Wednesday, January 31, 2018

Zero Hedge - Tyler Durden - FBI Releases Docs Claiming RT Founder Beat Himself To Death In His Hotel Room

The FBI just released the results of their investigation claiming that the media mogul and found of RT killed himself by repeatedly smashing his head and upper body into the ground.

In November 2015, the Free Thought Project reported that Mikhail Lesin, the former head of media affairs for the Russian government, and the founder of Russia Today (RT), was found dead in the hotel room that he was staying at in Washington DC.
Originally, authorities announced that Lesin died from a heart attack.

However, the results of his autopsy released months later indicated a far more sinister cause of death and the heavily redacted FBI documents that were just released add to that story.
The documents, detailing the FBI investigation into Lesin’s death were just released Saturday morning in spite of the investigation ending in October of 2016.
In spite of the original cause of death noted as a heart attack, a few months later, the District of Colombia’s Office of the Chief Medical Examiner (OCME) and Metropolitan Police Department said that “blunt force injuries of the neck, torso, upper extremities and lower extremities” contributed to Lesin’s death. “The Office of the Chief Medical Examiner (OCME) has released the cause and manner of death for Mikhail Lesin… Cause of Death: blunt force injuries of the head,” the statement said.
Now, FBI investigators have released the results of their investigation claiming that the blunt force trauma all over his body was self-inflicted.
Mr. Lesin died as a result of blunt for injuries to his head, with contributing causes being blunt force injuries of the neck, torso, upper extremities, and lower extremities, which were induced by falls, with acute ethanol intoxication,” the report states.
In other words, the FBI is claiming that Lesin got so drunk that he repeatedly and violently fell on things until he killed himself.
To show just how much information the FBI is willing to release on these findings, here is the version of the amended autopsy report they released in the report.

Since Trump's election, US dollar has eroded badly

Trump has been bragging about the stock market's gains, but what we don't hear about is the fact that the US dollar has eroded badly. Since his election the dollar has fallen to a 3-year low.

Trump is destroying the US dollar.
Trump is destroying the US dollar.

I called this at the time of the election and I said it was based, at the time, on two things. 1) Trump's  proposed expansion of fiscal stimulus. (More spending and tax cuts.) And, 2) the ongoing rate hike campaign of the Fed, which is inflationary and therefore NOT bullish for the dollar contrary to what most people believe.

Since then a new and far more corrosive element has entered the picture and that is the Trump Administration's aggressive use of sanctions. This is what I have called the "weaponization" of the US dollar.

This has set in motion an irreversible trend of "de-dollarization." The Rest of the World has no other choice. The USA's use of sanctions designed to limit or completely shut entities or entire nations out of the global, dollar-based transaction and clearing system is too great a risk. Even US allies can be indirectly affected by the sanctions' policy.

Alternatives will be sought. We see this in the rise of new, bilateral trade and clearing arrangements (Russia-China, China oil trading in yuan, etc.) We also see this in rise of Bitcoin and other cryptocurrencies, which I believe, reflects this trend toward de-dollarization and it will continue.

Trump will go down as having presided over the greatest period of dollar depreciation in history. Watch.

Boeing beats, projects 7% growth

Nice report from Boeing this quarter; $3.06 vs. $2.89 expected.  Projecting 7% growth in real output for 2018 too. Not too shabby...thank you low oil prices.

Boeing flying high; OPEC Venezuela in the shit hole.  Let's get another 7 years of this then maybe it will be  back close to "even"...

World Socialist Web: The Economist - The Next War

The Economist: Humanity teeters on the brink of world war

When will the Western electorate wake up the what's going on? KV

James Cogan
The Economist magazine, the influential London weekly described by Karl Marx over 150 years ago as the “European organ” of the “aristocracy of finance,” has devoted its latest issue to discussing “The Next War” and “The Growing Threat of Great Power Conflict.” Its lead editorial opens with a chilling warning:
In the past 25 years war has claimed too many lives. Yet even as civil and religious strife have raged in Syria, central Africa, Afghanistan and Iraq, a devastating clash between the world’s great powers has remained almost unimaginable.
No longer … powerful, long-term shifts in geopolitics and the proliferation of new technologies are eroding the extraordinary military dominance that America and its allies have enjoyed. Conflict on a scale and intensity not seen since the second world war is once again plausible. The world is not prepared.
The Economist envisages a dystopian, violent future, with the American military deploying to intimidate or destroy purported challenges to its dominance everywhere.
In an unintended echo of George Orwell’s “Newspeak,” the Economist concludes that “a strong America”—armed to the teeth and permanently threatening its rivals with obliteration—is the “best guarantor of world peace.”
The most chilling aspect of the report, however, is that it is pessimistic about its own prognosis for US imperialism succeeding in intimidating its rivals into submission. The very development of an ever more aggressive military stance toward China and Russia raises, not lessens, the likelihood of war.
“The greatest danger,” it states, “lies in miscalculation through a failure to understand an adversary’s intentions, leading to an unplanned escalation that runs out of control.”

The War Party Panorama BBC

Have you seen this, it's about the Neocons. I don't know if the BBC would make such a documentary today. It's really good.

Tuesday, January 30, 2018

Jason Smith — 2.4% growth forever?

Mentions Stephanie Kelton.
In addition to trying to set up a framework to understand these phenomena for the future book, I also saw a tweet from Stephanie Kelton talking about the downward revisions of potential RGDP and potential NGDP both in level and growth rate [3]. She thinks that 2% growth going forward is too pessimistic -- saying we can get 3% growth. Now the model above says that the dynamic equilibrium is 2.4% (so I'd agree that 2% growth is a shade pessimistic, see [3]).

But there is never a period in the history where the US has achieved a sustainable RGDP growth above the 2.4% dynamic equilibrium rate where we have decent data. The 60s and 70s involved a major change in the civilian labor force (increasing the relative fraction of women in the labor force) that gave us 20 or more years of RGDP growth periodically above 2.4% coupled with bouts of sub-2.4% growth. The only other times of above-2.4% growth were during the dot-com and housing bubbles.

I'm not saying it isn't possible, but it would require something that hasn't been tried in post-war US history [4]....
Information Transfer Economics
2.4% growth forever?
Jason Smith

See also

Losing my vestigial monetarism

Eric Zuesse — Trump"s Announced Strategy for Occupying Syria

“The President has committed, as a matter of strategy, that we will not leave Syria. We are not going to declare victory and go. And that is not my opinion; that’s the President’s strategic judgment. We’re going to stay for several reasons: stabilization and assistance in the vital north and northeast, protection of our allies the Syrian Democratic Forces, who have fought so valiantly against ISIS in the northeast, try to work to help transform the political structures in that area to a model for the rest of Syria, and capable of being credibly represented in a new Syrian state; but for other reasons as well, including countering Iran and its ability to enhance its presence in Syria, and serving as a weight or force helping us to achieve some of those broader objectives.”
That’s as spoken by David M. Satterfield, Acting Assistant Secretary of State for Near Eastern Affairs, and Bureau of Near Eastern Affairs, US Department of State, 11 January 2018, addressing the US Senate Foreign Relations Committee, on the topic of “US Policy Toward Syria.” You can see it in this clip from C-Span.
His statement hasn’t been reported in US newsmedia; so, it’s still news; and this means that it’s news to the American people, and to all others who, though this news wasn’t reported to them, trust US media to report any important American news (such as this US Government policy-statement to the US Senate certainly is).
Parts of this clip have been reported by the independent journalist Mutlu Civiroglu on twitter, and, from there to reddit, and also at Russia Defense Forum, and at the excellent general news site Signs Of The Times, where I came upon it, and whose reporter Joe Quinn contrasted this statement with a tweet from Donald Trump as a Presidential candidate on 5 Sep 2013: “Again, to our very foolish leader, do not attack Syria — if you do, many very bad things will happen & from that fight the US gets nothing!”
More endless war.

Strategic Culture Foundation
Trump"s Announced Strategy for Occupying Syria
Eric Zuesse

Reuters — Experts question Trump decision to hold off on Russian sanctions

Lawrence Freedman, emeritus professor at King’s College London [said], “the main concern is clearly not wanting to upset Russia more.”
Au contraire. I suspect that the biggest reason — and one that no one in the US government will talk about above a whisper in a secure room — is that the US is one the verge of losing Europe and either the president has figured this out for himself or he is being told by his advisers.

The US is also losing global leverage based on soft power. The US must therefore rely more and more on hard power, and that is also resulting in a predictable reaction.

Russian Prime Minister Medvedev and Foreign Minister Lavrov are among those targeted for sanction. Putin just trolled, why not me?
The entire Russian government is included in the US Treasury’s ‘Kremlin List,’ which also features scores of influential businessmen. Moscow slammed the report, saying it virtually amounts to a breakdown of ties. — RT
Jumping the shark.

Experts question Trump decision to hold off on Russian sanctions
Warren Strobel, Pete Schroeder


Sputnik International
WATCH: Joe Biden Says Europe 'Wanted No Part of the Sanctions on Russia'


Sputnik International
US 'Kremlin Report' Tool of Unfair Competition - Military Cooperation Service

The Kremlin has described the list as an attempt to interfere in the upcoming 2018 Russian presidential election.
Sputnik International
US Includes Russian PM Medvedev, FM Lavrov, Other Top Figures in 'Kremlin List'

The release of the so-called ‘Kremlin List’ by the US Treasury Department increases uncertainty in the Russian business environment and can affect interests of European investors and companies doing business or trading with Russia, the Association of European Businesses (AEB) said on Tuesday.

"The Association reiterates its calls on the Heads of States and Governments of the EU, the USA and Russia to refrain from actions, which can undermine the prospects of future economic cooperation, and find a common, mutually acceptable, solution of political problems in the spirit of peace and conciliation," the AEB said.

‘Kremlin List’ can affect interests of European business in Russia — AEB


Russian PM jokes that cabinet members not on US ‘Kremlin List’ should step down


German businessmen say sanctions on Russia fraught with serious risks


Alexandre Antonov — America's Democratic Hacking Is Totally Unlike Russia's, China's Undemocratic Hacking - Ex-Pentagon Chief

When US meddles in others people's elections, which is all the time, it's for their own good
Same with regime change operations, including coups, even if it involves installing brutal dictators and dictatorial regimes like the Shah in Iran and Pinochet in Chile.

Russia Insider
America's Democratic Hacking Is Totally Unlike Russia's, China's Undemocratic Hacking - Ex-Pentagon Chief
Alexandre Antonov

BBC — News Eddie Adams' iconic Vietnam War photo: What happened next

The BBC attempts to whitewash a murder.
Warning: This story includes Adams' photo of the moment of the shooting, and graphic descriptions of it.
It was an execution but war justified it, you see.

The article laments that the murder's career was (almost) destroyed by it.

Reminiscent of the many years of British colonialism, and why the Brits became hated even by their close neighbors, the Irish, who were also colonized. (Disclosure: I inculcated in the details of this as a child by the Irish side of my family.)

But the West is civilized, right? And Great Britain was the birthplace of liberalism as the foundation of the "Free World."

Inquiring minds wonder why this story was planted now.

BBC News
Eddie Adams' iconic Vietnam War photo: What happened next

Elizabeth Vos — Facebook Cracks Down On Independent Media, Under Guise Of ‘Enhancing Relationships’

Corporate media initiates "self-censorship" since government censorship is illegal.  The result is the same and few believe that the move is self-initiated.

Disobedient Media
Facebook Cracks Down On Independent Media, Under Guise Of ‘Enhancing Relationships’
Elizabeth Vos

Barkley Rosser — Is Treasury Secretary Mnuchin Right About The Impact Of The Dollar On US Trade?

Let me conclude that while I agree with Dean that lowering the value of the dollar may will certainly tend to increase the quantity of exports and lower the quantity of imports as well as tend therefore to increase employment somewhat, this does not mean that I necessarily support a "talking down the dollar" policy. One obvious problem, mentioned by Summers, is that a too obvious and aggressive such nationalist policy is likely to call forth retaliation from other nations, just as an aggressively protectionist policy is likely to do. They will start talking down their currencies and perhaps engage in more direct policies to lower their values, which can easily end up in a "beggar thy neighbor" war as described by Joan Robinson in 1937. More often than not a wiser policy for a TeasSec is not to push either a strong or weak currency policy and just keep quiet, just as such a policy is often best for central bankers as well, even though the TreasSec is "in charge" of the dollar. Sometimes asserting that authority is nothing more than a pointless macho exercise.
Is Treasury Secretary Mnuchin Right About The Impact Of The Dollar On US Trade?
J. Barkley Rosser | Professor of Economics and Business Administration James Madison University

Stephen Hawking campaign group wins judicial review of NHS ‘privatisation’ plans

The Tories say we need to save money. Hmm, but they gave it to all their banker friends who stashed it in the Caiman islands. The public is duped again by a complicit press which is owned by the One percent. Chunky Mark talks about 'bankrupt Britain'. Well, over 40 years of neoliberalism, AKA Thatcherism, or Monetarism,   - this wonderful new economic system dreamt up by the Conservatives - and we are busted as usual. KV

A campaign group backed by Professor Stephen Hawking has been granted permission to challenge Jeremy Hunt in the High Court over plans to allow private companies to play a greater role in the NHS.
The physicist has warned that introducing commercial companies to run parts of the health and social services would amount to an “attack on the fundamental principles of the NHS”, while campaigners said they feared the Government was trying to sneak the changes through “during the clamour of Brexit”.
The proposals will now be subject to judicial review, which is expected to take place “as soon as possible after March 14”.
Founded by three doctors and a university professor, campaign group JR4NHS say that the introduction of accountable care organisations (ACOs) will “Americanise” the NHS.
The campaigners say the ACOs will decide the boundary of what care is free and what has to be paid for, and that they will be paid more if they save money.

Jonathon Cook - How the ‘free’ media dupe us on climate change

Despite the $millions pumped into it by Billionaires, climate change deniers are losing the argument. The young are certainly concerned about man made climate change. There is no climate change skepticism in China.  KV
Jonathon Cook
Below is a fascinating 9-minute segment of Al Jazeera’s programme The Listening Post on why climate scepticism persists only in what it terms the Anglosphere media – those in the United States, UK, Australia and Canada. Paradoxically, the media in other big polluters, such as China and India, offer climate change deniers no houseroom at all.
The answer, the programme concludes, relates primarily to where political and economic power resides in each system.
In China, the media follow the party line, which is to accept the scientific evidence for approaching climate meltdown. In India, the corporations are so dominant, and political accountability so weak, that big business need not expend energy and waste money on manufacturing popular consent for its policies of rape and pillage of the planet.
In the Anglosphere, on the other hand, far more is at stake for the corporations. Ordinary people hold potentially more power, if they ever chose to exercise it. Science-based debates about climate change are, therefore, dangerous. So the corporate media seek to sow doubt, confusion and apathy by downplaying the science and conferring credibility on the deniers.
The issue of climate change is revealing about the key role of the media – and why I keep banging on about it. Given the science, there really should be zero room for doubt about imminent climate meltdown. Our confusion and apathy exist only because they have been manufactured by the media in the face of the overwhelming factual and scientific evidence.
So if we are being duped by the Anglosphere’s “free” media on climate change, where the facts are known and the consequences devastating for all of us, imagine how much easier it is to deceive us on other, less scientific matters – ones that occur far away and rarely touch directly on our own lives.

How reliable then is that same western corporate media likely to be in covering, for example, the endless resource wars that have been packaged and sold to us as wars on terrorism and instances of humanitarian intervention? The stakes, after all, are just as high for the corporations – the plunder of other countries’ resources and the maintenance of sky-high profits for their military industries.

Another ICO

Meh.. here's another one now out of Europe.... 90 million EUR... for just "coins"... no guarantees or warranties... just coins... ?!?!?!?!?

Ann Pettifor - Why building more homes will not solve Britain’s housing crisis

The problem of inflated prices lies in property speculation. That’s what we need to clamp down on

There is no two ways about it, I do like Ann Pettifor, although I like Positive money too who she has differences with about fractional reserve banking. 

Excerpts -

Everyone – from the government, to housing charities, to housebuilders – has bought into the conventional wisdom that the dysfunction that racks our housing market is a matter of demand and supply. We’re not building enough houses, so house prices have been sent rocketing, taking home-ownership out of reach for growing numbers of young people. But in reality, our housing problems are not a simple feature of supply and demand. Rather, our housing market has a bitcoin problem.

What has bitcoin mania got in common with house prices, especially in the capital? For starters, both are speculative bubbles. Vast sums of money have been poured into finite supplies of bitcoins and London property. Both have consequently exploded in value, albeit over different time periods. And so both have become financialised assets that deliver capital gains far in excess of people’s ability to earn income from work, or from investment in the real economy. And as with bitcoin, so with London property: speculators are convinced that prices will continue to rise for ever.

It’s speculation in the property market that is fuelling stratospheric house price rises, not shortage of supply. When the “fuel” of private capital, mortgage credit and cash from the bank of mum and dad is supplemented by government subsidies and tax breaks, house prices rise. Moreover, wealthy global and non-resident buyers have funnelled more than £100bn into London property over recent years, making the problem even worse.

So, rather counterintuitively, building more houses is not the right prescription. House prices won’t fall until the tide of cash flowing into the market abates, for example by tightening mortgage credit, or shrinking the pool of buy-to-let investors. That may already be starting to happen as real incomes continue to fall, the Bank of England toughens up buy-to-let mortgages, and stamp duty rises are phased in for second properties.

The best way to do this is through the tax system. First for consideration should be a property speculation tax (PST), as in Germany. This could be used to levy punitive rates on speculators, or those who own second homes and empty properties, encouraging them to invest their cash elsewhere.

Second, the government must manage speculative capital flows in and out of Britain by taxing them through a Tobin tax on global financial transactions. Corrupt politicians in the poorest countries and oligarchs in weak economies shift often-fraudulent cash into stable jurisdictions such as the UK. These mobile flows of capital inflate the price of Britain’s fixed supply of land.

Monday, January 29, 2018

Peter Cooper — Disequilibrium Dynamics of Output and Demand

Theoretical studies of output and growth often focus on the behavior of equilibrium output. The usefulness of this approach depends on there being a tendency for actual output to converge on equilibrium output. With such a tendency present, studying the behavior of equilibrium output will tell us something about the behavior of actual output. It is therefore of interest to spell out the process by which an economy in disequilibrium is thought to tend toward equilibrium.
A first step is to consider the disequilibrium behavior of an economy that, for simplicity, is taken to be stationary (non-growing) when in equilibrium. This approach is adopted in the present post. The exercise is really preparation for considering a continually growing economy – a task that is left for a possible future post.…
The material in this post is somewhat technical but hopefully not difficult. Even so, the post is long (about 4000 words) and, for readers not already familiar with similar material, possibly a stretch to read all in one go. I considered separating the post into numerous shorter ones but felt that the loss of continuity would require too much repetition in setting up the discussion each time.
The post is divided into sections that provide natural stopping points for readers who wish to take breaks. The section titles are:
  1. Macroeconomic Equilibrium
  2. Disequilibrium Behavior
  3. Adjustment Process
  4. Adjustment in Simple Algebra
  5. Convergence as a Power Series: λ = 1
  6. Convergence as a Power Series: λ < 1
  7. Adjustment of Growth Rates

Bill Mitchell — Planning public works – history has a lot to say if we listen properly

A few weeks ago, in my three part series answering questions about Modern Monetary Theory (MMT), I addressed the issue often raised about the fiscal policy emphasis in MMT, that it is difficult to time government spending injections to match the cyclical need. These criticisms go back a long way and were used by the likes of Milton Friedman to build up his case against discretionary fiscal activism in favour of monetary rules. Of course, that was an ideological preference, given the Monetarists wanted ‘small’ government and technocrats implementing economic policy. The basic precepts of Monetarism have not stood the test of time and the GFC and its aftermath have showed, beyond doubt, that monetary policy is an ineffective means of stimulating aggregate spending and that fiscal policy is the best way to counter non-government spending collapses. In those blogs, I outlined several ways in which fiscal policy could overcome ‘timing’ issues and deliver prompt stimulus when needed and be able to contract the stimulus in a timely manner once non-government confidence and spending had recovered. The points I raised are not new and have been discussed and made operational many times in the past. A tweet from my MMT colleague Stephanie Kelton last week reminded us of this again when the US National Resources Planning Board (NPP) was mentioned with a link to the The Internet Archive is a “non-profit library of millions of free books, movies, software, music, websites, and more” and is a fabulous resource for researchers. Reading the Report from the NPP is like music to the ears! History has a lot to say if we listen properly
It's ironic that China is doing this kind of national planning that the US used to do, while present US policy is to funnel money to the top.

Bill Mitchell – billy blog
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Alan R. Knight — We don't need a balanced budget amendment

Mentions MMT and Stephanie Kelton.

Charleston Gazette-Mail
Alan R. Knight: We don't need a balanced budget amendment
Alan R. Knight. retired editor of New England Farmer newspaper and formerly associate editor of American Agriculturist magazine, where he also wrote “The Uncommon Market,” an award-winning column that explored both the local and global marketplace into which farmers sell their products.

Sophie Kleber — As AI Meets the Reputation Economy, We’re All Being Silently Judged

Welcome to the reputation economy, where the individual social graph — the social data set about each person — determines one’s value in society, access to services, and employability. In this economy, reputation becomes currency.
The reputation economy is based on the simplistic, but effective star ratings system. Anyone who’s ever rated their Uber driver or Airbnb host has actively participated. But what happens when algorithms, rather than humans, determine an individual’s reputation score based on multiple data sources and mathematical formulas, promising more accuracy and more flexibility via machine learning?
China provides a good example. Chinese leaders are now introducing credit availability on a wide scale. The chief issue is assessing credit risk in an economy with no credit history. The solution they have come up with is assessing social reputation based on known behavior as a substitute initially, before credit information becomes available specifically. While the West is critical about privacy concerns, the people getting credit extension are happy to be doing so.
And China is aiming to implement a national social score for every citizen by 2020, based on crime records, their social media, what they buy, and even the scores of their friends.
Actually, economies were always reputational, since credit extension is ancient, and reputation also figures into many other fundamental areas of social life. Perviously, reputational assessment was largely local, but now conditions have changed and a much wider net is required. Big data and AI are coming to the fore.

Such as system might actually have advantages locally, too, since it is much more difficult to con an algorithm that has access to recorded behavior.

But no system is fool-proof and humans design and run systems. So controls are needed.
When AI starts determining an individual’s social worth, the stakes are high. As Kim Darah writes in The New Economy: “Far from being neutral and all-knowing decision tools, complex algorithms are shaped by humans, who are, for all intents and purposes, imperfect.” We must ask ourselves: How good is the data? How good is the math? How ready is society to be judged by AI? And what could possibly go wrong?
Harvard Business Review
As AI Meets the Reputation Economy, We’re All Being Silently Judged
Sophie Kleber

Stephen G. Cecchetti & Kermit L. Schoenholtz — Time Consistency: A Primer

The problem of time consistency is one of the most profound in social science. With applications in areas ranging from economic policy to counterterrorism, it arises whenever the effectiveness of a policy today depends on the credibility of the commitment to implement that policy in the future.
For simplicity, we will define a time consistent policy as one where a future policymaker lacks the opportunity or the incentive to renege. Conversely, a policy lacks time consistency when a future policymaker has both the means and the motivation to break the commitment.
In this post, we describe the conceptual origins of time consistency. To emphasize its broad importance, we provide three economic examples—in monetary policy, prudential regulation, and tax policy—where the impact of the idea is especially notable. (For other examples, see here and here.)
The US has demonstrated a problem with time consistency in making and keeping international agreements.

Money and Banking
Time Consistency: A Primer
Stephen G. Cecchetti, Professor of International Economics at the Brandeis International Business School, and Kermit L. Schoenholtz, Professor of Management Practice in the Department of Economics of New York University’s Leonard N. Stern School of Business

Cecchetti & Schoenholtz are the authors of Money, Banking and Financial Markets.

Andreas Dombret — "Basel III - Are we done now?"

On finalizing Basel III.

Andreas Dombret: "Basel III - Are we done now?"
Statement by Dr Andreas Dombret, Member of the Executive Board of the Deutsche Bundesbank, at the Institute for Law and Finance Conference on Basel III, Frankfurt am Main, 29 January 2018.

Alex Tabarrok — The Return of Henry George?

The notion that property owners should pay extra for their proximity to the subway is called “value capture” and has long been debated in urban planning circles. Now Gov. Andrew M. Cuomo, a Democrat, has made value capture a prominent part of his plan to salvage the subway system by proposing to give the Metropolitan Transportation Authority the power to designate “transit improvement subdistricts” and impose taxes.
Marginal Revolution
The Return of Henry George?
Alex Tabarrok | Bartley J. Madden Chair in Economics at the Mercatus Center and Professor of Economics at George Mason University, and a research fellow with the Mercatus Center

Japanese Electronics Retail Giant Launches Bitcoin Payments

More libertarian utopia...

Sunday, January 28, 2018

Edward Harrison — Grantham: The essence of every bubble is wonderful fundamentals, euphorically extrapolated

Jeremy Grantham sat down with Consuelo Mack at WealthTrack to expand upon his recent bullish comments about the US markets. However, far from being bullish, the essence of Grantham’s comments were extremely bearish, suggesting investors could expect only a couple of percent real return over the next couple of decades in US equities. The veteran investor also made bearish comments about the US bond market. His advice is to rotate out of US equities and pile into emerging markets, as much as you dare.
It must be noted first that Jeremy Grantham has called a few stock market bubbles — the tech stock bubble of the 1990s and the global credit bubble of the 2000s, to be sure. And he was spot on in timing the 2009 market bottom. See my February and March 2009, Jeremy Grantham: “Pull the trigger” and More bullishness from Jeremy Grantham.
So when Grantham, Co-Founder and Chief Investment Strategist at Boston-based fund manager GMO, talks of how to deal with a market melt-up, we should listen. In contrast to his written piece a couple of weeks ago, the views Grantham expressed in his WealthTrack interview show someone who is quite concerned about overvaluation in US markets, both in absolute and relative terms. I want to pick apart what he said and follow it with the video of his conversation.
Interesting tidbit.
He says,“the world has changed in many important ways I think,” suggesting he now believes corporate profit margins will not mean revert — that labor will not receive the same share of profits that it historically has done.
Demand problem that will be viewed as an over-supply problem.

Credit Writedowns
Grantham: The essence of every bubble is wonderful fundamentals, euphorically extrapolatedEdward Harrison

Olivia Lin — Chinese phone market enters ‘zero growth’ stage

Market saturation.

Bill Mitchell — IMF finds the Eurozone has failed at the most elemental level

The IMF put out a new working Paper last week (January 23, 2018)) – Economic Convergence in the Euro Area: Coming Together or Drifting Apart? – which while they don’t admit it demonstrates that the Economic and Monetary Union (EMU) has failed to achieve its most basic aims – economic convergence. The stated aim of European integration has always been to achieve a convergence in the living standards of those within the European Union. That goes back to the 1957 Treaty of Rome, which established the EEC (Common Market). It has been reiterated many times in official documents since. It was a centrepiece of the 1989 Delors Report, which was the final design document for the Treaty of Maastricht and the creation of the EMU. The success or otherwise of the system must therefore be judged in terms of its basic goals and one of them was to create this convergence. The IMF finds that the EMU has, in fact, created increased divergence across a number of indicators – GDP per capita, productivity growth, etc. It also finds that the basic architecture of the EMU, which has allowed nominal convergence to occur has been a destabilising force. It finds that the Stability and Growth Pact criteria has created an environment where fiscal policy has become pro-cyclical, which is the exemplar of irresponsible and damaging policy implementation. Overall, the conclusion has to be drawn that the EMU, at its most elemental level, has failed and defies effective reforms that would make it workable. It should be scrapped or nations should exercise their own volition and exit before it causes them further damage.
Bill Mitchell – billy blog
IMF finds the Eurozone has failed at the most elemental level
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Jesse — US Government Considers Nationalizing US Cellular Network And Unifying Upgrade to 5G Next Generation Wireless

Speculation at his point, but if the US doesn't do something like this, China will leave the US seriously in the dust.

Jesse's Café Américain
US Government Considers Nationalizing US Cellular Network And Unifying Upgrade to 5G Next Generation Wireless

See also
President Donald Trump’s national security team is looking at options to counter the threat of China spying on U.S. phone calls that include the government building a super-fast 5G wireless network, a senior administration official said on Sunday….
Earlier this month, AT&T (T.N) was forced to scrap a plan to offer its customers handsets built by China’s Huawei [HWT.UL] after some members of Congress lobbied against the idea with federal regulators, sources told Reuters....
"We want to build a network so the Chinese can’t listen to your calls,” the senior official told Reuters. “We have to have a secure network that doesn’t allow bad actors to get in. We also have to ensure the Chinese don’t take over the market and put every non-5G network out of business.”
Tyler Durden

The Telegraph: Jonathon Pearlman - 1 in 5 CEOs are psychopaths, study finds

An Australian study has found that about one in five corporate executives are psychopaths – roughly the same rate as among prisoners. 

The study of 261 senior professionals in the United States found that 21 per cent had clinically significant levels of psychopathic traits. The rate of psychopathy in the general population is about one in a hundred.

Nathan Brooks, a forensic psychologist who conducted the study, said the findings suggested that businesses should improve their recruitment screening. 

He said recruiters tend to focus on skills rather than personality features and this has led to firms hiring “successful psychopaths” who may engage in unethical and illegal practices or have a toxic impact on colleagues.

“Typically psychopaths create a lot of chaos and generally tend to play people off against each other,” he said.

“For psychopaths,  it [corporate success] is a game and they don’t mind if they violate morals. It is about getting where they want in the company and having dominance over others.”

The global financial crisis in 2008 has prompted researchers to study workplace traits that may have allowed a corporate culture in which unethical behaviour was able to flourish.

Mr Brooks’s research, conducted with a colleague from Australia’s Bond University and a researcher from the University of San Diego, was based on a study of corporate professionals in the supply chain management industry across the US. 

The findings, presented on Tuesday at the Australian Psychological Society Congress in Melbourne, are due to be published in the European Journal of Psychology.

The researchers have been examining ways to help employers screen for potential psychopaths.
“We hope to implement our screening tool in businesses so that there’s an adequate assessment to hopefully identify this problem - to stop people sneaking through into positions in the business that can become very costly,” Mr Brooks said.

Nancy Fraser — From Progressive Neoliberalism to Trump—and Beyond

In today’s widespread rejection of politics as usual, an objective systemwide crisis has found its subjective political voice. The political strand of our general crisis is a crisis of hegemony.
Donald Trump is the poster child for this hegemonic crisis. But we cannot understand his ascent unless we clarify the conditions that enabled it. And that means identifying the worldview that Trumpism displaced and charting the process through which it unraveled. The indispensable ideas for this purpose come from Antonio Gramsci. “Hegemony” is his term for the process by which a ruling class naturalizes its domination by installing the presuppositions of its own worldview as the common sense of society as a whole. Its organizational counterpart is the “hegemonic bloc”: a coalition of disparate social forces that the ruling class assembles and through which it asserts its leadership. If they hope to challenge these arrangements, the dominated classes must construct a new, more persuasive common sense or “counterhegemony” and a new, more powerful political alliance or “counterhegemonic bloc.”
To these ideas of Gramsci, we must add one more. Every hegemonic bloc embodies a set of assumptions about what is just and right and what is not. Since at least the mid-twentieth century in the United States and Europe, capitalist hegemony has been forged by combining two different aspects of right and justice—one focused on distribution, the other on recognition. The distributive aspect conveys a view about how society should allocate divisible goods, especially income. This aspect speaks to the economic structure of society and, however obliquely, to its class divisions. The recognition aspect expresses a sense of how society should apportion respect and esteem, the moral marks of membership and belonging. Focused on the status order of society, this aspect refers to its status hierarchies.
Together distribution and recognition constitute the essential normative components out of which hegemonies are constructed. Putting this idea together with Gramsci’s, we can say that what made Trump and Trumpism possible was the breakup of a previous hegemonic bloc—and the discrediting of its distinctive normative nexus of distribution and recognition. By parsing the construction and breakup of that nexus, we can clarify not only Trumpism, but also the prospects, post Trump, for a counterhegemonic bloc that could resolve the crisis. Let me explain.…
The alliance between the economically liberal right and socially and politically liberal left effected by the New Democrats under Bill Clinton and (and New Labor in the UK under Tony Blair).

Fraser's diagnosis is better than her therapy. Deep fissures are not easily overcome. They must be worked through. This is a dialectical process involving confrontation of both ideas and ideals, and the people holding them.

American Affairs
From Progressive Neoliberalism to Trump—and Beyond
Nancy Fraser | professor of philosophy and politics at the New School for Social Research

Nat Parry — Robert Parry’s Legacy and the Future of Consortiumnews

It is with a heavy heart that we inform Consortiumnews readers that Editor Robert Parry has passed away. As regular readers know, Robert (or Bob, as he was known to friends and family) suffered a stroke in December, which – despite his own speculation that it may have been brought on by the stress of covering Washington politics – was the result of undiagnosed pancreatic cancer that he had been unknowingly living with for the past 4-5 years.
He unfortunately suffered two more debilitating strokes in recent weeks and after the last one, was moved to hospice care on Tuesday. He passed away peacefully Saturday evening. He was 68.
Requiescat in pace.
As the United States continues down the path of a New Cold War, my dad would be pleased to know that he has such committed contributors who will enable the site to remain the indispensable home for independent journalism that it has become, and continue to push back on false narratives that threaten our very survival.
Thank you all for your support.
Consortium News
Robert Parry’s Legacy and the Future of Consortiumnews
Nat Parry (his son)

Saturday, January 27, 2018

Caitlan Johnstone — Russiagate Isn’t About Trump, And It Isn’t Even Ultimately About Russia

Caitlan Johnstone gets the policy, strategy and tactics right, in line what we have been saying here for some time.

It's about the US maintaining and extending global hegemony in face of the challenge of China's rise.

The 2018 US National Defense Strategy all but spells it out.
We are facing increased global disorder, characterized by decline in the long-standing rules-based international order…
Translation: The so-called international liberal order that held sway in the West since the end of WWII is fracturing, challenging Western hegemony under "US leadership."
China is a strategic competitor using predatory economics to intimidate its neighbors while militarizing features in the South China Sea. Russia has violated the borders of nearby nations and pursues veto power over the economic, diplomatic, and security decisions of its neighbors....
The central challenge to U.S. prosperity and security is the reemergence of long-term, strategic competition by what the National Security Strategy classifies as revisionist powers. It is increasingly clear that China and Russia want to shape a world consistent with their authoritarian model—gaining veto authority over other nations’ economic, diplomatic, and security decisions.
 Translation: Other countries are no longer doing what the US tells them to do as global leader. That is unacceptable under the Wolfowitz doctrine, that the US will brook no rivals.

The Greanville Post
Russiagate Isn’t About Trump, And It Isn’t Even Ultimately About Russia
Caitlan Johnstone

Anatoly Karlin — Russia Elections 2018: VCIOM Predictions Market

Anatoly Karlin reports from Moscow.

Putin is expected to win handily, but the rest of the vote does count because Putin will take the results into consideration in governing. So voting does actually send a message. 

Choosing not to vote does too, since it sends a message of citizens' political apathy and discouragement, as well as a vote for "none of the above" without actually casing it.

The Unz Review
Russia Elections 2018: VCIOM Predictions Market
Anatoly Karlin

Diamid - The Production of Money: How to Break the Power of Bankers – by Ann Pettifor

An interesting article on Ann Pettifor's book, The Production of Money: How to Break the Power of the Bankers 
Ann Pettifor is a director of Prime Economics, which advocates for a more Keynesian view of macroeconomics, and has been involved in development and environmental economics for many years. In The Production of Money: How to Break the Power of the Bankers (Verso, 2017) she correctly identifies that ‘money enables us to do what we can within our limited natural and human resources’, and so ‘creates economic activity’ rather than being a result of it. It does this by creating the finance needed for productive employment and investment. Bank finance ensures that there is never a ‘shortage of money’ and so we are only limited by humanity’s capacity and the physical ecosystem. Yet when 95% of the money in existence has been created by the commercial banking system, whose aim (quoting Michael Hudson) ‘is not to minimise the cost of roads, electric power, transportation, water or education, but to maximise what can be charged as monopoly rent’, this power must be rigorously regulated. So much should be uncontroversial today and I have written about this here.

The second main part of Pettifor’s argument is that because money is a social construct, then so are interest rates. ‘Savings are not necessary to fund purchases or investment’ because banks can create money along with debt. Saving in the sense of obtaining a financial claim, whether a banknote, deposit, bond or share, always requires the prior issue of a debt from a process that involves time – an investment. The saving flow is a consequence of the investment flow rather than the reverse. This financial sense of saving is contrasted with the physical sense of saving a commodity for later use rather than consuming it now. If saving follows automatically from investment, interest rates do not derive from a supply and demand nexus for savings and investment but from the costs of issuing the debt that sets the whole process off.
But Diamid has some criticisms of Ann Pettifor's book -
I find some issue with her discussion of interest rates. Since ‘credit is essentially a free good’ if prior savings are not required, then interest rates charged to borrowers are ‘socially constructed’ just as money is, she argues. Yet this seems incorrect – banks may not be providing a scarce commodity when they create money, but they are providing a service for which the required resources such as monitoring attention, the capacity to make good the losses of debt default and the infrastructure required to attract deposits are all limited. Even if access to central bank reserves is cheap, the cost of acquiring these and other resources needs to be set off against the interest rate revenue received. The puzzle then becomes why banks have so often miscalculated the default risk element of their lending costs – an element which has no direct connection to the level of the bank rate. Interestingly the critique of the free-market Austrian school of economists, while ignorant of the workings of the finance system and mistakenly clinging to the idea that there is a ‘natural’ rate of interest that matches supply and demand for savings, also blame interest rates for the Great Financial Crisis. In their case, however, they believe that central banks set rates too low in the run-up – creating a demand for investment that exceeded the savings available. But the same critique applies – the cost of reserves alters the potential gains on a risky loan, but should not make the calculation of that risk more prone to error.
Another doubtful issue raised by Pettifor is the apparent exponential nature of debt growth linked to the compounding of interest. Interest only compounds if it is unpaid. If it is paid as it comes due it is recirculated as purchasing power by the recipient bank. A loan created where compounding is anticipated is recklessly risky for both parties – why should it be contemplated under normal business incentives? A productive loan (and this may mean various things, including the welfare benefit of time-shifted consumption) creates an income flow that exceeds outlay, allowing profit for the borrower and interest revenue for the lender along with debt repayment. There is no inevitability of the exponential rise in debt – it is not driven intrinsically by the way money and credit are created by banks.


No austerity ever in the US anyway:

 Other harmful policies were implemented both to cause the GFC and the following slow recovery' but "austerity!" wasn't one of them...

Leo Standish — Head of RT: American Media is Completely Fake - Even Your President Agrees (Video)

Simonyan nails it, again.Simonyan nails it, again.
Russia Insider
Head of RT: American Media is Completely Fake - Even Your President Agrees (Video)
Leo Standish

Simon Wren-Lewis — Neoliberalism: How Seeing Markets as Perfect Turned into an Ideology Justifying Crony Capitalism

That idea, that the market ensures that only the most efficient prosper, is a central message of neoliberal ideology, and it has held UK and US governments under its sway since the time of Thatcher and Reagan. But that ideology contains a large and deep internal contradiction, which applies particularly to large firms like Carillion. To see what that contraction is, we need to talk about ordoliberalism and Ronald Coase.

Ordoliberalism is widely known as the German version of neoliberalism. It too celebrates the benefits of the market. It, like neoliberalism, ignores many of the failures of markets that Colin Crouch eloquently outlines and which economists spend a lot of time studying. But ordoliberalism does recognise one potential problem with their market ideal which neoliberalism ignores, and that is monopoly. Crouch makes a similar distinction in talking about market-neoliberals and corporate-neoliberals.
Asymmetrical powers enable rent extraction.

One of the paradoxes of liberalism is that limiting the power of government limits corruption. But corruption is not limited to people in government. As Adam Smith observed, business people have not only an incentive to collude but also a tendency toward it if not restrained.
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. — The Wealth of Nations 1.10.82
Freedom entails responsibility, and responsibility depends on accountability.


Branko Milanovic — The importance of Taleb’s system: from the Fourth Quadrant to the Skin in the Game

Interesting exploration of Nassim Taleb's systematic thought and its implicitly evolutionary basis.

Global Inequality
The importance of Taleb’s system: from the Fourth Quadrant to the Skin in the Game
Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Luxembourg Income Study (LIS), and formerly lead economist in the World Bank's research department and senior associate at Carnegie Endowment for International Peace

See also

Branko Milanovic also meanings Hayek's The Fatal Conceit, in which Hayek points to what is now called "bounded rationality" in arguing for a conservative approach that emphasizes the importance of tradition as that which served us well to get where we are. Here is an interest reflection on it.

Jonathan Neumann

Matias Vernengo — Demand Drives Growth all the Way

New paper by Lance Taylor, Duncan Foley and Armon Rezai.
Naked Keynesianism
Demand Drives Growth all the Way
Matias Vernengo | Associate Professor of Economics, Bucknell University

Serban V.C. Enache — Bulgaria and the Euro — How Mosler Bonds could help

MMT-based analysis and policy advice. Short.

Splice Today
Bulgaria and the Euro — How Mosler Bonds could help.
Serban V.C. Enache

Friday, January 26, 2018

Steve Randy Waldman — Segregation is a normal good

While SRW avoids the "C"-word, consciously or unconsciously, social, political and economic asymmetry is about class at bottom. But his analysis points to it.

Segregation is a normal good
Steve Randy Waldman

Eric Zuesse — Trump Now Increases ‘Defense’ Budget 37% Above Obama’s

The Washington Post headlined on January 26th, “Trump plans to ask for $716 billion for national defense in 2019 — a major increase”, and reported that when President Trump had entered the White House in January 2017, the ‘Defense’ budget was $521 billion, but that President Trump will propose in his upcoming State-of-the-Union speech, a 2019 ‘Defense’ budget of $716 billion, which, if it becomes law, would mean a 37% increase, above Obama’s last Pentagon budget (for 2017).
This is in line with President Trump’s recently announced strategic change, away from Obama’s military budget, which was focused mainly against radical Islamic terrorism, now to target, instead, mainly Russia and China, and, secondarily, Iran and North Korea. As CBS News summarized on January 20th, “There is a major change in U.S. military strategy. On Friday [January 19th], more than 16 years after the 9/11 attacks, U.S. Defense Secretary Jim Mattis said terrorism is no longer the No. 1 priority. … Maintaining a military advantage over China and Russia is now Defense Secretary Mattis’ top priority.”
Where is the money going to come from? (rhetorical question). Growth stimulated by the Trump tax cuts. (Trump economic team).

Should make for some interesting politics in a country where the conventional wisdom is that everything needs to be paid for (even though that is a false belief).

Washington's Blog
Trump Now Increases ‘Defense’ Budget 37% Above Obama’s
Eric Zuesse

Controversy over Corbyn’s Holocaust memorial message

What a load of baloney! How do they get away with this nonsense, every one knows what the holocaust refers to? This is a fake outrage to discredit Corbyn. KV

A longer message from the Labour leader, printed in a booklet for the service, referred by name to Jewish Holocaust victims, including Anne Frank, as “our Jewish brothers and sisters”.
In the HET memorial book, Mr Corbyn wrote: “We should never forget the Holocaust: The millions who died, the millions displaced and cruel hurt their descendants have suffered.
“We should understand the way fascism arose in Germany and the circumstances that gave space for the Nazis to grow.
“At this, and at all other times, we should reflect and make sure succeeding generations understand the power of words.
“Their power to do immense good and inspire; and their power to promote hate and division.
“Let us use their power to educate, to inspire, but above all to build values of trust and respect.”
His message sparked controversy on social media, with some Twitter users comparing it to US President Donald Trump’s failure to mention the Jews in his Holocaust Memorial Day message in 2017.
Message of support given by Jeremy Corbyn for the Holocaust Memorial Day ceremony
Simon Johnson, chief executive of the Jewish Leadership Council, said: “It is hard to believe anybody can neglect to mention Jews when writing a Holocaust Memorial Day Message, let alone the leader of the opposition.
“Mr Corbyn displays a complete lack of sensitivity to those who survived the atrocities of the Holocaust and its impact on the Jewish community.”
And a spokesman for the Campaign Against Anti-Semitism described it as “a disgraceful forgetting at a ceremony purposed for remembering”, adding; “We call on Mr Corbyn to apologise and issue a new statement.”
Jonathan Greenblatt, of the US-based Anti-Defamation League, said: “To omit any reference to Jews or anti-Semitism in your Holocaust remembrance statement is offensive to us and the millions murdered. Nazi ideology was rooted in hate and anti-Semitism. We can never forget that.”
A Labour source said: “Jeremy was clearly referring to the millions of Jewish victims of the Holocaust and their descendants.”