Today is truly a historical day. For the first time ever, the West has boycotted the Victory Day Parade in Moscow and, also for the first time ever, Chinese forces have marched on the Beautiful Square, (“Red” square is a mistranslation – the “Red Square” ought be called the “Beautiful Square”) with the Russians. I believe that this is a profoundly symbolic shift and one which makes perfectly good sense.
Both Russians and Americans are quite aware of what is at stake and neither side can back down. On one hand, if the US/NATO/EU prevail, they will have succeeded in breaking the Russian “back” and Russia will rapidly be submitted. Should that happen, all the BRICS countries will soon follow, including China. On the other hand, if Russia prevails in the Ukraine, then the US grip on the EU will soon be weakened and, possibly, lost altogether and the entire world will see that the Empire is crumbling. Should that happen, the entire international financial system will escape from the AngloZionst control and liquidate the petrodollar. The consequences of such a collapse will be felt worldwide.
The presence of Xi Jinpin next to Putin on this historic day, the participation of the Chinese military in the parade and the presence of PLA Navy ships alongside the Russian Black Sea Fleet, is a direct and powerful message to the world: in this titanic struggle, China is fully throwing her weight behind Russia.
[Sidebar: Notice on the photo of Xi and Putin that there is one more absolutely crucial figure sitting next to the war veteran: Nursultan Nazarbaev, the President of Kazakhstan. The crucial role this man has played to shape today’s world has not been recognized, but with time I am sure it will. Long before Putin, it was Nazarbaev who did everything in his power to prevent the breakup of the Soviet Union, the creation and strengthening of the Commonwealth of Independent States and the creation of the Eurasian Economic Union. I would note that Putin has, on several occasions, expressed his deep admiration for, and gratitude to, Nazarbaev whom he has explicitly described as the “father” of the new Eurasian union.]
This is the “new Russia” – one literally flanked by her two allies, China and Kazakhstan. It is hard to over-estimate the importance of this event: for the first time in 400 years Russia has finally fully turned her face to her natural ecosphere – the East.
Wolf Street / Naked Capitalism, By Don Quijones, April 27
The war on cash is escalating. As Mises’ Jo Salerno reports, the latest combatant to join the fray is JP Morgan Chase, the largest bank in the U.S., which recently enacted a policy restricting the use of cash in selected markets; bans cash payments for credit cards, mortgages, and auto loans; and disallows the storage of “any cash or coins” in safe deposit boxes. In other words, the war has moved on from one of words to actions.
Here are ten quotes that should chill the spine of any individual who cherishes his or her freedom and anonymity:
1. Kenneth Rogoff (from the intro to his paper The Costs and Benefits to Phasing Out Paper Currency):
Despite advances in transactions technologies, paper currency still constitutes a notable percentage of the money supply in most countries… Yet, it has important drawbacks. First, it can help facilitate activity in the underground (tax-evading) and illegal economy. Second, its existence creates the artifact of the zero bound on the nominal interest rate.
In other words, cash (not money) is the source of all evil and must be destroyed because governments can’t trace its every movement, and it represents a limiting factor on central banks’ ability to continue their insane negative-interest-rate experiment.
Representative Chris Van Hollen, the ranking member of the House Budget Committee, wrote in a letter to Representative Sandy Levin, the ranking member of the House Ways & Means Committee, that he would oppose fast-track authority, also known as Trade Promotion Authority or TPA. The letter was obtained by The Nation and its authenticity was confirmed by an aide to Van Hollen.
Van Hollen opposed a previous iteration of fast-track legislation last year, as did most other top Democrats, including Minority Leader Nancy Pelosi. But so far, many of those Democrats (including Van Hollen) had not yet announced a position on the new TPA legislation being hammered out by Senators Ron Wyden, Orrin Hatch, and Representative Paul Ryan. (Levin opted out of those talks, and believes Congress should see at least the outline of a trade deal before taking up legislation to fast-track its approval.) Pelosi still remains publicly undecided.
If Van Hollen—a visible member of the Democratic caucus and ranking member of a major committee—ultimately supported the Wyden-Hatch-Ryan bill, it would have been a signal that House Democrats were ready to go along with the Obama administration’s trade agenda. But in his letter, Van Hollen wrote “it is clear that many [of my concerns] will not be included in a revised TPA.”
In a rare public breach in the special relationship, the White House signalled its unease at Britain’s decision to become a founder member of the Asian Infrastructure Investment Bank (AIIB) by raising concerns about whether the new body would meet the standards of the World Bank.
The $50bn (£33.5bn) bank, which is designed to provide infrastructure funds to the Asia-Pacific region, is viewed with great suspicion by Washington officials, who see it as a rival to the World Bank. They believe Beijing will use the bank to extend its soft power in the region.
The White House statement reads: “This is the UK’s sovereign decision. We hope and expect that the UK will use its voice to push for adoption of high standards.”
Shocking! Unprecedented! Unfair! These were some of the politer adjectives used by financial experts to describe this week’s decision by the Swiss National Bank to abandon its currency peg to the euro. As is often the case with major central bank decisions involving currencies, the public finds it very hard to understand what is happening or why it matters. In Switzerland’s case, the situation was made even more confusing by the central bank lowering its overnight money rate to negative 0.75%. This means you have to pay interest to the central bank for the privilege of lending them your money, an act that strikes many as contrary to the laws of nature. Doesn’t the lender always earn interest, and the borrower always pay? Not in the topsy-turvy world of deflation, which is the strange financial anti-matter world that Switzerland now inhabits. The Swiss no doubt are asking themselves how they have found themselves in such a situation. We would all do well to ask the same question, because deflation is the most important financial reality facing the world today. Read More
The ugly ramifications of the Trade in Services Act (TiSA)
Wolf Street, By Don Quijones, December 25
Much has been written, at least in the alternative media, about the Trans Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), two multilateral trade treaties being negotiated between the representatives of dozens of national governments and armies of corporate lawyers and lobbyists (on which you can read more here, here and here). However, much less is known about the decidedly more secretive Trade in Services Act (TiSA), which involves more countries than either of the other two.
At least until now, that is. Thanks to a leaked document jointly published by the Associated Whistleblowing Press and Filtrala, the potential ramifications of the treaty being hashed out behind hermetically sealed doors in Geneva are finally seeping out into the public arena. Read More
It also will test his willingness to buck his own party in pursuit of a legacy-burnishing achievement. Already, fellow Democrats are accusing him of abandoning past promises on trade and potentially undermining his domestic priority of reducing income inequality.
The dynamic, as the White House plots strategy for the new year when the GOP has full control of Congress, has scrambled traditional political alliances. In recent weeks, Obama has rallied the business community behind his trade agenda, while leading Capitol Hill progressives, including Sen. Elizabeth Warren (D-Mass.), have raised objections and labor and environmental groups have mounted a public relations campaign against it.
The administration is moving aggressively in hopes of wrapping up negotiations by the middle of next year on a 12-nation free-trade pact in the Asia Pacific before the politics become even more daunting ahead of the 2016 presidential campaign.
“This is an all-hands-on-deck moment for the administration,” said Rep. Ron Kind (D-Wis.), a pro-trade Democrat viewed by the administration as a key ally. “They need to get out and educate members and address the concerns they might have. I’ve been advising colleagues who are skeptical and not supportive of trade to at least engage in conversations and feedback.”
Global financial crises have a tendency to spring upon the world unsuspected, especially if the foreign exchange markets are involved, since they tie all global markets together (equities, bonds, commodities, derivatives). That’s why it is necessary to keep one eye fixed for the moment on the yen.
The yen was trading around Yen 100/$ in October. On Halloween, Bank of Japan Governor Haruhiko Kuroda surprised the financial markets with a massive expansion of the central bank’s Quantitative Easing program. The Japanese central bank is now using QE to buy up every new bond that the Ministry of Finance is issuing. This constitutes 100% monetization of Japanese debt by its own government, a situation which is unprecedented in modern finance among major industrialized countries. The foreign exchange markets reacted poorly to this announcement, on that same day driving the yen down to Yen 110/$. Today it has now crossed the Yen 120/$ threshold, meaning several things. It is cheaper to buy yen – for every dollar spent, you now get 20 more yen than a few months ago.
This is great news for Japanese exporters, because their products are now 20% cheaper merely because of an exchange rate change. But the flip side of this is that Japan is exporting its deflation problem (which has persisted for over 20 years now), by forcing its competitors to lower their prices by 20%. This is a real problem for American and European manufacturers, who can’t afford such a hit to their revenue, but it is devastating for the Chinese export machine, since “Made in China” is the mainstay of the Chinese economy. China can quietly or not so quietly protest to the Japanese government, but much more likely, China can allow its currency to devalue in order to restore its competitiveness. This is how currency wars start, and currency wars have been the most frequent source of global financial crises in the past 30 years.
Japan will be under terrific pressure to halt the slide in its currency – but here’s the nub of the problem: Japan is out of tools to defend itself financially.
(originally posted Oct 31)
This week the Federal Reserve put an end to their fourth round of Quantitative Easing, having exploded their balance sheet from $800 billion at the start of QE, to over $3 trillion today. Everyone thought that the financial markets would now have to live without the monetary dope that has been fueling euphoria in stock markets in the U.S. and elsewhere. Everyone was wrong. In a completely unexpected move, the Bank of Japan announced it was expanding its Quantitative Easing program from 70 trillion yen to 80 trillion yen, bringing its monetary base to the equivalent of $750 billion. The purpose of all this liquidity? The Bank of Japan is desperately trying to achieve its target of 2% price inflation. Read More
The Baffler, By Daniel Brook, Baffler No. 25 (October? November?)
In a speech to the financial elite of India delivered in Mumbai in 2010, president Barack Obama opted for an unusual form of flattery. He saluted “all the Mumbaikars who get up every day in this City of Dreams to forge a better life for their children—from the boardrooms of world-class Indian companies to the shops in the winding alleys of Dharavi.” It was a notable name-check. Despite the president’s mangled pronunciation, his audience of well-heeled Mumbaikars all knew what Obama was talking about. Dharavi is their metropolis’s most famous slum.
Were Indian prime minister Narendra Modi to come to America and do the same—hail the impoverished workfare mothers of Anacostia while on a state visit to Washington, say, or give a shout-out to the tenants of Harlem’s housing projects during a speech on Wall Street—it would be an uncomfortable moment. But, of course, it would never happen. If Modi’s speechwriters tried to throw in a mention of a famous impoverished neighborhood, higher-ups would surely excise it. The American myth of equal opportunity is greatly cherished, they would inform the prime minister, so in the interest of being a gracious guest, let’s not mention the places that call it into question.
But Obama’s tribute to Dharavi went over remarkably well. Those present at the tony U.S.-India Business Council summit seem to have taken it as the compliment he intended it to be. By the time the president sang the praises of Asia’s largest slum, as it’s known (although these days Karachi’s Orangi neighborhood is challenging it for that dubious distinction), the ideological precedent for this sort of thing was well established. Through a decade of academic apologetics and media mythologizing, Dharavi had been transmuted from India’s most shameful urban space—the warren of exploitation, filth, and disease that it plainly is—to the pride of Mumbai. Prince Charles had visited Dharavi on a postcolonial inspection tour in 2003. (Prince Andrew would follow in 2012.) A cover story in National Geographic had presented Dharavi as a place of audacious dreamers. The Wall Street Journal had recommended Dharavi’s “dusty, bustling” leather goods market to “adventurous shoppers in search of true bargains,” and the New York Times had advised visitors to the Indian financial capital to take in Dharavi’s “hives of entrepreneurship,” where toil the “majority of Mumbaikars [who], of course, cannot afford nightclubs or cool boutiques.” By 2010 Dharavi was a well-established symbol, and what it symbolized was the capitalist dream: a wonderland of innovation in which resourceful economic actors deftly evade the interference of an overbearing government.
Before long, the idea of the market-affirming slum went global. Shantytowns all over the developing world were reconceived as industrious anthills of pluck and ingenuity, places that showed capitalism at its best. It was a stunning feat of intellectual alchemy, like a pundit using Soweto as an illustration of the wisdom of apartheid.
It caught on because it tapped into one of the most durable fantasies of the business culture—the notion that the poor make better, tougher capitalists than the rich. Durable because it delivers what all such fantasies aim to deliver: a balm for the middle-class conscience and the conviction that the poor enthusiastically support the system that keeps them poor.
Conservatively, 600,000 people per 530 acres. That’s 1132 people / acre, or 4.28 sq yards / person. Roomy, considering there could be 1,000,000 people there, yielding only 2.57 sq yards / person. I don’t want to hear any complaints, Tokyo!
A trove of secret documents details the US government’s global push for shale gas.
Mother Jones, By Mariah Blake, September/October ’14
One icy morning in February 2012, Hillary Clinton’s plane touched down in the Bulgarian capital, Sofia, which was just digging out from a fierce blizzard. Wrapped in a thick coat, the secretary of state descended the stairs to the snow-covered tarmac, where she and her aides piled into a motorcade bound for the presidential palace. That afternoon, they huddled with Bulgarian leaders, including Prime Minister Boyko Borissov, discussing everything from Syria’s bloody civil war to their joint search for loose nukes. But the focus of the talks was fracking. The previous year, Bulgaria had signed a five-year, $68 million deal, granting US oil giant Chevron millions of acres in shale gas concessions. Bulgarians were outraged. Shortly before Clinton arrived, tens of thousands of protesters poured into the streets carrying placards that read “Stop fracking with our water” and “Chevron go home.” Bulgaria’s parliament responded by voting overwhelmingly for a fracking moratorium. Read More
Why abandon K-Street, and acknowledge, then reject, the Big Business perception of the GOP? They’ve had the Republican Party’s back for some time, right? In the past, the largest companies favored one party over the other because they understood a pro-capitalist, low-regulation government benefits them.
However, in recent years, especially since the 2007-2008 recession, many have turned to viewing government as a revenue source, a competition crusher, an error-eraser, and a partner in padding their bottom line. Their interest in cheap labor, bailouts, and selectively-favorable legislation has led to a flood of dollars into the Democrat Party, or into political action committees (PACs) that attempt to move Republican congressional votes away from their bases’ expectations, like the U.S. Chamber of Commerce’s push for amnesty. Meanwhile, a mix of bad deals and worse legislation left taxpayers and shareholders on the hook for trillions, millions lost their homes and jobs, and the senators and corporate heads responsible are laughing all the way to the bailed-out bank.
The Bitter Truth Behind the Gospel of Productivity
VQR, By Esther Kaplan, Summer 2014
When Lisa Norris was a kid in Cookeville, Tennessee, her father worked at Acme Boots, and that plant and her childhood were intertwined. One of her earliest memories is of wandering around the factory among bins of leather, breathing in the smell of the well-oiled wood floors. Then the boot plant went to Mexico and her dad landed at Wrangler, which makes jeans, and then Red Kap, which makes workwear, and rarely ever again did he stay at a job for more than eighteen months. Each time, the plant would downsize or shutter, the jobs would cross the border, and he’d have to start all over again.
Norris spent her teenage years doing 4-H and helping out at her grandfather’s hardware store. She also went to five different high schools as her father chased work. This experience is why, in her early thirties, after several years doing human resources in the auto and defense industries, she started her own consulting firm dedicated to helping plants implement lean manufacturing principles and union avoidance, in an effort to save jobs in central Tennessee. “In all of my eleven years I never had a plant that left the area that I was involved with,” she told me proudly. “I was able to say nothing’s ever left. Nothing’s left the building.”
In late 2008, she got a call from Dave Uhrik, a veteran operations manager she deeply admired, who broke the news that he’d been hired on to manage a plant near Sparta, just down the road from where Norris grew up. The large factory produced commercial lighting fixtures and had recently been acquired by Philips, the $39 billion Dutch multinational best known for its vast array of consumer products, from light bulbs to electric toothbrushes to television sets. It took Norris “exactly twenty-seven minutes” to decide that she was going to sell her business and join what Uhrik pitched as “the dream team.” It was barely half the pay, but it was a chance to put all of her ideas into practice, to be part of “the best of the best,” a model for what was possible in American manufacturing. “It was like, Oh, my goodness, we could do great things!”
The humming Sparta plant had it all. For one thing, the town is within a day’s haul of most US markets—from New York and Chicago to Atlanta, St. Louis, and Dallas. Tennessee has decent, well-maintained highways. The plant was union—a new experience for Norris—but this IBEW local was steely-eyed about keeping and creating jobs; it had, for example, accepted a two-tier pay scale and surrendered contract protections in order to attract a highly automated production line from New Jersey. The press for that new line, known as a Bliss, was nearly three stories high (so big it had to be anchored twenty feet underground) and could stamp out eight or ten massive commercial fluorescent fixtures every minute. It attracted lucrative contracts from hospitals, prisons, grocery-store chains, and Walmart supercenters. Norris called it “a monument.” Brent Hall, the union rep, described it as a beating heart. “Every time that press rolled over,” he said, “the whole building would shake.”
You must go, now, and read a critically important piece questioning the logic of sending American manufacturing jobs offshore. It’s titled Losing Sparta (hat tip Dikaios Logos) by Ester Kaplan in VQR. We have written regularly about how we have been repeatedly told by managers and executives that the case for offshoring was often not compelling, particularly when risks, such as higher financing and shipping costs, exposure to foreign exchange losses, and inventory risk were included. This makes perfect sense when you consider that for most manufactured goods, factory labor is a mere 10-15% of total wholesale cost, and any savings in factory labor will be offset by higher shipping and greater managerial costs (more coordination, performed by much more highly paid workers). It is thus more accurate to regard a lot of offshoring as not being about cost savings, but a transfer from ordinary workers to managers and executives.
The TPP currently comprises 12 countries, including Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.
The discussions between trade officials are taking place in Ottawa from July 3 to 12. Federal ministers are not participating in the talks.
“No ministerial meeting will occur on the margin of the officials’ meeting in Ottawa,” said Claude Rochon, a spokesman for the department of Foreign Affairs. “This is a working-level technical meeting, held by the TPP negotiating leads and a small number of focused working groups, that meet as required to continue to advance negotiations.”
I was talking the other day about how people select their facts and their beliefs, how they use (or don’t use) science. I referred Dr. Strangelove and President Muffley’s line when he learns about the Soviet’s automatic doomsday device, “This is absolute madness. Why should you build such a thing?”
The name of the New Yorker article this comes from is Almost Everything in ‘Dr. Strangelove’ Was True. It is an entertaining article and informative when describing the actual Cold War mechanics used to constrain the use of nuclear weapons and weaponeers, and how Kubrick decided to portray it all. As a film maker, he was trying to convey his perceived “truth” through the channel of dramatic, commercial art. I am a little unsure of the word ‘truth’ here, but I will let it suffice for now.
I said it wasn’t obvious to me how science offered much help exploring Muffley’s question. Science is useful for splitting atoms, but not as useful for explaining the desire to split them. Science helps us ascertain certain kinds of ‘facts’ and principles from which they are derived and demonstrated. Social science is philosophically and experimentally more challenged.
I am wandering again, but I am trying to head North. Bear with me.
As I remember the film, Kubrick used his artistic sense to convey how the threat of self-imposed nuclear suicide–Mutual Assured Destruction– was a Gordian knot only the insane could accept. And yet we did. We had all the necessary science to show us how many die, how many live, the probabilities associated with pulling the trigger. We had the fear calibrated in megatons. The counter-intuitive logic of holding a gun to our own head as well as one upon the head of an equally equipped enemy using the precisely the same strategy—it is hilarious and terrifying. Some claim it is the thing that has preserved us all since World War Two. Others claim (as the movie suggests) MAD comtemplates everything but the Black Swan–the slip-up, the miscue, the failsafe that fails unsafely. Or the O-rings that froze before launch. Or the tsunami that peaked higher than the seawalls.
But what’s ‘true’ about this? Step way,way back and you might say: “Well–it’s human nature. Tsk, tsk. Just another in a long line of human follies. We’ll never learn. We oughta know better.”
Is that a fact? Is it so self-evident that we all accept it anyway, so what’s new? Is it just an amusing observation after all? Is it useful as some sort of cultural or spiritual reminder? I mean like the mother constantly reminding the kids “Don’t run with scissors!”—only funnier?
There are certainly interesting moments in the movie that you can appreciate without accepting a particular slant on human nature. I don’t even know what Kubrick’s real worldview was. Whatever it was, he could certainly make me laugh the laugh of absurdity.
What I believe about what Kubrick believes isn’t really very important. Oh sure, I can entertain myself trying to ferret out what he believes and why, but that seems less important than what I walk away with after seeing movie. It is useful to me. I selected it, I judged it, it provides an satisfying model of the human predicament. It isn’t science, nor is it perfect, but it is believable in its own way.
I am going to pivot now to another movie. I ran across it the other day by accident. I had been reading at other sites about TISA–the Trade In Services Agreement which is being negotiated among several nations but without transparency to the media or even to elected bodies of national governments. It is controversial for that reason. It is “secret” to the extent that most elected officials cannot preview or participate in the negotiations which will promulgate it. I’d like to tell you more about it, but I can’t. WikiLeaks says its nominal purpose is to simplify cross-border financial data flow, but will likely open the door to expanded snooping and undercut any sort of sovereign control over the transparency of the transactions.
I was interested in the topic because it was provoking a vocal resistance not unlike that which NAFTA provoked. I found the linked documentary online and watched it.
The documentary is Canadian and focuses (refreshingly) on Canada instead of America. It is not made for entertainment. It is made to present a point of view, but– true to its gracious Canadian civility– devotes a lot of interview time to Canadian authorities who were involved in the evolution of international trade agreements. It gives them ample space to present their case. It also presents Prof. Herbert Gruber of Simon Fraser University who, in 1999, wrote a scholarly paper proposing the concept of a North American currency–the “Amero” modeled after the Euro and the European Union. It also samples “man on the street” reactions in Mexico, the US and Canada and ‘conspiracy theorists’ and ordinary grassroots organizers.
It’s long (about 2 hrs), but it offers some literate insights into the processes that drive these agreements. It is tempting to buy into the right-vs-wrong analysis of the film. I think that was the filmaker’s intention, but I think there is a bigger take-way to be had.
For me? I am forced to wonder whether a social science (economics) is really rational? Can we honestly expect, as Gruber declares (about 25 minutes-54 seconds into the film), that economics is beneficial engine of regional and global community (borders be damned), but national politics has a role. Its duty is to appoint representatives to determine daily policies that manage “price stability”, but not to meddle with central banking?
So, in a nutshell, is this film factual or factoidal?
Is Dr. Stangelove more informative?
Is there an elite 1% vs a 99%?
If there is a 1%, do we owe them the benign neglect they seem to think they deserve?
1) a brief or trivial item of news or information.
2) an assumption or speculation that is reported and repeated so often that it becomes accepted as fact.