Ann Rosener Reconditioning spark plugs, Melrose Park Buick plant, Chicago 1942
We need to do a lot more thinking, and take a far more critical look at ourselves, than we do at present. We’re not even playing it safe, we’re only playing it easy. And that’s just not enough. The marches in Paris and numerous other cities today were attended by people who mean well, but who should ask themselves if they want to be part of what was predictably turned into a propaganda event by ‘world leaders’. One thing is for sure; the murdered Charlie Hebdo staff would not have approved of it.
The leaders hark back to usual suspect slogans like we defend ‘Liberty’, ‘Freedom of Expression’ and ‘Our Values’. But we can’t turn our backs on the fact that ‘our values’ these days include torture and other fine ‘tactics’ that make people in other parts of the world turn their backs on us. We might want – need – to march to express our feelings about torture executed in our name, as much as to express our horror at cartoonists we never heard of being the target of automatic weapons.
There are major armed conflicts going on in 6 different Arab countries, and ‘we’ play a part in all of them. We get up in the morning and prepare to march against violence in our own streets, but we should perhaps – also – protest the violence committed in our name on other people’s streets just as much. We may feel innocent as we’re marching, but that’s simply because we refuse to look at ourselves in the mirror. And we must be able to do better than that. Both to be the best we can be (which is still a valid goal), and to prevent future attacks.
And that’s not nearly the entire story. Our governments play ‘divide and rule’ both domestically and abroad. They play nations against each other in far away parts of the globe, and poor vs rich and generation vs generation at home. If you want a better world, don’t look at your leaders to make that happen. They like the world the way it is; it got them where they are. Moreover, they’re all beholden to numerous supra-national organizations that are the real power behind the throne across the globe; NATO, IMF, EU, World Bank et al.
If you want a better world, and one in which the risk of attacks like the one this week goes down, you’ll have to look at yourself first, and take it from there. Marching in a mostly self-righteous parade in which the wrong people form the first line is not going to do it. You’re not going to solve this sitting on your couch. Our world is not just financially bankrupt, and in deep debt to boot, it’s also about as morally broke as can be.
We therefore have to rethink our world just about from scratch. Or else. We’ve lived chasing the recovery carrot for years now, but the economy won’t recover; it can’t. There hasn’t been any real growth since at least the 1980s, the only thing there’s been is increasing debt levels that we mistook for growth.
A great first example of how to do this rethinking was provided late last year, and I referred to it before, by UofM Amherst economics professor James K. Boyce:
Imagine that without major new investments in adaptation, climate change will cause world incomes to fall in the next two decades by 25% across the board, with everyone’s income going down, from the poorest farmworker in Bangladesh to the wealthiest real estate baron in Manhattan. Adaptation can cushion some but not all of these losses. What should be our priority: reduce losses for the farmworker or the baron? For the farmworker, and a billion others in the world who live on about $1 a day, this 25% income loss will be a disaster, perhaps the difference between life and death.
Yet in dollars, the loss is just 25 cents a day. For the land baron and other “one-percenters” in the U.S. with average incomes of about $2,000 a day, the 25% income loss would be a matter of regret, not survival. He’ll find a way to get by on $1,500 a day. In human terms, the baron’s loss pales compared with that of the farmworker. But in dollar terms, it’s 2,000 times larger. Conventional economic models would prescribe spending more to protect the barons than the farmworkers of the world.
It’s how we think. Boyce describes it perfectly. We chase money, no questions asked, and even call it no. 1. And unless we change the way we think, one Manhattan land baron will be saved, and 1000 Bangla Deshi farmers and their entire families will either drown or be forced higher inland, where there are already too many people just like them. A dollar or a person. Our present economic models know which one to choose. But we should have more than mere economic models guide us.
Michael Lewis – yes, him – provides another wonderful example in the New Republic. I tried to make the quote as short as I could, but, hey, Lewis is .. Lewis. The original title was ‘Extreme Wealth Is Bad for Everyone – Especially the Wealthy’ (Getting rich won’t make you happy. But it will make you more selfish and dishonest). The Week turned in into this:
When I was 14, I met a man with a talent for restoring a sense of fairness to a society with vast and growing inequalities in wealth. His name was Jack Kenney, and he’d created a tennis camp, called Tamarack, in the mountains of northern New Hampshire. The kids who went to the Tamarack Tennis Camp mostly came from well-to-do East Coast families, but the camp itself didn’t feel like a rich person’s place: It wasn’t unusual for the local health inspectors to warn the camp about its conditions, or for the mother of some Boston Brahmin dropping her child off, and seeing where he would sleep and eat for the next month, to burst into tears.
Kenney himself had enjoyed a brief, exotic career as a professional tennis player — he’d even played a doubles match on ice with Fred Perry – but he was pushing 60 and had long since abandoned whatever interest he’d had in fame and fortune. He ran his tennis camp less as a factory for future champions than as an antidote to American materialism – and also to the idea that a person could be at once successful and selfish.
Jack Kenney’s assault on teenaged American inequality began at breakfast the first morning. The bell clanged early, and the kids all rolled out of their old stained bunk beds, scratched their fresh mosquito bites, and crawled to the dining hall. On each table were small boxes of cereal, enough for each kid to have one box, but not enough that everyone could have the brand of cereal he wanted. There were Froot Loops and Cheerios, but also more than a few boxes of the deadly dark bran stuff consumed willingly only by old people suffering from constipation.
On the second morning, when the breakfast bell clanged, a mad footrace ensued. Kids sprung from their bunks and shot from cabins in the New Hampshire woods to the dining hall. The winners got the Froot Loops, the losers a laxative. By the third morning, it was clear that, in the race to the Froot Loops, some kids had a natural advantage. They were bigger and faster; or their cabins were closer to the dining hall; or they just had that special knack some people have for getting whatever they want. Some kids would always get the Froot Loops, and others would always get the laxative. Life was now officially unfair.
After that third breakfast, Kenney called an assembly on a hill overlooking a tennis court. He was unkempt and a bit odd; wisps of gray hair crossed his forehead, and he looked as if he hadn’t bathed in a week. He was also kind and gentle and funny, and kids instantly sensed that he was worth listening to and wanted to hear what he had to say.
“You all live in important places surrounded by important people,” he’d begin. “When I’m in the big city, I never understand the faces of the people, especially the people who want to be successful. They look so worried! So unsatisfied!” Here his eyes closed shut and his hands became lobster claws, pinching and grasping the air in front of him. “In the city you see people grasping, grasping, grasping. Taking, taking, taking. And it must be so hard! To be always grasping-grasping, and taking-taking. But no matter how much they have, they never have enough. They’re still worried. About what they don’t have. They’re always empty.”
“You have a choice. You don’t realize it, but you have a choice. You can be a giver or you can be a taker. You can get filled up or empty. You make that choice every day. You make that choice at breakfast when you rush to grab the cereal you want so others can’t have what they want.”
On the fourth morning, no one ate the Froot Loops. Kids were thrusting the colorful boxes at each other and leaping on the constipation cereal like war heroes jumping on hand grenades. In a stroke, the texture of life in this tennis camp had changed, from a chapter out of Lord of the Flies to the feeling between the lines of Walden. Even the most fantastically selfish kids did what they could to contribute to the general welfare of the place, and there was not a shred of doubt that everyone felt happier for it. The distinction between haves and have-nots, winners and losers, wasn’t entirely gone, of course. But it became less important than this other distinction, between the givers and the takers.
So far for the Jack Kenney story. Michael Lewis continues:
What is clear about rich people and their money — and becoming ever clearer — is how it changes them. A body of quirky but persuasive research has sought to understand the effects of wealth and privilege on human behavior — and any future book about the nature of billionaires would do well to consult it.
One especially fertile source is the University of California at Berkeley psychology department lab overseen by a professor named Dacher Keltner. In one study, Keltner and his colleague Paul Piff installed note takers and cameras at city street intersections with four-way Stop signs. The people driving expensive cars were four times more likely to cut in front of other drivers than drivers of cheap cars.
The researchers then followed the drivers to the city’s crosswalks and positioned themselves as pedestrians, waiting to cross the street. The drivers in the cheap cars all respected the pedestrians’ right of way. The drivers in the expensive cars ignored the pedestrians 46.2% of the time – a finding that was replicated in spirit by another team of researchers in Manhattan, who found drivers of expensive cars were far more likely to double-park.
In yet another study, the Berkeley researchers invited a cross section of the population into their lab and marched them through a series of tasks. Upon leaving the laboratory testing room, the subjects passed a big jar of candy. The richer the person, the more likely he was to reach in and take candy from the jar — and ignore the big sign on the jar that said the candy was for the children who passed through the department.
Maybe my favorite study done by the Berkeley team rigged a game with cash prizes in favor of one of the players, and then showed how that person, as he grows richer, becomes more likely to cheat. In his forthcoming book on power, Keltner contemplates his findings:
If I have $100,000 in my bank account, winning $50 alters my personal wealth in trivial fashion. It just isn’t that big of a deal. If I have $84 in my bank account, winning $50 not only changes my personal wealth significantly, it matters in terms of the quality of my life — the extra $50 changes what bill I might be able to pay, what I might put in my refrigerator at the end of the month, the kind of date I would go out on, or whether or not I could buy a beer for a friend. The value of winning $50 is greater for the poor, and, by implication, the incentive for lying in our study greater. Yet it was our wealthy participants who were far more likely to lie for the chance of winning fifty bucks.
There is plenty more like this to be found, if you look for it. A team of researchers at the New York State Psychiatric Institute surveyed 43,000 Americans and found that, by some wide margin, the rich were more likely to shoplift than the poor. Another study, by a coalition of nonprofits called the Independent Sector, revealed that people with incomes below 25 grand give away, on average, 4.2% of their income, while those earning more than 150 grand a year give away only 2.7%. A UCLA neuroscientist named Keely Muscatell has published an interesting paper showing that wealth quiets the nerves in the brain associated with empathy.
If you show rich people and poor people pictures of kids with cancer, the poor people’s brains exhibit a great deal more activity than the rich people’s. “As you move up the class ladder,” says Keltner, “you are more likely to violate the rules of the road, to lie, to cheat, to take candy from kids, to shoplift, and to be tightfisted in giving to others. Straightforward economic analyses have trouble making sense of this pattern of results.”
But that wouldn’t work, you think? Not for you, not in today’s world, and certainly not for the political class? Well, we happen to have the example of a real life president of a nation who questions all we tend to think is ‘normal’. Back in October, HuffPo had this portrait of Uruguayan President José Mujica. And please see this against the backdrop of US presidential candidates raising hundreds of millions of dollars even just for their preliminary campaigns.
Mujica says what I often have, that money should be kept out of a political system, because if it isn’t it will end up buying and eating that system whole. Too late for the US and Europe, but perhaps not for Uruguay.
People who like money too much ought to be kicked out of politics, Uruguayan President José Mujica told CNN en Español [..] “We invented this thing called representative democracy, where we say the majority is who decides,” Mujica said in the interview. “So it seems to me that we [heads of state] should live like the majority and not like the minority.” Dubbed the “World’s Poorest President” in a widely circulated BBC piece from 2012, Mujica reportedly donates 90% of his salary to charity.
Mujica’s example offers a strong contrast to the United States, where in politics the median member of Congress is worth more than $1 million and corporations have many of the same rights as individuals when it comes to donating to political campaigns. “The red carpet, people who play – those things,” Mujica said, mimicking a person playing a cornet. “All those things are feudal leftovers. And the staff that surrounds the president are like the old court.”
“I’m not against people who have money, who like money, who go crazy for money,” Mujica said. “But in politics we have to separate them. We have to run people who love money too much out of politics, they’re a danger in politics… People who love money should dedicate themselves to industry, to commerce, to multiply wealth. But politics is the struggle for the happiness of all.”
Asked why rich people make bad representatives of poor people, Mujica said: “They tend to view the world through their perspective, which is the perspective of money. Even when operating with good intentions, the perspective they have of the world, of life, of their decisions, is informed by wealth. If we live in a world where the majority is supposed to govern, we have to try to root our perspective in that of the majority, not the minority.”
“I’m an enemy of consumerism. Because of this hyperconsumerism, we’re forgetting about fundamental things and wasting human strength on frivolities that have little to do with human happiness.”
He lives on a small farm on the outskirts of the capital of Montevideo with his wife, Uruguayan Sen. Lucia Topolansky and their three-legged dog Manuela. He says he rejects materialism because it would rob him of the time he uses to enjoy his passions, like tending to his flower farm and working outside. “I don’t have the hands of a president,” Mujica told CNN. “They’re kind of mangled.”
Mujica is the kind of man, make that human being, who should be in charge of all countries. Money and politics don’t mix, or at least not in a democracy. And I don’t see any exceptions to that rule. Mujica is right: if and when the majority of people in a country are poor, which is true just about everywhere, and certainly in the Anglo world and most EU countries, then their president should be poor too.
And inevitably, if you would follow the example of your president, so should his people. Not dirt poor, not starving, just being content with basic necessities for you and your family. And then tend to your flower farm, or your vegetable farm, your kids.
Sounds stupid. I know. But we haven’t had any real growth in decades, and the wizard’s curtain is being lifted on the fake growth we did have since too. So maybe the economy’s not all that cyclical after all, or maybe the cycles are longer than we would like, Kondratieff 70 year like. Or even longer.
Ask anyone if they would like to have $1000, or $10,000 or $1 million or more, and you know that the answer would be. But Michael Lewis shows that none of it would make you any happier, if you already have – or make – enough to survive on. Still, it’s generally accepted that more is always good.
And then you have the president of Uruguay, admittedly a small country and in South America to boot, who says that only poor people can truly represent poor people, who will always be in the majority in whichever country you may live in, and that that is the core of democracy.
Here’s thinking we are absolutely clueless when it comes to the value of wealth, and that we keep chasing more of it because we’re not smart enough to recognize that value. And that that’s why we have torture and wars and all the other things that make us so ugly. We have absolutely no clue what the value of wealth is. And as long as we don’t, we shouldn’t have any.
Dorothea Lange Children and home of cotton workers at migratory camp in southern San Joaquin Valley, CA 1936
My long time pal Jesse Colombo, now at Real Investment Advice, recently linked on Twitter to a Zero Hedge article, which quoted CoreLogic as saying more than half of American homes are overvalued. CoreLogic calls itself “a leading provider of consumer, financial and property data, analytics and services to business and government.”
Well, CoreLogic is way off. All American homes are overvalued. How can we tell? It’s easy. It’s so easy it’s perhaps no wonder that people overlook the reasons why. But we all know them: The Fed has pushed some $20 trillion down the throats of the financial system. It has also lowered interest rates to near zero Kelvin. Then the government added a “relaxation” of lending standards and an upward tweak of credit scores. And Bob’s your uncle.
These measures haven’t influenced just half of US homes, they’ve hit every single one of them. Some more than others, not every bubble is as big as San Francisco’s, but the suggestion that nearly half of homes are not overvalued is simply misleading. It falsely suggests that if you buy a home in the ‘right’ place, you’ll be fine. You won’t be. The Washington-induced bubble will and must pop, and precious few homes will be ‘worth’ what they are ‘worth’ today.
Here’s what Jesse tweeted along with his link to the Zero Hedge article:
“Almost half of the US housing market is overvalued” – this is why U.S. household wealth is also overvalued/in an unsustainable bubble.
He followed up with:
U.S. household wealth is in a bubble thanks to Fed-inflated asset prices. This is creating a “wealth effect” that is helping to drive our spurious economic recovery. This economy is nothing but a sham. It’s smoke and mirrors. Wake the F up, everyone!!!
My reaction to this:
Sorry, my friend Jesse, but every single US home is overvalued. It just depends on the vantage point you look from. All prices have been distorted by the Fed’s policies, not just half of them. Arguably some more than others, but can that be the core argument here?
Jesse’s reply:
Yes, that’s a good point.
Another long time pal, Dave Collum, chimed in with a good observation:
I think even us bunker monkeys start recalibrating, no matter how hard we try to maintain what we believe to be perspective.
Yes, we’ve been at this for a while. Even if Jesse was still a student when he started out. We’ve been doing it so long that he recently wrote an article named: Why It’s Right To Warn About A Bubble For 10 Years. And he’s right on that too.
Let’s get to the article the conversation started with:
CoreLogic reports that residential real estate prices nationwide increased 6.9% year over year from April 2017 to April 2018. The firm’s Home Price Index (HPI) also shows a 1.2% rise on the month-over-month basis from March to April 2018. This has certainly sparked the debate of housing affordability across the nation with many millennials struggling to achieve the American dream.
CoreLogic Market Condition Indicators showed that 40% of the 100 largest metropolitan areas were overvalued in April, compared to 28% undervalued, and 32% in line with valuations. The report uncovers a shocking discovery that of the nation’s top 50 largest residential real estate markets, 52% were overvalued in April.
CoreLogic’s methodology behind overvalued housing markets “as one in which home prices are at least 10% higher than the long-term, sustainable level, while an undervalued housing market is one in which home prices are at least 10% below the sustainable level.”
The CoreLogic people probably mean well, but they also probably don’t want to rattle the cage. It’s not really important. As soon as someone starts talking about a ‘sustainable level’ for home prices, you can tune out. Because no such thing exists. Unless you first take those $20 trillion out of the ‘market’, free up interest rates, tighten lending standards and lower credit scores. Only then MAY you find a ‘sustainable level’ for prices.
Historically a house in the US cost around 3 to 4 times the median annual income. During the housing bubble of 2007 the ratio surpassed 5 – in other words, the median price for a single-family home in the United States cost more than 5 times the US median annual household income. According to Mike Maloney, this ratio is heavily influenced by interest rates. When interest rates go down the affordability of a house goes up, so people spend more money on a house. Interest rates have now been falling since 1981 when they peaked at 15.32% (for a 10-year US treasury bond).
Mike Maloney, another longtime friend of the Automatic Earth, is dead on. Price to income is a useless point unless you include interest rates in the calculation. And then you can get large differences. Since interest rates have been falling for 37 years, count on them to rise. And see what that does to your model.
“The best antidote for rising home prices is additional supply,” said Dr. Frank Nothaft, chief economist for CoreLogic. “New construction has failed to keep up with and meet new housing growth or replace existing inventory. More construction of for-sale and rental housing will alleviate housing cost pressures,” Nothaft added.
Right, yeah. Now we know the CoreLogic mindset. The more you build, the better home prices will be. Just one of many problems with that is that if you really expect prices to fall once you build, people will build fewer houses, because profit margins fall too. The whole idea that we can save housing markets by simply building ever more has never rung very true. But that’s for another day.
In a recent op-ed piece via The Wall Street Journal, Paul Kupiec and Edward Pinto place the blame on the government for creating another real estate bubble through “loose mortgage terms pushing home prices up.” They claim that mortgage underwriters need to tighten standards.
“Home prices are booming. So far, 2018 has posted the strongest growth since 2005. “About 60% of all U.S. metros saw an acceleration in the rate of price increases through February this year,” according to Housing Wire. Since mid-2012, real home prices have increased 28%, according to data from the American Enterprise Institute. Entry-level home prices are up about double that rate. In contrast, over the same period household income has barely kept pace with inflation. The current pace of home-price inflation is increasing the risk of another housing bubble.
The Fed is raising rates -finally- and home prices grow at the fastest rate in 13 years. Over the past 6 years prices are up 28%. Entry level homes are up more than 50% in that time frame. That is just profoundly scary. It’s like Dante’s descent into hell. And no, it’s not true that “The current pace of home-price inflation is increasing the risk of another housing bubble”. We’re already caught up head first in a new housing bubble.
“The root of the problem is declining underwriting standards. In April Freddie Mac announced an expansion of its 3% down-payment mortgage, the better to compete with the Federal Housing Administration and Fannie Mae . Such moves propel home prices upward. Because government agencies guarantee about 80% of all home-purchase mortgages, their underwriting standards guide the market.
Making lending even more dangerous, CNBC recently reported that “credit scores may go up” because new regulatory guidance allows delinquent taxes to be excluded when calculating credit scores. These are only some of the measures that “expand the credit box” and qualify ever-shakier borrowers for mortgages.”
As I said before: if you lower lending -and underwriting- standards and artificially raise credit scores, then yes, you can keep the bubble going for a while longer. But it overvalues properties. You’re just moving goalposts.
“During the last crisis, easy credit led home prices to rise at an unsustainable pace, leading marginally qualified borrowers to stretch themselves thin. Millions of Americans’ dreams became nightmares when the housing market turned. The lax underwriting terms that helped borrowers qualify for a mortgage haunted many households for the next decade.”
No, it’s not just homes. Stocks and bonds as just as overvalued. Because of a behemoth attempt at making the economy look good, even though it’s entirely fake. No price discovery, no market, just central banks and tweaking standards and surveys. C’mon, we all know where this must go. We just don’t want to know. So this Marketwatch piece gets a wry smile at best:
The housing market has not only recovered from the Great Recession, it’s heated up. According to an analysis from Attom Data, nearly 14 million Americans are now “equity rich” – meaning they have at least 50% equity in their homes. It bears repeating that many owners and communities are not so lucky: over a million Americans are underwater, and some cities and towns are still reeling under the weight of abandoned and vacant homes and stagnant micro-economies. But for most of the country, rapidly rising home prices and a dearth of anything else to buy means people are staying in their homes longer, allowing them to accrue more and more equity: $15 trillion worth, to be exact.
Let’s see. On February 18, I wrote an essay called “Not Nearly Enough Growth To Keep Growing”, in which I said “..the Automatic Earth has said for many years that the peak of our wealth was sometime in the 1970’s or even late 1960’s”.
That provoked a wonderfully written reaction from long-time Automatic Earth reader Ken Latta, which I published on February 23 as “When Was America’s Peak Wealth?”. Ken put peak wealth sometime in the late ’50s to early 60’s. As I said then, I really liked his definition of ‘wealth’ as being “best measured by the capacity to be utterly wasteful”. The article spawned a series of nice comments, for some reason largely by people in his age bracket (Ken’s 73).
Which is nice, but it poses as many questions as it provides answers. Like: why does the Automatic Earth have so many ‘older’ readers? Should that be a reason for worry? And also: why don’t the young react in equal numbers? Don’t younger Americans have as many ideas as the generation(s) before them about when America’s peak wealth might have occurred?
Must one have been an eye-witness to the decline to know that it happened? Do only old farts ponder these things? Are there lessons to be learned, be they personal or history-wide? Interesting, all of it, if you ask me. Do younger people not acknowledge that peak wealth is behind us, and perhaps occurred before they were even born? Me, I like history lessons, and Ken’s for sure.
Tomorrow, I’ll have another take on all this written by Charles A. Hall, Emeritus Professor at State University of New York College of Environmental Science and Forestry, Syracuse. Charlie thinks neither Ken nor myself have given nearly enough attention to the role energy plays in wealth, and the peak thereof.
But first, here’s Ken Latta’s response to the comments on his article.
Ken Latta: The responses to my article on peak wealth were so thought-provoking that a follow-up article seemed appropriate. You can’t cover the history of the world in one blog post and I appreciate the additional ideas from the commentariat.
John Day: I remember 1969 as better than 1970. That first moon landing was a real high point for all of us. Everybody thought 1971 sucked. Things were different after November 1963. LBJ was a “sonofabitch”, as he put it. It’s hard to nail a year down, but after we lost our president, things were never the same.
John Day: Reminded us of a substantial breaking point the assassination of John Kennedy represented to the flow of history. But, history has its own problems. The finer details are oh so often swamped by a popular narrative. JFK was way more beloved dead than alive. Like Trump he could draw big crowds, but he very narrowly beat Nixon. Detractors favored referring to him as weak on foreign affairs.
I clearly recall were I was when the news came in about him being shot in Dallas. I was hanging out with some of my squadron mates in our team office when our Captain came by to inform us. He was African-American and clearly disturbed by it. It was much less concerning to the enlisted ranks. He had not been popular with most of us. It was a divided nation even then. I think his mourners should not forget that JFK presided over the early stages of the Viet-Nam adventure. With Green Berets and meddling in the South Viet-Nam government’s affairs, as is our custom.
It was just another case of his bad luck really. The American War on Viet-Nam could have happened to Eisenhower. My older brother was staged in a Korean Port waiting for orders to board a troop ship for transport to what was then still usually known as French Indo-China to support the French Army in their losing battle against the Viet Minh. But, Ike was a fairly sensible man and called it off.
V. Arnold: Wow, great thread. I’m 72 and was there also; I remember it pretty much as you tell it. I’d agree with your time-line also as to when peak wealth occurred. The beginning of the downturn was very late in the 50’s/early 60’s with our war in Vietnam and then; Nixon going off the gold standard. That allowed the next chapter of crony capitalism.
I attribute an accelerating deterioration to Friedman and his Chicago School of Economics and the age of the neo-liberal. Don’t forget Reagan; I felt the effects of his union busting first hand with stagnant wages until I retired over seas in 2007. I hope to read more of your writings from time to time. Cheers.
V. Arnold: Wrote very derogatory words about Uncle Miltie Friedman and the Chicago School of Terror. For that I salute him or her. Hell is too good for Milton and his apostles.
Forget Reagan? Not as long as I live. I also remember where I was when he was declared the next president. Sitting in the nicest bar in the little mountain town of Boulder Creek, Ca, nursing a drink. The bar was crowded and broke into loud celebration at the news. All I could think of was how f**king doomed we were. How I wish I had been wrong.
Hotrod: Thank you for your thought provoking article. I sometimes look at the health of the surviving car companies after WWII as a bellwether to the shape of the economy. Hudson, Nash, Studebaker, Packard all were struggling mightily by the mid 50’s. For the farming community the peak was about 1952. After the post war demand had been met, and greatly exceeded, farming declined into a real recession during the middle and late 50’s and never was quite the same.
Since then, machinery and technology, mostly purchased on credit, has kept production up and prices down for farmers, typically at or below the cost of production. Many of these labor saving and production enhancing tools stand unused, but are still being paid for. The only exception to this situation is massive drought, or massive flooding which can temporarily insert profitability to those not affected.
Hotrod: Reminisced on the tribulations of many car makers [Hudson, Nash, Studebaker, Packard], some of them long established, in the early 1950’s. I remember that too. I think a substantial part of their problems probably stemmed from not having enough dealerships. People were traveling more and wanted reassurance that a dealer with parts and experienced mechanics would be available in the next town. I think it actually surprising that those companies lasted as long as they did. Actually Nash and I think it was Packard merged to become American Motors and lasted another three decades.
He (my assumption) also mentioned farming and its trials. Farming is not the easy route to riches. The compensation has always been that if you hadn’t pledged your feal to the Lord of a Manor or signed up to be a share cropper, you were your own boss.
The late 40’s thru early 50’s were pretty good on our farm. When I was a little tike, we had an already ancient Macormick-Deering 10-20 tractor and a team of draught horses. My eldest brother having been told of his tour of northern and central Europe under the guidance of a man named Patton, wrote to dad asking him to take the money he had been sending home and buy a new tractor. All dad could find at a local dealer was a Minneapolis-Moline as they were about the only company allowed to build tractors during the war.
Many of them were shipped to England to help the British increase their food production. That was the only brand new tractor our family has ever owned right up to this day. My nephew still has it, but it’s in bits and pieces now. By around 1950 we were fully mechanised. Shortly after dad died in 1959, my brother rented out the land got himself a factory job. The prices of equipment steadily increased. The value of crops did not.
Crop prices did increase substantially about a decade ago, but not nearly enough to pay for new equipment unless you operated a very large farm. And more recently crops have declined in value again. I think a lot of farmers are in trouble.
Patricia: I am worried. Everybody who comments here is in their 70s as I am. Is that because we have more time to reflect and write down our thoughts or is it because the youth of today aren’t interested in anything except Facebook? If that is the case then I am so glad I am at the end of my life but what about my darling grandchildren.
Patricia: Expressed concern over whether the prevalence here of geezers was due to us having too much time on our hands or the youth having no time for anything except Facebook. Based on my own family, I can say that their devotion to Facebook is tempered by addiction to gaming. I mean video not casino. I think we can say that Patricia is right on both counts.
I too feel a certain gratitude for having been born during the war years with the expectation that I may be expired before the ordure collides with the air circulator. We oldies do have a psychological quandary with regard to our descendants. Knowing as we do that it’s coming. I too have grandchildren and a great grandchild. I desperately wanted to make them aware and try to offer some guidance.
What I learned was that they are at least vaguely aware of the looming threats and don’t want to hear more about it. They know there isn’t really much they can do about it. I think they believe that when it happens they will just do what they can to deal with it. All things considered (apologies to the Canadian Broadcasting Corporation, I wonder if that program is still on) that is probably about the best attitude any of us can have.
What bothers me most about our youth is what they don’t seem to know. I’m talking about the kinds of knowledge that will likely be very useful when things get stinky. Larding debt onto the kids so they could go to college and learn computer science, physics, art history and how to be a social justice warrior was probably to their detriment.
I don’t exactly know what would be absolutely best for them to know, but I’m pretty sure it isn’t those kinds of things. I tend to believe that it will be good to know, as examples, how to shoot, how to fish, how to tell the difference between weeds and food, how to loosen rusted bolts and how to turn hemp into rope in addition to dope.
Marjory Collins Cooperative grocery store, Greenbelt, MD May 1942
Let me start off by saying that I don’t mean any disrespect to the families and loved ones of the passengers and crew on board the missing Malaysian plane. I just wish I didn’t have the insistent impression I’m the only one who doesn’t mean disrespect. But if this story can teach us one thing it’s that we have further mastered the art of all too easily turning genuine human misery into a made for 24/7 TV void. Channel after channel treats its emptiness-hungry viewers to hour after hour of experts, graphs, maps, photographs, and they all manage to show us absolutely nothing.
CNN might as well be airing footage of the Great Lakes, it wouldn’t make one iota of difference. Dozens of camera teams talking heads and pundits are sent to interminable Kuala Lumpur press ops where nothing is said simply because there is nothing to be said, while dozens of other teams are sent to cover search and rescue missions in any part of any ocean that any expert may have mentioned as a possible site to find debris. Any debris.
When Ted Turner started CNN there was no such thing as reality TV. And it still took a remarkably long time for TV makers to clue in on the most important lesson 24-hour news had in store: that people simply love to watch absolutely nothing, as long as it’s on, and the screen flickers. That this is perhaps a little disrespectful to the potential victims and their families and friends is something that doesn’t seem to occur to neither viewers nor TV makers. The camera crews and everyone around them probably even feel by now that they’re part of the story, and that they’re helping in getting the mystery solved.
So here goes another aerial shot of the Indian Ocean, or the Pacific, or the local pond, that shows what might be a piece of the plane, or it might not, with the same grainy resolution and clarity that we’ve come to know from the snapshots taken by holiday goers who claimed that dot in the middle was the monster of Loch Ness.
Disgrace, embarrassment, shame.
I’m not the biggest Ron Paul fan on the planet, I think he’s alright but he exhibits a few too many traits of a fossil for my taste. But today America should be proud they have the man, because he’s the only one in the crowd who dares speak truth to power, and does so in the elegant, concise and eloquent manner used exclusively by those who have nothing to hide and therefore don’t need to choose their words with the utmost care. Dr. Paul needs only 1:20 min to explain what is going on in Ukraine: “I think it was wrong for us to get involved and participate in the overthrow of their government. We spent over $5 billion with our NGOs to agitate and get rid of an elected government [..] … it would be best for us to stay out.” Listen to Ron Paul, America, and remember what he says next time Obama or any other politician talks about Ukraine and Russia:
As I said, I think Dr. Paul is a bit of a fossil, but in my book he’s 1000% better than that other Fossil on the Hill, John McCain, who compared Putin to Stalin and Hitler, both of whom as we all know he knew personally, and forgot to mention Genghis Khan and Attila the Hun, presumably because he’s repressed the memories of the time he spent as their PoW. McCain has now outlived Methuselah by a century or two, with a brain degraded enough to fool himself into thinking he’s still serving the American people, and you just sense in the air that he’s desperate to throw some bombs on someone’s head one more time. It’s the very desire that might be keeping him alive.
And there are many Americans who believe McCain and all the rest of them when they talk about how bad a man Putin is. And what an awfully illegal act it was for the Crimeans to hold a referendum on where they want their land to belong. And what a great thing it is for Washington to declare sanctions against Putin’s cabal of oligarchs, even though most of them were installed by Washington itself in the early 1990s when Yeltsin held his boozed up yardsale, and it was Putin who reined them in.
Ron Paul says that “the best part about this whole story is that the market is going to overrule the rhetoric of both sides”, but I’m afraid that may be a while yet. Watching EU leaders like Van Rompuy and Barroso announce their version of sanctions gives me the eerie feeling they’re wallowing far too much in their new found sense of power, that allows them to finally harm someone else than a few down on their luck Greeks or Italians, and they may long for more of the same.
These guys are well capable of painting Europe into a corner they won’t be able to walk out of without more, and more severe, damage being done. And they find kindred spirits in McCain and many other US “leaders” who see this as an opportunity to live out the same power fantasies they satisfy twice a week as they have their naked sorry asses whipped in one of Madame X’s dungeons. There is a reason why these people rise to their positions of power, and it’s not intelligence. And the fact that they are where they are is dangerous; the mindset that makes them rise to those positions is the same one that loves to inflict pain .
These people are a disgrace, they embarrass everyone they represent, and every European and American should be ashamed of having them speak in their name. And Ron Paul may be a bit of a fossil, but he doesn’t have that mindset, he’s not a power starved psychopath.
“I think it was wrong for us to get involved and participate in the overthrow of the government,” exclaims Ron Paul in this brief clip, adding the US is “stirring up trouble in Crimea.” The American people are “tired of it,” and “it would be best for us to stay out.” The US doesn’t need another war – and certainly can’t afford it – and “we don’t want trade wars.” Simply put, he concludes, “it’s best we stay out.”
As any long-time reader of this column knows, we routinely draw from historical lessons to highlight that this time is not different. Throughout the 18th century, for example, France was the greatest superpower in Europe, if not the world. But they became complacent, believing that they had some sort of ‘divine right’ to reign supreme, and that they could be as fiscally irresponsible as they liked.
The French government spent money like drunken sailors; they had substantial welfare programs, free hospitals, and grand monuments. They held vast territories overseas, engaged in constant warfare, and even had their own intrusive intelligence service that spied on King and subject alike. Of course, they couldn’t pay for any of this. French budget deficits were out of control, and they resorted to going heavily into debt and rapidly debasing their currency. Stop me when this sounds familiar. The French economy ultimately failed, bringing with it a 26-year period of hyperinflation, civil war, military conquest, and genocide.
History is full of examples, from ancient Mesopotamia to the Soviet Union, which show that whenever societies reach unsustainable levels of resource consumption and allocation, they collapse. I’ve been writing about this for years, and the idea is now hitting mainstream. A recent research paper funded by NASA highlights this same premise.
According to the authors:
“Collapses of even advanced civilizations have occurred many times in the past five thousand years, and they were frequently followed by centuries of population and cultural decline and economic regression.”
The results of their experiments show that some of the very clear trends which exist today– unsustainable resource consumption, and economic stratification that favors the elite– can very easily result in collapse. In fact, they write that “collapse is very difficult to avoid and requires major policy changes.” This isn’t exactly good news.
But here’s the thing– between massive debts, deficits, money printing, war, resource depletion, etc., our modern society seems riddled with these risks. And history certainly shows that dominant powers are always changing. Empires rise and fall. The global monetary system is always changing. The prevailing social contract is always changing. But there is one FAR greater trend across history that supercedes all of the rest… and that trend is the RISE of humanity. Human beings are fundamentally tool creators. We take problems and turn them into opportunities. We find solutions. We adapt and overcome.
The world is not coming to an end. It’s going to reset. There’s a huge difference between the two. Think about the system that we’re living under. A tiny elite has total control of the money supply. They wield intrusive spy networks and weapons of mass destruction. The can confiscate the wealth of others in their sole discretion. They can indebt unborn generations. Curiously, these are the same people who are so incompetent they can’t put a website together. It’s not working. And just about everyone knows it.
China’s stocks rallied, sending the benchmark index to its biggest gain in four months, amid speculation the government is loosening funding restrictions for property developers and banks to support economic growth. Shanghai Pudong Development Bank and Industrial Bank both surged at least 6.6%. The China Securities Regulatory Commission said after exchanges closed that lenders can issue preferred shares. China Vanke Co. and Poly Real Estate Group Co. jumped more than 6% after the Shanghai Securities News reported regulators are reviewing financing applications from “many” listed developers.
The Shanghai Composite Index climbed 2.7% to 2,047.62 at the close, the biggest gain since Nov. 18, after reaching record-low valuations yesterday. Policy makers are trying to bolster real estate and financial companies as the economy slows and bad debts increase. Allowing lenders to sell preferred shares would give them a new way to meet long-term fundraising requirements.
“Investors hear talk that banks may be the first to be included in the preferred-shares program,” said Xu Shengjun, analyst at Jianghai Securities in Shanghai. “Investors are hoping this will bring a lot of benefits to the companies, including boosting their capital.” The Shanghai index has dropped 3.2% this year as analysts cut their estimates for 2014 economic growth, the nation suffered its first onshore corporate bond default and an unlisted developer collapsed. Today’s announcement on preferred shares follows a government statement this week that China will speed up construction projects to bolster the economy.
China’s yuan has suffered its biggest one-week fall in 20 years, nearing key trigger levels that threaten a wave of forced selling and mounting stress for those with dollar debts. The jitters come amid reports of fire-sales of Hong Kong property by Chinese investors desperate to raise cash, some slashing their prices by 20pc for a quick sale. A liquidity squeeze in mainland China has already led to the collapse of Zhejiang Xingrun real estate this week with $570m of debts, the biggest property failure so far.
The yuan weakened sharply on Thursday to 6.23 against the dollar and has now lost 3pc since January, a clear break with China’s long-standing policy of slow appreciation. Geoffrey Kendrick, from Morgan Stanley, said the currency has broken through the 6.20 level where a cluster of structured products are triggered. These are known as losses on target redemption funds. The losses have already hit $3.5bn.
The latest move creates a potential “non-linear movement” that could push the yuan rapidly to the next level at 6.38, where estimated losses would reach $7.5bn, and from there jump to 6.50. Mr Kendrick said banks in Singapore, Taiwan and South Korea are heavily exposed, but there could also be a serious fallout for Chinese airlines, shipping and property companies, as well as a nexus of finance built around use of copper and iron as collateral.
Chinese companies have borrowed $1.1 trillion on the Hong Kong markets, a quarter from UK-based banks. There is complex web “carry trade” of positions in which investors borrow in dollars to buy yuan assets, often with leverage. These trades are highly vulnerable to a dollar squeeze as the US Federal Reserve brings forward its plans for rate rises. Morgan Stanley said the Chinese central bank may have to intervene to shore up the yuan by selling some of its US dollar bonds if the slide goes much further. The authorities spent $80bn in June/July 2012 to defend its currency band.
For now China seems to be weakening the yuan deliberately. Mark Williams and Qinwei Wang, from Capital Economics, said the data flow suggests that the central bank bought $25bn of foreign bonds last month in order to force down the currency. The motive is to teach speculators a lesson and curb hot money inflows.
However, suspicions are also are growing that China’s authorities have quietly switched to a devaluation policy to buffer the shock to the economy as they attempt to curb excess credit, even though this would risk a clash with Washington. “The more they undershoot their growth target, the more tempting it may look to have a weaker currency to help out,” said Kit Juckes, from Societe Generale.
Premier Li Keqiang said on Thursday that China would take steps quickly to “stabilise growth and boost domestic demand”, a sign Beijing is worried that tightening may have gone too far. Credit Agricole expects the central bank to slash the reserve requirement ratio for banks by 200 basis points this year.
Morgan Stanley said China is approaching a “Minsky Moment”, a turning point when credit bubbles implode under their weight. “There is evidence that this debt growth has become excessive and non-productive. It now takes four renminbi of debt to create one renminbi of GDP growth from a nearly 1:1 ratio in the early and mid-2000s.” “It is clear to us that speculative and Ponzi finance dominate China’s economy at this stage. The question is when and how the system’s current instability resolves itself,” said the bank. “A disorderly unwind could take Chinese growth down to 4pc in a shorter time frame with potentially disastrous consequences for levered Chinese assets (banks, property) and the entire commodity supply chain,” it said.
China’s slowing economy has stoked chatter among economists that Beijing is moving closer to unleashing fresh monetary and potential fiscal stimulus measures as soon as next quarter. There are increasing concerns over growth among the leaders, said Zhiwei Zhang, chief China economist at Nomura, citing discussions at the State Council’s weekly meeting on Wednesday.
In a statement following the meeting, Premier Li Keqiang said the government should roll out measures as soon as possible to stabilize growth and boost domestic demand, according to state news agency Xinhua. “This reinforces our view of policy easing picking up in the second quarter,” Zhang said.
Nomura expects the People’s Bank of China (PBoC) will cut banks’ reserve requirement ratio (RRR) – or the amount of cash they must set aside as reserves – by 50 basis points in the second quarter and by another 50 basis points in the third quarter. The central bank last cut its RRR in May 2012. The RRR now stands at 20%, near its record level of 21.5%. The likelihood of an interest rate cut is rising as well, said Zhang. However, he noted that it is not yet in the bank’s baseline forecast.
Societe Generale holds a similar view, forecasting a 50 basis point RRR cut early in the second quarter, in order to offset potential capital outflows. “The recent economic deceleration has indeed been more than what Beijing is willing to tolerate in the short term,” the bank said.
According to some market watchers, the PBoC’s decision to widen the yuan trading band over the weekend – following a spate of disappointing economic data – could also be part of the government’s efforts to stabilize growth. Economic indicators such as retail spending and industrial output for January-February, for example, came in well below market expectations.
“While band widening itself has little impact on the economy, the possible consequence could be used to stabilize the growth. The weak economic data implies that it is unlikely to see CNY appreciation and capital inflows after the band widening,” said Haibin Zhu, chief China economist at JPMorgan wrote in a report over the weekend. If this is the case, “CNY depreciation could support exports, and capital outflow will drain domestic liquidity and open the window for RRR cuts by the PBoC,” he said.
Foreign investors boosted purchases of China’s onshore bonds by 16% this year as some funds look at the yuan’s drop as a buying opportunity. They increased their holdings to a record 384.1 billion yuan ($62 billion) as of Feb. 28 from 331.9 billion yuan at the end of 2013, according to data from China Central Depository & Clearing Co. and the Shanghai Clearing House. Schroder Investment Management Ltd. says renminbi debt is attractive after the currency’s 2.8% loss this year, Stratton Street Capital LLP is applying to enter the onshore market and Western Asset Management Co. doesn’t expect long-term depreciation.
“It has definitely become interesting at these levels to accumulate currency positions,” said Rajeev De Mello, who manages $10 billion as Singapore-based head of Asian fixed income at Schroder. He is considering adding to his yuan holdings after paring them in February.
Policy makers in the world’s second-largest economy are seeking to discourage the accumulation of debt by allowing companies to default and by introducing more volatility in exchange rates and borrowing costs. JPMorgan Chase & Co. said in a note after the central bank doubled the yuan’s daily trading limit to 2% on March 17 that the currency will strengthen to 5.95 per dollar by the end of this year from 6.2275 yesterday. China’s 10-year sovereign bond yield is 4.52%, compared with 2.77% for similar U.S. Treasuries.
“Yields at 4% and the currency’s appreciation prospects make Chinese government bonds extremely attractive compared to the nations with the same rating elsewhere in the world,” said Andy Seaman, London-based partner and fund manager at Stratton Street, which oversees $1.5 billion. Overseas investors currently hold just 1.3% of the total 28.9 trillion yuan of onshore debt, with 77% of that either sovereign bonds or notes issued by China’s three policy banks, according to Bloomberg calculations. In the U.S., overseas buyers account for 47% of Treasuries.
China controls access to its domestic markets through the Qualified Foreign Institutional Investors program. As of last month, the State Administration of Foreign Exchange had approved $52.3 billion investment quotas for QFIIs, up from $40.8 billion a year earlier. The foreign-exchange regulator also approved 180.4 billion yuan in investment by Renminbi QFIIs while China Securities Regulatory Commission Chairman Xiao Gang said on March 11 that more foreign institutional investors will be allowed to enter the local market.
“As the world’s second-largest economy, and one that still has a lot of growth potential, China is significantly under allocated in global assets,” said Wang Ming, marketing director at Shanghai Yaozhi Asset Management LLP, which oversees 2 billion yuan of fixed-income investments. “Bonds are a relatively safe choice, and demand will grow as the country further opens its market, perhaps regardless of interest-rate differentials.”
In a normal world the US Federal Reserve would barely cause a ripple by tweaking its interest rate forecast a year or two ahead. But we are not in normal world. We are facing a confluence of events somewhat like 1998 when Fed tightening turned the East Asian crisis into a global credit event. We all forget now that Alan Greenspan told emerging markets to drop dead at his Humphrey Hawkins testimony that year – saying he was more concerned about US inflation – and drop dead is exactly what they then did. (The Fed soon had to slash interest rates to avert a global crash)
Janet Yellen now says interest rates could start rising “around six months” after the Fed stops tapering bod purchases (later this year). This is a minor shock. The markets were expecting a much longer lead time as you can see from the chart below. She tried to wind back comment during her press conference but by then it was too late. Markets were already looking at the Fed’s now famous “dot chart” showing that rates were likely to be 1% by the end of 2015 and 2.25% by the end of 2016, significantly higher than expected.
The market reaction has been swift. Yields on 5-year US Treasuries surged 15% in short order, with ripple effects through the global system. Yields have come down a bit since but then net effect as of writing is a jump in 10-yields by the following amounts in basis points: Philippines 21, Indonesia 15, Turkey 14, US 12, Hong Kong 12, Brazil 12, UK 11, Germany 7.
No doubt other factors are at work in each country but this looks like the start of a global squeeze. All we need now is a serious rise in the dollar and we will start to see the next leg of an emerging market shake-out.
The China carry trade is already going bad as the yuan continues its six-week slide, leaving us wondering what will happen to the $1.1 trillion dollar loans through Hong Kong – clearly now the epicentre of the next storm.
EM bulls will argue that developing countries are far less vulnerable this time because their governments no longer borrow in dollars. This debate has become a little stale. The counter-argument – made by the BIS and the IMF – is that private companies in many of these countries do indeed borrow in dollars and on a huge scale. There has been a $4 trillion flow of funds into EM since 2009 and a fair chunk is fickle money chasing yield. [..]
Europe took the final step to complete a banking union on Thursday with an agency to shut failing euro zone banks, but there will be no joint government back-up to pay the costs of closures. The breakthrough ends an impasse with the European Parliament, which persuaded euro zone countries to strengthen the scheme. It completes the second pillar of banking union, which starts at the end of the year when the European Central Bank takes over as watchdog. The accord means that the ECB has the means to shut banks it decides are too weak to survive, reinforcing its role as supervisor as it prepares to run health checks on the still fragile sector.
ECB President Mario Draghi said that plans to allow the new ‘resolution’ or clean-up fund to borrow to top itself up looked promising and that the decision-making scheme to shut a bank had been streamlined. “The point we’ve always made that we need a mechanism that is properly funded and the agreement actually improves the existing funding,” Draghi told journalists as he entered a meeting of European Union leaders. “All in all we made progress for a better banking union.” Michel Barnier, the European commissioner in charge of regulation, said the scheme would help to bring “an end to the era of massive bailouts”. “The second pillar of banking union will allow bank crises to be managed more effectively,” he said.
Thursday’s agreement makes it harder for EU countries to challenge the ECB if the central bank triggers bank closures, and establishes a common 55 billion euro back-up fund over eight years – quicker than planned but far longer than the ECB’s watchdog had hoped. But the new system, which Barnier conceded was not ‘perfect’, has shortcomings. For one, the ‘resolution’ fund is small and would, in the view of the ECB watchdog, be quickly spent. To remedy that the fund will be able to borrow to replenish spent money. Euro zone governments will not, however, club together to make it cheaper and easier for it to do so.
The 18 euro zone countries do not intend to cover jointly the cost of dealing with individual bank failures, a central tenet of the original plan for banking union. Germany resisted pressure from Spain and France to make such a concession. Its finance minister Wolfgang Schaeuble welcomed new rules forcing bank creditors to take losses and that “the mutualised liability … remained ruled out” – a reference to sharing the burden of a bank collapse. Neither will there be any joint protection of deposits.
This is a great story. The Bank of England announces a QE program. Which means they’ll start buying bonds at elevated prices. So a trader, in that spirit, raises the price of bonds he intends to sell them, but fumbles the moment he does it. He ends up with losses and a ban instead of free money.
A former Credit Suisse trader who saw the Bank of England’s quantitative easing (QE) programme as “cake” to profit from has been fined nearly £700,000 by the City regulator after rigging the price of UK bonds. Mark Stevenson, a bond trader with nearly 30 years’ experience, was also banned from the industry by the Financial Conduct Authority (FCA) after his attempt to exploit the £375bn programme intended to help nurse the economy back to health. The FCA found that he artificially ramped up the price of a £1.2bn holding in a set of gilts hours before he intended to sell them to the Bank.
His unusual trading was reported within 40 minutes and officials at Threadneedle Street decided not to buy the gilt, which it had been due to buy as part of QE. The FCA found the trading had the potential to affect taxpayers, since if the Bank had overpaid for the bond its losses would be shouldered by the Treasury. Details of the episode in October 2011 surfaced publicly last summer when the Bank’s executive director for markets, Paul Fisher, told MPs that claims about the “thoroughly reprehensible” allegations had been referred to the regulator.
On Thursday the FCA announced that Stevenson, who left Credit Suisse last December, had been fined £662,700 after qualifying for a 30% discount from a potential £946,800 fine because he agreed to settle at an early stage. It is the first enforcement action for manipulation of the gilt market, and comes in the wake of a series of market-rigging scandals. Banks have been fined billions for manipulation of the Libor interbank lending rate and world regulators are investigating allegations of foreign exchange rate rigging that threaten to become at least as serious.
Tracey McDermott, the FCA’s director of enforcement, said: “Stevenson’s abuse took advantage of a policy designed to boost the economy with no regard for the potential consequences for other market participants and, ultimately, for UK taxpayers. “He has paid a heavy price for his actions. Fair dealing is at the heart of market integrity. This case sends a clear message about how seriously the FCA views attempts to manipulate the market.” The FCA described Stevenson’s actions as “particularly egregious”. It added that the episode was the action of one trader on one day, and there was no evidence of collusion with other banks.
Market manipulation has been on my mind a lot recently so I guess it’s worth explaining what it is. In simple form, market manipulation is:
• buying a lot of an asset,
• with the goal of pushing its price up,
• so you can sell it at that higher price to a price-insensitive buyer.
Or vice versa, with selling.1 If you think you’ve spotted market manipulation, a useful question to ask is, “who is the price-insensitive buyer?”2 Because buying a lot of an asset with the goal of pushing its price up and then, just, like, selling a lot of it on the market is not in general a positive expectation strategy.
You know who is a great price-insensitive buyer? A major central bank that has embarked on a program of quantitative easing. The goal of quantitative easing is to push bond prices up (interest rates down), so sort of by definition the bank is not trying to buy bonds cheaply. If it was trying to buy bonds cheaply, it would not announce the quantitative easing in advance. Really, its goals are the opposite: Not only would it rather push prices up than buy cheaply; it would rather push prices up than buy at all. If the Fed could say “quantitative easing, go, move rates down by 50 basis points,” it would be happy to do that without buying bonds.
Here is a U.K. Financial Conduct Authority action against a former Credit Suisse trader who manipulated gilt prices during a Bank of England quantitative easing auction in 2011. The trader, Mark Stevenson, was fined 662,700 pounds and banned from the industry, and, fair enough, he did bad:
Mr Stevenson, an experienced bond trader formerly employed by Credit Suisse Securities (Europe) Limited (“CSSEL”), bought £331 million of the UKT 8.75% 2017 (the “Bond”), a UK government gilt, between 09:00 and 14:30 on 10 October 2011. The Bond was relatively illiquid and Mr Stevenson’s purchases represented approximately 2,700% of the average daily volume traded for the Bond in the previous four months and 92% of the value of the Bond purchased in the IDB market on 10 October 2011. The price and yield of the Bond significantly outperformed all gilts of similar maturity on 10 October 2011, as a direct result of Mr Stevenson’s trading.
He then tendered it into the quantitative easing auction at the end of that day, and … oops! The BOE decided to be price-sensitive, for the only time ever,3 because this bond’s price got really out of whack, and because other dealers called the BOE to complain, as you’d expect them to:
By 09:39 (38 minutes after Mr Stevenson began trading in the Bond), a market participant had telephoned the BOE regarding the Bond’s outperformance. Several other market participants telephoned the BOE throughout the day, suggesting that the Bond had been “squeezed”, “rammed”, and that someone “was messing around with” it.
No honor among thieves etc. So the BOE didn’t buy any of the bond that Stevenson was trading, its price got right back into whack, and Stevenson lost a lot of money:
Remember up is down, so that blue line going down at the beginning of the day was Stevenson pushing up the price of his favorite bond, and that line shooting up at the end of the day was him realizing that he’d made a terrible mistake and dumping his bonds until they got back in line with all the other bonds. You can’t tell for certain, but it sure looks like he sold his bonds at lower prices (higher yields) than he bought them at. Also: Fined and banned from the industry!
One lesson here is, if you’re going to manipulate markets, you should be really sure that your price-insensitive buyer is in fact price-insensitive,4 and a buyer. A bigger lesson is that hogs get slaughtered. [..]
New York Attorney General Eric Schneiderman has set himself the noble goal of making financial markets safer for the small investor. Unfortunately, his latest foray into the world of high-frequency trading will achieve little or nothing toward that end.
Schneiderman announced this week that he is scrutinizing what has become a common practice: Some traders get privileged access to market data by paying to place their computer systems inside exchanges’ premises or by subscribing to faster and more detailed data feeds. Because this allows them to act on information that others don’t have, Schneiderman sees it as akin to insider trading.
To put Schneiderman’s view in the proper context, it helps to understand a bit about how high-speed trading works. Consider two securities, both of which are supposed to track the S&P 500 stock index. From one second to the next, their prices move in lockstep. At shorter time intervals, measured in the thousandths of a second, incoming orders might push up the price of one before the other has time to catch up. This creates an opportunity: By selling at the higher price and buying at the lower price, a trader can make a quick profit.
Such opportunities — and other, less-perfect arbitrages — are estimated to be worth billions of dollars a year, but only to those fast enough to seize them. Hence, high-speed traders are willing to spend a lot on being the first to know when an opportunity appears, and to get their orders to the front of the line. Much of that money goes into computer systems, software and ultrafast data links, such as a microwave link that can carry data from New York to Chicago in a matter of several milliseconds. Some also goes to pay for the proprietary data feeds and privileged server parking that trouble Schneiderman. (Bloomberg LP, the parent of Bloomberg News, provides its clients with access to some proprietary exchange feeds.)
The high-speed traders’ advantage might seem unfair, but it’s not unfair in the same way as insider trading. In the latter case, privileged information is available only to a limited group — company executives, for example — who break the law if they use it to make money at the expense of less-informed investors. In the former, the information is available to anyone willing to pay. It’s akin to paying an airline for the privilege to board a flight early, or — just to emphasize a previously disclosed interest — to buying a subscription to a Bloomberg terminal.
On a more practical level, most of the advantage will remain even if Schneiderman manages to make access to information more equal — as he has already done by pressuring news-release distributors Business Wire and Marketwired to get rid of their direct feeds. High-frequency traders will still be a lot faster than investors who don’t make the same investments in technology. Eliminating the advantage would require draconian measures.
The more important issue is whether, in their incessant efforts to identify opportunities and get to the front of the line, high-frequency traders are harming others or presenting a threat to the financial system. Research suggests that they can actually help individual investors by lowering transaction costs and making sure market prices accurately reflect available information. But they might also make trading more expensive for institutions, such as mutual funds and pension plans, by anticipating and piling in ahead of big trades. Most troubling is the possibility that many algorithms interacting at such speed might bring about a market meltdown, of the kind that nearly occurred in the Flash Crash of 2010.
If Schneiderman’s investigation helps answer those questions, it will do investors a service. So far, it seems to be going in a different direction — fast.
Mt.Gox said on Friday it found 200,000 “forgotten” bitcoins on March 7, a week after the Tokyo-based digital currency exchange filed for bankruptcy protection, saying it lost nearly all the 850,000 bitcoins it held, worth some $500 million at today’s prices. Mt.Gox made the announcement on its website. Online sleuths had noticed around 200,000 bitcoins moving through the crypto-currency exchange after the bankruptcy filing.
The exchange, headed by 28-year-old Frenchman Mark Karpeles, said the bitcoins were found in an old-format online wallet which it had thought no longer held any bitcoins, but which it checked again after its bankruptcy filing. “On March 7, 2014, Mt.Gox confirmed that an old format wallet which was used prior to June 2011 held a balance of approximately 200,000 BTC,” the statement said. It added that it moved the 200,000 bitcoins from online to offline wallets on March 14-15 “for security reasons.” “These bitcoin movements, including the change in the manner in which these coins were stored, had been reported to the court and the supervisor by counsels,” it noted.
Many of Mt.Gox’s 127,000 creditors, who feared they had lost their investments when the exchange filed for bankruptcy, are skeptical about what the exchange has said happened to the bitcoins it had. In its bankruptcy filing, Mt. Gox also said $28 million was “missing” from its Japanese bank accounts.
On Thursday, a U.S. judge in Chicago overseeing a class action against Mt.Gox revised a previous order, allowing some of the exchange’s bitcoin movements to be tracked. “Today in court we got relief … specifically to track the 180,000 bitcoins, which we’ve been monitoring. Hours later, Mt. Gox claimed it “found” these bitcoins … it appears Mt.Gox realized we were close and decided to acknowledge that it owned these 180,000-200,000 bitcoins,” Steven L. Woodrow, a partner at law firm Edelson, told Reuters vin emailed comments.
Edelson is representing Illinois resident Gregory Greene, who proposed the class action over what he claims is a massive fraud. Mt. Gox blamed the loss of 750,000 bitcoins belonging to its customers and 100,000 of its own on hackers who attacked its software. Bitcoin is bought and sold on a peer-to-peer network independent of central control. Its value soared last year, and the total worth of bitcoins is now about $7 billion.
John Vachon Grand Grocery in Lincoln, Nebraska 1942
I would like to get your thoughts on one of the most basic questions in an economy: what is value, what creates value, and how can value change or even fluctuate? Sometimes it’s best to take a step back and make sure we properly (re-)define the terms we use, lest confusion rules the day.
As a reference for the question(s) I want to use two articles I read over the past week. In particular, I’m interested in discussing whether the Fed’s Quantitative Easing (QE) programs have created value, and whether QE is capable of doing so in the first place. And I don’t mean obvious views like ‘money has no value at all because it’s created out of nothing as credit/debt’, we know that. I want to start with the idea that an asset, a good, plus the work man is capable of, can be assigned a value in dollar terms, and then see how that value is defined.
The first article comes from Mark J. Perry, University of Michigan economics professor and scholar at The American Enterprise Institute (and I know what various parties think about the AEI, that’s for another discussion). Perry quotes from a report by the World Federation of Exchanges, and there are some impressive numbers in that. What surprised, even baffled me, was Mr. Perry’s conclusion at the end.
The Paris-based World Federation of Exchanges (WFE), an association of 58 publicly regulated stock market exchanges around the world, recently released updated data on its monthly measure of the total market capitalization of the world’s major equity markets through the end of November. Here are some highlights:
1. As of the end of November, the total value of equities in those 58 major stock markets reached $63.4 trillion and set several milestones. First, global equity value reached a new all-time record high in November, and second, exceeded for the first time the previous all-time record monthly high of $62.8 trillion for global equity valuation in October 2007, several months before the global economic slowdown and financial crisis started, and caused global equity values to plummet by more than 50% (and by almost $34 trillion), from $62.8 trillion at the end of 2007 to only $29.1 trillion by early 2009 (see chart).
2. Global equities gained slightly more than $700 billion in value during the month of November, and increased by 1.1% from October.
3. Compared to a year earlier, November’s world stock market capitalization increased by 20.1%, led by a 23.0% gain in the Americas, followed by increases of 21.1% in the Europe-Africa-Middle East region and 15.9% in the Asia-Pacific region.
4. By individual country, the largest year-over-year gains for November were recorded in Greece (121%), Ireland (71.3%), China (50.4%), UAE (39.5%) and Japan (35.3%). In the US, the NASDAQ capitalization increased by 31.3% and the NYSE by 27.8%. The biggest losses in equity value over the last year (measured in US dollars) were posted in Peru (-21.7%), Turkey (-17.4%) and Indonesia (-17.3%).
Mark J. Perry: Compared to the recessionary low of $29.1 trillion in February 2009, the total world stock market capitalization more than doubled (118% increase) to the current level of $63.4 trillion in November, more than recapturing all of the global equity value that was lost due to the severe global recession and the various financial, mortgage and housing crises in 2008 and 2009.
The global stock market rally over the last five years has added back more than $34 trillion to world equity values since 2009, and demonstrates the incredible resiliency of economies and financial markets to recover and prosper, even following the worst financial crisis and global economic slowdown in at least a generation.
My immediate question is: really? That’s what that demonstrates? Incredible resiliency? It had nothing to do with QE and other stimulus measures? What about all the reports about increased poverty, food stamps, pension cuts, budget cuts, 50+% unemployment among young people in several countries, and many more stories from the bottom rung, how do they fit in with that incredible resiliency? How can stock markets set record new highs while economies still suffer? And why does the Fed taper QE by just 10$ billion out of a total $85 billion a month when the S&P 500 hits those new records?
Given that QE is ultimately the financial responsibility of everyone in the economy, why is it that not everyone seems to benefit from it? What about fundamentals? Wouldn’t it make sense to first produce and consume more before stocks set new records? Isn’t that what the S&P is supposed to reflect? Not that I think we need to consume more, mind you, if only because we would have to borrow more and get deeper into debt in order to raise consumption (there are other reasons), and we’re already record deep in debt (no shortage of records). I mean, isn’t it perhaps equally valid to say we see an incredible bubble building up as it is to talk of incredible resiliency? Exactly what part of “Incredible resiliency” is not merely wishful thinking? And how do you know? I know it’s Christmas time, but come on …
The second article is by Robert Frank at CNBC, who poses questions pretty similar to what I did yesterday in The Ben Bernanke Balance Sheet. In a few words: what is the link between stimulus and increasing inequality?
Every Ferrari dealership in the country should have a framed picture of Ben Bernanke in their lobby. It should read: “Our #1 Salesman.”
The largesse of the Federal Reserve over the past five years has amounted to one of the largest ever subsidies to the American wealthy -fueling record fortunes, record numbers of new millionaires and billionaires, and an unprecedented shopping spree for everything from Ferraris to Francis Bacon paintings. The prices of the assets owned by the wealthy, and the things they buy, have gone parabolic, bearing little relationship to the weak, broader economy.
On Wednesday, the Fed decided to start the long-awaited taper, dialing down its purchases of mortgage bonds and Treasury securities by a combined $10 billion. But the core of its program will remain through to 2014. And even if the Fed ends quantitative easing altogether next year, it’s become increasingly clear that much of the gains from the program have flowed to the top 1%.
More millionaires have been created over the past five years than during the entire eight years of the Bush administration. According to Spectrem Group, there were 2.3 million new millionaires created between 2008 and 2012. This year, the number will likely grow by at least 200,000, which would bring the millionaire population past its previous record in 2007.
[..] According to Wealth-X, the top 10 billionaires in America saw their fortunes grow by a combined $101.8 billion this year. [..] Fed policy has fueled a surge in the value of financial assets. Since the wealthiest 5% of Americans own 60% of financial assets, and the top 10% own 80% of the stocks, those gains in financial assets have gone disproportionately to a small group at the top.
Or as James Grant, of Grant’s Interest Rate Observer said Tuesday on CNBC’s “Squawk Box,” the money is all “going to Greenwich” Conn., the wealthy hedge-fund haven. Stanley Druckenmiller, the billionaire founder of Duquesne Capital, called the Fed’s policies “the biggest redistribution of wealth from the middle class and the poor to the rich ever.”
It’s not just asset wealth that’s become more unequal. The income gap has also grown since 2008. According to Berkeley economics professor Emmanuel Saez, 95% of the income growth in the U.S. between 2009 and 2012 was captured by the top 1%. That’s due largely to compensation that’s tied to stocks—either through options or shares.
Some argue that the Fed has “punished savers” and helped the rich. That’s only partly true. If you look at which segment holds most of the interest-bearing savings or CD deposits in the U.S., it’s the wealthy that hold the most. The top 10% holds 70.5% of interest-earnings bank deposits, according to Edward Wolff, the economist and wealth expert at New York University.
All of that wealth and income piling up at the top has created huge cash hoards by companies and the rich. The savings rate of the wealthiest 1% soared to 37% this year—and more than three times their savings rate in 2007, according to a study from Harrison Group and American Express Publishing. Americans with at least $100,000 in disposable income have at least $6 trillion in savings, and that number could double by 2014, according to the study.
We have record stock market highs and record numbers of new millionaires and billionaires on the one hand. On the other, there’s the $17 trillion record in US national debt, the record $4 trillion Fed balance sheet, and the near record $11.28 trillion household debt. Put together, they somehow “demonstrate the incredible resiliency of economies and financial markets to recover and prosper”.
It has to be all of them together, right? You can’t just look at the stock market and the new rich and declare all lost terrain recovered, and all problems solved, not without accounting for two times US GDP in debt, that would be a tad careless. A $17 trillion dollar federal debt does not seem to spell “prosper”. Neither does an $85 (soon $75) billion a moth QE package, except for the direct recipients.
My initial question was about value. Mr. Perry says that “the total value of equities in those 58 major stock markets reached $63.4 trillion”. First, I’m not sure that’s the proper use of the term “value“. It certainly doesn’t look good enough to qualify as intrinsic value. Valuation, perhaps, but that’s a whimsical one.
I would like “value” to be more resilient than something that just goes from $62.8 trillion at the end of 2007 to $29.1 trillion by early 2009, and then back up to $63.4 trillion 5 years later, a move that coincides with huge rises in government debt. If anything, that seems a recipe for disaster. If we presume that a connection exists between the increase in debt on one side and the increase in “asset value” on the other, then I would say chances are we’re looking at both a gigantic wealth transfer from the poor towards the rich and a huge bubble that allows that to happen, and that will make the poor even poorer when it bursts. Which seems inevitable, because debt by itself cannot create value.
And if I’m right, what we’re seeing is not the incredible resiliency of the markets, and no real increase in asset value, but an increase in the threat to the social cohesion of our communities, cities and nations. But I could be wrong. Perhaps I’m the one who misinterprets the value of the term “value”.
Season’s Greetings from Nicole and I. Please support The Automatic Earth.
January 22, 2013Posted by Raúl Ilargi Meijer at 11:00 pmFinanceComments Off on The Last Remaining Store Of Real Wealth – 1
Yeah, The Last Remaining Store Of Real Wealth is somewhat tongue in cheek. I'm talking about pensions here, and despite the fact that hundreds of millions of people, especially in the west world, count on the pensions they pay into year after year for decades, to be there for them when they reach a certain age – which gets pushed forward all the time, talk about Receding Horizons! -, I've long since said that for most that is not going to happen. But many still see it that way: The Last Remaining Store Of Real Wealth.
I started writing a follow-up on the pensions topic, it's been 5 months or so since I wrote The Global Demise of Pension Plans, and while I don't want to do anything as broad as that article at this point, there are developments that warrant what could be labeled an update.
Alas, though I was plodding along nicely, the material itself somehow got in the way, and it would have become too long and winding. Which means that the original article must wait till later in the week, and today I'm going to have to present you with a kind of riddle.
You see, as I was reading through a bunch of recent news pieces, I came upon a Bloomberg article about CalPERS, the California Public Employees' Retirement System, America's largest public pension fund. It made me think back of a July 21, 2012 Barron's article I cited in The Global Demise of Pension Plans, and it didn't add up at first glance. Here's that older article first, written by Michael Aneiro:
The California Public Employees' Retirement System, the nation's biggest public pension fund at $233 billion, reported a mere 1% return on its investments in its fiscal year ended June 30. Earlier this year, in an attempted acknowledgment of today's realities, CalPERS had lowered its discount rate–an actuarial figure determining the amount that must be invested now to meet future payout needs—for the first time in a decade, to 7.5% from 7.75%. That represents combined assumptions of a 2.75% rate of inflation and a 4.75% rate of return.
Needless to say, a 1% annual return didn't come close to hitting any of those figures [..] CalPERS was quick to note that its 20-year investment return is still 7.7% [..]
Later in the week, S&P Dow Jones Indices said that the underfunding of S&P 500 companies' defined-benefit pensions had reached a record $354.7 billion at the end of 2011, more than $100 billion above 2010's deficit. The organization reported that funding levels at the end of 2011 ran around 75%, on average, and that future contributions will constitute a "material expense" for many companies.
Fitch Ratings later released its own study of 230 U.S. companies with defined-benefit pension plans and found that median funding had dropped to 74.4% in 2011 from 78.5% in 2010, and that corporate pension assets grew just 2.9% in 2011 amid sluggish returns and a 6% decline in contributions.
[..]Interestingly, at a time when bond interest rates are so depressingly poor, fixed-income investments constituted the second-best performing asset class for CalPERS last year, returning 12.7%, no doubt thanks to price gains for high-grade bonds. That result trailed only the fund's 15.9% return on its real-estate investments. What derailed CalPERS, then? Losses of 7.2% on stock investments, 11% on forest-land holdings and 2% on absolute-return assets.
From the bleachers: A "15.9% return on its real-estate investments"? In the moribund 2011-12 US housing market? Really? How does that work? And that's not all: here's a quote from a WSJ article you'll find below:
CalPERS real estate portfolio return for the three year period ending in June [2012] wasn't as pretty: it lost 24%, according to Wilshire Consulting.
Looks like maybe we need to make a choice here; I don't see how all these things can be true at the same time.
On January 21, 2013, exactly 7 months after the first article I quoted, Michael B. Marois writes the following for Barron's, and I can't seem to figure out how the transformation is possible:
The California Public Employees’ Retirement System is poised to top a record $260 billion in assets, the market value it held before the global financial crisis wiped out more than a third of its wealth, by sticking with a strategy of buy-and-hold.
The largest U.S. public pension, with half of its money in publicly traded equities, was worth $253.2 billion on Jan. 17, or about 97% of the pre-recession high set in October 2007. The fund returned 13% in 2012, about the same gain as the Standard & Poor’s 500-stock index achieved.
"A lot of the improvements in portfolio returns is simply reflective of the return of the market," Chief Investment Officer Joe Dear said in an interview. "But there is still an important lesson there, which is that when the crisis was full on, we didn’t drastically reduce our equity exposure."
CalPERS isn’t alone in nearing previous high marks. The 100 largest public pensions in the U.S. had $2.9 trillion in assets in the fourth quarter of 2007, according to U.S. Census Bureau data. That dropped to $2 trillion in 2009 and rebounded to almost $2.8 trillion as of Sept. 30.
The median funded status of state pensions, meaning how much money a system has in order to pay its obligations, fell to 72% in 2011 from 83% in 2007, according to data compiled by Bloomberg.
Even with its gains, the Sacramento-based pension is still short $87 billion, or about 26%, of meeting its long-term commitments, and has had to ask the state and struggling cities to contribute more. One municipality, San Bernardino, sought bankruptcy protection, saying it can’t afford to pay $13 million it owes to CalPERS.
Do you see what's puzzling me? CalPERS had assets valued at $233 billion on June 30 2012, with a 1% return in the fiscal year ending June 30 2012 (i.e. fiscal year 2011). Still, 7 months later, January 17 2013, its assets are worth $253 billion .
Also, CalPERS boasted a 1% return on its assets in the fiscal year ending June 30 2012, but a 13% return in the calendar year 2012. That means they made what, 24%-25% in the second half of the year? And the COO claims this was "simply reflective of the return of the market"?!
"It’s certainly good news that the asset base has grown and recovered," said Bradley Belt, senior managing director of the Milken Institute and former executive director of the federal Pension Benefit Guaranty Corp. "The bad news is that while you’ve gotten back to where you were on the asset side — through a combination of good market returns and new contributions — liabilities never took a holiday. Liabilities are now a whole heck of a lot larger than they were."
CalPERS’s value was already in decline when Lehman Brothers Holdings Inc. went bankrupt in September 2008, leading to a panic that wiped out more than $6 trillion in U.S. stock-market value in about six months. By 2009, CalPERS’s value had plummeted to $164.7 billion.
Since then, the pension fund has benefited from the stock market’s recovery after the Standard & Poor’s 500 Index touched a 12-year low in March 2009. The benchmark gauge of U.S. equities climbed more than 13% last year and has more than doubled since its low.
CalPERS had assets valued at $164.7 billion in 2009. On June 30, 2012, the number stood at $233 billion (though its real estate portfolio lost 24% over that time). In other words, it had added $68.3 billion, or 41.5%, over 2.5 years, even though its return was just 1% return in the fiscal year ending June 30 2012, as we saw before. The fund then proceeded to add another $20 billion in value in the 6 months after that. Let's read on:
Apart from stocks, CalPERS invests about 17% of its money in bonds, 14% in private equity, 9% in real estate, 4% in cash-equivalents, 4% in inflation- linked holdings such as commodities, and 2% in forestland and infrastructure such as airports and power plants. "We held on to our allocation," the 61-year-old Dear said. "We believed the markets were going to come back and we held our allocation at around 50% and that decision has been justified."
After CalPERS’ real-estate portfolio lost almost half its value by the end of the 2009 fiscal year, Dear set out to shrink leverage used to make purchases, got rid of underperforming managers, focus on core income investments such as rental apartments, industrial parks, offices and retail space. It also sold off a fifth of its speculative residential housing.
The real-estate unit returned almost 13% in 2012, averaging 6% in the past three years, though that’s still below its internal target of 10%.
OK, if I understand this well, according to Bloomberg, CalPERS real estate averaged a 6% return from end 2009 to end 2012, while according to the Wall Street Journal, which cites Wilshire Consulting, it lost 24% between mid 2009 and mid 2012. You tell me.
More CalPERS in an Orange County Register editorial today:
[..] But while union-backed politicians gained power after Nov. 6, the financial problems faced by CalPERS and other funds are growing, especially if Moody's, the prestigious credit-rating service, changes the assumptions it uses for calculating public-employee pension debt. As we've argued before, the math equations will soon overtake the political calculations. [..]
CalPERS estimates that its investments will earn a 7.5% rate of return, even though they managed only 1% last year. That's an aggressive and unrealistic assumption, but the higher the projected rate of return, the less the projected debt. This is where the games begin. Supporters of these outsized pension formulas want to hide the amount of debt and the approaching problem by embracing unrealistically high rates of return.
Moody's calls for lowering the assumed rate of return to 5.5%, which still may be too high. Moody's can't force local governments to do anything, but its formulas determining creditworthiness affect how outsiders evaluate the financial health of government agencies and lending rates for bonds.
The California Public Policy Center recently released a new report by financial expert John Dickerson, analyzing the effect of the Moody's proposed new rate on six Northern California counties. His conclusion:
"These counties pay about $640 million each year to their pension funds. These adjustments would increase this annual payment to $1.4 billion – from 29% of payroll to 63%. To put this in perspective, payments to pension funds and pension bonds today consume about half of these counties' independent property tax income.
These adjustments show they should consume ALL county property tax income."
And in that WSJ piece by Robbie Whelan and Craig Karmin I quoted above:
CalPERS, the giant California pension fund, is dumping one of its last major housing investments at a big loss. In a major step toward winding down a two-decade program as the pension world's biggest player in the U.S. housing market, CalPERS is selling a portfolio of 28 housing communities to a partnership between San Diego-based developer Newland Real Estate Group LLC and an affiliate of Japan's largest home-building company, Sekisui House Ltd.
The portfolio, which includes 16,300 unbuilt home sites and thousands of acres of additional undeveloped land in 11 states, represents about one-fifth of CalPERS' residential land portfolio. People familiar with the terms said the portfolio sold for between $500 million and $600 million.
At that price range, the deal values each home site at about $35,000, at most. During the housing boom, big builders would typically buy the land underneath new homes for $75,000 to $150,000, depending on location and state of infrastructure completion. This means that CalPERS, which bought the property over about five years starting in 2002, is likely suffering a loss of as much as 30% to 50%, the people said.
CalPERS move comes after three years of distressed-land sales by other major owners, including builders and banks that have driven down values by as much as 75% in some markets. CalPERS has resisted a major liquidation of its holdings until recently.
During the past decade, CalPERS was the biggest U.S. public pension fund investing in residential housing and land deals, in certain deals using debt to finance up to 80% of the purchases. That boosted returns, but also risks.
Currently CalPERS has about 9% of its $226 billion in assets invested in real estate. Up until the crash, the pension fund used the proceeds from its housing investments to make payments to over 1.5 million state retirees.[..]
After the bubble burst, CalPERS began suffering losses on a number of deals—losing more than $900 million on one deal alone. Last year, the pension giant started overhauling its real-estate-investment program and since then, it has put in place a plan to sell down its portfolio and concentrate on safer, income-producing commercial property.
CalPERS officials think they are moving in the right direction. While the real-estate portfolio lost nearly half its value, or about $10 billion from March 2008 to June 2009, CalPERS says, it has rebounded more recently. For the 12 months through September, the most recent numbers available, the real estate portfolio returned 14%, according to CalPERS.
That return last year beat the Standard & Poor's 500 Index, which fell 1.3% through September. But CalPERS real estate portfolio return for the three year period ending in June wasn't as pretty: it lost 24%, according to Wilshire Consulting.
So there it is for now. And as I said, I don’t get it. CalPERS assets hit a high in October 2007 of $261 billion. Their value fell to $164.7 billion in 2009. Since then, if we follow the WSJ news report, the portfolio gained $91.3 billion, not far below 20% per year. Even as fiscal year 2011 return was just 1%.
Moody's says CalPERS should lower its assumed rate of return to 5.5%, because it can't achieve the 7.5% the fund itself estimates it will make. It's today selling real estate holdings that have fallen from 30%-75% in value.
I get that CalPERS tries to hide losses through unrealistically high return assumptions, nothing new there. But these numbers are something else altogether. And I don't get it. Do you?
Photo: Russell Lee The Law of God February 1939
"Child of migrant sitting by kitchen cabinet in tent home near Edinburg, Texas." Shorpy.com
March 6, 2012Posted by Raúl Ilargi Meijer at 12:39 amEarthComments Off on Uneconomic Growth: When Illth Trumps Wealth
Herman Daly is a formidable mind. He has been writing for many years about the true effects of clinging to our perpetual growth paradigm. Daly concluded long ago that the solution to the plethora of problems this paradigm leads us to would be to move to a steady state economy. This conclusion is questioned by many, and perhaps not always for the wrong reasons.
There can not really be a question, though, about the data that bring him to his conclusions. From a purely economical point of view, we can see that the added value conveyed by every additional – borrowed – dollar has at the very least threatened to become negative.
That would of course mean the end of the game, even if those operating in the narrow confines of the financial world are loathe to even contemplate it. They see nothing narrow in their view of the world. For them, they are the world. They will simply refuse to entertain the idea that injecting more money/credit could start leading to less growth.
But the numbers don't lie; if there's any growth left, it's very marginal. And that's in a system where externalities, the costs of things like depletion of resources and pollution resulting from consuming resources, are simply not counted. We discount the future, by pretending we live only in the here and now (and damn our children). It's our reptillian or even amoeba brain speaking.
In short, we may have already reached the point where there no longer is any economic growth, there is only uneconomic growth. Or as Daly puts it: "illth increases faster than wealth".
This realization is a major threat to our economic system, and it will therefore continue to be completely ignored and discounted – until the system collapses -. Businessmen, bankers and politicians realize they owe their positions to the growth paradigm. No present-day banker or businessman will make a profit when the paradigm dissolves, nor will any incumbent politician be re-elected on a platform of "hold it right there".
From their point of view, this is a logical conclusion; for mankind as a whole, it's the stupidest idea ever, and a very destructive one. It's just that the destruction doesn't take place at this moment. It takes place at some point in the future. And so we ignore it; we discount the future, and we discount the lives and well-being of our children.
The US and Western Europe are in a recession threatening to become a depression as bad as that of the 1930s. Therefore we look to Keynesian policies as the cure, namely stimulate consumption and investment—that is, stimulate growth of the economy. It seemed to work in the past, so why not now? Should not ecological economics and steady-state ideas give way to Keynesian growth economics in view of the present crisis?
Certainly not! Why? Because we no longer live in the empty world of the 1930s — we live in a full world. Furthermore, in the 1930s the goal was full employment and growth was the means to it. Nowadays growth itself has become the goal and the means to it are off-shoring of jobs, automation, mergers, union busting, importing cheap labor, and other employment-cutting policies. The former goal of full employment has been sacrificed to the modern ideology of “growth in share holder value.”
Growth has filled the world with us and our products. I was born in 1938, and in my lifetime world population has tripled. That is unprecedented. But even more unprecedented is the growth in populations of artifacts — “our stuff” — cars, houses, livestock, refrigerators, TVs, cell phones, ships, airplanes, etc. These populations of things have vastly more than tripled. The matter-energy embodied in these living and nonliving populations was extracted from the ecosystem.
The matter-energy required to maintain and replace these stocks also comes from the ecosystem. The populations or stocks of all these things have in common that they are what physicists call “dissipative structures” — i.e., their natural tendency, thanks to the entropy law, is to fall apart, to die, to dissipate. The dissipated matter-energy returns to the ecosystem as waste, to be reabsorbed by natural cycles or accumulated as pollution.
All these dissipative structures exist in the midst of an entropic throughput of matter-energy that both depletes and pollutes the finite ecosphere of which the economy is a wholly contained subsystem. When the subsystem outgrows the regenerative capacity of the parent system then further growth becomes biophysically impossible.
But long before growth becomes impossible it becomes uneconomic — it begins to cost more than it is worth at the margin. We refer to growth in the economy as “economic growth,” — even after such growth has become uneconomic in the more basic sense of increasing illth faster than wealth. That is where we are now, but we are unable to recognize it.
Why this inability? Partly because our national accounting system, GDP, only measures “economic activity,” not true income, much less welfare. Rather than separate costs from benefits and compare them at the margin we just add up all final goods and services, including anti-bads (without subtracting the bads that made the anti-bad necessary). Also depletion of natural capital and natural services are counted as income, as are financial transactions that are nothing but bets on debts, and then further bets on those bets.
Also since no one wants to buy illth, it has no market price and is often ignored. But illth is a joint product with wealth and is everywhere: nuclear wastes, the dead zone in the Gulf of Mexico, gyres of plastic trash in the oceans, the ozone hole, biodiversity loss, climate change from excess carbon in the atmosphere, depleted mines, eroded topsoil, dry wells, exhausting and dangerous labor, exploding debt, etc. Standard economists claim that the solution to poverty is more growth — without ever asking if growth still makes us richer, as it did back when the world was empty and the goal was full employment, rather than growth itself. Or has growth begun to make us poorer in a world that is now too full of us, and all our products, counted or not in GDP?
Does growth now increase illth faster than wealth? This is a threatening question, because if growth has become uneconomic then the solution to poverty becomes sharing now, not growth in the future. Sharing is frequently referred to as “class warfare.” But it is really the alternative to the class warfare that will result from the current uneconomic growth in which the dwindling benefits are privatized to the elite, while the exploding costs are socialized to the poor, the future, and to other species.
Finally, I eagerly submit that even if we limit quantitative physical throughput (growth) it should still be possible to experience qualitative improvement (development) thanks to technological advance and to ethical improvement of our priorities. I think therefore we should urge policies to limit the quantitative growth of throughput, thereby raising resource prices, in order to increase resource efficiency, to force the path of progress from growth to development, from bigger to better, and to stop the present folly of continuing uneconomic growth.
A policy of quantitative limits on throughput (cap-auction-trade) will also block the erosion of initial resource savings resulting from efficiency improvements (the rebound effect or Jevons paradox). In addition the auction will raise much revenue and make it possible to tax value added (labor and capital) less because in effect we will have shifted the tax base to resource throughput.
Value added is a good, so stop taxing it. Depletion and pollution, the two ends of the throughput, are bads, so tax them. If you are a technological optimist please have the courage of your convictions and join us in advocating policies that give incentive to the resource-saving technologies that you believe are within easy reach. You may be right — I hope you are. Let’s find out. If you turn out to be wrong, there is really no downside, because it was still necessary to limit throughput to avoid uneconomic growth.
Nicole Foss has completed a huge tour de force with her update of the Automatic Earth Primer Guide. The first update since 2013 is now more like a Primer Library, with close to 160 articles and videos published over the past -almost- 10 years, and Nicole’s words to guide you through it. Here’s Nicole:
The Automatic Earth (TAE) has existed for almost ten years now. That is nearly ten years of exploring and describing the biggest possible big picture of our present predicament. The intention of this post is to gather all of our most fundamental articles in one place, so that readers can access our worldview in its most comprehensive form. For new readers, this is the place to start. The articles are roughly organised into topics, although there is often considerable overlap.
We are reaching limits to growth in so many ways at the same time, but it is not enough to understand which are the limiting factors, but also what time frame each particular subset of reality operates over, and therefore which is the key driver at what time. We can think of the next century as a race of hurdles we need to clear. We need to know how to prepare for each as it approaches, as we need to clear each one in order to be able to stay in the race.
TAE is known primarily as a finance site because finance has the shortest time frame of all. So much of finance exists in a virtual world in which changes can unfold very quickly. There are those who assume that changes in a virtual system can happen without major impact, but this assumption is dangerously misguided. Finance is the global operating system – the interface between ourselves, our institutions and our resource base. When the operating system crashes, nothing much will work until the system is rebooted. The next few years will see that crash and reboot. As financial contraction is set to occur first, finance will be the primary driver to the downside for the next several years. After that, we will be dealing with energy crisis, other resource limits, limitations of carrying capacity and increasing geopolitical ramifications.
The global financial system is rapidly approaching a Minsky Moment:
“A Minsky moment is a sudden major collapse of asset values which is part of the credit cycle or business cycle. Such moments occur because long periods of prosperity and increasing value of investments lead to increasing speculation using borrowed money. The spiraling debt incurred in financing speculative investments leads to cash flow problems for investors. The cash generated by their assets is no longer sufficient to pay off the debt they took on to acquire them.
Losses on such speculative assets prompt lenders to call in their loans. This is likely to lead to a collapse of asset values. Meanwhile, the over-indebted investors are forced to sell even their less-speculative positions to make good on their loans. However, at this point no counterparty can be found to bid at the high asking prices previously quoted. This starts a major sell-off, leading to a sudden and precipitous collapse in market-clearing asset prices, a sharp drop in market liquidity, and a severe demand for cash.”
This is the inevitable result of decades of ponzi finance, as our credit bubble expanded relentlessly, leaving us today with a giant pile of intertwined human promises which cannot be kept. Bubbles create, and rely on, building stacks of IOUs ever more removed from any basis in underlying real wealth. When the bubble finally implodes, the value of those promises disappears as it becomes obvious they will not be kept. Bust follows boom, as it has done throughout human history. The ensuing Great Collateral Grab will reveal just how historically under-collateralized our supposed prosperity has become. Very few of the myriad claims to underlying real wealth can actually be met, leaving the excess claims to be exposed as empty promises. These are destined to be rapidly and messily extinguished in a deflationary implosion.
While we cannot tell you exactly when the bust will unfold in specific locations, we can see that it is already well underway in some parts of the world, notably the European periphery. Given that preparation takes time, and that one cannot be late, now is the time to prepare, whether one thinks the Great Collateral Grab will manifest close to home next month or next year. Those who are not prepared risk losing everything, very much including their freedom of action to address subsequent challenges as they arise. It would be a tragedy to fall at the first hurdle, and then be at the mercy of whatever fate has to throw at you thereafter. The Automatic Earth has been covering finance, market psychology and the consequences of excess credit and debt since our inception, providing readers with the tools to navigate a major financial accident.
Giotto Legend of St Francis, Exorcism of the Demons at Arezzo c.1297-1299
The second limiting factor is likely to be energy, although this may vary with location, given that energy sources are not evenly distributed. Changes in supply and demand for energy are grounded in the real world, albeit in a highly financialized way, hence they unfold over a longer time frame than virtual finance. Over-financializing a sector of the real economy leaves it subject to the swings of boom and bust, or bubbles and their aftermath, but the changes in physical systems typically play out over months to years rather than days to weeks.
Financial crisis can be expected to deprive people of purchasing power, quickly and comprehensively, thereby depressing demand substantially (given that demand is not what one wants, but what one can pay for). Commodity prices fall under such circumstances, and they can be expected to fall more quickly than the cost of production, leaving margins squeezed and both physical and financial risk rising sharply. This would deter investment for a substantial period of time. As a financial reboot begins to deliver economic recovery some years down the line, the economy can expect to hit a hard energy supply ceiling as a result. Financial crisis initially buys us time in the coming world of hard energy limits, but at the expense of worsening the energy crisis in the longer term.
Energy is the master resource – the capacity to do work. Our modern society is the result of the enormous energy subsidy we have enjoyed in the form of fossil fuels, specifically fossil fuels with a very high energy profit ratio (EROEI). Energy surplus drove expansion, intensification, and the development of socioeconomic complexity, but now we stand on the edge of the net energy cliff. The surplus energy, beyond that which has to be reinvested in future energy production, is rapidly diminishing. We would have to greatly increase gross production to make up for reduced energy profit ratio, but production is flat to falling so this is no longer an option. As both gross production and the energy profit ratio fall, the net energy available for all society’s other purposes will fall even more quickly than gross production declines would suggest. Every society rests on a minimum energy profit ratio. The implication of falling below that minimum for industrial society, as we are now poised to do, is that society will be forced to simplify.
A plethora of energy fantasies is making the rounds at the moment. Whether based on unconventional oil and gas or renewables (that are not actually renewable), these are stories we tell ourselves in order to deny that we are facing any kind of future energy scarcity, or that supply could be in any way a concern. They are an attempt to maintain the fiction that our society can continue in its current form, or even increase in complexity. This is a vain attempt to deny the existence of non-negotiable limits to growth. The touted alternatives are not energy sources for our current society, because low EROEI energy sources cannot sustain a society complex enough to produce them.
We are poised to throw away what remains of our conventional energy inheritance chasing an impossible dream of perpetual energy riches, because doing so will be profitable for the few in the short term, and virtually no one is taking a genuine long term view. We will make the transition to a lower energy society much more difficult than it need have been. At The Automatic Earth we have covered these issues extensively, pointing particularly to the importance of net energy, or energy profit ratios, for alternative supplies. We have also addressed the intersections of energy and finance.
Underwood&Underwood Chicago framed by Gothic stonework high in the Tribune Tower 1952
In the aftermath of the Fukushima disaster, TAE provided coverage of the developing catastrophe, drawing on an earlier academic background in nuclear safety. It will be many years before the true impact of Fukushima is known, both because health impacts take time to be demonstrable and because the radiation releases are not over. The destroyed reactors continue to leak radiation into the environment, and are likely to do so for the foreseeable future. The vulnerability of the site to additional seismic activity is substantial, and the potential for further radiation releases as a result is similarly large. The disaster is therefore far worse than it first appeared to be. The number of people in harms way, for whom no evacuation is realistic despite the risk, is huge, and the health impacts will prove to be tragic, particularly for the young.
The Automatic Earth takes a broad view of the context in which finance, energy and resources operate, looking at issues of how society functions at a macro level. Context is vital to understanding the bigger picture, particularly human context as it relates to the critical factor of scale and the emergent properties that flow from it. We have continually emphasised the importance of the trust horizon; in determining what functions at what time, and what kind of social milieu we can expect as matters evolve.
Expansions are built upon the optimistic side of human nature and tend to lead to greater inclusiveness and recognition of common humanity over time. Higher levels of political aggregation, and more complex webs of trading relationships, come into being and achieve popular support thanks to the benefits they confer. In contrast, contractions tend to reveal, and be driven by, the darker and more pessimistic side of human collective psychology. They are social and are political as well as economic. In both directions, collective attitudes can create their own self-fulfilling prophecies at the societal level.
Trust determines effective organisational scale, extending political legitimacy to higher levels of political organisation during expansions and withdrawing it during periods of contraction, leaving political entities beyond the trust horizon. Where popular legitimacy is withdrawn, organisational effectiveness is substantially undermined, and much additional effort may go into maintaining control at that scale through surveillance and coercion.
The effort is destined to fail over the longer term, and smaller scale forms of organisation, still within the trust horizon, may come to hold much greater significance. The key to effective action is to know at what scale to operate at any given time. As we have said before, while one cannot control the large scale waves of expansion and contraction that unfold over decades or centuries, understanding where a given society finds itself within that wave structure can allow people and their communities to surf those waves.
Finally, TAE has provided some initial guidance as to how to position one’s self, family, friends and community so as to reduce vulnerability to system shocks and increase resilience. The idea is to reduce the range of dependencies on the large scale, centralised life-support systems that characterise modernity, and also to reduce dependency on the solvency of middle men. The centralised systems we take so much for granted are very likely to be much less reliable in the future. For a long time we have uploaded responsibility to larger scale organisational entities, but this has led to a dangerous level of complacency.
It is now time to reclaim responsibility for our own future by seeking to understand our predicament and take local control of efforts to mitigate its effects. While we cannot prevent a bubble from bursting once it has been blown, we can make a substantial difference to how widely and deeply the impact is felt. The goal is to provide a sufficient cushion of basic essentials to allow as many people as possible to preserve the luxury of the longer term view, rather than be pitched into a state of short term crisis management. In doing so we can hope to minimise the scale of the human over-reaction to events beyond our control. In the longer term, we need to position ourselves to reboot the system into something simpler, more functional and less extractive of the natural capital upon which we and subsequent generations depend.
Jesse Watters slams Judge Merchan for his gag order on President Trump:
“The daughter's been paid by the Biden campaign, being paid by Adam Schiff who colluded with star witnes, Michael Cohen & Trump can't talk about it. Cohen can say whatever he wants but Trump is gagged. They… pic.twitter.com/8iJuF1Ha80
The real measure of your wealth is how much you’d be worth if you lost all your money. – Benjamin Franklin
Scott Ritter: “I think these student protests right now are some of the most important things to have happened in American society in many, many decades..”
Last week, Israeli Prime Minister Benjamin Netanyahu said in a video address that the protests against his country on American universities that had then only recently sprung up were “antisemitic mobs” that had “taken over” college campuses. He called on US authorities to do more to stop them. The growing student protest movement against the continued bombardment of Gazans by the Israeli government is among one of the most important things to happen in the US in “many, many decades,” former UN inspector and military expert Scott Ritter told Sputnik’s The Critical Hour on Tuesday. “If you were an American like myself, who is not inclined to go out and protest and hold signs and disrupt things, man, we have to wake up,” he explained. “I have to wake up. We have to join these students one way or another and join their cause in letting the government know that we will not stand silent in the face of police oppression of the right of American citizens to speak out, to assemble, to hold their government [to] account.”
“I think these student protests right now are some of the most important things to have happened in American society in many, many decades,” Ritter emphasized. Tuesday night, what appeared to be hundreds of officers with the New York Police Department entered Columbia University in riot gear and military-grade vehicles, arresting approximately 300 people, according to New York City Mayor Eric Adams. That raid came after similar raids across the country, including in Texas, where 79 people, including some faculty members who joined students, were arrested. Meanwhile, a 65-year-old professor, Steve Tamari, was hospitalized after an officer at Washington University in St. Louis slammed him to the ground, breaking multiple ribs and his hand, according to a statement he put out from the hospital. More than 100 people were arrested in that protest. Colleges being a place for the free exchange of ideals is a critical part of our society, Ritter argued, adding that he believes the crackdown is designed to end this.
“As somebody who has taken an oath to uphold and defend the Constitution of the United States… I respect not only [the] students’ constitutional rights to free speech and freedom of assembly, I also recognize that college is one of the great zones of developing good citizens,” Ritter said. Over the weekend, presidential candidate Jill Stein was arrested at a protest. Stein says she was told she was being charged with assaulting an officer, but clarified in a later interview with journalist Glenn Greenwald that was not on her paperwork. Part of the purpose of colleges is “to create an incubator for the development of good citizenship, not compliant zombies,” Ritter explained, arguing that the US needs, “citizens who think, who empower themselves with knowledge and information and express that individually and collectively.”
At University of California, Los Angeles, a group of pro-Israeli protesters reportedly fired pepper spray and fireworks at student protesters during clashes. Witnesses claim that while the police were standing by, they did not intervene for hours. Ritter noted the US government is doing “just about everything possible wrong,” underscoring that the US “needs these students to come out and they’ve picked an issue, Gaza, which is the manifestation of the totality of all we do wrong as a government.” “When you go to university, we need you to become radical. We need you to think. We need you to exercise your brain and your spirit and your conscience. And [the government is] trying to suppress them because apparently we don’t want good citizens anymore,” the analyst concluded.
Hundreds of New York City police officers descended on Columbia University Tuesday night to arrest dozens of pro-Palestinian student protesters and dismantle a Gaza solidarity encampment that inspired campus protests across the United States, with demonstrators calling on their schools to divest from companies profiting off Israel’s devastating war. Police, some wearing riot gear, entered Columbia’s campus at the request of the university’s president, Minouche Shafik, who authorized the NYPD to “clear all individuals from Hamilton Hall and all campus encampments.” Video footage shows officers entering a campus building that students occupied hours earlier, renaming it “Hind’s Hall” after a 6-year-old girl who was killed by Israeli forces earlier this year. The Columbia Daily Spectator, the university’s student newspaper, reported that “as they entered the building, officers threw down the metal and wooden tables barricading the doors and shattered the glass on the leftmost doors of Hamilton to enter with shields in hand.”
“Several officers drew their guns, according to footage posted by NYPD Deputy Commissioner of Operations Kaz Daughtry,” the newspaper added. “At around 9:37 pm, officers led dozens of protesters out the entrance of Hamilton. The protesters’ hands were zip-tied behind their backs. The arrested individuals chanted, ‘Free, free Palestine’ as they were led away from the building.” Other footage shows NYPD officers forcing their way through students who locked arms in front of the occupied campus building. One cop is seen kneeing a student on the ground. Students reported that police used tear gas, which is banned in war, on demonstrators. “Tonight, my university called in a militarized police force—armed in riot gear, with guns drawn, deploying weapons banned under international law—to attack teenagers,” Lea Salim, a student member of Jewish Voice for Peace-Columbia/Barnard, said in a statement. “All because Columbia refuses to divest from the Israeli military and its genocidal campaign on the people of Gaza.”
As police set up barricades around the perimeter of the campus, onlookers gathered and chanted, “Let the students go!” in solidarity with the arrested demonstrators. Rep. Jamaal Bowman (D-N.Y.) said he was “outraged” by the police presence at both Columbia and the City College of New York, writing on social media that the “militarization of college campuses, extensive police presence, and arrest of hundreds of students are in direct opposition to the role of education as a cornerstone of our democracy.” “I call upon the Columbia administration to stop this dangerous escalation before it leads to further harm,” Bowman added, “and allow the faculty back onto campus so that all parties can collectively come to a solution that centers humanity over hate.”
In a letter to the New York City Police Department on Tuesday, Shafik—who is facing mounting calls to resign—requested that officers maintain a presence on Columbia’s campus “through at least May 17, 2024 to maintain order and ensure encampments are not reestablished.” The police crackdown on Columbia students is part of a broader wave of repression against campus protests that have emerged across the country in recent weeks as Israel’s assault on and forced starvation of Gaza civilians continues with no end in sight. Police actions, approved by the leaders of some universities and cheered on by right-wing government officials, have drawn international rebukes. In a statement Tuesday, United Nations High Commissioner for Human Rights Volker Türk said he is “concerned that some of law enforcement actions across a series of universities appear disproportionate in their impacts.”
“..soft power can be more effective than hard power in achieving political outcomes, because it influences the preferences of others rather than forcing them to change through coercion.”
On 18 April, students at Columbia University in New York initiated a sit-in on the campus lawn, protesting the Ivy League institution’s ongoing financial links to companies connected to Israel’s occupation of Palestine and its brutal war on Gaza. The demonstrations quickly spread to other top US universities, including New York University, Yale, the Massachusetts Institute of Technology (MIT), and the University of North Carolina, as demands intensified for an end to both the war and support for the occupation state. This growing wave of US and global student activism is of vital importance: it represents the soft power ripple effects of the resistance‘s Operation Al-Aqsa Flood, and as with other historic, mass US student movements against South African apartheid and the Vietnam war, will likely begin to fray at American support for Israeli aggressions. For decades, the US has portrayed Israel as a beacon of democracy in a region dominated by authoritarian regimes, often citing it as “the only democracy” in West Asia to justify its unwavering support.
However, recent shifts in public perception, particularly among western youth, now increasingly portray Israelis as “terrorists” and “colonizers.” This sea change in the discourse, driven by the global spread of information and activism, will have a significant impact on the Zionist entity. Israel’s global reputation had already been tarnished by the time South Africa filed genocide charges against the state in the International Court of Justice (ICJ) earlier this year, the first time Israel has faced such accusations at this level. In March, the ICJ demanded that Israel take immediate, effective measures to ensure the entry of essential food supplies to Gaza’s residents, emphasizing the severe famine conditions already present. “Soft power” is defined by Joseph Nye as “the ability to get what you want through attraction rather than coercion or pressure.”
Joshua Kurlantzick, senior fellow for Southeast Asia at the influential Council on Foreign Relations, argues that “soft power can be more effective than hard power in achieving political outcomes, because it influences the preferences of others rather than forcing them to change through coercion.” This form of influence arises through culture, values, and policies that are universally attractive and morally legitimate – and, therefore, harder to contain. Decades of Tel Aviv’s “nation branding” or soft power initiatives in the west, geared at deeply entrenching the notion of Israel as “the only democracy” in West Asia that shared the occident’s “Judeo-Christian values,” aimed to justify Washington’s unconditional support for the occupation state. It took a show of Palestinian hard power, however, to unlock that narrative stranglehold in the west. Within weeks of Operation Al-Aqsa Flood, western populations began for the first time to see the real face of Zionism – unleashed in an overwhelming military assault on Gaza’s hospitals, universities, infrastructure, and civilian populations.
Dozens of Google workers who were fired for protesting the tech giant’s cloud deal with the Israeli government filed a complaint on April 29 with the National Labor Relations Board over their termination. The complaint, obtained by The Washington Post, alleges that Google violated the workers’ rights by “terminating and/or placing them on administrative leave in response to their protected concerted activity, namely, participation (or perceived participation) in a peaceful, non-disruptive protest that was directly and explicitly connected to their terms and conditions of work.” The workers are seeking reinstatement of their jobs and back pay, alleging that Google “unlawfully retaliated” against them for engaging in “peaceful” protest, Jane Chung, a spokesperson for No Tech for Apartheid, was quoted as saying by the New York Post.
No Tech for Apartheid, the group organizing the protests, claimed that Google fired more than 20 workers on April 23, including bystanders who were not participating. This adds to the 30 workers fired last week for their involvement in sit-in protests at Google offices in New York and Sunnyvale, California, bringing the total number of terminated workers to more than 50. Google did not immediately respond to a request for comment. The protests targeted a $1.2 billion deal known as Project Nimbus that provides artificial intelligence (AI) technology to the Israeli government. The fired workers contend that the system is being lethally deployed in the Gaza war. “Google’s aims are clear: the corporation is attempting to quash dissent, silence its workers, and reassert its power over them,” the group said in an April 23 statement. “In its attempts to do so, Google has decided to unceremoniously, and without due process, upend the livelihoods of over 50 of its own workers.” The activist group has vowed to continue organizing until Google meets their demands: that it “drop Project Nimbus and stop powering Israel’s genocide of Palestinians in Gaza now.”
Project Nimbus was signed in 2021. It involves joint cloud computing and AI services provided by Google and Amazon to the Israeli government. Google has said that the program is not being used for military or intelligence purposes. Google has said that it fired the workers after gathering details from coworkers who were “physically disrupted” and it identified employees who used masks and didn’t carry their staff badges to hide their identities. Google didn’t specify how many were fired. In a blog post on April 18, Google CEO Sundar Pichai hinted that workers will be on a short leash as the company intensifies its efforts to improve its AI technology at a pivotal moment in the industry and, potentially, history. He did not openly refer to a specific incident. “But ultimately we are a workplace and our policies and expectations are clear: this is a business, and not a place to act in a way that disrupts coworkers or makes them feel unsafe, to attempt to use the company as a personal platform, or to fight over disruptive issues or debate politics,” Mr. Pichai wrote. “We have a duty to be an objective and trusted provider of information that serves all of our users globally.”
When Robert Mueller appointed Andrew Weissmann as one of his top advisers, many of us warned that it was a poor choice. Weissmann seemed intent to prove those objections correct in increasingly unhinged and partisan statements. This week, he ratcheted up the rhetoric even further in claiming that the nation is “one vote away” from the end of democracy if the Supreme Court does not embrace the sweeping claims of Special Counsel Jack Smith. At the time of his appointment, many Republicans objected to Weissmann’s status as a democratic donor, including his reported attendance of the election night party for Hillary Clinton in 2016. My objection was not to his political affiliations but to his professional history, which included extreme interpretations that were ultimately rejected by courts. Weissmann was responsible for the overextension of an obstruction provision in a jury instruction that led the Supreme Court to reverse the conviction in the Arthur Andersen case in 2005.
Weissmann then became a MSNBC analyst and a professor at New York University. In his book, he attacked prosecutors for refusing to take on his extreme views. Weissmann called on prosecutors to refuse to assist John Durham in his investigation. Now he is predicting the end of democracy if the Court remand the immunity case for further proceedings. Weissmann told MSNBC anchor Jen Psaki on Sunday: “I think that it’s important to remember that at the outset, the court had already given Donald Trump the win that he was seeking, which is the delay of the DC trial.” So going into this, this was all upside for him. I mean, I think he had to be thinking, I’m making this really outlandish argument, with ramifications that couldn’t possibly be squared with the text and history. The text of the Constitution or the history of the presidency? So it’s all upside if the court would actually bite on this.
And so what was surprising is that there were justices who actually were taking this seriously. And it just was, frankly, shocking. Remember, going into this, the given was that private conduct was certainly not, immunized from criminal liability. What everyone’s talking about now is, hey, maybe they think that some of this is private and they can go forward, but that was what was given going into this. And the reason people are thinking that is because there seem to be four justices who were really taking Donald Trump’s claim of criminal immunity seriously. And we are. I mean, I know it sounds like hyperbole, but I think your opening is so correct that we are essentially, as Neil put it, one vote away from sort of the end of democracy as we know it with checks and balances. And to say it’s an imperial presidency that would be created is, it’s frankly saying it would be a king, he would be criminally immune. And that that is what is so shocking is how close we are.
And we are really on the razor’s edge of that kind of result. But for the chief justice. Just for the record, it sounds less “like hyperbole” than hysteria. The justices were exploring the implications of the sweeping arguments on both sides of the immunity question. What they were not willing to do (as does Weissmann) is simply dismiss any arguments of official status on the part of the accused. That would establish a dangerous ambiguity for the future as prosecutors claim that political statements are private matters for the purpose of prosecution. Ironically, Weissmann’s lack of concern for the implications of such an interpretation is reminiscent of his prior sweeping arguments as a prosecutor that led to the stinging defeat in the Anderson case.
Of course, there is another possibility is that the justices were not seeking the end of democracy. The Court was honestly trying to get this standard correct not just for this case but future cases. To do so, it will require a record on the underlying actions rather than the categorical threshold judgment made by the district court. The argument showed justices exploring how to avoid a parade of horribles on either extreme with a more moderate approach. As I previously noted, it has been almost 50 years since the high court ruled presidents have absolute immunity from civil lawsuits in Nixon v. Fitzgerald. That protection applied to acts taken “within the ‘outer perimeter’ of his official responsibility.”
Gaza is not the only genocide. Genocide is taking place all over Europe and in the US. All over Europe and the US governments prefer immigrant-invaders over their own citizens.“The migrants are eligible for free accommodation, free social welfare, free medical care, food, clothes, and various other perks. Whilst at the same time that the Irish government is facilitating mass immigration there are 14,000 Irish homeless people on the streets.” And many more homeless Irish citizens are on the way. Migrants are given free accommodation in hotels and country estates throughout the land, while the Irish people are seriously struggling to make ends meet in a rigged inflationary system, with a never-ending story of sky-high rents, high taxes, inflation, and an ongoing extremely serious accommodation crisis. Many young Irish citizens are left with little option but to live with their parents or emigrate to countries such as Australia as they cannot afford to live in their own country.
This is an extremely important article. It shows that the West is being intentionally destroyed by its own governments. The threat that all citizens in the West face comes not from Russia, China, Iran, but from their own government. Irish citizens who peacefully protest their replacement by immigrant-invaders are brutally beaten–even mothers and children–by police, which emphasizes the second class status of Irish ethnicity. “Many of the Irish police in balaclavas that are enforcing these tactics against the Irish people are not Irish at all, but are more akin to non-Irish hired mercenaries, or more like an EU army.” “The stark reality is the Irish government is not really the Irish government it is just a puppet of the EU bureaucracy. Ireland has been a fully controlled vassal state of the banker-controlled EU, in particular since the controversial (and rerun) Lisbon referendum 14 years ago, which hammered a nail in the coffin of Irish sovereignty.”
In my effort to awake humanity to its extinction in the nuclear war that is advancing upon us, I have pointed my finger at Putin and Xi’s mistaken belief that the way to avoid it is to ignore provocations and wait for Washington to come to its senses. This shows diplomacy at its highest level, but it is mistaken. The ignored provocations encourage more and worst provocations. The Asia Times, if the story can be believed, reports that NATO has begun deploying troops in Ukraine’s defense. “NATO is starting to deploy combat troops to Ukraine. Soldiers from Poland, France, the UK, Finland and other NATO members are arriving in larger numbers.“ Although Russia says there are over 3,100 mercenaries in Ukraine, these newly arriving troops are not mercenaries. They are in uniform, home country proclaimed via insignia.
They mostly are concentrated in the western part of the country, although in some cases they are close to the actual fighting in the east. “NATO is putting out the word these are not combat soldiers but are in Ukraine to operate sophisticated western hardware. But if they are firing at the Russians the only proper way to interpret their presence is that they are playing an active part in the shooting war.” It is the same plan as Washington’s intervention in Vietnam. What will the sequel be? Putin and XI are diplomats. But they have no comprehension of Washington. Their naiveness has blinded them to reality. Consequently, they are walking into Armageddon by betting that Washington is rational.
Ukraine needs to defeat Russia on the battlefield in order to be admitted to NATO, President Vladimir Zelensky has said. The US-led alliance has made it clear earlier that Kiev cannot become a member while the fighting is ongoing. “I believe that we will be in NATO only if we win. I don’t think that we will be admitted to NATO during the war,” Zelensky said on Tuesday during a meeting with a group of military officers in Kiev. He explained that the admission of Ukraine would require unanimous approval by the alliance’s 32 members. Some members are reluctant to admit Ukraine in the midst of an ongoing armed conflict because “they feel the risks, while others are simply skeptical,” Zelensky argued. “Therefore, for Ukraine to be accepted into the alliance, we need victory.” He went on to add that eventual membership would secure Ukraine’s security and independence.
Ukraine formally applied to join NATO in September 2022. While NATO Secretary General Jens Stoltenberg and individual members agree that Ukraine should someday become part of NATO, Kiev has not been presented with a concrete timetable. It is widely understood that the country will not be admitted until the conflict with Russia is resolved.v Stoltenberg, who visited Kiev on Monday, admitted to Reuters that the delays in promised weapons deliveries had “put a dent into the trust” between Ukraine and its foreign backers.
While the EU is struggling to find enough arms and ammunition for Ukraine’s wartime needs, the newest aid package from the US had been stuck for months in Congress due to political wrangling. The delays sparked worries in Kiev, with Zelensky openly warning that Ukraine would lose if ammunition shortages are not remedied. Ukrainian officials have blamed the slowdown of deliveries for last year’s failed counteroffensive, as well as more recent losses of cities in the east to the Russian army. Russia, for its part, has cited NATO’s continuing expansion eastward and the bloc’s military cooperation with Ukraine as one of the root causes of the conflict. Moscow considers NATO a threat to its national security and insists that Ukraine must become a neutral country.
It is not clear whether a Chinese official was at the Beijing airport to bid farewell to Secretary of State Antony Blinken as he ended his three-day visit to China on Friday, but the send-off was in any event low-key and Chinese leader Xi Jinping slighted America’s top diplomat at the end of his troubled stay. Also, China, literally and figuratively, did not roll out the red carpet for his arrival in Shanghai on Wednesday. Only a low-level official was on hand to greet Blinken as he stepped off the plane. “The Chinese government flouted international protocols at the airport on the secretary of state’s arrival in Shanghai and departure from Beijing,” Charles Burton of the Prague-based Sinopsis think tank told Gatestone. “It was petty.” “This was more than a slight,” Burton, a former Canadian diplomat who served in Beijing, said. “Aside from a calculated insult to the dignity of the United States, the move indicates Xi Jinping is making clear that the accepted norms of diplomacy will not be respected by China anymore.”
Blinken was in China to discuss the growing list of disagreements between Washington and Beijing. Not surprisingly, he did not accomplish anything there other than register America’s complaints on matters such as Beijing’s support for the Russian war effort in Ukraine and unfair treatment of U.S. companies. On every major issue, the U.S. and China take different sides, and the Chinese have clearly dug in. Blinken was reduced to begging. As a result, America is resorting to the dialogue-is-progress narrative. “I think it’s important to underscore the value—in fact, the necessity—of direct engagement, of sustained engagement, of speaking to each other, laying out our differences which are real, seeking to work through them, as also looking for ways to build cooperation where we can,” Blinken said to Chen Jining, Communist Party secretary of Shanghai, ahead of his talks in the Chinese capital.
After the end of fruitless sessions in Beijing—Blinken met with, among others, President Xi Jinping and Foreign Minister Wang Yi—all the secretary of state could do is highlight new dialogue issues. “I’m pleased to announce that earlier today, we agreed to hold the first U.S.-PRC talks on artificial intelligence to be held in the coming weeks,” he said at a press availability on April 26, as he wrapped up his trip to China. “We’ll share our respective views on the risks and safety concerns around advanced AI and how best to manage them.” Blinken’s comments repeated those of President Joe Biden after his November 15 meeting with Xi Jinping in Woodside, California. In substance, therefore, Blinken in Beijing continued talking about talking.
There is no question that AI is an important topic, especially when it comes to the control of nuclear weapons. Yet this does not mean the U.S. should seek an agreement with China on that topic. “The latest shambolic display by the Biden administration comes in the form of Secretary of State Antony Blinken groveling before China’s Ruler-for-Life Xi Jinping for a new set of protocols for governing the development of artificial intelligence between America and China, the two nations contributing the most to both the advancement of AI and its weaponization,” Brandon Weichert, a national security analyst at The National Interest, told Gatestone. “Although creating such protocols may sound like a good idea, it seems like a bad idea for Washington to unilaterally agree to limit its own activities.”
The Trump campaign on Tuesday issued a rebuke of the Commission on Presidential Debates (CPD) refusal to move up its debate schedule until after millions of Americans have already cast their ballots, calling it “unacceptable” and a “grave disservice” to the electorate. In a statement, former President Donald Trump’s campaign representatives Chris LaCivita and Susie Wiles intensified criticism of the body that sponsors all general election presidential debates. Previously, they had requested debates to be held “much earlier” than the commission’s planned first debate in mid-September. The Trump campaign repeated its argument that voters deserve to hear from both candidates before they begin casting their votes.
“The Presidential Debate Commission’s schedule does not begin until after millions of Americans will have already cast their ballots. This is unacceptable, and by refusing to move up the debates, they are doing a grave disservice to the American public who deserve to hear from both candidates before voting begins,” the statement read. The statement comes after the nonprofit commission told Fox News that it would stick with its debate schedule, which was released last November. Four debates are planned: three presidential and one vice presidential.The first presidential debate takes place on Sept. 16 at Texas State University in San Marcos; the second takes place on Oct. 1 at Virginia State University in Petersburg; and the third takes place on Oct. 9 at the University of Utah in Salt Lake City.
The commission said that it “is proceeding with production and broadcast plans at its four debate sites as also announced on November 20, 2023.” Responding to the criticism, the CPD issued a statement on Wednesday, clarifying its decision-making process regarding the schedule for the 2024 debates. The commission noted that the first debate scheduled for Sept. 16 “will be the earliest televised general election debate ever held.” The selection of debate dates aimed to ensure accessibility for the American public, taking into account factors such as religious and federal holidays, early voting, and state ballot closing dates, according to the CPD.
A New York state appeals court denied a request from former President Donald Trump to have his so-called “hush-money” judge removed. Lawyers for the former president sought a stay in the proceedings and the recusal of Judge Juan Merchan, who is overseeing the trial that will likely last for at least another month. Both the application for his recusal and for a stay in the case were denied on Tuesday without explanation by the New York State Supreme Court’s Appellate Division for the First Department. His lawyers had argued that the trial judge should be removed because he had acted out of his jurisdiction by refusing to recuse himself and restricting the number of docket entries, among other matters. “Now, upon reading and filing the papers with respect to the motion, and due deliberation having been had thereon,” Tuesday’s court order stated. “It is ordered that the motion is denied.”
In April, before the jury selection process started, Judge Merchan himself denied a request from President Trump’s attorneys to step down. Several days before that, the former president’s lawyers said in a hearing that the trial should be delayed, which the court also denied. “The unconstitutional effects of Justice Merchan’s rulings are causing ongoing, irreparable constitutional harms to Petitioner and the voting public and, if not stopped, will prevent Petitioner from receiving a fair trial,” Trump attorney Todd Blanche wrote in an application to the court. A judge, Ellen Gesmer, denied the application. Also last month, the state appeals court rejected another bid to stay the trial while the defense tried to move the trial away from Manhattan, arguing that they were concerned that the jury pool would be tainted. The court also rejected an appeal to pause the trial while President Trump appealed a gag order that was handed down by Judge Merchan earlier this year.
On Tuesday morning, Judge Merchan fined President Trump $9,000 for nine separate posts he made online that he believes violated the gag order. He further warned President Trump that he could be incarcerated if he continues to make the posts. Previously, President Trump and his attorneys argued that the gag order, which prohibits the former president from commenting on most people connected to the case, is a violation of his First Amendment rights. In a social media statement after the fines were handed down, President Trump wrote: “This gag order is not only unique, it’s totally unconstitutional. I am the Republican Candidate for President of the United States.” “This is a total Witch Hunt. Hours of sitting down and listening to nothing except EXONERATION AND LIES,” he continued. “The Trial is going like a speeding bullet, because the Judge is working hard to make all of his friends happy. Merchan is Rigged, Crooked and above all, and without question, CONFLICTED. It’s a disgrace to our Country — They’ve taken away my Right to Free Speech.”
I have just been immersed in an extraordinary experience: a mini-tour of conferences in Brazil encompassing four key cities – Sao Paulo, Rio, Salvador, Belo Horizonte. Full houses, sharp questions, fabulously warm people, divine gastronomy – a deep dive into the 8th largest economy in the world and major BRICS+ node. As much as I was trying to impress the finer points of the long and winding road to multipolarity and the multiple instances of frontal clash between NATOstan and the Global Majority, I was learning non-stop from an array of generous Brazilians about the current inner contradictions of a society of astonishing complexity. It’s as if I was immersed in a psychedelic journey conducted by Os Mutantes, the iconic trio of the late 1960s Tropicalia movement: from the business front in Sao Paulo – with its world-class restaurants and frantic deal-making – to the blinding beauty of Rio; from Salvador – the capital of Brazilian Africa – to Belo Horizonte, the capital of the third-wealthiest state in the Federation, Minas Gerais, a powerhouse of iron ore, uranium and niobium exports.
I learned about how China chose the state of Bahia as arguably its key node in Brazil, where Chinese investment is everywhere – even if Brazil is not yet a formal member of the Belt and Road Initiative (BRI). In Rio, I was presented with an astonishing work on Stoics Zeno and Cleanthes by essayist Ciro Moroni – delving among other issues into the equivalences between Stoic theogony/theology and the Hindu Vedanta – the tradition of culture, religion and sacred rituals in India up to the Buddha era.
And in a sort of psychedelic synchronicity, I felt like Zeno in the Agora as we debated the NATO proxy war against Russia in Ukraine at a lovely round pavillion – a mini-Agora – in fabled Liberty Square in Belo Horizonte, across the street from a fabulous exhibition of Treasures of Peruvian Art. Much to my astonishment, a Peruvian, Carlos Ledesma, flew in from Lima especially for my conference and the exhibition; and then he told me about the Chancay port being built south of Lima, owned 70% by COSCO and the rest by private Peruvian capital; that will be a sister port of Shanghai.
Chancay-Shanghai: APEC in action across the Pacific. Next November, there will be three nearly simultaneous key events in South America: the G20 in Rio, the APEC summit in Lima, and the inauguration of Chancay. Chancay will be boosted by no less than five rail corridors that may eventually be built – certainly with Chinese investment – from the agribusiness Valhalla in the Brazilian Center-West all the way to Peru. Yes, China is all over the place in its largest trade partner in Latin America – much to the despair of a Hegemon sending lowly functionary Little Blinken to Beijing to hear the letter of the new law by Xi Jinping himself: it’s cooperation or confrontation, a “downward spiral”. Your downward spiral.
A magnificent scene of a passing horse herd in the mountains of France. This is a transhumance of horses on the Couserans mountains: it happens every year in spring and back in autumn
Judge Juan Merchan donated to Biden, and his adult daughter Loren Merchan raised $100 million on this case.
Senior Justice Department political appointee Matthew Colangelo was deployed from the Biden Justice Department to assist Soros-funded Manhattan D.A. Alvin Bragg.
Jim Cramer on Elon Musk: "Here he is doing something no American CEO can do. Just get on a plane & make a deal with a leader of a country that our Gov isn't fond of; Plenty of ppl shorted the stock. They failed. The stock can keep running until the shorts are all crushed." pic.twitter.com/CBHDULcdsY
Manhattan Supreme Court Judge Juan Merchan has held Donald Trump in contempt of court for ‘repeatedly violating’ a gag order in his so-called hush money trial in New York. According to Merchan, Trump violated the gag order nine times in online posts which targeted jurors or likely witnesses in the trial. The former president was fined the maximum of $1,000 per violation, or $9,000 – and was ordered to remove all of the offending posts by 2:15 p.m. ET on Tuesday. What’s more, Merchan threatened to toss Trump in jail if he willfully violates court orders again. “Defendant is hereby warned that the Court will not tolerate continued willful violations of its lawful orders and that if necessary and appropriate under the circumstances, it will impose an incarceratory punishment,” wrote Merchan in his ruling, CNBC reports. Merchan read the order aloud before the trial resumed with more testimony from a banker who worked with the former president’s lawyer on a $130,000 hush money payment to porn star Stormy Daniels.
That payment is at the heart of Manhattan prosecutors’ case accusing Trump of falsifying business records as part of a scheme to influence the 2016 presidential election. Gary Farro, a former senior managing director at First Republic bank, took the stand Friday and continued testifying Tuesday. On his way into the courtroom, Trump repeated his call for Merchan to both recuse himself from the case and dismiss it entirely. -CNBC. “The judge should terminate the case because they have no case,” said Trump in response, adding that he’s been unable to campaign for president because he’s stuck in court. That said, Merchan is allowing Trump to attend his son Barron’s high school graduation on May 17. The historic trial began last week, which has included testimony from former National Enquirer publisher David Pecker, as well as Trump’s longtime personal secretary, Rhona Graff.
Pecker testified to his efforts to “catch and kill” stories that could be damaging to Trump – including one instance in which his company American Media paying $30,000 for the rights to a former Trump Tower doorman’s story about Trump having a secret love child – though Pecker believes the story is untrue. The company also inked a $150,000 deal with former Playboy model Karen McDougal, who claimed to have had an extramarital affair with Trump, according to Pecker. Pecker said he did not pay to silence Daniels, who claims she had sex with Trump. As the Epoch Times notes further, Court was resuming Tuesday with Gary Farro, a banker who helped President Trump’s former attorney Michael Cohen open accounts, including one that Mr. Cohen used to send a payment to adult film performer Stormy Daniels, whose real name is Stephanie Clifford. She alleged a 2006 affair with President Trump, which he denies.
Retired Harvard law professor Alan Dershowitz said on April 28 that he believes that Manhattan District Attorney Alvin Bragg’s case against former President Donald Trump could fail because prosecutors have charged the former president with fake crimes. “There is no crime,” Mr. Dershowitz said during an interview on Fox News on April 28, referring to the case in which Mr. Bragg’s office has charged the former president with 34 counts of falsifying business records to hide so-called hush money payments that prosecutors allege amounted to a criminal conspiracy to influence the 2016 presidential election. Mr. Dershowitz argued that making nondisclosure payments is not a crime and that neither is paying for the non-publication of potentially embarrassing stories (the so-called catch-and-kill dimension of the case), both of which prosecutors have alleged were part of a conspiracy to sway voters.
The retired law professor argued that Mr. Bragg’s office is in danger of having the case thrown out on grounds similar to those on which the conviction of Harvey Weinstein was recently overturned, namely that prosecutors prejudiced the case by a number of “egregious” improper rulings, including allowing testimony that was unrelated to what Mr. Weinstein was charged with. “They ought to be very careful about this because the Supreme Court of the Appellate Court in Albany just reversed Harvey Weinstein’s conviction on the ground that they put in too much information that wasn’t really relevant to the case,” Mr. Dershowitz said, adding that this is “what’s happening” in the trial against President Trump. “There is no crime in Manhattan. You cannot figure out what the crime is. That’s why they’re putting on all this evidence of non-crimes,” Mr. Dershowitz said.
“Trying to persuade the jury that ‘catch-and-kill’ is a crime—it’s not. Paying hush money is a crime—it’s not. Putting a corporate statement is a misdemeanor barred by the statute of limitations. You can’t suddenly resurrect that and turn that into a crime by invoking a federal statute which the federal government refused to invoke—the Federal Election Commission refused to invoke.” The former Harvard law professor has repeatedly criticized Mr. Bragg for elevating the charges against President Trump from misdemeanors to felonies on what Mr. Dershowitz has argued was an invalid legal premise because the Manhattan district attorney invoked federal statutes over which New York has no jurisdiction. Republicans have accused Mr. Bragg of bringing the case against the former president for political reasons.
[..] Under New York state law, falsifying business records is a misdemeanor. However, if the records fraud was used to cover up or commit another crime, the charge could be elevated to a felony, though a number of legal experts—including Mr. Dershowitz—have challenged the way that has been done in this case. “In order to turn the state statute into a felony, you have to borrow a federal statute,” Mr. Dershowitz told The Epoch Times in March 2023. He said that this combining of laws “seems to raise real serious legal questions.” “In Bragg’s case, what they’re trying to do is add one and one and come up with 11,” Mr. Dershowitz said. “No rational person would look at these two statutes and say that Trump violated them.”
“The Gag Order imposed on me, a political candidate running for the highest office in the land, is totally UNCONSTITUTIONAL! Nothing like this has ever happened before..”
Former US President Donald Trump has been ordered to pay $9,000 for repeatedly violating a gag order imposed by the judge overseeing his ‘hush money’ trial in New York. Trump was threatened with jail if he continues to breach the order. At a hearing in Manhattan on Tuesday, Judge Juan Merchan fined Trump $1,000 for nine separate instances in which he violated the gag order. Merchan explained in his ruling that while a $1,000 fine ultimately matters little to a man of Trump’s wealth, he could not legally issue a larger fine. However, the judge added that he would consider whether “jail may be a necessary punishment” if Trump continues to break the order in future. Trump is currently on trial for allegedly misreporting ‘hush-money’ payments made to porn star Stormy Daniels.
Since last month, Merchan has forbidden him from making public statements about Manhattan District Attorney Alvin Bragg or the jurors working on the case, and from uttering anything that could interfere with the work of the court. Nevertheless, Trump has spoken to the media outside the courthouse every day since the trial began earlier this month. In these appearances and in posts on his Truth Social platform, the former president has denounced the “sham case” against him, often quoting conservative pundits and journalists in an apparent bid to skirt the gag order. “The Gag Order imposed on me, a political candidate running for the highest office in the land, is totally UNCONSTITUTIONAL! Nothing like this has ever happened before,” Trump wrote last week. “The Conflicted Judge’s friends and party members can say whatever they want about me, but I am not allowed to respond.”
Trump’s lawyers have argued that Merchan’s connections to the Democratic Party – his daughter owns a consulting firm that creates fundraising campaigns for Democratic politicians, including President Joe Biden – make him unsuitable to judge the case. However, Merchan has refused multiple requests to recuse himself, saying that Trump has “failed to provide” evidence of a conflict of interest. In addition to the ‘hush money’ trial, Trump is also facing two federal criminal cases concerning his alleged incitement of the January 6, 2021 riot on Capitol Hill and his alleged mishandling of classified documents, as well as a state-level racketeering case in Georgia concerning his alleged efforts to overturn Biden’s 2020 victory in the state. Trump is the presumptive Republican nominee to challenge Biden in November’s presidential election. Despite the ongoing trial effectively halting his campaign in its tracks, a CNN poll published on Sunday showed him leading Biden by a 49%-43% margin, with six in ten respondents disapproving of Biden’s performance as president.
[..] let’s not dismiss the theory completely. Based on a New York Times (NYT) piece that appeared last week, it contains more than a grain of truth. The article is titled: “Campaign Puts Trump and the Spy Agencies on a Collision Course.” Quote: “Even as president, Donald J. Trump flaunted his animosity for intelligence officials, portraying them as part of a politicized ‘deep state’ out to get him. And since he left office, that distrust has grown into outright hostility, with potentially serious implications for national security should he be elected again.” Ok, let’s be clear. If the intelligence community led by the CIA is not the “deep state,” what is? Further, it is proven many times over that the Deep State is in fact out to get him. This is not even controversial. Indeed, there is no reason for these journalists to write the above as if Donald Trump is somehow consumed by some kind of baseless paranoia.
Let’s keep going here: “Trump is now on a possible collision course with the intelligence community …. The result is a complicated and possibly destabilizing situation the United States has never seen before: deep-seated suspicion and disdain on the part of a former and perhaps future president toward the very people he would be relying on for the most sensitive information he would need to perform his role if elected again.” Wait just a moment. You are telling us that all previous presidents have had a happy relationship with the CIA? That’s rather interesting to know. And deeply troubling too, since the CIA has been managing regime change the world over for a very long time, and is now directly involved in U.S. politics at the most intimate level. Any president worth his salt should absolutely have a hostile relationship with such an agency, if only to establish clear civilian control over the government, without which it’s not possible to say that we live in a Constitutional republic.
And now, according to the NYT, we have one seeking the Presidency who does not defer to the agency and that this is destabilizing and deeply problematic. Who does that suggest really rules this country? Is the NYT itself guilty of the most extreme conspiracy theory imaginable, or is it just stating facts as we know them? I’m going to guess that it is the latter. In this case, every single American should be deeply alarmed.Crazy huh? As for the phrase “never seen before,” we have to push back. What about George Washington, Thomas Jefferson, Andrew Jackson, James Polk, and Calvin Coolidge? They were all previous presidents, according to the history books that people once read. There was no CIA back then. If you doubt this, I’m pretty sure that your favorite AI engine will confirm it. One must suppose that when the NYT says “never seen before,” it means in the post-war period. And that very well might be true. John F. Kennedy defied them. We know that for certain.
The mysteries surrounding his murder won’t be solved fully until we get the documents. But the consensus is growing that this murder was really a coup by the CIA, a message sent as a lesson to every successor in that office. Think of that: we live in a country today where most people readily admit that the CIA probably killed the president. Amazing. [..] Have you considered that maybe the crackpots are exactly right? If so, shouldn’t we, at bare minimum, seek to support a Presidential candidate with a hostile relationship to the intelligence community? Indeed, that ought to be a bare minimum standard of qualification. There is simply no way we can restore civilian control of government and constitutional government until this agency can be thoroughly reigned in or abolished completely.
Every spring, when it’s certain no more snow will fall on Moscow, it helps to remember what the celebration stands for, and look forward with hope. Hope doesn’t come cheaply. In English and many other languages including Latin, May Day meant the return of fecundity, flowers, food harvests, and so hopefulness after winter, with entertainment from the randiest, cleverest, and silliest of the field creatures, the hare and the goat. Mayday! Mayday! That started in 1927 as an internationally recognized distress call put out on radio, which had nothing to do with the month of May. It started in French – m’aidez! “Help me!” That replaced the Morse code for SOS (“Save our Ship”) which was first adopted internationally in 1905. Mayday!, the radio call for help, was needed when radio replaced the telegraph and a speaking voice was required instead of taps and pips.
These days it’s the traditional left wing, based on workers’ movements, which need help. In France they have been superseded by spontaneous mobilizations, like the gilets jaunes, but they are failing against the Macron presidency; Keir Starmer’s British Labour Party is already a failure of the left before it defeats the Tories. There are leftwing movements in Germany and the US, but it is unlikely that such splinters can achieve more than splinters can – that’s pinpricks. Altogether, this left contributes next to nothing to the defeat of their governments, arms, and armies on the Ukrainian and Middle Eastern battlefields compared to the Russian Army and the Axis of Resistance. In Russia, the party of Marx and Engels has one leader embalmed and horizontal in Red Square; and a stone’s throw away in the State Duma, the current leader, Gennady Zyuganov, embalmed and vertical. The vote for the Communist Party candidate for president, Nikolai Kharitonin, in the March election was just 4.37% — the lowest level ever reached.
For this year’s May Day, the Communist Party has published no analysis of the current situation in Russia or party programme. Instead, it has called for a rally at the Karl Marx statue in front of the Bolshoi Theatre. In addition, the party has announced two dozen slogans for May Day. These include: “Long live the red May Day!”, “Proletarians of all countries, unite!”, “A job! Salary! Confidence in the future!”, “No increase in prices and tariffs!”, “Affordable housing for a young family!”, and “Scholarships at the minimum wage level!” The alternative leftwing Russian leaders, Sergei Glazyev and Mikhail Delyagin, have published nothing for May Day. Without mentioning May Day, Vzglyad, the semi-official platform for national security and economic analysis, has issued a report on a new government planning document setting out three scenarios for Russia’s economic future. The author is Vzglyad’s economics reporter, Olga Samofalova.
The recent Congressional hearings leading to a bloodbath of university presidents brings back memories from my teen-age years in the 1950s when everyone’s eyes were glued to the TV broadcast of the McCarthy hearings. And the student revolts incited by vicious college presidents trying to stifle academic freedom when it opposes foreign unjust wars awakens memories of the 1960s protests against the Vietnam War and the campus clampdowns confronting police violence. I was the junior member of the “Columbia three” alongside Seymour Melman and my mentor Terence McCarthy (both of whom taught at Columbia’s Seeley Mudd School of Industrial Engineering; my job was mainly to handle publicity and publication). At the end of that decade, students occupied my office and all others at the New School’s graduate faculty in New York City – very peacefully, without disturbing any of my books and papers.
Only the epithets have changed. The invective “Communist” has been replaced by “anti-Semite,” and the renewal of police violence on campus has not yet led to a Kent State-style rifle barrage against protesters. But the common denominators are all here once again. A concerted effort has been organized to condemn and even to punish today’s nationwide student uprisings against the genocide occurring in Gaza and the West Bank. Just as the House Unamerican Activities Committee (HUAC) aimed to end the careers of progressive actors, directors, professors and State Department officials unsympathetic to Chiang Kai-Shek or sympathetic to the Soviet Union from 1947 to 1975, today’s version aims at ending what remains of academic freedom in the United States.
The epithet of “communism” from 75 years ago has been updated to “anti-Semitism.” Senator Joe McCarthy of Wisconsin has been replaced by Elise Stefanik, House Republican from upstate New York, and Senator “Scoop” Jackson upgraded to President Joe Biden. Harvard University President Claudine Gay (now forced to resign), former University of Pennsylvania President Elizabeth Magill (also given the boot), and Massachusetts Institute of Technology President Sally Kornbluth were called upon to abase themselves by promising to accuse peace advocates critical of U.S. foreign policy of anti-Semitism.
The most recent victim was Columbia’s president Nemat “Minouche” Shafik, a cosmopolitan opportunist with trilateral citizenship who enforced neoliberal economic policy as a high-ranking official at the IMF (where she was no stranger to the violence of “IMF riots) and the World Bank, and who brought her lawyers along to help her acquiesce in the Congressional Committee’s demands. She did that and more, all on her own. Despite being told not to by the faculty and student affairs committees, she called in the police to arrest peaceful demonstrators. This radical trespass of police violence against peaceful demonstrators (the police themselves attested to their peacefulness) triggered sympathetic revolts throughout the United States, met with even more violent police responses at Emory College in Atlanta and California State Polytechnic, where cell phone videos were quickly posted on various media platforms.
Just as intellectual freedom and free speech were attacked by HUAC 75 years ago, academic freedom is now under attack at these universities. The police have trespassed onto school grounds to accuse students themselves of trespassing, with violence reminiscent of the demonstrations that peaked in May 1970 when the Ohio National Guard shot Kent State students singing and speaking out against America’s war in Vietnam. Today’s demonstrations are in opposition to the Biden-Netanyahu genocide in Gaza and the West Bank. The more underlying crisis can be boiled down to the insistence by Benjamin Netanyahu that to criticize Israel is anti-Semitic. That is the “enabling slur” of today’s assault on academic freedom.
By “Israel,” Biden and Netanyahu mean specifically the right-wing Likud Party and its theocratic supporters aiming to create “a land without a [non-Jewish] people.” They assert that Jews owe their loyalty not to their current nationality (or humanity) but to Israel and its policy of driving the Gaza Strip’s millions of Palestinians into the sea by bombing them out of their homes, hospitals and refugee camps. The implication is that to support the International Court of Justice’s accusations that Israel is plausibly committing genocide is an anti-Semitic act. Supporting the UN resolutions vetoed by the United States is anti-Semitic. The claim is that Israel is defending itself and that protesting the genocide of the Palestinians in Gaza and the West Bank frightens Jewish students. But research by students at Columbia’s School of Journalism found that the complaints cited by the New York Times and other pro-Israeli media were made by non-students trying to spread the story that Israel’s violence was in self-defense.
The neo-Nazi regime in Kiev engages in an unperceived, generously glossed over but extremely grave violation of humanitarian principles. It is one of many breaches in that regard, of course. But it must be held to account for this and ultimately for every single one. In the zone the regime still controls in Ukraine, as Russian troops advance the neo-Nazi junta compels the local population to abandon its habitations and to withdraw alongside the retreating Ukrainian armed forces. Since generally that occurs in predominantly ethnically Russian areas, the reluctance of the population to withdraw with what it regards as occupation troops is understandable. For that reason, this hideous practice on the part of the Ukrainian authorities also unmistakably exhibits the legal elements of ethnic cleansing. The political objective behind these compulsory population movements is to project the propaganda illusion that the civilian population in Ukraine are averse to the arrival of Russian forces and would prefer to live under Kiev regime rule.
Reports of forced deportation of local residents are plentiful (also see here, here, and here). A quick search of the internet will yield much additional evidence. Western governments and “human rights monitors” have remained utterly silent about this egregious conduct, which in the past they would have denounced vociferously whenever the perpetrators could be presented as actors hostile to the collective West’s political interests. In the present case, however, the perpetrators happen to be their Ukrainian proxies, recently rewarded with another tranche of multibillion dollar largesse. Hence the studious silence of the Western governments and media. The enablers are loath to publicise their vassals’ transgressions. What does international humanitarian law have to say about the forced displacement of civilians during armed conflict? Individual or mass deportations are prohibited, regardless of their motive, by the Fourth Geneva Convention (Art. 49).
Deportation refers to the forced transfer of civilians (or other persons protected by the Geneva Conventions) from the territory where they reside to the territory of the occupying power or to any other territory, whether occupied or not. Such acts are prosecutable according to the universal jurisdiction principle (Geneva Convention IV on Civilians, Art. 147). They can also be constitutive elements of crimes such as ethnic cleansing and genocide. There is a degree of ambiguity in the scope and application of the norm, which in Article 49 holds that “individual or mass forcible transfers, as well as deportations of protected persons from occupied territory to the territory of the Occupying Power or to that of any other country, occupied or not, are prohibited, regardless of their motive.” The presence of the related concept of “population transfer” further complicates the legal analysis because it seems to describe a forced movement of the population which takes place within the national territory and thus, perhaps, under the direction of the domestic authorities.
“..It is not accurate to say everyone in the Republican Party is a conspiracy theorist but as with racists, all of the conspiracy theorists are Republicans.”
There has been a notable shift toward more and more extreme rhetoric in the media from predicting that democracy will end with this election to “disappearing” journalists and gays to ending all rights for everyone. On Monday, MSNBC host Nicolle Wallace added to this litany with a claim that “as with racists, all of the conspiracy theorists are Republicans.” After discussing how GOP candidates have stated that they believe that the last election was “stolen,” Wallace added “It is not accurate to say everyone in the Republican Party is a conspiracy theorist but as with racists, all of the conspiracy theorists are Republicans.” It was a crushingly ironic moment. Wallace has been repeatedly criticized for spreading false news. For example, the “Deadline: White House” host told viewers that they should not take the Hunter Biden laptop seriously: “We shouldn’t look at it as anything other than a Russian disinformation operation.”
Wallace heralded the Mueller investigation while pushing the now debunked Russian collusion claims. However, on the Durham investigation, she told viewers that they could ignore it despite the fact that the report stands uncontradicted: “Durham’s whole thing is predicated on it’s like a rabbit hole conspiracy that suggests that the Trump-Barr paranoia infected his ability to stand back and evaluate whether the probe yielded guilty convictions of people who would have had nothing to do with any of these questions he looked at.” Wallace and MSNBC also pushed false claims about Bill Barr clearing Lafayette Park for a Trump “photo op.” On August 5th, 2019, MSNBC’s Nicole Wallace falsely claimed that Trump had talked about “exterminating Latinos.”
Wallace and MSNBC pushed the false story of border agents whipping migrants in Texas. Wallace claimed that the lab theory of the Covid 19 was a “conspiracy theory.” It has been embraced by various federal agencies despite being called racist by many experts. Many on the left now routinely call opposing views as spreaders of disinformation or conspiracy theories. The Biden Administration has funded various groups to blacklist or bar those with opposing views as disinformation, malinformation, or misinformation. Indeed, new groups are being formed before the election to echo these claims, including one headed by the former “Disinformation Czar.”
The ever-growing anti-Russia sentiment in the West stems from the fact that Russia adheres to traditional values that Western “progressives” are trying to destroy, philosopher and political commentator Aleksandr Dugin said in an interview with journalist Tucker Carlson that was posted on the latter’s YouTube channel on Monday. During the interview, Dugin laid out his view of the contemporary Western world and what he sees as the historical origins of its current ideology. He explained that the West has moved from “classical liberalism” – which professed individual freedom and democracy as understood as the rule of the majority – to a “new liberalism” defined by the rule of minorities and woke-ism. Rather than emphasizing freedom of the individual, the new incarnation of liberalism prescribes adherence to certain progressive values that are completely at odds with traditional values and in fact seeks to abolish them.
Carlson asked Dugin why many Westerners, even those who previously supported the Soviet Union, turned against Russia when President Vladimir Putin came to power in the early 2000s and started professing Russophobic ideas. The philosopher said that “Putin is a traditional leader” who defends traditional values, which run counter to those currently in vogue in the West. “When [Putin] came to power, from the very beginning, he started to extract Russia from global influence. He started to contradict the global progressive agenda… tried with success to restore traditional values – sovereignty of the state, Christianity, traditional family,” he said, explaining that Western progressives saw these developments as being in opposition to their values. This hatred is not something casual… it’s metaphysical. If your main task and main goal is to destroy traditional values – traditional family, traditional state, traditional relations, traditional beliefs – and someone with a nuclear weapon… stands strong defending traditional values you are going to abolish – they have some basis for this Russophobia and hatred for Putin.
In 2022, Dugin’s daughter Darya was killed in a car bombing in Moscow, which the Russian authorities claim was orchestrated by Ukrainian agents, a version also expressed by the US government. Darya, a journalist and political activist in her own right, was a vocal supporter of Russia’s military operation against Kiev. Russophobic sentiment has been growing exponentially in light of the Russia-Ukraine conflict, the outbreak of which in 2022 the West has blamed squarely on Russia. NATO has branded Russia the “most significant and direct threat” to its members’ peace and security, and many Western leaders have claimed that Moscow would attack Europe if it secures victory in Ukraine. Russia has repeatedly said it has no such plans, with Putin last month dismissing such claims as “nonsense.” Kremlin spokesman Dmitry Peskov last week called such ideas “horror stories” made up to divert attention from domestic problems in the West.
Forget this whole “election” charade and just glue the crown onto her head, already.Ursula von der Leyen, the unelected European Commission President, is up for job renewal in June. She’d have to be re-nominated by the majority of EU member state leaders and then re-confirmed by members of the newly-elected European Parliament. They’d have to be crazy to dethrone this ultimate incarnation of true EU values, like transparency and foresight (or rather, lack thereof). One particular tale about Queen Ursula comes to mind that perfectly illustrates the point.
During Covid, the European Union rolled out a bloc-wide QR code system as proof of vaccination for travel, leisure, and in some cases a condition of employment – even as reports started raising doubts about how reliable the shot really was when it came to stopping infection, transmission, and death. It’s like there was this interest in Brussels to move fast in getting shots into arms as quickly as possible, and setting up this digital identity system linked to jab status before the scary music stopped or people just tuned it out. Skeptical members of the European Parliament have been demanding to know what kind of deal the bloc’s leadership actually signed with the manufacturers of these injections. We’re talking about 11 contracts, 4.6 billion vaccines, and €71 billion of public money transferred to Big Pharma.
So far, neither the citizens who paid for all of it, nor their elected representatives have been able to get full transparency on those deals. According to research published last year by the French NGO Global Health Advocates, and the UK based health nonprofit, StopAids, the European Commission “agreed to extensive confidentiality requirements with pharmaceutical corporations that may not be fully consistent with EU legislation,” and that of the contracts analyzed with AstraZeneca, Pfizer, and Moderna, “the Pfizer contract was the most significantly redacted.” Specifically, they noted that the European Commission “redacted the most information about product safety and indemnification in the Pfizer and Moderna contract,” concluding that “it looks like most of the risk was borne by the EU in a desperate attempt to get access to these vaccines.”
The reports also draw attention to the lack of interest on the part of certain Big Pharma CEOs when it comes to accountability towards their customers – their end-clients who received and ultimately paid for the jabs: average EU citizens. “We provided Pfizer, AstraZeneca, and Moderna the opportunity to react to the claims… but we did not receive a response,” the NGOs said. It turns out that Pfizer CEO Albert Bourla is also the same person who was exchanging private text messages with von der Leyen the month before the Pfizer contract was negotiated. How do we know that? Because she said so herself in April of 2021 in a New York Times interview. While she was busy doing that, questions arose over how German defense contracts were being awarded. Politico reported on it in 2019, citing the increased use of consultants during her time in office, and she ultimately copped to “mistakes” having been made. Nor would they be the last of their kind, apparently.
US calls for Russia to hold talks on ending the Ukraine conflict seem detached from reality and ignore Moscow’s previous attempts to reach a settlement, Foreign Ministry spokeswoman Maria Zakharova has said. US Secretary of State Antony Blinken insisted on Monday that Moscow’s alleged plans “to erase Ukraine from the map… failed.” He added that he hopes Russian President Vladimir Putin has taken note of Western support for Ukraine, “gets the message, and demonstrates a willingness to genuinely negotiate consistent with the basic principles… of the international community and the UN Charter: sovereignty, territorial integrity, independence.” Responding to Blinken’s remarks later that day, Zakharova said American politicians seem to live in a “wonderland.”
She recalled that in 2014 and 2015, Russia “showed respect for international law” by promoting the now-defunct Minsk agreements, which sought to end the bloodshed in the region by giving the two Donbass republics special status within the Ukrainian state. Moscow has claimed that Kiev and Western countries never intended to implement the deal in the first place. Former Ukrainian President Pyotr Poroshenko, ex-German Chancellor Angela Merkel, and ex-French President Francois Hollande have admitted that the primary purpose of the agreements was to help Kiev buy time to build a stronger military force. Zakharova also noted that Moscow was ready to engage in peace talks in 2022. At the time, negotiations in Istanbul, Türkiye initially made headway, but later collapsed after what Russia claims was interference by then-UK Prime Minister Boris Johnson, who allegedly advised Kiev to keep fighting. Johnson has denied the accusation.
The spokeswoman stated that Blinken himself had proposed settling the conflict “based not on international law,” but on the ‘peace formula’ proposed by Ukrainian President Vladimir Zelensky, which demands that Russia withdraw all troops from the territory Kiev claims as its own and includes several other clauses that Moscow has rejected as unacceptable. “Everything has gone haywire in the White House,” Zakharova said. Moscow maintains that it is open to talks with Ukraine. However, Zelensky signed a decree in autumn 2022 barring negotiations with the current leadership in Moscow. The move came after four former Ukrainian regions voted overwhelmingly to join Russia.
“There is a straight line between this relentless, politically motivated fear-mongering and the thought that Fascism in some American incarnation is hard upon us..”
On April 19, just as a court in Lower Manhattan finished selecting a jury to hear the farcical “hush money” case against Donald Trump, a 37-year-old Floridian named Max Azzarello set himself ablaze across the street from the courthouse. Azzarello, by subsequent accounts, was a peaceable man, an agreeable neighbor, and was much taken up with questions of social justice. He was also no slouch on the academic side: Azzarello had a degree in anthropology from the University of North Carolina and a master’s in urban planning from Rutgers. To go by the mainstream press reports, Azzarello seems to have lost it somewhat after his mother died two years ago this month. But it is not anyone’s place, other than those close to him, to go any more deeply, or even this far, into the man’s psychiatric profile. Max Azzarello did have something to say to the rest of us as he stood in the park across from the Center Street Courthouse, however.
Just before setting himself ablaze, he held up a placard that read, in all caps, “TRUMP IS WITH BIDEN AND THEY’RE ABOUT TO FASCIST COUP US.” We ought to pay attention to this. An apparently capable man, by all accounts a compassionate man, died dreading an imminent Fascist takeover in America. This makes me very angry. To go straight to my point: A human life is wasted in consequence of a ridiculous, paranoiac idea that has for some time circulated among us either out of foolishness or for the most cynical of political motives. I was very sad to learn of Aaron Bushnell’s self-immolation before the Israeli Embassy in Washington on February 25. I was sad to read of Max Azzarello’s final act, too, but in a different way. Bushnell died for “what people have been experiencing in Palestine at the hands of their colonizers,” as he put it in his final moments. An Air Force enlistee, Bushnell declared he could “no longer be complicit in genocide.” His last words were “Free Palestine!” One would rather Bushnell were still with us, but his was an honorable death.
Azzarello died in a state of confusion and delusion, and I draw this conclusion from the message on his placard. His death honored no one. I will go so far as to say there are many among us who dishonorably bear responsibility for it. Readers of this column may have noted over the months that I am a stickler for nomenclature. To name things properly is essential to our understanding. It enables us to act, if we are so inclined, because we are clear in our minds as to what is to be done. To name things improperly causes all kinds of problems. It leaves us confused and deluded, as in the case of Max Azzarello. It can paralyze us. Or if we choose to act, we are likely to act wrongly. As in the case of Max Azzarello. There are so many misnomers abroad among us, amid the panic on our sinking ship, one sometimes grows weary of language altogether. Russia is an aggressor, China is an imperialist power, Israel is a democracy, and so on through the Orwellian lexicon: War is peace, etc.
On the domestic side, the Jan. 6, 2021, protests at the Capitol were an attempted coup. Or an insurrection. We have Donald Trump is a tyrant. We have Donald Trump is a dictator — “King Trump,” I am now reading in The New York Times. And we have it that America, as per the late Max Azzarello and countless other like him, is on the eve of a Fascist takeover. Much of this, let’s call it the pollution of public discourse, comes from the liberal authoritarians. Rachel Maddow, to take one of the more pitiful cases, wants us to think Trump the dictator will end elections, destroy the courts, and render the Congress powerless. The MSNBC commentator has actually said these things on air. One-man rule is the theme, if you listen to the Rachel Maddows. The evident intent is to cast Donald Trump in the most fearsome light possible, as it becomes clear Trump could well defeat President Biden at the polls come Nov. 5. We can mark this stuff down to crude politicking in an election year, surely. There is nothing new in it. But this is not the point.
There is a straight line between this relentless, politically motivated fear-mongering and the thought that Fascism in some American incarnation is hard upon us — a straight line, this is to say, from our Rachel Maddows to the self-immolation of Max Azzarello. This is the point.
I attended a classic car show recently and realized why my generation was so happy compared to the current ones. Cars in those days were beautiful and the muscle car element had glorious sounds. Beginning in 1954 but especially with the advent of the 1955 Chevrolet Bel Air coup and Ford Fairlane coup you were looking at beauty enhanced by two-tone paint jobs. Some were a combination of pastels. Others were combinations of strong colors–red and black, yellow and black, red and white, and some were a combination of a strong color and a pastel–navy blue and French blue, pink and black. In 1955 Chevrolet brought back the V-8 for its cars, and it was a performer. A stock ’55 Chevy V-8 was a match for our souped up 1950 Ford flatheads. What you could do to that 55 Chevy V-8 was something else. So many of the cars, not only Chevrolets and Fords, but also Pontiac, Oldsmobile, and Dodges had beautiful two-tone paint jobs and delightful styling. The cars also offered wonderful visibility. You could see where you were going, backing up, and what was on either side.
For us what constituted safety was visibility, good brakes, and maneuverability. The mid to late 60s into 1972-73 was the muscle car era. The cars had appealing design as they were designed by designers and not by safety bureaucrats. Some of the colors were outrageous–plum crazy purple, bright lime green, triple black, orange. Such outstanding colors usually indicated potent performance. How fast were the muscle cars of a half century ago? Very. Plymouth Barracudas, Superbirds, Dusters, Roadrunners, Dodge Daytonas, Chargers, Ford Torinos, Oldsmobile Cutlasses, 442s, Pontaic GTOs, Firebirds, Chevrolet Chevelles, Cameros could compete in quarter mile times with the supercar of the era, a Lamborghini Miura S (1970). The muscle cars would leave in the dust James Bond’s Aston Martin DB5, Ferrari’s 250 GT Lusso, and even beat fast cars from 20 and 30 years later such as the Lotus Esprit Turbo (1988) and Subaru’s 2001 WRX.
Moreover, a muscle car could be souped up to high heaven. Some of them run 9 and 10 second quarter mile times, which beats the entire range of today’s supercars, such as Ferrari, Porsche, Lamborghini, Corvettes, and Shelby Mustangs. Not many of the souped up muscle cars from a half century ago can beat the present day Dodge Demon, but they can run with it. The thing about muscle cars is that they were so fast that you didn’t need to soup them up like you did a 1950s Ford flathead or a 55 Chevy. Muscle cars date from the days of 30 cents per gallon gasoline, and in those days it was 100 octane. The combination of low purchase cost (a Plymouth Barracuda with a Hemi engine cost $4,000), operating cost, style, and performance made them a deal that no longer exists. Today’s cars are loaded down with electronics and “safety” that you don’t need and that is difficult to live with and costly. If the tire pressure in my safe car drops from 32 to 31 on come warning lights and notices on my screen.
You have to go through a pointless exercise and then spend half an hour figuring out how to turn off the warning indicators. Moreover, the accepted safety style comes from federal safety bureaucrats. Consequently, unless you can see the Mercedes star, you can’t tell one from a Toyota. Today all cars look alike. And you have 4 color choices–white, black, gray, and a dark red. Mopar performance cars, Corvettes, and performance Mustangs are bringing back striking colors and their performance products have a striking appearance. They certainly get your attention, but they are not beautiful. At a large car show cars from the past and present will be on display. The older cars are beautiful. The new ones are aggressive and heavy in appearance. They don’t inspire. They drive well but they don’t make you happy. They look brutish, like American foreign policy. In my teenage years driving down a road was like driving along a rainbow. Colors everywhere. Distinctive styles with no possibility of confusing one make with another, glorious sounds if a muscle car passed you, and wonderful visibility.
All of this ended when the fools up high decided to make us safe. One of the consequences has been that we can’t see out of our cars. My safety designer car has great forward vision unless I turn left down hill. Then the massive pillar that makes me safe blocks all vision. There could be a dog, a child, a huge pothole in the road and I am unable to see it. Rear vision depends on cameras, but they are useless when you are backing out of a parking slot in a shopping center. You can see behind you but not on your side as the enormous pillar blocks all vision. When the massive trucks of today are parked along side of you, it is a game of Russian Roulette to back out. The emphasis on safety has homogenized car design. There is no distinction, and there are no shapes that work with two-tone paint. The modern car world is drab, and drabness produces depression. Thus, the cost of our bureaucratic imposed safety is depression. We are mired in sameness and brutal shapes. When did you last see a happy American?
Herman Daly is a formidable mind. He has been writing for many years about the true effects of clinging to our perpetual growth paradigm. Daly concluded long ago that the solution to the plethora of problems this paradigm leads us to would be to move to a steady state economy. This conclusion is questioned by many, and perhaps not always for the wrong reasons.
