Dorothea Lange Saturday afternoon, Pittsboro, North Carolina 1939
From one of Reagan’s main economic advisers.
President Donald Trump may think the Chinese are the “grand champions” of currency manipulation, but he’s wrong, expert John Rutledge told CNBC on Friday. “Trump is an idiot on this. He has no clue what currency manipulation means,” the chief investment officer of global investment firm Safanad said in an interview with “Closing Bell.” During the campaign, Trump accused China of keeping its yuan currency artificially low against the U.S. dollar to make Chinese exports cheaper, “stealing” American manufacturing jobs. On Thursday, the president told Reuters he has not “held back” in his assessment, despite not acting on a pledge to declare the country a currency manipulator on his first day in office. “Well they, I think they’re grand champions at manipulation of currency. So I haven’t held back,” Trump said. “We’ll see what happens.”
However, earlier Thursday Treasury Secretary Steve Mnuchin told CNBC he wasn’t ready to pass judgment on China’s currency practices. “We have a process within Treasury where we go through and look at currency manipulation across the board. We’ll go through that process. We’ll do that as we have in the past. We’re not making any judgments until we continue that process,” he told “Squawk Box.” Rutledge, who was one of the principal architects of President Ronald Reagan’s economic plan, said China is actually trying to support its currency. “Chinese authorities have actually sold a trillion dollars’ worth of foreign reserves in the last year to support their currency that’s trying to fall because Chinese nationals are trying to get their money out of China,” he said. That is anti-manipulation.”
It’s all about the debt ceiling.
The Deep State’s coup against Donald Trump is palpable. So count it as another element of reality to which Wall Street and its raging robo-machines and day traders are blind as bats. After all, they are essentially “pricing-in” the most successful presidency in modern times on the economic front. The Trump Stimulus was even supposed to be “in like Flynn” in time to boost corporate earnings materially in 2017. But it has already transpired that the Flynn in question was named Mike, not Errol; and the conquest was not that of a swashbuckling outsider who quickly had his way with the Imperial City, but the doings of resident swamp creatures bent on turning back the Donald’s unwelcome challenge.
So in a matter of weeks or months at most, Trump will be struggling to survive, while the giant fiscal stimulus that has Wall Street all bulled-up will amount to a heap of ruins scattered about a debilitating political war zone on Capitol Hill. I never thought the vaunted Trump tax cut and infrastructure boom would see the light of day in their own right, of course, because the Donald is caught in an inherited debt trap that he does not yet even dimly appreciate. Yet with each passing day, the magnitude of the trap materially enlarges. As of the Daily Treasury Statement for February 17, for example, the public debt was $19.895 trillion compared to $18.99 trillion on the same date a year ago. When you factor in a slight gain in the Treasury’s cash balance to $262 billion, the math speaks for itself.
During the past year Uncle Sam’s “cash burn rate” was nearly $75 billion per month. That means Washington actually consumed $885 billion of cash during the last 365 days — or far more than implied by the official budget deficit of $587 billion for the fiscal year just ended (FY 2016). It also means that once the tax collection season ends in April, it will be Katie-bar-the-door time on the debt ceiling front. When the latter becomes frozen into place on March 15 after the insidious Boehner-Obama debt ceiling “holiday” expires, there will not be enough cash to last the summer — even if the Treasury resorts to the usual gimmicks, such as temporarily divesting the trust funds. So let this part be crystal clear. What is coming down the track is the mother of all debt ceiling showdowns and the virtual certainty of government shutdowns and deferred payments to states, contractors and even some transfer payment beneficiaries.
Funny, but not new. They can always deflect criticism be saying it was an Obama list.
Analysts at the Homeland Security Department’s intelligence arm found insufficient evidence that citizens of seven Muslim-majority countries included in President Donald Trump’s travel ban pose a terror threat to the United States. A draft document obtained by The Associated Press concludes that citizenship is an “unlikely indicator” of terrorism threats to the United States and that few people from the countries Trump listed in his travel ban have carried out attacks or been involved in terrorism-related activities in the U.S. since Syria’s civil war started in 2011. Trump cited terrorism concerns as the primary reason he signed the sweeping temporary travel ban in late January, which also halted the U.S. refugee program. A federal judge in Washington state blocked the government from carrying out the order earlier this month.
Trump said Friday a new edict would be announced soon. The administration has been working on a new version that could withstand legal challenges. Homeland Security spokeswoman Gillian Christensen on Friday did not dispute the report’s authenticity, but said it was not a final comprehensive review of the government’s intelligence. “While DHS was asked to draft a comprehensive report on this issue, the document you’re referencing was commentary from a single intelligence source versus an official, robust document with thorough interagency sourcing,” Christensen said. “The … report does not include data from other intelligence community sources. It is incomplete.”
The Homeland Security report is based on unclassified information from Justice Department press releases on terrorism-related convictions and attackers killed in the act, State Department visa statistics, the 2016 Worldwide Threat Assessment from the U.S. intelligence community and the State Department Country Reports on Terrorism 2015. The three-page report challenges Trump’s core claims. It said that of 82 people the government determined were inspired by a foreign terrorist group to carry out or try to carry out an attack in the United States, just over half were U.S. citizens born in the United States. The others were from 26 countries, led by Pakistan, Somalia, Bangladesh, Cuba, Ethiopia, Iraq and Uzbekistan. Of these, only Somalia and Iraq were among the seven nations included in the ban.
It’s one way to change the conversation. C’mon, guys, you’ll be let back in soon.
The White House barred several news organizations from an off-camera press briefing on Friday, handpicking a select group of reporters that included a number of conservative outlets friendly toward Donald Trump. The “gaggle” with Sean Spicer, the White House press secretary, took place in lieu of his daily briefing and was originally scheduled as an on-camera event. But the White House press office announced later in the day that the Q&A session would take place off camera before only an “expanded pool” of journalists, and in Spicer’s West Wing office as opposed to the James S Brady press briefing room where it is typically held. Outlets seeking to gain entry whose requests were denied included the Guardian, the New York Times, Politico, CNN, BuzzFeed, the BBC, the Daily Mail and others.
Conservative publications such as Breitbart News, the One America News Network and the Washington Times were allowed into the meeting, as well as TV networks CBS, NBC, Fox and ABC. The Associated Press and Time were invited but boycotted the briefing. The decision to limit access to Spicer, hours after Trump once again declared that much of the media was “the enemy of the American people” while speaking at the annual Conservative Political Action Conference, marked a dramatic shift. While prior administrations have occasionally held background briefings with smaller groups of reporters, it is highly unusual for the White House to cherry-pick which media outlets can participate in what would have otherwise been the press secretary’s televised daily briefing.
The briefing has become indispensable viewing for journalists trying to interpret the often contradictory statements coming out of the Trump administration, and Spicer’s aggressive handling of the press and delivery of false or misleading statements have already been memorably mocked on NBC’s Saturday Night Live. “Gaggles” – more informal briefings – with the press secretary are traditionally only limited to the pool when they conflict with the president’s travel, in which case they often take place aboard Air Force One. At times, impromptu gaggles form with reporters who spend their days in the White House, but denying outlets wishing to participate is extremely uncommon.
Don’t believe it for a second.
Greek Prime Minister Alexis Tsipras says the era of austerity is over for his country, painting a positive picture Friday of reforms the country has agreed to take after its latest bailout program ends in 2018. Speaking in parliament, Tsipras described the deal reached Monday as an “exceptional success” and said it showed the country’s creditors accepted Greeces insistence that it could no longer bear any further budget austerity. “I am fully convinced we achieved an honorable compromise,” Tsipras said, adding that all sides at the eurozone finance ministers’ meeting in Brussels had agreed for the “first time after seven years … to leave the path of continued austerity behind us.”
On Monday, Greece agreed to legislate new reforms to come into effect in 2019, but said these will be fiscally neutral: for every euros worth of new burdens on the Greek taxpayer, an equal amount of relief will be granted. In return, Greeces creditors agreed to send their bailout inspectors back to Athens next week for further talks to complete a long overdue review of progress made in Greeces bailout. Tsipras said both creditor-requested new measures and government-proposed relief measures will be legislated at the same time, and that therefore there was no conditionality for the relief measures. The prime minister’s left-led coalition government, trailing in polls, has presented the deal as a decisive, positive step forward for austerity-weary Greeks hammered by seven years of a financial crisis that plunged the country into an economic depression.
I found this very interesting. Looks like the IMF has never truly looked at whether being part of the euro is best for Greece. Why not? It’s not as if they only do what countries want. Whose interests is the IMF really defending here?
Part of transcript of a press briefing with Gerry Rice, IMF Director of Communications, and reporters.
QUESTIONER: Gerry, help me to understand how the IMF weighs a member country’s interests, economic interests when it is in a monetary union, when the interests may be that it be out of a monetary union. I haven’t seen any analysis by the IMF about the pros and cons, economic pros and cons of Greece exiting the euro. And it seems to me that Madame Lagarde has expressed herself as a pro euro and a pro EU advocate. So help me to understand, one, why we haven’t seen any economic analysis to defend the IMF’s position to not counsel Greece for exiting the euro or – and two, how it weighs this decision when obviously other member countries who are not in a program want Greece to stay in the euro. Do you understand where I’m getting at? I just haven’t seen any analysis from the IMF to defend or argue either case.
MR. RICE: You know, the amount of economic analysis that we’ve undertaken on Greece over the last seven years, you probably know as well as anyone, is voluminous. So, you know, I think there’s plenty out there to analyze and digest. [..] So, you know, on the question of Greece being a member of the eurozone and the monetary union, you know, it’s been Greece’s explicit objective to retain its membership of the eurozone. It’s been one of its priority objectives since the very beginning. It’s been also a priority objective of the other eurozone members. So, you know, in terms of how we weigh our service and support to a member country, you know, these are obviously important factors that we take into account, and we have taken those into account and are trying to support and service the member as best we can in that context.
QUESTIONER: But, if I may follow up, Gerry. There are cases in which a member country is explicitly – to use your language – has an explicit objective to do for economic policies that the IMF believes to not be in that member country’s economic interests or in the global economic interest. And it speaks truth to power, and yet there has been no analysis to argue why Greece should remain part of the euro or why it shouldn’t. And to me that’s a fundamental economic argument, since you’re talking about internal devaluation versus a nominal exchange rate devaluation. I mean, that’s at the heart of the problem. So can you tell me why the IMF hasn’t at least published its analysis or any analysis on why Greece should remain in the euro or should exit as a part of its truth-telling economic advice to a member country?
MR. RICE: Well, you know, again I think there’s been plenty of analysis of Greece’s economic situation and how the IMF assesses what is in Greece’s best interests. And, you know, I just think there’s voluminous information on that. And –
QUESTIONER: If you can point me to the – and respectfully, I appreciate your patience and me interrupting you – but if you can point me to the voluminous analysis of Greece – which I admit is voluminous, it will probably fill several volumes in fact, several history books, but I have seen in none of it that I am aware of any analysis of the pros and cons of Greece staying or exiting the eurozone.
MR. RICE: [..] I’ll come back to you, but I do believe there is actually a lot of analysis where you can clearly distill what the IMF’s view is as being in Greece’s best economic interest. I would include in that the many staff reports and, in particular, these ex post evaluation studies that we have done that, again, I can point you to some of this material afterwards. But I do think there’s plenty of material.
QUESTIONER: I just want to follow up on Ian’s question and maybe have another question if you don’t mind. Maybe you can clarify do you think – does the IMF think that it’s in Greece’s best interest to retain its membership in the eurozone? And the second question has to do with the timeline entry, because you mentioned the fact that the discussion on the debt will take place following the discussion on reforms. So should we assume that this discussion on the debt relief won’t start before the second review is completed?
MR. RICE: Yes, I don’t have the timing on the completion of the second review. Again, I want to revert to my formulation. Before we would be able – we, the IMF – would be able to, you know, make a commitment on our participation in the program, we would need to have the discussion of both policies and debt relief, and beyond the discussion, credible commitments in which we have confidence. So that’s the way I would like to formulate that.
Been saying that forever. But as we saw last week, Toronto’s entire budget is based on high and rising house prices.
Toronto may require measures to cool its red-hot housing market similar to moves taken in Vancouver if interest rates don’t increase, said Royal Bank of Canada Chief Executive Officer David McKay. The head of Canada’s largest lender said Toronto housing is “running hot” and is fueled by a “concerning mix of drivers” that include lack of supply, continued low rates, rising foreign money and speculative activity. Similar circumstances in Vancouver prompted British Columbia’s government last year to impose a 15% tax on foreign buyers. “In the absence of being able to use higher rates to reduce that, I do think we’re going to at some point have to consider similar measures to slow down the housing price growth,” McKay said Friday in a telephone interview.
The comments from the bank CEO come as frustration grows over the unaffordability of properties in Canada’s biggest city. The average home price in Toronto jumped 22% in January from the previous year, the fifth straight month of gains topping 20%. Listings have dropped off, down by half from last year, squeezing prices further. The CEOs of Canada’s other big banks last year called on the government to increase housing regulation amid skyrocketing prices in Vancouver and Toronto. National Bank of Canada CEO Louis Vachon said that minimum downpayments should return to 10% from 5%, while Bank of Nova Scotia head Brian Porter suggested his company was pulling back on mortgage lending due to concern about high home prices in those two cities.
Vancouver, once Canada’s fastest-paced home market and now supplanted by Toronto, has seen slowing sales after several regulatory moves. In August, British Columbia added a 15% tax to home purchases by non-Canadians after they were found to have bought more than C$1 billion ($760 million) in property in a five-week period. The city of Vancouver in January began taxing empty homes and plans to further regulate short-term rentals. Since the tax was imposed in Vancouver, monthly transactions in the metro region fell on average by 36% compared to a year earlier, according to data from the Real Estate Board of Greater Vancouver. Prices for prized single-family detached homes had been rising in double digits last year. In the past six months, they’ve fallen 6.6% to an average C$1.47 million, according to board figures released earlier this month.
The left largely has itself become part of neoliberalism. Ergo: there is no left, left, other than in name.
The 10th anniversary of the global financial crisis looms this year, which means it’s almost a decade since neoliberal economics began to fall apart. The crisis spawned a global recession, the near collapse of global finance and the subsequent eurozone crisis as governments incurred huge debts amid efforts to rescue the hapless banking industry. The then Australian prime minister, Kevin Rudd, observed in the immediate aftermath: The current crisis is the culmination of a 30-year domination of economic policy by a free-market ideology that has been variously called neoliberalism, economic liberalism, economic fundamentalism, Thatcherism or the Washington consensus. The central thrust of this ideology has been that government activity should be constrained, and ultimately replaced, by market forces.
The global recession that followed was the worst in 70 years and its effects continue to be felt in many developed countries. Australia was one of the fortunate few to avoid a recession, thanks to enormous government-funded stimulus packages and the continuation of an unprecedented mining boom. Nevertheless, economic activity has been sluggish ever since, job growth has stalled, wage growth has collapsed and inequality is on the rise. And yet in 2017, just as neoliberalism is on its knees, so too is the left. It matters not whether we are describing social democrats, socialists, the hard left or the moderate left. A swath of populist extreme rightwing forces is sweeping through many developed countries. Europe now resembles a graveyard for social democracy. How did it come to this?
First and foremost, there is incompetence. Neoliberal economics, a creation of the right and embraced to varying degrees by social democrats, has dominated western politics for nigh on four decades. Its mantras of deregulation, privatisation and cutting tax for the wealthy and corporations have been exhausted, if not discredited. There are only so many assets that can be privatised and, as the head of the Australian Competition and Consumer Commission, Rod Sims, has noted, replacing a public-sector monopoly with a private-sector monopoly has simply driven up prices. The fetish for deregulation and tax cutting has caused immense harm – for consumers, for workers and for governments seeking to provide services demanded of them but hampered by inadequate revenue.
It is not just Pope Francis who has called for major reform of the economic system. The World Economic Forum, which met in January, advocated “fundamental reforms to market capitalism to tackle inequality”. In doing so, it echoed statements of the IMF and World Bank, formerly strong advocates of the neoliberal agenda.
Legal schmegal. If they can do it, they will. All of them. Question: is this worse than banning them?
According to documents seen by SPIEGEL, the BND conducted surveillance on at least 50 additional telephone numbers, fax numbers and email addresses belonging to journalists or newsrooms around the world in the years following 1999. Included among them were more than a dozen connections belonging to the BBC, often to the offices of the international World Service. The documents indicate that the German intelligence agency didn’t just tap into the phones of BBC correspondents in Afghanistan, but also targeted telephone and fax numbers at BBC headquarters in London. A phone number belonging to the New York Times in Afghanistan was also on the BND list, as were several mobile and satellite numbers belonging to the news agency Reuters in Afghanistan, Pakistan and Nigeria.
The German spies also conducted surveillance on the independent Zimbabwean newspaper Daily News before dictator Robert Mugabe banned it for seven years in 2003. Other numbers on the list belonged to news agencies from Kuwait, Lebanon and India in addition to journalist associations in Nepal and Indonesia. Journalists in Germany enjoy far-reaching protection against state meddling. They enjoy similar legal protection to lawyers, doctors and priests: occupations that require secrecy. Journalists have the right to refuse to testify in court in order to protect their sources. German law forbids the country’s domestic intelligence agency from conducting surveillance on persons who have that right.
The German chapter of Reporters without Borders says that the BND’s systematic surveillance of journalists is an “egregious attack on press freedoms” and “a new dimension of constitutional violation.” Christian Mihr, head of the German chapter of Reporters without Borders, says that press freedom “is not a right granted by the graciousness of the German government, it is an inviolable human right that also applies to foreign journalists.” The allegations come as the German parliamentary investigative committee focusing on U.S. spying in Germany is completing its inquiry. Chancellor Angela Merkel, who appeared before the committee last Thursday, was the last witness called and now the committee members are working on their closing report. But even as the committee also addressed extensive BND spying, the surveillance of journalists was only a fringe issue.
Things are not what they seem.
Say you had the choice between two surgeons of similar rank in the same department in some hospital. The first is highly refined in appearance; he wears silver-rimmed glasses, has a thin built, delicate hands, a measured speech, and elegant gestures. His hair is silver and well combed. He is the person you would put in a movie if you needed to impersonate a surgeon. His office prominently boasts an Ivy League diploma, both for his undergraduate and medical schools. The second one looks like a butcher; he is overweight, with large hands, uncouth speech and an unkempt appearance. His shirt is dangling from the back. No known tailor in the East Coast of the U.S. is capable of making his shirt button at the neck. He speaks unapologetically with a strong New Yawk accent, as if he wasn’t aware of it. He even has a gold tooth showing when he opens his mouth.
The absence of diploma on the wall hints at the lack of pride in his education: he perhaps went to some local college. In a movie, you would expect him to impersonate a retired bodyguard for a junior congressman, or a third-generation cook in a New Jersey cafeteria. Now if I had to pick, I would overcome my suckerproneness and take the butcher any minute. Even more: I would seek the butcher as a third option if my choice was between two doctors who looked like doctors. Why? Simply the one who doesn’t look the part, conditional of having made a (sort of) successful career in his profession, had to have much to overcome in terms of perception. And if we are lucky enough to have people who do not look the part, it is thanks to the presence of some skin in the game, the contact with reality that filters out incompetence, as reality is blind to looks.
When the results come from dealing directly with reality rather than through the agency of commentators, image matters less, even if it correlates to skills. But image matters quite a bit when there is hierarchy and standardized “job evaluation”. Consider the chief executive officers of corporations: they not just look the part, but they even look the same. And, worse, when you listen to them talk, they will sound the same, down to the same vocabulary and metaphors. But that’s their jobs: as I keep reminding the reader, counter to the common belief, executives are different from entrepreneurs and are supposed to look like actors.
Now there may be some correlation between looks and skills; but conditional on having had some success in spite of not looking the part is potent, even crucial, information. So it becomes no wonder that the job of chief executive of the country, that is, the president, was once filled by a former actor, Ronald Reagan. Actually, the best actor is the one nobody realizes is an actor: a closer look at the record and the activity shows that Barack Obama was even more of an actor: a fancy Ivy-League education combined with a liberal reputation is compelling as an image builder. (In fact much as President Trump has going for him is that he doesn’t act as a president).