Mar 182018
 
 March 18, 2018  Posted by at 12:14 pm Finance Tagged with: , , , , , , , , , ,  7 Responses »


Gordon Parks Daytona Beach, Florida. Bethune-Cookman College. Football practice 1943

 

 

Here’s a delicious little rant from Dr. D., by now a regular contributor at the Automatic Earth.

 

 

Dr. D: The schizophrenia surrounding the tariff plan is really startling. But then I could just say, “the level of insanity everywhere is startling.”

Self-avowed schmartz-guys are all “doesn’t the U.S. know their empire is failing and everybody is cutting them off? What are they thinking starting trade wars with allies and raising prices???” Stop. So your argument is the U.S. is losing its influence, other nations are about to cut it off and end the trade deficit, and thereby basically halt imports? While the U.S. has no internal manufacturing? And your argument here is that, not if but when the world cuts us off we a) would like to have some steel and aluminum to build factories, washing machines and tanks or b) do NOT want to have access to the basic raw materials of society? Whiskey Tango Foxtrot.

I’m sorry that this generation burned down the factory, then retreated to the mansion, sold off and burned all the furniture there too, then ran up the credit card with cocaine and heroin parties while yelling “I’m a rock star! I’m a Contender!”, but they did. Now there are only bad decisions, like the ones real adults have.

And there’s nothing but work to put that factory back up, and that’s going to cost something, in this case, money and higher prices, using the thousand-year method of protective tariffs. Why not? Europe has 25% tariffs. China has a virtual lockout. If the U.S. machine then also has higher real wages for U.S. workers they can afford the tariffs. I mean, what’s their counterargument? If it’s better to not have steel and aluminum, perhaps we should shut down the few remaining foundries and have NO materials? I mean, if a little is bad, surely none is way better.

Mish for example thinks this way: if China is willing to give us cheap, under-market steel we should take it. No, not if you want to have a country, you don’t. Isn’t it a matter of national security to be able to make tanks, ships, railroads, and artillery? There’s more to the world than money.

Nor is this arcane. You know that brewing Japanese scandal about approving sub-standard steel worldwide for going on 40 years? Well that sub-standard Chinese and Japanese steel was turned into, say, sub-standard U.S. Abrams Tanks, which may explain why they’ve been breaking and unexpectedly going up like roman candles. So how’s your low-cost steel discount look now that the U.S. doesn’t have an effective military? Come on, guys. Again, the world is not only money, to be measured in money. It’s strategy, it’s community, it’s values. I’m surprised we’re so lost I need to bring this up.

Don’t get me started on how we don’t own (and therefore don’t really secure) our toll roads, ports, bridges, and utilities. They are also widely owned by foreigners now. Really? We (or they) sold every living thing out of the United States, and we’re looking for Russians and Terrorists under the bed? For the love of Pete…

 

How do you prepare for an Argentina-like collapse and/or up to civil war we are so close to? People who have lived through it say, “you can’t.” If the whole country is mad, which it is, there is nowhere to turn for sense or even allies, to say nothing of dry goods. Co-Americans are now so immoral, so self-serving, so rapacious, so badly thinking, so ill-positioned and ill-prepared that they themselves are the largest single liability, to me, but mostly to themselves. Without basic morality — you know, like do your job, don’t lie about everyone around you, don’t sleep with other people and/or kids at the local high school — there is no “community” as Ilargi discusses. My place may be here, but I can only say: “stay exiled.”

Think the 30% uptick in opioid overdoses is bad? In my small county there are now 3 support groups of 30 each for pedophiles. These are mostly court-directed, meaning these are only the ones we know about. That’s in ADDITION to the self-help groups for alcohol and drug addition. Hey, where did we get those volunteers for Oxfam, UNICEF, and Haiti? And are the police, judges, Congressmen and FBI not also from this same population? Or are they going to arrest themselves and stop it? Maybe I should go arrest the police and see how that goes. It ain’t good.

Only Morality can fix it, where the nation cries out to God and says, “we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe to assure the return of justice and order, even if it means paying for my own crimes.” You see that happening yet? My biggest fear is the present turn will patch it over enough to limp on a little further with no reform, and yet that seems the most likely.

Adams said, “Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.” Benjamin Franklin said, “only a virtuous people are capable of freedom.” This is just Tytler’s cycle of history:

 

 

We’ve done it all but bondage. When China cuts off the imports and calls the loans, the cycle of bondage will be complete. Until we find faith, we’ll be peasants in our own land, as planned.

 

 

Feb 162015
 
 February 16, 2015  Posted by at 8:46 pm Finance Tagged with: , , , , , , ,  10 Responses »


John M. Fox WCBS studios, 49 East 52nd Street, NYC 1948

It’s really not that hard. It’s even elegantly simple. But that still requires you’re willing to listen, willing to think, and you don’t go into talks with your mind already made up. Obviously, that is too much to ask from the Eurogroup side of the negotiations with Greece. They haven’t been able to move one inch from their ‘Do as we say or else’ bluster.

German Fin Min Schäuble earlier implied that the Greek people have elected the ‘wrong’ government, an already unforgivable intrusion into a EU member state’s internal affairs. What if the Greeks said the same about Merkel et al, what do you think the reaction would be? Today, SPD executive board member, Joachim Poß, member of Merkel’s German coalition government, does Schäuble one better:

“In the interest of the Greek people and in view of the difficult situation, Prime Minister Tsipras should consider to replace Mr Varoufakis with a political experienced, realistic-efficient person.”

They call for the Greeks to see reality, but they themselves have completely lost it. They think reality is whatever they think or wish it is. The only true reality, however, is that the Greek people, in a very democratic and very convincing way, have elected the government that a cackle of Germans now apparently find inconvenient.

Germany has European reality, and history, and economics, fully upside down. Which, no matter how you take the Greek claim that Germany got in 1953 what Greece deserves today, or their insistence on WWII reparations, is remarkable. How is it possible that there is no voice coming from Berlin to question, doubt, attack, their government’s position? It’s after all not as if there are no unresolved issues left. There are no clear cut positions other than what Berlin and Brussels say there are.

Merkel and Dijsselbloem and Draghi don’t get to decide for the entire world what goes and what does not. Their ‘model’, their ideas, have failed dramatically, and Dijsselbloem’s hollow statement that “much progress has been made” (talking about Greece) only serves to confirm that. They seem to think that a double or nothing on Greece will hide their failures, but the exact opposite is true: Syriza is exposing them as unsavory naked emperors.

Schäuble, in the same vein as Dijsselbloem, insists on saying: “look how great we’ve been doing, which is why we have the right to keep on acting the way we have”. But that is nonsense, neither Schäuble nor Draghi’s policies have been a huge success, far from it. And while Germany may have scraped by – and not much more than that -, this is not remotely true for some of the countries both gentlemen are in an economic union with, least of all Greece. It is simply not true, it’s a self absorbed and self aggrandizing delusion.

If New York State, Texas and California were not bound by the policies inherent in a federal fiscal union, they would have been even richer than they are, but Oklahoma and Nebraska (I’m just picking a few examples) would have been much poorer, and would have no reason to remain part of the USA. The EU and eurozone have no such fiscal union, which means Germany gets to keep all the spoil, and Greece pays the bill. This is possible because Greece, unlike Oklahoma, only gets hand-outs that it has to pay back with interest. Which may be low right now, but that doesn’t change the principle – or the principal, for that matter: Greece gets it share of ‘help’ of the union it’s in, in the form of additional debt. Oklahoma does not.

While at the same time, Greece no longer has a central bank or a currency, so it’s fully dependent on what Berlin decides Frankfurt (ECB) must do. And wouldn’t you know, Frankfurt always decides on doing what is best for Berlin, because it’s the major power in the union. That leaves Greece in a deep dark hole, and one that can only possibly get deeper and darker, unless the eurozone economy starts growing at double digit rates (not!). And even then. Even then that – fantasy – growth would be primarily German.

Just like Nebraska will never be New York or California, Greece will never be Germany. In the US, this was understood – luckily – at an early stage. Or there wouldn’t be a US. I’m not saying the present day US is some sort of Nirvana, but at least it got its basic fiscal principles down early in the game. There’s a means for the federal government to lift up the poorer parts of the union using tax revenues from the richer. And no, that’s not socialism, it’s the only way to keep the better part of an entire continent tied together. And when I say ‘better’, please note I’ve already in my young life lived in Canada for 20 years. And left. And that Canada is actually bigger than the US. It’s a figure of speech.

Schäuble pretends that what is good for Germany, is also good for Greece. And that is manifestly untrue. It would be in a true fiscal union, but it is not true today. It’s nonsense. Doesn’t Germany understand this? That’s hard to believe. Still, they insist that the only way forward for Europe is the one that benefits themselves most. And they get the likes of Dijsselbloem and Draghi to confirm that for them.

All against the Greek underdog. Which, as democratically as their ancestors invented it eons ago, voted they had had enough. And what is Germany’ s reaction? Schäuble said: “The problem is that Greece has lived beyond its means for a long time..” But isn’t that perhaps even more true for Germany itself? It depends on how you look at it.

Greece never stood a chance in the present configuration. All benefits would always have gone to Germany, simply because they get to decide everything. There are no EU or eurozone rules that say Berlin has to bequeath part of its surplus to weaker parts of the union. What inevitably follows from that is that Germany will, as time goes by, squeeze Greece and Italy and Spain ever drier. After all, Berlin is not the Salvation Army, right?! These things should have been written down in very strong terms long ago, like they were in the US. If you don’t do that, there’s no escaping the consequences.

What Greece, Syriza, Tsipras and Varoufakis are doing right now is to try and change this arrangement, which benefits only the richer parts of the European Union, and does so on an inevitably ever larger scale. They’re trying to make the EU perhaps not precisely like the US (Zeus forbid!), but certainly more like it.

In the US there’s at least a basic kind of fairness, which – well, mostly – prevents parts of its union to dissolve into Third World status. Europe has no such fairness, and it therefore does indeed create that sort of misery within its own borders. And instead of saying, ‘okay, perhaps we should have shared a bit more of our wealth, and let’s discuss that’, they dig in and they treat the Greeks like they’re some kind of inferior species whose best option is to wait for some scraps to fall off the beer and beerwurst-laden tables of Bavaria.

And lest we forget it, one more time, and Varoufakis repeated it again last week, the majority of the Greek debt is what Germany and France burdened the country with when they decided to bail out their own banks who has wagered huge amounts of ‘money’, encouraged by Goldman Sachs’ derivatives schemes that hid Athens debts and allowed Greece entry into the eurozone to begin with.

But for Schäuble to state that “Greece has lived beyond its means for a long time” is a huge leap away from that, because those people lining up at the soup kitchens, and those who sleep in the streets, and those who’re dying from ailments that a 100 miles from the Greek border don’t even faze anyone, have obviously not lives beyond their means.

The Greek people haven’t “lived beyond their means for a long time”, or they wouldn’t live in their “hideous humanitarian crisis”, as Varoufakis calls it, to begin with. The Greek elite may have made off like bandits, but not the people. And who did the EU, Schäuble, Dijsselbloem and Draghi, make the deals with that got the situation where it is?

That’s right, the elites. Brussels installed the technocrat Samaras government, and they did it for a reason. And now that whole set-up has been defeated. Which is why Schäuble says things like “the new Greek government [is] behaving “quite irresponsibly”, and it’s all their fault and none of it is his.

Hubris, bluster, and not much else. That’s how Europe enters the negotiations with Greece. So why should Varoufakis be replaced? I can think of a few others who should first. The entire Greek debt story is nothing but a narrative that will only hold until it no longer can. Thing is, by then the entire eurozone may be gone. And whether you think that’s a good idea or not, just make sure you understand that it will happen only because a bunch of stuck-up politicians too full of themselves to see their own blubber want it to.

Not because of Greece or Syriza. They just want to stop their people’s misery. And what does Germany have to say about that? Well, as per Herr Schäuble, that the Greek government is behaving “quite irresponsibly”.

Upside down, topsy turvy, Bizarro. And that’s what Tsipras and Varoufakis must face. l can only hope they have more patience with it than I would.

Oct 182014
 
 October 18, 2014  Posted by at 8:12 pm Finance Tagged with: , , , , , , , ,  7 Responses »


NPC Dedication, George Washington Masonic Memorial, Alexandria, VA Nov 1 1923

A comment on an article that comments on a book. I don’t think either provides, for the topic they deal with, the depth it needs and deserves. Not so much a criticism, more a ‘look further, keep digging, and ye shall find more’. And since the topic in question is perhaps the most defining one of our day and age, it seems worth it to me to try and explain.

The article in question is Charles Hugh Smith’s Why Nations (and organizations) Fail: Self-Serving Elites, and the book he references is Why Nations Fail: The Origins of Power, Prosperity, and Poverty by Daron Acemoglu and James Robinson.

Charles starts off by saying:

The book neatly summarizes why nations fail in a few lines:

(A nation) is poor precisely because it has been ruled by a narrow elite that has organized society for their own benefit at the expense of the vast mass of people. Political power has been narrowly concentrated, and has been used to create great wealth for those who possess it.

The Amazon blurb for the book states that the writers “conclusively show that it is man-made political and economic institutions that underlie economic success (or lack of it)”, and continues with examples used such as ancient Rome, North Korea, Zimbabwe, the Congo, to make the point that some countries get rich and others don’t, because of differences in leadership structures. That in itself certainly seems true, but that doesn’t necessarily make it the whole story.

In the case of the Congo, for instance, the perhaps richest place on earth when it comes to resources, there’s not only the devastating history it’s had to endure with incredibly cruel Belgian colonial powers, there’s to this day a lot of western involvement aimed at keeping the region off balance, and feed different tribes and peoples with weaponry up the wazoo, in order to allow the west to keep plundering it. It’s not just about national goings-on, it’s – also – a supra-national thing.

That’s one of two shortcomings in the material, the breadth and width of why nations and organizations fail their people but serve their masters. In the present day, national boundaries, whether they are physical or merely legal/political, are not the best yardsticks anymore by which to measure and gauge events.

The second shortcoming, in my view, is that inequality, a theme so popular that even Janet Yellen addressed it this week in what can only be seen as her worst possible impression of Marie Antoinette, and expressed her ‘worry’ about wealth inequality in America. The very person publicly responsible for that inequality thinks it’s ‘just awful’. Go bake a cake, gramps.

Wealth inequality is but a symptom of what goes on. Charles Hugh Smith has a few graphs depicting just how bad wealth inequality has become in the US. We all know those by now. It’s bad indeed. But where does that come from? Charles touches on it, but still hits a foul ball:

I submit that this dynamic of failure – the concentrated power and wealth of self-serving elites – is scale-invariant, meaning that it is equally true of communities, towns, cities, states, nations and empires alike: all fail when they’re run for the benefit of a narrow elite. There is a bitter irony in the ease with which American pundits discern this dynamic in developing-world kleptocracies while ignoring the same dynamic in America.

One would imagine it would be easier to see the elites-inevitably-cause-failure in one’s home country, but the pundits by and large are members of the Clerisy Upper Caste, well-paid functionaries, apparatchiks, lackeys, factotums, toadies, sycophants and apologists for the very elites that are leading America down the path of systemic failure as the ontological consequence of their self-serving consolidation of wealth and power.

Here’s the thing: especially after WWII, though before that already as well, the western world woke up to the need for international co-operation. Dozens of organizations were established to structure that co-operation. But then, in yet another fountain of unintended consequences, something man is better at than just about anything else, we let those organizations loose upon the world without ever asking what happened to what they were intended for, or whether the original grounds for founding them still existed, and whether they should perhaps be abolished or put on a tight leash.

These are questions that should be asked about any large-scale organization. Be they multinational corporations, global banks, Google or indeed the United States of America. We can’t just assume these powers, which gather more power as time goes by, share and serve the purposes of the people. What if they gradually come to serve only their own purpose, and it contradicts that of the people? Should we not get that leash out?

Turns out, we never do. If someone would suggest today to break up the USA, because its present status contradicts that which the Founding Fathers had in mind (and there are plenty of arguments to be made that such contradictions exist in plain view), (s)he would not even be sent to a nuthouse, because no-one would take him/her serious enough to do so.

But wealth inequality still rises rapidly within America, and it doesn’t serve the people. So why does it happen, and why do we let it? Because the inequality that matters most is not wealth, but power. And we’ve been made to believe that we still have that power, but we don’t. Voting in elections has the same function today as singing around a Christmas tree: everyone feels a strong emotional connection, but it’s all just become one giant TV commercial.

Even if families are genuinely happy to meet up and exchange gifts and stories, it’s all modeled after the building blocks handed to us by chain stores. It isn’t really our story anymore, and Jesus certainly wasn’t born in a manger: he was born in a MacMansion and the first thing the child saw was his mom’s fake boobs, a wall-sized TV and an iPhone.

In that same vein, we lost the stories bitterly fought and suffered for by our grandparents through two world wars and the brutal invasions of Vietnam and Iraq, the stories of how we can best keep ourselves safe and out of – international – trouble. Not just military trouble, but economic and political trouble. These things are no longer our decision. We founded supra-national, indeed global, institutions for that. And then let them slip out of our sight.

The US is a bit of an outlier here, simply because it’s older. But the IMF, the World Bank, UN, NATO and the EU absolutely all fit the picture of organizations that have – happily – grown beyond our range of view, and that exhibit the exact same inverted pyramid characteristics we see on wealth inequality, only for these organizations it’s not wealth that floats and concentrates increasingly from the bottom to the top, it’s power.

Wealth comes after that. And one shouldn’t confuse that order. Because power buys wealth infinitely faster than wealth buys power.

All these supra-national institutions were established with good intentions – at least from some of the founders. But then we forgot, ignored, to check on them, and they accumulated ever more power when we weren’t watching (we were watching TV, remember?)

And what we see now is that any effort, any at all, to break up the IMF, World Bank, UN, NATO and EU would be met with the same derision that an effort to break up the USA would be met with. We have built, in true sorcerer’s apprentice or Frankenstein fashion, entities that we cannot control. And they have taken over our lives. They serve the interests of elites, not of the people. So why do we let them continue to exist?

What powers do we have left when it comes to bailing out banks, invading countries, making sure our young people have jobs when they leave school? We have none. We lost the decision making power along the way, and we’re not getting it back unless we quit watching the tube (or the plasma) and fight for it. Until we do, power will keep floating to the top like so much excrement; it’s a law of – human – nature.

That the people we voluntarily endow with such control over our lives would also use that control to enrich themselves, is so obvious it barely requires mentioning. But that doesn’t mean this is about wealth inequality, that’s not the main issue, in fact it’s not much more than an afterthought. It’s about the power we have over our lives. Or rather, the power we don’t have.