring, consumerism, and suburbia that makes up the armature of "normal" life in the USA. They chatter about electric driverless car fleets, home delivery drone services, and as-yet-undeveloped modes of energy production to replace problematic fossil fuels, while ignoring the self-evident resource and capital constraints now upon us and even the laws of physics -- especially entropy , the second law of thermodynamics. Their main mental block is their belief in infinite industrial growth on a finite planet, an idea so powerfully foolish that it obviates their standing as technocrats.
The non-technocratic cohort of the thinking class squanders its waking hours on a quixotic campaign to destroy the remnant of an American common culture and, by extension, a reviled Western civilization they blame for the failure in our time to establish a utopia on earth. By the logic of the day, "inclusion" and "diversity" are achieved by forbidding the transmission of ideas, shutting down debate, and creating new racially segregated college dorms. Sexuality is declared to not be biologically determined, yet so-called cis-gendered persons (whose gender identity corresponds with their sex as detected at birth) are vilified by dint of not being "other-gendered" -- thereby thwarting the pursuit of happiness of persons self-identified as other-gendered. Casuistry anyone?
The universities beget a class of what Nassim Taleb prankishly called "intellectuals-yet-idiots," hierophants trafficking in fads and falsehoods, conveyed in esoteric jargon larded with psychobabble in support of a therapeutic crypto-gnostic crusade bent on transforming human nature to fit the wished-for utopian template of a world where anything goes. In fact, they have only produced a new intellectual despotism worthy of Stalin, Mao Zedong, and Pol Pot.
In case you haven't been paying attention to the hijinks on campus -- the attacks on reason, fairness, and common decency, the kangaroo courts, diversity tribunals, assaults on public speech and speakers themselves -- here is the key take-away: it's not about ideas or ideologies anymore; it's purely about the pleasures of coercion, of pushing other people around. Coercion is fun and exciting! In fact, it's intoxicating, and rewarded with brownie points and career advancement. It's rather perverse that this passion for tyranny is suddenly so popular on the liberal left.
Until fairly recently, the Democratic Party did not roll that way. It was right-wing Republicans who tried to ban books, censor pop music, and stifle free expression. If anything, Democrats strenuously defended the First Amendment, including the principle that unpopular and discomforting ideas had to be tolerated in order to protect all speech. Back in in 1977 the ACLU defended the right of neo-Nazis to march for their cause (National Socialist Party of America v. Village of Skokie, 432 U.S. 43).
The new and false idea that something labeled "hate speech" -- labeled by whom? -- is equivalent to violence floated out of the graduate schools on a toxic cloud of intellectual hysteria concocted in the laboratory of so-called "post-structuralist" philosophy, where sundry body parts of Michel Foucault, Jacques Derrida, Judith Butler, and Gilles Deleuze were sewn onto a brain comprised of one-third each Thomas Hobbes, Saul Alinsky, and Tupac Shakur to create a perfect Frankenstein monster of thought. It all boiled down to the proposition that the will to power negated all other human drives and values, in particular the search for truth. Under this scheme, all human relations were reduced to a dramatis personae of the oppressed and their oppressors, the former generally "people of color" and women, all subjugated by whites, mostly males. Tactical moves in politics among these self-described "oppressed" and "marginalized" are based on the credo that the ends justify the means (the Alinsky model).
This is the recipe for what we call identity politics, the main thrust of which these days, the quest for "social justice," is to present a suit against white male privilege and, shall we say, the horse it rode in on: western civ. A peculiar feature of the social justice agenda is the wish to erect strict boundaries around racial identities while erasing behavioral boundaries, sexual boundaries, and ethical boundaries. Since so much of this thought-monster is actually promulgated by white college professors and administrators, and white political activists, against people like themselves, the motives in this concerted campaign might appear puzzling to the casual observer.
I would account for it as the psychological displacement among this political cohort of their shame, disappointment, and despair over the outcome of the civil rights campaign that started in the 1960s and formed the core of progressive ideology. It did not bring about the hoped-for utopia. The racial divide in America is starker now than ever, even after two terms of a black president. Today, there is more grievance and resentment, and less hope for a better future, than when Martin Luther King made the case for progress on the steps of the Lincoln Memorial in 1963. The recent flash points of racial conflict -- Ferguson, the Dallas police ambush, the Charleston church massacre, et cetera -- don't have to be rehearsed in detail here to make the point that there is a great deal of ill feeling throughout the land, and quite a bit of acting out on both sides.
The black underclass is larger, more dysfunctional, and more alienated than it was in the 1960s. My theory, for what it's worth, is that the civil rights legislation of 1964 and '65, which removed legal barriers to full participation in national life, induced considerable anxiety among black citizens over the new disposition of things, for one reason or another. And that is exactly why a black separatism movement arose as an alternative at the time, led initially by such charismatic figures as Malcolm X and Stokely Carmichael. Some of that was arguably a product of the same youthful energy that drove the rest of the Sixties counterculture: adolescent rebellion. But the residue of the "Black Power" movement is still present in the widespread ambivalence about making covenant with a common culture, and it has only been exacerbated by a now long-running "multiculturalism and diversity" crusade that effectively nullifies the concept of a national common culture.
What follows from these dynamics is the deflection of all ideas that don't feed a narrative of power relations between oppressors and victims, with the self-identified victims ever more eager to exercise their power to coerce, punish, and humiliate their self-identified oppressors, the "privileged," who condescend to be abused to a shockingly masochistic degree. Nobody stands up to this organized ceremonial nonsense. The punishments are too severe, including the loss of livelihood, status, and reputation, especially in the university. Once branded a "racist," you're done. And venturing to join the oft-called-for "honest conversation about race" is certain to invite that fate.
Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class -- which included a great many white Americans who used to be able to support a family with simple labor. Hung out to dry economically, this class of whites fell into many of the same behaviors as the poor blacks before them: absent fathers, out-of-wedlock births, drug abuse. Then the Great Financial Crisis of 2008 wiped up the floor with the middle-middle class above them, foreclosing on their homes and futures, and in their desperation many of these people became Trump voters -- though I doubt that Trump himself truly understood how this all worked exactly. However, he did see that the white middle class had come to identify as yet another victim group, allowing him to pose as their champion.
The evolving matrix of rackets that prompted the 2008 debacle has only grown more elaborate and craven as the old economy of stuff dies and is replaced by a financialized economy of swindles and frauds . Almost nothing in America's financial life is on the level anymore, from the mendacious "guidance" statements of the Federal Reserve, to the official economic statistics of the federal agencies, to the manipulation of all markets, to the shenanigans on the fiscal side, to the pervasive accounting fraud that underlies it all. Ironically, the systematic chiseling of the foundering middle class is most visible in the rackets that medicine and education have become -- two activities that were formerly dedicated to doing no harm and seeking the truth !
Life in this milieu of immersive dishonesty drives citizens beyond cynicism to an even more desperate state of mind. The suffering public ends up having no idea what is really going on, what is actually happening. The toolkit of the Enlightenment -- reason, empiricism -- doesn't work very well in this socioeconomic hall of mirrors, so all that baggage is discarded for the idea that reality is just a social construct, just whatever story you feel like telling about it. On the right, Karl Rove expressed this point of view some years ago when he bragged, of the Bush II White House, that "we make our own reality." The left says nearly the same thing in the post-structuralist malarkey of academia: "you make your own reality." In the end, both sides are left with a lot of bad feelings and the belief that only raw power has meaning.
Erasing psychological boundaries is a dangerous thing. When the rackets finally come to grief -- as they must because their operations don't add up -- and the reckoning with true price discovery commences at the macro scale, the American people will find themselves in even more distress than they've endured so far. This will be the moment when either nobody has any money, or there is plenty of worthless money for everyone. Either way, the functional bankruptcy of the nation will be complete, and nothing will work anymore, including getting enough to eat. That is exactly the moment when Americans on all sides will beg someone to step up and push them around to get their world working again. And even that may not avail.
James Howard Kunstler's many books include The Geography of Nowhere, The Long Emergency, Too Much Magic: Wishful Thinking, Technology, and the Fate of the Nation , and the World Made by Hand novel series. He blogs on Mondays and Fridays at Kunstler.com .
Whine Merchant December 20, 2017 at 10:49 pmWow – is there ever negative!Celery , says: December 20, 2017 at 11:33 pmI think I need to go listen to an old-fashioned Christmas song now.Fran Macadam , says: December 20, 2017 at 11:55 pm
The ability to be financially, or at least resource, sustaining is the goal of many I know since we share a lack of confidence in any of our institutions. We can only hope that God might look down with compassion on us, but He's not in the practical plan of how to feed and sustain ourselves when things play out to their inevitable end. Having come from a better time, we joke about our dystopian preparations, self-conscious about our "overreaction," but preparing all the same.
Merry Christmas!Look at it this way: Germany had to be leveled and its citizens reduced to abject penury, before Volkswagen could become the world's biggest car company, and autobahns built throughout the world. It will be darkest before the dawn, and hopefully, that light that comes after, won't be the miniature sunrise of a nuclear conflagration.KD , says: December 21, 2017 at 6:02 amEat, Drink, and be Merry, you can charge it on your credit card!Rock Stehdy , says: December 21, 2017 at 6:38 amHard words, but true. Kunstler is always worth reading for his common-sense wisdom.Helmut , says: December 21, 2017 at 7:04 amAn excellent summary and bleak reminder of what our so-called civilization has become. How do we extricate ourselves from this strange death spiral?Liam , says: December 21, 2017 at 7:38 am
I have long suspected that we humans are creatures of our own personal/group/tribal/national/global fables and mythologies. We are compelled by our genes, marrow, and blood to tell ourselves stories of our purpose and who we are. It is time for new mythologies and stories of "who we are". This bizarre hyper-techno all-for-profit world needs a new story.Peter , says: December 21, 2017 at 8:34 am"The black underclass is larger, more dysfunctional, and more alienated than it was in the 1960s. My theory, for what it's worth, is that the civil rights legislation of 1964 and '65, which removed legal barriers to full participation in national life, induced considerable anxiety among black citizens over the new disposition of things, for one reason or another."
Um, forgotten by Kunstler is the fact that 1965 was also the year when the USA reopened its doors to low-skilled immigrants from the Third World – who very quickly became competitors with black Americans. And then the Boom ended, and corporate American, influenced by thinking such as that displayed in Lewis Powell's (in)famous 1971 memorandum, decided to claw back the gains made by the working and middle classes in the previous 3 decades.I have some faith that the American people can recover from an excursion into unreality. I base it on my own survival to the end of this silly rant.SteveM , says: December 21, 2017 at 9:08 amRe: Whine Merchant, "Wow – is there ever negative!"Dave Wright , says: December 21, 2017 at 9:22 am
Can't argue with the facts
P.S. Merry Christmas.Hey Jim, I know you love to blame Wall Street and the Republicans for the GFC. I remember back in '08 you were urging Democrats to blame it all on Republicans to help Obama win. But I have news for you. It wasn't Wall Street that caused the GFC. The crisis actually had its roots in the Clinton Administration's use of the Community Reinvestment Act to pressure banks to relax mortgage underwriting standards. This was done at the behest of left wing activists who claimed (without evidence, of course) that the standards discriminated against minorities. The result was an effective repeal of all underwriting standards and an explosion of real estate speculation with borrowed money. Speculation with borrowed money never ends well.NoahK , says: December 21, 2017 at 10:15 am
I have to laugh, too, when you say that it's perverse that the passion for tyranny is popular on the left. Have you ever heard of the French Revolution? How about the USSR? Communist China? North Korea? Et cetera.
Leftism is leftism. Call it Marxism, Communism, socialism, liberalism, progressivism, or what have you. The ideology is the same. Only the tactics and methods change. Destroy the evil institutions of marriage, family, and religion, and Man's innate goodness will shine forth, and the glorious Godless utopia will naturally result.
Of course, the father of lies is ultimately behind it all. "He was a liar and a murderer from the beginning."
When man turns his back on God, nothing good happens. That's the most fundamental problem in Western society today. Not to say that there aren't other issues, but until we return to God, there's not much hope for improvement.It's like somebody just got a bunch of right-wing talking points and mashed them together into one incohesive whole. This is just lazy.Andrew Imlay , says: December 21, 2017 at 10:36 amHmm. I just wandered over here by accident. Being a construction contractor, I don't know enough about globalization, academia, or finance to evaluate your assertions about those realms. But being in a biracial family, and having lived, worked, and worshiped equally in white and black communities, I can evaluate your statements about social justice, race, and civil rights. Long story short, you pick out fringe liberal ideas, misrepresent them as mainstream among liberals, and shoot them down. Casuistry, anyone?peter in boston , says: December 21, 2017 at 10:48 am
You also misrepresent reality to your readers. No, the black underclass is not larger, more dysfunctional, and more alienated now than in the 1960's, when cities across the country burned and machine guns were stationed on the Capitol steps. The "racial divide" is not "starker now than ever"; that's just preposterous to anyone who was alive then. And nobody I've ever known felt "shame" over the "outcome of the civil rights campaign". I know nobody who seeks to "punish and humiliate" the 'privileged'.
I get that this column is a quick toss-off before the holiday, and that your strength is supposed to be in your presentation, not your ideas. For me, it's a helpful way to rehearse debunking common tropes that I'll encounter elsewhere.
But, really, your readers deserve better, and so do the people you misrepresent. We need bad liberal ideas to be critiqued while they're still on the fringe. But by calling fringe ideas mainstream, you discredit yourself, misinform your readers, and contribute to stereotypes both of liberals and of conservatives. I'm looking for serious conservative critiques that help me take a second look at familiar ideas. I won't be back.Love Kunstler -- and love reading him here -- but he needs a strong editor to get him to turn a formless harangue into clear essay.Someone in the crowd , says: December 21, 2017 at 11:07 amI disagree, NoahK, that the whole is incohesive, and I also disagree that these are right-wing talking points.Jon , says: December 21, 2017 at 11:10 am
The theme of this piece is the long crisis in the US, its nature and causes. At no point does this essay, despite it stream of consciousness style, veer away from that theme. Hence it is cohesive.
As for the right wing charge, though it is true, to be sure, that Kunstler's position is in many respects classically conservative -- he believes for example that there should be a national consensus on certain fundamentals, such as whether or not there are two sexes (for the most part), or, instead, an infinite variety of sexes chosen day by day at whim -- you must have noticed that he condemned both the voluntarism of Karl Rove AND the voluntarism of the post-structuralist crowd.
My impression is that what Kunstler is doing here is diagnosing the long crisis of a decadent liberal post-modernity, and his stance is not that of either of the warring sides within our divorced-from-reality political establishment, neither that of the 'right' or 'left.' Which is why, logically, he published it here. National Review would never have accepted this piece. QED.This malaise is rooted in human consciousness that when reflecting on itself celebrating its capacity for apperception suffers from the tension that such an inquiry, such an inward glance produces. In a word, the capacity for the human being to be aware of his or herself as an intelligent being capable of reflecting on aspects of reality through the artful manipulation of symbols engenders this tension, this angst.Joe the Plutocrat , says: December 21, 2017 at 11:27 am
Some will attempt to extinguish this inner tension through intoxication while others through the thrill of war, and it has been played out since the dawn of man and well documented when the written word emerged.
The malaise which Mr. Kunstler addresses as the problem of our times is rooted in our existence from time immemorial. But the problem is not only existential but ontological. It is rooted in our being as self-aware creatures. Thus no solution avails itself as humanity in and of itself is the problem. Each side (both right and left) seeks its own anodyne whether through profligacy or intolerance, and each side mans the barricades to clash experiencing the adrenaline rush that arises from the perpetual call to arms.The scientist 880 , says: December 21, 2017 at 11:48 am"Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class -- which included a great many white Americans who used to be able to support a family with simple labor."
And to whom do we hand the tab for this? Globalization is a word. It is a concept, a talking point. Globalization is oligarchy by another name. Unfortunately, under-educated, deplorable, Americans; regardless of party affiliation/ideology have embraced. And the most ironic part?
Russia and China (the eventual surviving oligarchies) will eventually have to duke it out to decide which superpower gets to make the USA it's b*tch (excuse prison reference, but that's where we're headed folks).
And one more irony. Only in American, could Christianity, which was grew from concepts like compassion, generosity, humility, and benevolence; be re-branded and 'weaponized' to further greed, bigotry, misogyny, intolerance, and violence/war. Americans fiddled (over same sex marriage, abortion, who has to bake wedding cakes, and who gets to use which public restroom), while the oligarchs burned the last resources (natural, financial, and even legal).Adam , says: December 21, 2017 at 11:57 am"Today, there is more grievance and resentment, and less hope for a better future, than when Martin Luther King made the case for progress on the steps of the Lincoln Memorial in 1963."
Spoken like a white guy who has zero contact with black people. I mean, even a little bit of research and familiarity would give lie to the idea that blacks are more pessimistic about life today than in the 1960's.
Black millenials are the most optimistic group of Americans about the future. Anyone who has spent any significant time around older black people will notice that you don't hear the rose colored memories of the past. Black people don't miss the 1980's, much less the 1950's. Young black people are told by their elders how lucky they are to grow up today because things are much better than when grandpa was our age and we all know this history.\
It's clear that this part of the article was written from absolute ignorance of the actual black experience with no interest in even looking up some facts. Hell, Obama even gave a speech at Howard telling graduates how lucky they were to be young and black Today compared to even when he was their age in the 80's!
Here is the direct quote;
"In my inaugural address, I remarked that just 60 years earlier, my father might not have been served in a D.C. restaurant -- at least not certain of them. There were no black CEOs of Fortune 500 companies. Very few black judges. Shoot, as Larry Wilmore pointed out last week, a lot of folks didn't even think blacks had the tools to be a quarterback. Today, former Bull Michael Jordan isn't just the greatest basketball player of all time -- he owns the team. (Laughter.) When I was graduating, the main black hero on TV was Mr. T. (Laughter.) Rap and hip hop were counterculture, underground. Now, Shonda Rhimes owns Thursday night, and Beyoncé runs the world. (Laughter.) We're no longer only entertainers, we're producers, studio executives. No longer small business owners -- we're CEOs, we're mayors, representatives, Presidents of the United States. (Applause.)
I am not saying gaps do not persist. Obviously, they do. Racism persists. Inequality persists. Don't worry -- I'm going to get to that. But I wanted to start, Class of 2016, by opening your eyes to the moment that you are in. If you had to choose one moment in history in which you could be born, and you didn't know ahead of time who you were going to be -- what nationality, what gender, what race, whether you'd be rich or poor, gay or straight, what faith you'd be born into -- you wouldn't choose 100 years ago. You wouldn't choose the fifties, or the sixties, or the seventies. You'd choose right now. If you had to choose a time to be, in the words of Lorraine Hansberry, "young, gifted, and black" in America, you would choose right now. (Applause.)"
https://www.google.com/amp/s/m.huffpost.com/us/entry/us_58cf1d9ae4b0ec9d29dcf283/ampI love reading about how the Community Reinvestment Act was the catalyst of all that is wrong in the world. As someone in the industry the issue was actually twofold. The Commodities Futures Modernization Act turned the mortgage securities market into a casino with the underlying actual debt instruments multiplied through the use of additional debt instruments tied to the performance but with no actual underlying value. These securities were then sold around the world essentially infecting the entire market. In order that feed the beast, these NON GOVERNMENT loans had their underwriting standards lowered to rediculous levels. If you run out of qualified customers, just lower the qualifications. Government loans such as FHA, VA, and USDA were avoided because it was easier to qualify people with the new stuff. And get paid. The short version is all of the incentives that were in place at the time, starting with the Futures Act, directly led to the actions that culminated in the Crash. So yes, it was the government, just a different piece of legislation.SteveM , says: December 21, 2017 at 12:29 pmKunstler itemizing the social and economic pathologies in the United States is not enough. Because there are other models that demonstrate it didn't have to be this way.One Guy , says: December 21, 2017 at 1:10 pm
E.g. Germany. Germany is anything but perfect and its recent government has screwed up with its immigration policies. But Germany has a high standard of living, an educated work force (including unions and skilled crafts-people), a more rational distribution of wealth and high quality universal health care that costs 47% less per capita than in the U.S. and with no intrinsic need to maraud around the planet wasting gobs of taxpayer money playing Global Cop.
The larger subtext is that the U.S. house of cards was planned out and constructed as deliberately as the German model was. Only the objective was not to maximize the health and happiness of the citizenry, but to line the pockets of the parasitic Elites. (E.g., note that Mitch McConnell has been a government employee for 50 years but somehow acquired a net worth of over $10 Million.)
P.S. About the notionally high U.S. GDP. Factor out the TRILLIONS inexplicably hoovered up by the pathological health care system, the metastasized and sanctified National Security State (with its Global Cop shenanigans) and the cronied-up Ponzi scheme of electron-churn financialization ginned up by Goldman Sachs and the rest of the Banksters, and then see how much GDP that reflects the actual wealth of the middle class is left over.Right-Wing Dittoheads and Fox Watchers love to blame the Community Reinvestment Act. It allows them to blame both poor black people AND the government. The truth is that many parties were to blame.LouB , says: December 21, 2017 at 1:14 pmOne of the things I love about this rag is that almost all of the comments are included. You may be sure that similar commenting privilege doesn't exist most anywhere else.tzx4 , says: December 21, 2017 at 1:57 pm
Any disfavor regarding the supposed bleakness with the weak hearted souls aside, Mr K's broadside seems pretty spot on to me.I think the author overlooks the fact that government over the past 30 to 40 years has been tilting the playing field ever more towards the uppermost classes and against the middle class. The evisceration of the middle class is plain to see.Jeeves , says: December 21, 2017 at 2:09 pm
If the the common man had more money and security, lots of our current intrasocial conflicts would be far less intense.Andrew Imlay: You provide a thoughtful corrective to one of Kunstler's more hyperbolic claims. And you should know that his jeremiad doesn't represent usual fare at TAC. So do come back.Wezz , says: December 21, 2017 at 2:44 pm
Whether or not every one of Kunstler's assertions can withstand a rigorous fact-check, he is a formidable rhetorician. A generous serving of Weltschmerz is just what the season calls for.America is stupefied from propaganda on steroids for, largely from the right wing, 25? years of Limbaugh, Fox, etc etc etc Clinton hate x 10, "weapons of mass destruction", "they hate us because we are free", birtherism, death panels, Jade Helm, pedophile pizza, and more Clinton hate porn.John Blade Wiederspan , says: December 21, 2017 at 4:26 pm
Americans have been taught to worship the wealthy regardless of how they got there. Americans have been taught they are "Exceptional" (better, smarter, more godly than every one else) in spite of outward appearances. Americans are under educated and encouraged to make decisions based on emotion from constant barrage of extra loud advertising from birth selling illusion.
Americans brain chemistry is most likely as messed up as the rest of their bodies from junk or molested food. Are they even capable of normal thought?
Donald Trump has convinced at least a third of Americans that only he, Fox, Breitbart and one or two other sources are telling the Truth, every one else is lying and that he is their friend.
Is it possible we are just plane doomed and there's no way out?I loathe the cotton candy clown and his Quislings; however, I must admit, his presence as President of the United States has forced everyone (left, right, religious, non-religious) to look behind the curtain. He has done more to dis-spell the idealism of both liberal and conservative, Democrat and Republican, rich and poor, than any other elected official in history. The sheer amount of mind-numbing absurdity resulting from a publicity stunt that got out of control ..I am 70 and I have seen a lot. This is beyond anything I could ever imagine. America is not going to improve or even remain the same. It is in a 4 year march into worse, three years to go.EarlyBird , says: December 21, 2017 at 5:23 pmSheesh. Should I shoot myself now, or wait until I get home?dvxprime , says: December 21, 2017 at 5:46 pmMr. Kuntzler has an honest and fairly accurate assessment of the situation. And as usual, the liberal audience that TAC is trying so hard to reach, is tossing out their usual talking points whilst being in denial of the situation.Slooch , says: December 21, 2017 at 7:03 pm
The Holy Bible teaches us that repentance is the first crucial step on the path towards salvation. Until the progressives, from their alleged "elite" down the rank and file at Kos, HuffPo, whatever, take a good, long, hard look at the current national dumpster fire and start claiming some responsibility, America has no chance of solving problems or fixing anything.Kunstler must have had a good time writing this, and I had a good time reading it. Skewed perspective, wild overstatement, and obsessive cherry-picking of the rare checkable facts are mixed with a little eye of newt and toe of frog and smothered in a oar and roll of rhetoric that was thrilling to be immersed in. Good work!jp , says: December 21, 2017 at 8:09 pmaah, same old Kunstler, slightly retailored for the Trump years.c.meyer , says: December 21, 2017 at 8:30 pm
for those of you familiar with him, remember his "peak oil" mania from the late 00s and early 2010s? every blog post was about it. every new year was going to be IT: the long emergency would start, people would be Mad Maxing over oil supplies cos prices at the pump would be $10 a gallon or somesuch.
in this new rant, i did a control-F for "peak oil" and hey, not a mention. I guess even cranks like Kunstler know when to give a tired horse a rest.So what else is new. Too 'clever', overwritten, no new ideas. Can't anyone move beyond clichés?Active investor , says: December 22, 2017 at 12:35 amKunstler once again waxes eloquent on the American body politic. Every word rings true, except when it doesn't. At times poetic, at other times paranoid, Kunstler does us a great service by pointing a finger at the deepest pain points in America, any one of which could be the geyser that brings on catastrophic failure.JonF , says: December 22, 2017 at 9:52 am
However, as has been pointed out, he definitely does not hang out with black people. For example, the statement:
But the residue of the "Black Power" movement is still present in the widespread ambivalence about making covenant with a common culture, and it has only been exacerbated by a now long-running "multiculturalism and diversity" crusade that effectively nullifies the concept of a national common culture.
The notion of a 'national common culture' is interesting but pretty much a fantasy that never existed, save colonial times.
Yet Kunstler's voice is one that must be heard, even if he is mostly tuning in to the widespread radicalism on both ends of the spectrum, albeit in relatively small numbers. Let's face it, people are in the streets marching, yelling, and hating and mass murders keep happening, with the regularity of Old Faithful. And he makes a good point about academia loosing touch with reality much of the time. He's spot on about the false expectations of what technology can do for the economy, which is inflated with fiat currency and God knows how many charlatans and hucksters. And yes, the white working class is feeling increasingly like a 'victim group.'
While Kunstler may be more a poet than a lawyer, more songwriter than historian, my gut feeling is that America had better take notice of him, as The American ship of state is being swept by a ferocious tide and the helmsman is high on Fentanyl (made in China).Re: The crisis actually had its roots in the Clinton Administration's use of the Community Reinvestment Actkevin on the left , says: December 22, 2017 at 10:49 am
Here we go again with this rotting zombie which rises from its grave no matter how many times it has been debunked by statisticians and reputable economists (and no, not just those on the left– the ranks include Bruce Bartlett for example, a solid Reaganist). To reiterate again : the CRA played no role in the mortgage boom and bust. Among other facts in the way of that hypothesis is the fact that riskiest loans were being made by non-bank lenders (Countrywide) who were not covered by the CRA which only applied to actual banks– and the banks did not really get into the game full tilt, lowering their lending standards, until late in the game, c. 2005, in response to their loss of business to the non-bank lenders. Ditto for the GSEs, which did not lower their standards until 2005 and even then relied on wall Street to vet the subprime loans they were buying.
To be sure, blaming Wall Street for everything is also wrong-headed, though wall Street certainly did some stupid, greedy and shady things (No, I am not letting them off the hook!) But the cast of miscreants is numbered in the millions and it stretches around the planet. Everyone (for example) who got into the get-rich-quick Ponzi scheme of house flipping, especially if they lied about their income to do so. And everyone who took out a HELOC (Home Equity Line of Credit) and foolishly charged it up on a consumption binge. And shall we talk about the mortgage brokers who coached people into lying, the loan officers who steered customers into the riskiest (and highest earning) loans they could, the sellers who asked palace-prices for crackerbox hovels, the appraisers who rubber-stamped such prices, the regulators who turned a blind eye to all the fraud and malfeasance, the ratings agencies who handed out AAA ratings to securities full of junk, the politicians who rejoiced over the apparent "Bush Boom" well, I could continue, but you get the picture.
We have met the enemy and he was us."The Holy Bible teaches us that repentance is the first crucial step on the path towards salvation. Until the progressives, from their alleged "elite" down the rank and file at Kos, HuffPo, whatever, take a good, long, hard look at the current national dumpster fire and start claiming some responsibility, America has no chance of solving problems or fixing anything."
Pretty sure that calling other people to repent of their sin of disagreeing with you is not quite what the Holy Bible intended.
Dec 22, 2017 | www.nakedcapitalism.com
Jim Haygood , December 21, 2017 at 11:16 amOther JL , December 21, 2017 at 12:04 pm
David Stockman estimates that front-loaded tax cuts will produce a federal deficit of about $1.3 trillion in fiscal year 2019. In effect, fiscal stimulus is being cranked from 3 to 6 percent of GDP.
Gunning the economy could help reduce R party losses in the 2018 midterm elections. But it's very poor timing for the 2020 presidential election. By then, with rate hikes biting and stimulus easing, the economy is likely to take a tumble at the worst possible time for re-electing the incumbent.
But given the regal out-of-touchness of elitist Dems, coupled with their jaw-dropping incompetence, they should still be able to seize defeat from the jaws of victory.L , December 21, 2017 at 12:14 pm
My biggest complaint with this argument is that it's far from clear the tax bill is gunning the economy. It looks much more like looting, in terms of where the gains go.
Doubling the standard deduction might have a big effect on a number of cash-constrained households. It won't do much for the 47%, and of course it expires. I don't know how much effect it will have in aggregate though.timbers , December 21, 2017 at 12:16 pm
I agree with you on the looting. What I expect that the Republicans are counting on is:
1) The base (the people most immediately screwed by this) will still vote with them because of tribalism and a few symbolic bonuses from a grateful AT&T.
2) The middle-class will be carried through the mid-terms by the immediate cuts and some measure of gullibility.
3) The stock owners will enjoy the sugar high as buybacks kick off speculation, and thus be more predisposed to it.
4) The donor cash will cushion the blow of any real blowback and the Dems will fumble the fight over extending the "temporary" cuts so that the Repubs can look like middle class saviors.
5) Even if all that fails they get cushy jobs as consultants.Jim Haygood , December 21, 2017 at 12:50 pm
Disagree that it gins the economy because the distribution of the tax cuts looks more like a QE program than what tax cuts were when they cut taxes for working people.
The tax cuts go to those who hoard money and take it out of circulation – the rich and corporations. They aren't going to spend more, they will save more or do stock buy backs.
Thus the velocity of money will decline further.
So where is the gin coming from because I'm not seeing it.timbers , December 21, 2017 at 8:57 pm
Tax cuts are one part of fiscal stimulus. But so is increased direct spending. Stockman elaborates:
We expect FY 2019 outlays to rise by upwards of $200 billion from CBO's most recent baseline projection. That would include $75 billion for defense, $65 billion for disaster aid, $25 billion for increased of domestic appropriations above the sequester cap, $20 billion for the ObamaCare subsidies and another $15 billion for interest on higher spending and lower revenues.
Those kinds of spending increases are now virtually certain, and will take total FY 2019 outlays to around $4.575 trillion -- nearly 20% more than the $3.85 trillion spent during FY 2016 during the run-up to the presidential election.
If such radically ramped-up spending fails to gin the economy, then we will be obliged to question (as some do) whether fiscal stimulus actually works at all.
I don't really know what to tell you boo boo
I mean I try (you know I try)
-- Aventura, Yo quisiera amarlaSynoia , December 21, 2017 at 12:22 pm
I was referring to the tax cut, but you are right about the spending side and wrong too IMO.
Disagree that this "increase" in spending – which is party a decrease of a decrease – is even light years close to "radical" as you say.
The Defense spending is the least stimulate type of fiscal spending, Obamacare goes mostly to rich gigantic corporations, disaster relief is transitory, and the interest goes to investors.
So spending increases of a small very non radical nature that go largely to rich gigantic corporations.
Ok I'm seeing some gin. But I'm still not seeing much gin.Michael Fiorillo , December 21, 2017 at 1:29 pm
Never attribute behavior to incompetence when it can be attributed to greed.
Or class warfare
Dec 20, 2017 | www.nakedcapitalism.com
By Bill Black, the author of The Best Way to Rob a Bank is to Own One, an associate professor of economics and law at the University of Missouri-Kansas City, and co-founder of Bank Whistleblowers United. Originally published at New Economic Perspectives
The truly exceptional thing about 'modern macroeconomics' devotees is not that they are so consistently and horrifically wrong or that they persist in their errors – but their exceptional combination of arrogance and disdain for those who have dramatically better records and broader and more relevant expertise. Kartik Athreya, the Richmond Fed's Research Director, led the modern macro parade on June 17, 2010 with his blog (which he later withdrew in embarrassment) when he announced the Athreya Axiom of Absolute Arrogance.
So far, I've claimed something a bit obnoxious-sounding: that writers who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy. Taken literally, I am almost certainly wrong. Some of them have great ideas, for sure. But this is irrelevant. The real issue is that there is extremely low likelihood that the speculations of the untrained, on a topic almost pathologically riddled by dynamic considerations and feedback effects, will offer anything new. Moreover, there is a substantial likelihood that it will instead offer something incoherent or misleading.
Modern macro devotees suffered far worse substantive embarrassment than Athreya's personal embarrassment. After Athreya (briefly) published his Axiom, a flurry of the world's top economists issued devastating critiques of modern macro's foundational myths in their dynamic stochastic general equilibrium (DSGE) models. The takedowns enraged and humiliated modern macro devotees, and because they are incapable of staying embarrassed, they doubled-down on Athreya's Axiom by announcing the Dilettante Doctrine .
People who don't like dynamic stochastic general equilibrium (DSGE) models are dilettantes. By this we mean they aren't serious about policy analysis.
Lawrence J. Christiano, Martin S. Eichenbaum, and Mathias Trabandt, authored "On DSGE Models on November 9, 2017. Christiano and Eichenbaum are freshwater modern macro devotees trained largely at the University of Minnesota, and now holding prominent positions at Northwestern. Trabandt is a German modern macro devotee.
A dilettante is a person who cultivates an area of interest, such as the arts, without real commitment or knowledge. The Dilettante Doctrine takes modern macro's arrogance to a new pinnacle. Only their model is legitimate, and it is illegitimate to criticize their DSGE models, even though they repeatedly fail. Instead, we must all "like" their models. We cannot make any statements about macroeconomics unless we "like [DSGE] models." The Dilettante Doctrine is a sure-fire means of winning academic disputes. You demand that your critics endorse your views, or you dismiss them as dilettantes unworthy of respect.
Readers may recall that the scientific method works in the opposite direction of the Dilettante Doctrine. Modern macro proposes a theory (DSGE) and tests its predictive ability. The DSGE models fail recurrently, on the most important macro events, and the failures are massive. The scientific method requires the theorist of the failed model to declare it falsified. Economists who "like" repeatedly falsified DSGE models are, as Paul Romer famously declared, engaged in "pseudoscience."
Athreya then inadvertently compounded modern macro's failures by putting in writing a bit too many of modern macro's darker secrets in his 2013 book about macroeconomics. Athreya confirmed many of the most fundamental criticisms of modern macro devotees, revealed additional failures that were even more devastating, and illustrated perfectly the blindness of modern macro's devotees to their dogmas and logic. Athreya did recognize clearly one dogma that made modern macro devotees unable to spot even the world's largest bubble – but treated that failure as if it were a virtue. Modern macro devotees train macroeconomists to be unable to identify warn against, or take action to end even the most destructive bubbles. This is like training surgeons to believe that shock cannot occur and they should ignore shock in treating patients.
I will return to these errors in subsequent columns, but in this initial column, I introduce Athreya's most embarrassing and devastating admission. Athreya goes on for over 100 pages on how wondrous his fellow modern macro devotees are. They are brilliant specialists who are the world's top practitioners of ultra-rigorous logic and ultra-sophisticated mathematics skills that make it impossible for them to be anything other than transparent and scrupulously honest. In particular, Athreya tells the reader that the paramount problem in macro and microeconomics is recognizing, understanding, and countering deceit, the defining element at law of fraud. (Actually, he does that only in an exceptionally opaque manner.) On p.103, however, Athreya admits that modern macro devotees know that their vaunted DSGE models rest on a fatal premise that is so preposterous and embarrassing that they dare not state it. "A silent assumption of the ADM model" is that "the ADM God" perfectly prevents all crimes, predation, and deceit – at no cost. Note that this means that modern macro devotees (silently) designed their DSGE models to be incapable of recognizing, understanding, measuring, or countering deceit, which they admit is their paramount and fatal failure.
It is never good to be arrogant. It is always dangerous and limiting to be (proudly) ignorant of fields that are likely to have superior understanding of issues such as deceit, fraud, and predation. Athreya's book displays his pride in both of these faults.
The authors of the Dilettante Doctrine inadvertently revealed another embarrassing modern macro failure of great importance. It is the combination of repeated, devastating failure and unfailing arrogance that defines (and dooms) modern macro as pseudoscientists. In fairness to the authors, they announced their Dilettante Doctrine in the context of an article admitting catastrophic errors in modern macro. They also unintentionally admit the non-scientific nature of their enterprise. Consider this passage:
For [IMF's leader] to take DSGE model-based recommendations seriously, the economic intuition underlying those recommendations has to be made in compelling and intuitive ways.
Yes, they actually wrote that for anyone to take DSGE models "seriously" their "economic intuition" must "be made intuitive." Wow, who knew science could be so 'intuitive?' Not satisfied with announcing their new "intuitive method" as a substitute for the scientific method, the authors double-down on the concept that 'intuition' is the secret sauce of economics declaring that the super-secret is to keep that 'intuition' "simple."
To be convincing, it is critical for a DSGE modeler to understand and convey the economic intuition behind the model's implications in simple and intuitive terms.
Notice that the authors are not stating the conditions required to make the DSGE models 'correct.' They are only interested in what practices will make the models' results "convincing" to the bosses.
The bosses decide "actual policymaking." The Dilettante Doctrine authors declare policymaking to be even less scientific than relying on 'simple' 'intuition' to convey DSGE model results. It turns out that DSGE models are the 'canvas' on which modern macro devotees "see the combined effect of the different colors" of their "art."
Inevitably, actual policymaking will always be to some extent an art. But even an artist needs a canvas to see the combined effect of the different colors. A DSGE model is that canvas.
These passages are not simply embarrassing, they are revealing. DSGE is a substantive farce that repeatedly fails because modern macro devotees shaped their models from the beginning to embrace laissez faire dogmas. The 'simple' 'intuitions' underlying DSGE models are the most destructive laissez faire dogmas. Narayana Kocherlakota's sly use of the word "almost" reveals his agreement with this point.
[A]lmost coincidentally -- in these [early DSGE] models, all government interventions (including all forms of stabilization policy) are undesirable.
The authors of the Dilettante Doctrine agree with Kocherlakota's observation about the original DSGE models.
The associated policy implications are clear: there was no need for any form of government intervention. In fact, government policies aimed at stabilizing the business cycle are welfare-reducing.
Modern macro is proud that its 'freshwater' and 'saltwater' factions have achieved a grand fusion. The saltwater types agreed to use DSGE models and the freshwater types agreed that the freshwater types could add 'frictions' to the DSGE models that would allow the models to at least purport to address some of the actual macroeconomic problems. There is a misleading view that because the 'saltwater' types often call themselves "New Keynesians" they must have views sympathetic to Keynesian thought. The Dilettante Doctrine authors make the useful point that "New Keynesian" dogma is actually Milton Friedman's core laissez faire dogmas.
Prototypical pre-crisis DSGE models built upon the chassis of the RBC model to allow for nominal frictions, both in labor and goods markets. These models are often referred to as New Keynesian (NK) DSGE models. But, it would be just as appropriate to refer to them as Friedmanite DSGE models. The reason is that they embody the fundamental world view articulated in Friedman's seminal Presidential Address .
The Dilettante Doctrine authors admit that DSGE models failed at the most fundamental level – they could not even spot that the economy was becoming progressively more dangerous and harmful.
Pre-crisis DSGE models didn't predict the increasing vulnerability of the US economy to a financial crisis.
The authors go badly wrong in multiple ways when they attempt to explain the DSGE models failures and their implications for economic theory and policy.
There is still an ongoing debate about the causes of the financial crisis. Our view, shared by Bernanke (2009) and many others, is that the financial crisis was precipitated by a rollover crisis in a very large and highly levered shadow-banking sector that relied on short-term debt to fund long-term assets.19
The trigger for the rollover crisis was developments in the housing sector. U.S. housing prices had risen rapidly in the 1990's with the S&P/Case-Shiller U.S. National Home Price Index rising by a factor of roughly 2.5 between 1991 and 2006. The precise role played by expectations, the subprime market, declining lending standards in mortgage markets, and overly-loose monetary policy is not critical for our purposes. What is critical is that housing prices began to decline in mid-2006, causing a fall in the value of the assets of shadow banks that had heavily invested in mortgage-backed securities. The Fed's willingness to provide a safety net for the shadow banking system was at best implicit, creating the conditions under which a roll-over crisis was possible. In fact a rollover crisis did occur and shadow banks had to sell their asset-backed securities at fire-sale prices, precipitating the Great Recession.
In sum, the pre-crisis mainstream DSGE models failed to forecast the financial crisis because they did not integrate the shadow banking system into their analysis.
I begin with the most fundamental failure – the failure to ask the right questions. Two prominent examples are why didn't the DSGE models warn us decades ago that the economy was systematically misallocating assets and creating the largest bubble in world history and what should we do to change the perverse incentives harming the economy and economic stability? Kocherlakota, in the same article from which I quoted above, emphasized that modern macro failed to warn about the coming financial crisis and the Great Recession and failed to provide effective policies to respond to them.
The dilettante article only uses the word 'bubble' once – to describe the tech bubble. It never labels the vastly larger housing bubble a 'bubble.' The dilettante article's authors claim it is not relevant for their purposes to know how the bubble arose, why it continued to inflate for over a decade, why it burst, or why it triggered the global financial crisis and the Great Recession. Only a dilettante could make or believe that claim.
Recall that Athreya emphasizes that deceit is the key factor that screws up economies – and that DSGE models "silently" assume "the ADM God" makes deceit impossible. I have explained in scores of columns why deceit, fraud, and predation were the central causes of the housing bubble hyper-inflating, the financial crisis, and the creation of the Great Recession. The dilettante authors refusal to call the housing bubble a bubble does not change the fact that they claim that the dramatic fall in housing values after 2005 was the paramount "trigger" of the financial crisis and the Great Recession.
The dilettante authors create a fiction about what "precipitat[ed] the Great Recession.
In fact a rollover crisis did occur and shadow banks had to sell their asset-backed securities at fire-sale prices, precipitating the Great Recession.
The dilettante authors then make their twin ' mea culpa ' on behalf of modern macro.
Against this background, we turn to the first of the two criticisms of DSGE models mentioned above, namely their failure to signal the increasing vulnerability of the U.S. economy to a financial crisis. This criticism is correct. The failure reflected a broader failure of the economics community.
The failure was to allow a small shadow-banking system to metastasize into a massive, poorly-regulated wild west-like sector that was not protected by deposit insurance or lender-of-last-resort backstops.
We now turn to the second criticism of DSGE models, namely that they did not sufficiently emphasize financial frictions. One reason why modelers did not emphasize financial frictions in DSGE models is that until the recent crisis, post-war recessions in the U.S. and Western Europe did not seem closely tied to disturbances in financial markets. The Savings and Loans crisis in the US was a localized affair that did not grow into anything like the Great Recession. Similarly, the stock market meltdown in the late 1980's and the bursting of the tech-bubble in 2001 only had minor effects on aggregate economic activity.
At the same time, the financial frictions that were included in DSGE models did not seem to have very big effects.
The dilettante authors have no idea how important their concessions are. Their premise is that it was government regulation, deposit insurance, and the central bank's 'lender of last resort' function that prevented prior epidemics of accounting control fraud from causing anything worse than "minor effects on aggregate economic activity." The obvious problem is that since its inception 30 years ago modern macro ideologues have claimed the opposite is true – that governmental action is unnecessary and harmful. They constructed their DSGE models to valorize their Friedmanite dogmas.
The less obvious problem is that freshwater modern macro has claimed that the lesson of the financial crisis is the opposite. Athreya and the Richmond Fed have preached for years that the federal safety net caused the housing problem, the financial crisis, and the Great Recession. The Richmond Fed claims that the key policy response to future financial crises is allowing the shadow sector to collapse in an orgy of "rollover cris[e]s."
The broader problem is why the dilettante authors are so wedded to their failed models, which at their core assume out of existence the institutions and events they say are most critical to explaining the catastrophic failures of their models. Why, for example, start with a general equilibrium model based on absurdly utopian assumptions (stated and unstated) that invariably produces equilibrium when the things we most need to study involve the failure of markets to function? It is nonsensical to make contradictory assumptions in different parts of your model about human behavior. Modern macro models keep failing and their devotees' response is to add (over time) dozens of fudges that posit that humans typically act in a manner that contradicts to the explicit and unstated assumptions of the DSGE model about human behavior. DSGE models increasingly resemble Borg constructs. The Borg also claim that there is no alternative to assimilation into their collective.
Aaron Layman , December 20, 2017 at 10:23 amdiptherio , December 20, 2017 at 11:07 am
Excellent points. Helps to explain how you get a supposedly serious site covering real estate falling for ridiculous tripe about the root cause of the housing crisis (aka Great Recession). Take a careful look at the bombshell "working paper" and the new "narrative" cited, and you can see the groupstink of the Fed written all over it
https://betterdwelling.com/forget-subprime-canadian-real-estate-buyers-investors-crashed-the-us-market/Altandmain , December 20, 2017 at 12:01 pm
Modern mainstream macro is like a police detective whose model of the world states that people are nice and the body heals itself, and that therefore we will all live happily ever after. When confronted by a murder victim lying in a pool of their own blood, and that fact's apparent incompatibility with their model of the world, they respond, "My model is correct only, you see, it failed to account for sudden massive blood loss. How that loss of blood happened is beyond the scope of my investigation, the important thing is that I've now incorporated that knowledge in my new improved model, which proves that we will all live happily ever after -- except in cases of a sudden, massive loss of blood ."shinola , December 20, 2017 at 2:10 pm
There has not been a big mea-culpa from neoliberal economists after the 2008 Financial Crisis. I don't think there will be. Many are essentially the equal of religious fundamentalists.
However, we should also remember that the very wealthy have backed the neoliberal economists against the general public. Neolibe3ralism provides a pseudoscientific economic excuse for what amounts to turning society into a plutocracy, which is precisely what the rich want.flora , December 20, 2017 at 3:26 pm
" essentially the equal of religious fundamentalists."
Yes – nailed it!Skip Intro , December 20, 2017 at 3:12 pm
aka: The divine right of markets. /sMatthew G. Saroff , December 20, 2017 at 12:16 pm
The GFC worked out very well for the neoliberal agenda. What you can't predict, you don't need to prevent or protect against. If the result happens to be a massive transfer of funds from states to speculators that eases the path to austerity and asset stripping, what's to apologize for?Robert Denne , December 20, 2017 at 12:50 pm
What is ADM, aside from the agribusiness?Jean , December 20, 2017 at 12:31 pm
ADM is the Arrow-Debreu-McKenzie (ADM) model, as revealed in the blurb for the Athreya book on Amazon.voislav , December 20, 2017 at 1:28 pm
Lack of higher math skills precludes citizen involvement in economics.
Blame it on the math card in PCs that makes doing it by hand and thus learning and understanding how numbers work.djrichard , December 20, 2017 at 1:31 pm
Most economists lack higher math skills too, but that doesn't seem to be obstacle for them. It's spherical chickens in a vacuum, models that are supposedly related to real world but are simplified beyond recognition because most economists are ignorant of even rudimentary statistics.Amfortas the Hippie , December 20, 2017 at 3:59 pm
You don't need math to follow the money.Synoia , December 20, 2017 at 12:48 pm
and you don't need math to discover that the holy Models rely on downright silly assumptions about Human Beings.
"rational actors with perfect information".
Most of the economic actors I know do not even remotely resemble that.
and whomever said that modern econ is akin to fundamentalist religion is right on.
I can't read "Money" or watch CNBC without thinking about Pat Robertson or Billy Graham.
It's just a different god they worship.
With this in mind, I think it's hilarious that the current hyperventilation about "cryptocurrency" could possibly be the bubble that, in popping, brings the whole mess down.
"Masters of the Universe", indeed.
Know Thy Farmer.PB , December 20, 2017 at 1:28 pm
Personally I believe economic as practiced is an example of telling the boss (the King) what they want to hear.
Economist appear descended form a long line of Court Magicians, telling the futures from the entrails of an animal, consulting the spirits for guidance, or using a Chrystal ball.
Of more pointedly Bullshit, baffles brains.
Prof Black make the point that he DSGE models assume away fraud. They also assume people are "rational actors, driven only by logic," that is: we are all Vulcans from Star Trek.
A simple view of women's fashions (high heels) with regard to comfort or safety would demolish any theory of people as "rational actors." Or men's behavior over their "sports teams."
To assume away human behavior and emotion, and thus chaos or catastrophe theory, would put economists at odds with their masters, and cut their income, by the nearly always fatal, or career limiting "telling truth to power."
It's interesting to speculate what would be the scope or size of common ground in a dialog between anthropologists and economists. Null set perhaps?
Just a quick note for those who were initially confused by Bill Black's use of "modern macroeconomic theory" and thought "modern monetary theory". (I know I did, and was initially really confused by his take, and had to re-read the first three paragraphs a few times to re-set my mental pointers). As far as I know (and I did a year of Ph.D economics at Stanford, so I pass Arthreya's first test) I haven't heard of "modern" applied to DSGE macro but that probably reflects my choice of reading material more than anything else. In short, "modern macro" is bad, "modern monetary" is good.
BTW, one of the best takes of macroeconomics I've encountered is Steve Keen's work, which I gratefully acknowledge I first read here on NC. Keen's critique of DSGE models is utterly spot-on and mathematically sophisticated. Part of the problem with economics is that it has been afflicted with 'math envy' since its earliest days, and the ADM results were proved with Banach Space methods, so they just *had* to be right. Google the phrase "spherical cow" for more on this mindset, not to mention one of the few really funny math jokes I know.
Apr 04, 2015 | Economist's View
Darryl FKA Ron -> pgl...
At the risk of oversimplifying might it not be as simple as stronger leanings towards IS-LM and kind are indicative of a bias towards full employment and stronger leanings towards DSGE, microfoundations, and kind are indicative of a bias towards low inflation?
IN general I consider over-simplification a fault, if and only if, it is a rigidly adhered to final position. This is to say that over-simplification is always a good starting point and never a good ending point. If in the end your problem was simple to begin with, then the simplified answer would not be OVER-simplified anyway. It is just as bad to over-complicate a simple problem as it is to over-simplify a complex problem. It is easier to build complexity on top of a simple foundation than it is to extract simplicity from a complex foundation.
A lot of the Chicago School initiative into microfoundations and DSGE may have been motivated by a desire to bind Keynes in a NAIRU straight-jacket. Even though economic policy making is largely done just one step at a time then that is still one step too much if it might violate rentier interests.
Darryl FKA Ron -> Barry...
There are two possible (but unlikely) schools of (generously attributed to as) thought for which internal consistency might take precedence over external consistency. One such school wants to consider what would be best in a perfect world full of perfect people and then just assume that is best for the real world just to let the chips fall where they may according to the faults and imperfections of the real world. The second such school is the one whose eyes just glaze over mesmerized by how over their heads they are and remain affraid to ask any question lest they appear stupid.
A more probable school of thought is that this game was created as a con and a cover for the status quo capitalist establishment to indulge themselves in their hard money and liquidity fetishes, consequences be damned.
Richard H. SerlinConsistency sounds so good, Oh, of course we want consistency, who wouldn't?! But consistent in what way? What exactly do you mean? Consistent with reality, or consistent with people all being superhumans? Which concept is usually more useful, or more useful for the task at hand?Richard H. Serlin -> Richard H. Serlin...
Essentially, they want models that are consistent with only certain things, and often because this makes their preferred ideology look far better. They want models, typically, that are consistent with everyone in the world having perfect expertise in every subject there is, from finance to medicine to engineering, perfect public information, and perfect self-discipline, and usually on top, frictionless and perfectly complete markets, often perfectly competitive too.
But a big thing to note is that perfectly consistent people means a level of perfection in expertise, public information, self-discipline, and "rationality", that's extremely at odds with how people actually are. And as a result, this can make the model extremely misleading if it's interpreted very literally (as so often it is, especially by freshwater economists), or taken as The Truth, as Paul Krugman puts it.
You get things like the equity premium "puzzle", which involves why people don't invest more in stocks when the risk-adjusted return appears to usually be so abnormally good, and this "puzzle" can only be answered with "consistency", that people are all perfectly expert in finance, with perfect information, so they must have some mysterious hidden good reason. It can't be at all that it's because 65% of people answered incorrectly when asked how many reindeer would remain if Santa had to lay off 25% of his eight reindeer ( http://richardhserlin.blogspot.com/2013/12/surveys-showing-massive-ignorance-and.html ).
Yes, these perfect optimizer consistency models can give useful insights, and help to see what is best, what we can do better, and they can, in some cases, be good as approximations. But to say they should be used only, and interpreted literally, is, well, inconsistent with optimal, rational behavior -- of the economist using them.Of course, unless the economist using them is doing so to mislead people into supporting his libertarian/plutocratic ideology.
As an old broken down mech engineer, I wonder why all the pissing and moaning about micro foundations vs aggregation. In strength of materials equations that aggregate properties work quite well within the boundaries of the questions to be answered. We all know that at the level of crystals, materials have much complexity. Even within crystals there is deeper complexities down to the molecular levels. However, the addition of quantum mechanics adds no usable information about what materials to build a bridge with.
But, when working at the scale of the most advanced computer chips quantum mechanics is required. WTF! I guess in economics there is no quantum mechanics theories or even reliable aggregation theories.
Poor economists, doomed to argue, forever, over how many micro foundations can dance on the head of a pin.
RGC -> dilbert dogbert...
Endless discussions about how quantum effects aggregate to produce a material suitable for bridge building crowd out discussions about wher