Thursday, June 30, 2016

Glenn Greenwald — Major New Brazil Events Expose the Fraud of Dilma’s Impeachment — and Temer’s Corruption

From the start of the campaign to impeach Brazil’s democratically elected President Dilma Rousseff, the primary justification was that she used a budget trick known as pedaladas (“peddling”: illegal delay of re-payments to state banks) to mask public debt. But this week, as the Senate conducts her impeachment trial, that accusation was obliterated: The Senate’s own expert report concluded there was “no indication of direct or indirect action by Dilma” in any such budgetary maneuvers. As the Associated Press put it: “Independent auditors hired by Brazil’s Senate said in a report released Monday that suspended President Dilma Rousseff didn’t engage in the creative accounting she was charged with at her impeachment trial.” In other words, the Senate’s own objective experts gutted the primary claim as to why impeachment was something other than a coup.…
But so obviously, impeachment was never about any alleged lawbreaking by Dilma — that was just the excuse to remove a democratically elected president for ideological reasons — which is why the destruction of the primary legal charge against her has barely dented the impeachment momentum. Even the vehemently anti-Dilma paper Estadão documented how leading impeachment advocates this week instantly shifted their rationale: from claiming that pedaladas requires her impeachment to proclaiming that it was never actually important in the first place. Those are the actions of people devoted to an end without caring about the justification: They are determined to impeach Dilma for ideological reasons, so the destruction of the legal case against her makes no difference.…
Even more significant is the growing evidence of the full-scale corruption of Dilma’s installed replacement, Michel Temer. In just over 30 days since his installation, Temer lost three of his chosen ministers to corruption. One of them, his extremely close ally Romero Jucá, was caught on tape plotting Dilma’s impeachment as a way to shut down the ongoing corruption investigation, as well as indicating that Brazil’s military, the media, and the courts were all participants in the impeachment plotting.
A key investigation informant, former senator and construction executive Sérgio Machado, has now said that Temer received and controlled 1.5 million reals in illegal campaign funds, while a separate informant last week said Temer was the “beneficiary” of 1 million reals in bribes. And Temer is now banned by a court order from running for any office for eight years due to his own violation of election laws. Remember: This is who, in the name of fighting “corruption,” Brazil’s elites installed in the place of the elected president.
Meanwhile, Temer’s political party, PMDB, is almost certainly the most corrupt in this hemisphere. Its president of the lower House, Eduardo Cunha — who presided over Dilma’s impeachment — is now suspended by the Supreme Court, and the House’s Ethics Commission just voted to expel him entirely because he lied about bribe-filled Swiss bank accounts he controls. The same construction executive, Machado, testified that three of PMBD’s key leaders — including Jucá — were paid a total of 71.1 million reals in bribes. Meanwhile, two key Temer allies from the center-right PSDB that Dilma defeated in 2014 — Temer’s Foreign Minister José Serra and Dilma’s 2014 opponent Aécio Neves — are now both targets of the corruption investigation.…
Just think about what has happened when it comes to control over the world’s fifth most populous (and very oil-rich) country. The democratically elected president was impeached despite no allegations of personal corruption — by politicians who are knee-deep in bribery and kickback scandals. The primary pretext used to impeach her has just been debunked by the Senate’s own independent expert report. The corruption-plagued man they installed in her place — who currently has a 70 percent disapproval rating, and whom 60 percent of the country wants impeached — is now secretly meeting with the very judges whose supposed independence, credibility, and integrity were the prime argument against calling this a “coup,” all while he plots to save his bribery-enriched fellow party member. And while all this happens, they are blithely proceeding to impose a right-wing agenda of austerity and privatization that democracy would never allow.,,,
And these are "our" (US) guys. Yes, they are all men. The women were either fired or resigned.

The Intercept

Alexander Mercouris — Putin’s Grand Strategy: The Greater Eurasia Project

One of the most sterile debates that goes on in certain sections of the Anglophone media is on whether Putin is a strategist or just a tactician. There are any number of articles that debate the question with the answer usually given that he is just a tactician.
The correct answer to the question is that Putin or more correctly the Russian leadership most definitely do have a strategy, though the Anglophone media commentators who debate the question can be forgiven for always giving the wrong answer because – as their articles all too clearly show – they haven’t the least idea of what this strategy actually is. This is very surprising because Putin has explained it on many occasions.
With large numbers of Europeans in the audience at SPIEF 2016 he took the opportunity to do so again, emphasising this time the key role Europe – and specifically the European Union – plays in it….
The Duran
Putin’s Grand Strategy: The Greater Eurasia Project

John Helmer on European Court "justice"

Melchior Wathelet (lead image, left), the Advocate-General of the European Court in Luxembourg, publicly recommended on May 31 that the court should dismiss a challenge to the legality of European Union sanctions by the Russian state oil company Rosneft. Wathelet has a history of secret operations against Moscow. That history ought to have disqualified Wathelet from participating in the Rosneft case, lawyers at the court say.
“He should have done so voluntarily,” one of the lawyers adds. “Instead, Wathelet, along with the Belgian President of the Court, Koen Lenaerts, have kept the past secret, allowing a serious conflict of interest to influence the outcome of the case.”
As the minister of justice in his native Belgium, Wathelet supervised the Belgian state security service, and officially participated himself over several years in NATO spying, military operations and propaganda schemes against Russia and the Soviet Union.
Details of Wathelet’s involvement in NATO’s Operation Gladio were not known to Rosneft when Wathelet was assigned to the case. Rosneft’s Anglo-American law firm did not investigate Wathelet’s bacckgournd. Also, the law firm, Hage Joseph Aaronson, has kept from Rosneft the knowledge that one of their own lawyers was a long-serving officer in the US Defence Intelligence Agency.
Lawyers engaged in European Court cases in Luxembourg say they are astonished by the conflict of interest. “This case is hugely important,” said one source engaged in a parallel sanctions proceeding. “If Rosneft were to win, the legality of sanctions would collapse”. A London lawyer adds he is surprised that Rosneft management and its lawyers in Luxembourg failed to challenge Wathelet’s participation in the case.

Wathelet is not denying the information about his past involvement in NATO operations. He won’t explain why he and the presiding judge, Court President Koen Lenaerts, acted together to arrange his assessment of the Rosneft legal papers.…
It gets worse:
Wathelet was forced out of the Belgian government in 1995. His exit followed charges of interference from the justice ministry in the faulty prosecution and early release from prison of members of a pedophile ring; they has been convicted of pandering to the sexual tastes of high Belgian officials. Wathelet was also accused of involvement in the ring himself, but no allegations came to court, and Wathelet has not been charged with wrongdoing. The challenge by the European parliament to his fitness as a European Court judge failed in 1997; read more.

Before the pedophile scandal led to Wathelet’s outing from Belgium and his promotion to the bench in Luxembourg, his involvement in Operation Gladio also came under official scrutiny by the Belgian senate in 1991. The Belgian investigation was triggered by disclosures in France and Italy, indicating that the US and British secret services had set up a NATO operation for recruiting, arming, training and operating groups of men in the NATO member states. Their mission to start with, according to the Belgium senate record, was to “stay behind” after invasion, and prepare resistance to occupation by enemy forces. Although Belgium has twice been occupied by German troops, and then by the British and American armies, the only enemy in the Gladio plan was to come from Moscow.

In practice, Gladio agents and their commanders were fanatical ideologues, German collaborators, haters of both Russia and communism, who organized violence against domestic left-wing organizations, as well as terrorist attacks against the general population. The Brabant killings in Belgium, which occurred between 1983 and 1985, have never been solved, but some investigations have believed Gladio operatives were involved.For details, click.…
Helmer's post are generally longish and detailed, as this one is. Reading through it, one would conclude that the European enterprise is hopelessly compromised and "fixed." It should be completely dismantled. If internationalists wish to pursue it, they should start afresh, disqualifying all present participants and thoroughly vetting all new participants in an atmosphere of complete transparency to regain credibility.

Dances with Bears
Melchior Wathelet, The Gladio – Advocate-General Of European Court In Rosneft Sanctions Case Worked With Secret Nato Spy And Terror Ring Against Russia; Rosneft Lawyers In Sanctions Case Include Us SpyJohn Helmer

Alejandro Reuss — An Historical Perspective on Brexit

Capitalist Internationalism, Reactionary Nationalism, and Socialist Internationalism
[Karl] Kautsky saw ultra-imperialism as a possible result of capitalism’s tendency toward international economic integration, along with the ruling classes’ conscious desire to avoid future ruinous conflicts…
Leading figures in Western Europe’s mainstream social democratic parties embraced European political and economic integration as a way to avert a replay of the disasters of the first half of the 20th century. (Some were, surely, also motivated by the aim of strengthening Western Europe vis-a-vis the United States. And some had dreams for a united Europe that were genuinely social democratic—though not anti-capitalist.) In the most recent period, the “Third Way” figures who came to dominate the mainstream social democratic parties (like “New Labour” in the U.K.) signed on to the neoliberal project and to the selling of it as a triumph of globalism and cosmopolitanism over nationalism and parochialism. Now that this corporate-dominated and finance-dominated globalization has fallen into a disastrous crisis, a nationalist revanchism—embodied in nativist and “economic nationalist” movements—is capturing the backlash….
There needs to be a radical left alternative that rejects nationalism and racism, that rejects the false equation of capitalist globalization with internationalism, and that fights for a new internationalism founded in workers’ solidarity.
Triple Crisis
An Historical Perspective on Brexit
Alejandro Reuss | Instructor at the Labor Relations and Research Center, UMass-Amherst.

Gavin Kennedy — Jeffrey Madrick's Quite Wrong Account Of Adam Smith

Oh, and incidently, Adam Smith never mentioned ‘laissez-faire” in his entire writings.
Adam Smith's Lost Legacy
Gavin Kennedy | Professor Emeritus, Heriot Watt University

Elizabeth Warren Hits the Campaign Trail With Hillary Clinton in Ohio—Embarrasses Herself

This is sick, just watch it and you will see, Elizabeth Warren backs the war bitch, Hilary Clinton. Elizabeth Warren had done a one 180 degree turn and trashed everything she has every believed in. Maybe she thinks she will get the vice presidency, but that's unlikely as Wall Street hates her. How could she be so stupid?

The Humanist Report:

This article also looks at how the bankruptcy laws were changed in the US so that it became more difficult for people to claim bankruptcy, therefore turning unlucky people into virtual slaves.

Some people borrow from rich people, or from bankers who invent the money out of thin air, but then it goes wrong for them and they end up with compound interest greatly increasing the value of the loan. Eventually they realize that they will never be able to pay off the loan, only the interest. Then for the rest of their lives they will be paying interest sometimes worth multiple times what the original loan was worth. Which means it is possible that over the course of their  lifetime they may in effect pay off the loan hundreds of times over but with the principle is still left in place. This isn't fair. A rich person can end up with hundreds, and maybe millions, of debt slaves this way.

Maybe the law needs changing that once you have paid twice in interest what the original loan was worth the debt is cancelled. But the ' free market' would just greatly increase the cost of borrowing money as the bankers would push up the price of loans to get their profits back.

Pastor Sheldon Emry in his book, Billions for the Bankers, Debt for the People: the Real Story of the Money-Control over America, says that state banks should issue loans without any interest at all. So if you were to borrow £100,000 for a house, you would only need to pay back £100,000  - although slowly over the over the lifetime of the mortgage. (There will have to be a surcharge to pay for administrative costs, maybe added to the loan).

And so in the  system we presently have there are very rich people who have lots of power because of their wealth, with millions of  powerless poor people who are desperate for a loan. They might need a loan to buy a car so they can get work, or they may need it to buy a house, as everyone needs somewhere nice to live, or they may need to pay for a child's healthcare, or their own healthcare, if they live in the US, that beastly place.  But if the free market can't supply inexpensive loans then citizens have every right to vote in a government that will create publicly owned banks that will.

"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." —Thomas Jefferson

Only government has the immensely powerful tool of fiat money creation, and this is why libertarians hate fiat money so much. Yet libertarians always talk about freedom, and say that this is central to their belief, but cheap government fiat money truly sets people free.  

Timothy Taylor — Corporate Boards: Stop Expecting the Impossible?

Are corporate boards adequately representing and managing shareholder interests? Apparently not.

Convertible Economist
Corporate Boards: Stop Expecting the Impossible?
Timothy Taylor | Managing editor of the Journal of Economic Perspectives, based at Macalester College in St. Paul, Minnesota

James Kwak — Mysteries of Money

James Kwak on Christine Desan's Making Money. Useful summary of debt and chartal (state) money, both of which are legally based although the use of debt grew out of custom. Chartal money is the liability (debt) of the sovereign that the sovereign accepts in payment of liabilities (debt) owed to the sovereign. Christine Desan is a law professor.
To paraphrase Desan, at the same time that the English political system invented the modern monetary system, liberal theorists like Locke obscured it behind a simplistic fetishization of gold. The fable that money was simply transmutated gold went hand in hand with the fable that the economy was simply a neutral market populated by households and firms seeking material gain. This primacy of the economic over the political—the idea that government policy should simply set the conditions for the operation of private interests—is, of course, one of the central pillars of the capitalist ethos. Among other things, it justified the practice of allowing private banks to make profits by selling liquidity to individuals (that’s what happens when you deposit money at a low or zero interest rate)—a privilege that once belonged to sovereign governments.
Making Money is the most fascinating book about anything, let alone money, I’ve read in a while—thought-provoking like David Graeber’s Debt, but firmly grounded in the minutiae of English history. In these times when everyone from gold bugs (like Ted Cruz, let’s not forget) to Bitcoin enthusiasts is calling for a redefinition of money, it reminds us what a complicated and politically determined thing money always has been.
Liberal economics (capitalism) is based on a hoax spun from just-so stories.

Baseline Scenario
Mysteries of Money
James Kwak

Beverly Mann — Clinton’s figured out how to ensure her victory: Threaten Sanders that if he doesn’t endorse her, pronto, she’ll begin campaigning as a triangular.

Depends on who has leverage on this issue. If Clinton triangulates like Bill, she risks losing so much of the progressive base that she can't win a general election. The first rule is to secure one's base. HRC has not done that and, in fact, has alienated a good part of it. I'm not sure that Bernie endorsing HRC would fix that. At least some of the progressive base would likely see that as a betrayal.

Angry Bear
Clinton’s figured out how to ensure her victory: Threaten Sanders that if he doesn’t endorse her, pronto, she’ll begin campaigning as a triangular.
Beverly Mann

Wednesday, June 29, 2016

Lars P. Syll — Mainstream economics — a pointless waste of time

Be sure to read the comment by Asad Zaman also. Zaman argues that conventional economics is not merely a pointless waste of time but designed for a purpose and to make very explicit points about it. This is not ignorance but deception and part of class warfare.
My view is that economics does perfectly what it is designed to do. It is a MISTAKE to think that conventional economic theory is WRONG. In order to make progress, it is essential to understand the function of economic theories.
1. Every economic policy hurts some groups and helps others
2. No group has sufficient POWER to ENFORCE policies favorable to them.
3. Groups with power MUST somehow create consent among a majority to enact policies favorable to them. If they do not do so, then policies against their interests will be enacted in a democracy.
4. People judge policies according to their THEORETICAL IMPACT, since no one can actually foresee the future. This means that policies are not evaluated as good or bad according to reality, but according to how widely accepted theories predict their impact (for a vivid example, consider BREXIT)
5. Thus the elite, the top 1%, are faced with the necessity of creating theories which show that policies which favor their interests are actually benefical for all, or for a majority.
 [6.?] Let us a label a theory to be ET1% — an Economic Theory of the top 1% — if it shows a policy to be favorable for the majority, when in fact the policy actually favors the top 1%.
7. Now if we consider conventional economic theory, it is easy to show that nearly all of it is ET1% — it is DESIGNED to prove that policies which favor the top 1% are beneficial for all. 
NOW LET US consider dominant economic theories and models in the light of this analysis.…
Real-World Economics Review Blog
Mainstream economics — a pointless waste of time
Lars P. Syll | Professor, Malmo University

Pat Lang — The MSM in the US are actually an arm of the Clinton campaign.

Globalists versus nationalists. Media on side of globalists. Didn't help the Remain folks though.

Sic Semper Tyrannis
The MSM in the US are actually an arm of the Clinton campaign.
Col. W. Patrick Lang, US Army (ret.), former military intelligence officer at the US Defense Intelligence Agency

Matt Stoller — How the US Saw Multinationals as a Means to Prevent War

Must-see if you haven't already.
Yves — This Twitterstorm helps explain why US policy has been so keen to promote “free trade” and make the world safe for multinationals.
I would add liberal internationalism, liberal interventionism, and neoconservatism along with neoliberalism (liberalization, deregulation, privatization), neo-imperialism, and neocolonialism, as the basis of liberal globalization.

This is a strategy based on a policy, which is grounded in an ideology including a values system and social, political and economic interests.

It is a mixture of idealism — "bearing the white man's burden" — and realism — there is huge amount of status, power and wealth on the table. The West is here to help — at a cost. That cost is transnational corporatism and the elimination of national sovereignty as the basis of nationalism, and democracy to the degree that it enables "the rule of the rabble." After all, elites know best what is good for all, and that is summarized as "a rising tide lifts all boats."

Russian UN Rep — Ukrainian Advance in Donbass May Be Considered an Offensive

Ominous sign. Ukraine is heating up again.

For Russ
Russian UN Rep: Ukrainian Advance in Donbass May Be Considered an Offensive
Russian RT
Translated from Russian by Kristina Kharlova



Some time ago after it appeared that the UAF was beefing up in the eastern region and the Right Sector volunteers were becoming more active, the insurgent leader warned Poroshenko that this time it would be different. The insurgents would not only kick ass again but come after him and the whole of them.  

Luigi Zingales — The Real Lesson From Brexit

One of the most important–and least discussed–aspects of the vote for Brexit has been the failure of most pollsters and newspapers to predict and understand the reasons for Brexit. Even the betting market, generally much more reliable, got it wrong. This phenomenon is not unique to Brexit. Most pundits and pollsters missed the importance of Trump. Why?

What we have observed in Britain and what we are observing in the U.S. with Trump is a growing mistrust of voters toward experts. In the Brexit debate it was hard to find any economist justifying a departure from the European Union. In fact, many were willing to make forecasts so pessimistic as to be accused of scaremongering. Not only did these forecasts fail to rally the vote for Remain, they probably contributed to the victory of Leave.

In the Financial Times Chris Giles lamented this phenomenon as an example of voters’ irrationality. I fear this has nothing to do with irrationality, but has everything to do with mistrust; a mistrust that, while exaggerated, has a very rational basis: the disconnect between the intellectual elite and the population at large–the very disconnect that caused pollsters, betters, and journalists to miss the mounting Brexit wave.…

ProMarket — The blog of the Stigler Center at the University of Chicago Booth School of Business
The Real Lesson From Brexit
Luigi Zingales | Robert C. McCormack Professor of Entrepreneurship and Finance at University of Chicago Booth School of Business
ht Mark Thoma at Economist's View

WTF??? Osborne says tax hikes and spending cuts needed to "offset the shock" of Brexit! !@#$%^&

I'm not even going to say, "Can you believe this?" because, how many times have we seen these morons fuck themselves? Over and over and over.

Tax rises and spending cuts will be needed to deal with the "shock" to the UK economy caused by leaving the EU, Chancellor George Osborne has said. Read more.

There you go. Complete moron.

The only hope is, that the next Prime Minister won't listen to him, but that's a low probability because it'll likely be one of the conservatives and they're all over the "fiscal responsibility" bullshit.

The whole Brexit thing for them was about immigration.

Geoffrey Hodgson — Why We Need Adam Smith and Charles Darwin to Fix the Global Economy

Adam Smith is said to be the founder of modern economics.[1] Yet, contrary to a widespread view, Smith regarded individuals as driven by moral motives as well as self-interest. This is most clear in his Theory of Moral Sentiments, but ideas of justice and morality also pervade his Wealth of Nations.[2]
It took economics a while to get rid of this argument. In two classic works published in 1871, William Stanley Jevons and Carl Menger placed individual self-interest at the foundation of economics. Three years later, Léon Walras built neoclassical general equilibrium analysis upon a similar assumption. For the next 100 years or more, self-interested, utility-maximizing, “economic man” was the centerpiece of mainstream economic theory.
But also in 1871, Darwin published his Descent of Man, with its evolutionary explanation of cooperative solidarity and morality, which took over one hundred years to be confirmed broadly by theoretical and empirical research. In that same year, Darwin had provided an evolutionary vindication of Smith’s view of human motivation. But it was ignored by most economists.
It is one of the great ironies of history that portraits of Smith and Darwin appear respectively on £10 and £20 banknotes in the UK. I do not think that these designs were intended to remind us that moral and evolutionary considerations are central to our understanding of a money-driven economy. But they are.…
When morality is ignored as not being substantive, then the result is that morality is equated with legality, so that if it is legal it is moral. Powerful elites then use their power and influence to shape the law so that what society regards as being immoral or unethical is made legal and there is not penalty involved in acting immorally or illegally. Elites are famously shameless, so that reputational stricture does not apply to them or restrain their behavior.

Why We Need Adam Smith and Charles Darwin to Fix the Global Economy
Geoffrey Hodgson | research professor at Hertfordshire Business School, University of Hertfordshire, England

Deirdre Fulton — Trump Just Drove a Truck Through Hole DNC Platform Panel Left in Clinton's TPP Promise

Laying bare how dangerous it could be for Democrats to ignore populist opposition to corporate-friendly "free trade" deals, Republican presidential nominee Donald Trump on Tuesday attacked Hillary Clinton for her stance on trade in general and the Trans Pacific Partnership (TPP) in particular.
Speaking in Monessen, Pennsylvania, Trump said the "TPP would be the death blow for American manufacturing" and vowed to "withdraw" the U.S. from the agreement.
He said Clinton took "a leading part" in drafting the 12-nation deal, noting that the former secretary of state "praised or pushed the TPP on 45 separate occasions, and even called it the 'gold standard,'" according to prepared remarks.

"Hillary Clinton was totally for the TPP just a short while ago, but when she saw my stance, which is totally against, she was shamed into saying she would be against it too," he said. "But have no doubt, she will immediately approve it if it is put before her, guaranteed. She will do this just as she has betrayed American workers for Wall Street throughout her career."
With this claim, MSNBC reporter Alex Seitz-Wald wrote on Twitter, Trump appeared to be "speaking directly to [Bernie] Sanders supporters." Sanders has made opposition to the TPP and other rights-trampling deals a cornerstone of his campaign.

Trump also said he would renegotiate the North American Free Trade Agreement (NAFTA)—and placed partial blame for that deal also at Clinton's feet. "It was Bill Clinton who signed NAFTA in 1993, and Hillary Clinton who supported it," he said.
Common Dreams
Trump Just Drove a Truck Through Hole DNC Platform Panel Left in Clinton's TPP Promise
Deirdre Fulton, staff writer
ht Don Quijones at Raging Bull-Shit

Barkley Rosser — Details-Schmetails!: Brexit And Uncertainty

An FB friend of mine skeptical that Brexit will have much of a negative economic impact has put up a post entitled "Brexit-Schmexit!" To this I say, "Details-Schmetails!" because the widely varying possible impacts of details of that exit have induced a massive increase in uncertainty over the future around much of the world that itself can cause considerable economic harm. Just for the US alone, Jim Hamilton atEconbrowser documents the sharpest increase in measured policy uncertainty since the debt ceiling crisis of 2013 (also linked to by Mark Thoma at Economists View), and this is the leading complaint by most EU leaders against the plan by David Cameron (and Boris Johnson too apparently, as well as many in the UK hoping for an eventual Remain outcome) to delay invoking Article 50 of the Lisbon Treaty that would trigger the two year divorce negotiations, even as I sympathize with those in the UK hoping such a delay might lead to no Brexit at all in the end. The Europeans want the negotiations to start sooner so as to end the uncertainty sooner, which they see as hanging over the heads of their economies and damaging them, which seems a fair point.…
In any case, whether declining foreign direct investment tanking the UK economy has a greater impact than some gain in import competition and exports due to a devaluing pound, it looks from most in the EU that the greatest damage to their economies and the British one, as well as others around the world, will arise from the uncertainty associated with how all this will work itself out and how long it will take. In this regard I agree with the Europeans: whether or not the Brexit vote by the British was wise or not, they must minimize the damage of it to the rest of the world and get out ASAP to reduce all this world economy wrecking uncertainty.
Business and finance hate "uncertainty," by which they mean risk that cannot be measured. This is an issue with policy uncertainty.

Details-Schmetails!: Brexit And Uncertainty
J. Barkley Rosser | Professor of Economics and Business Administration James Madison University

See also

Policy Uncertainty (in America) in the Wake of Brexit
Menzie Chinn

Jim Rogers is the gift that keeps on giving.

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Illustration of a causation not a correlation below:

They simply are not qualified.

Goldman is not a trader. It's a scammer. If they can't scam, they lose.

Goldman Sachs

Everyone knows about the Abacus trade back in 2007-2008, where Goldman scammed some German banks so that John Paulson could make a fortune shorting the subprime market.

Saying this is not conjecture or libel on my part. Goldman ADMITTED to fraud and paid a fine. One of many.

So now it comes to light in a new court case in the U.K. that Goldman scammed the Libyan sovereign wealth fund by putting it into questionable investments. Goldman of course made a fortune in fees on these deals. Check it out:

In a trial at London's High Court, the Libyan Investment Authority (LIA) is trying to claw back $1.2 billion from Goldman Sachs related to nine disputed trades carried out in 2008.
The LIA argues Goldman took advantage of its financial naivety by first gaining its trust, then encouraging it to make risky and ultimately worthless investments. Read more.

This is how Wall Street operates. Their business model is fraud. They can't trade. They are losers if they are not able to scam clients.

Tuesday, June 28, 2016

'Can't barrage the Farage'

A riff on Brexit from the "Can't stump the Trump" guy below:

vox.ue — Fighting ‘currency wars’ with blanks: The limited role of exchange rates in export competitiveness

In the ‘currency wars’ discussion, it is almost taken for granted that exchange rate depreciations will result in non-trivial export gains. Using evidence from countries in Europe and Asia, this column argues instead that factors unrelated to prices/exchange rates often play a predominant role in shaping trade developments. Moreover, these factors affect export outcomes in a very diversified manner across countries, in part because of the interplay of global value chains.
So much for that theory.

Fighting ‘currency wars’ with blanks: The limited role of exchange rates in export competitiveness
Filippo di Mauro, Konstantins Benkovskis, Sante De Pinto, Marco Grazioli

Brian Romanchuk — Another Example Why Bond Investors Ignore Developed Sovereign Credit Ratings

Fitch and Standard & Poor's both downgraded the U.K. to AA (from AAA) this week in response to the Brexit vote ( article). As experienced market watchers would expect, U.K. gilts have been rallying (yields falling), which is not the usual narrative that one hears about ratings actions. This article explains why bond investors treat credit ratings for free-floating developed sovereign governments as sources of entertainment, and not investment guidance.
As I discuss at length in Understanding Government Finance (paperback edition will be published shortly), developed sovereigns with a free-floating government are not at risk of involuntary default; rather the risk is of voluntary repudiation of debt. Although some investors have been slow learners about this reality -- take the parade of JGB shorts -- most government bond investors have accepted this reality.
Although credit ratings are unfortunately worked into bond indices, bank regulations treat the sovereign issuer as special, with a 0% risk weighting, Furthermore, everyone knows that the government cannot be forced to default. This knowledge either comes from something resembling Modern Monetary Theory's analysis of governmental finance operations, or the more primitive "they can just print the money."…
Bond Economics
Another Example Why Bond Investors Ignore Developed Sovereign Credit Ratings
Brian Romanchuk

Peter Lavelle — 5 Questions for Peter Lavelle on Brexit

The Brexit questions and answers that main stream media will never tackle.
Peter Lavelle provides an alternate view.

The Duran
5 Questions for Peter Lavelle on Brexit
Peter Lavelle
Lavelle received a B.A. in International Economic Relations, an M.A. in European history, and completed Ph.D. courses in Studies in European Economic History from the University of California, Davis. He was a Fulbright Research Fellow at the Institute of Political Studies of the Polish Academy of Sciences in Warsaw, Poland.[7] He has been living in Eastern Europe and Russia for over 25 years while working as a lecturer at the University of Warsaw, a market researcher for Colgate-Palmolive, and an investment analyst for brokerage firms, including Russia's Alfa-Bank. Wikipedia

The Saker — Brexit: how the British people have forfeited the confidence of their government (a quick commentary)

To say that the Brexit was a historical event is an understatement, not because of the political or economic consequences of this vote, but because first and foremost it is a loud, painful and most humiliated smack in the collective face of the ruling “elites”which run the AngloZionist Empire. All of them, not just Cameron, Merkel and Obama, but also and most importantly, their puppeteers: the AngloZionist comprador class which administers the EU colony on behalf of the USA. That is not to say that those who voted to leave the EU did that with the intention to make a political statement against the “elites”s, though some undoubtedly did, but because this is how the 1% class of plutocrats which run the Empire will perceive it. For them, this is something like a peasant insurrection, a Jacquerie if you want, and the normal reaction of feudal overlords threatened by their serfs it to put it down, not to negotiate with the serfs or, even less so, “reform” any of their ways.
Over and over again, we have seen that each time the referendums in Europe did not go the Empire’s way, or when the Empire was defeated in its policies (as in Syria, for ex.), the reaction was not to change course or engage in a lessons learned exercise, but to double-down and engage in what the French call “une fuite en avant” (to flee forward). 
And that is what they will do next.…
A military and intelligence analyst looks at Brexit.

The Vineyard of the Saker
Brexit: how the British people have forfeited the confidence of their government (a quick commentary)
The Saker

Bill Black — The Terrible Cost to Democrats and Our Nation of Ignoring Tom Frank’s Warnings

Thomas Frank is a historian and writer. He is also the man who tried to save the Democratic Party and our Nation from great harm. He is the great chronicler of one of the most grievous, self-inflicted wounds in modern American history. Twelve years ago, in What’s the Matter with Kansas? How Conservatives Won the Heart of America, Frank tried to warn the Democratic Party’s dominant elites’ that their policies and contempt for workers were pushing a large part of its base out of the Party. Many of the workers that were the Democratic Party’s traditional base were leaving the Party and failing to participate in elections, but some were supporting the far-right wing of the Republican Party. At the national level, the New Democrats’ candidates remained highly competitive, but the Republican Party was able to attain complete political domination of most states.
This year, Frank renewed his warnings in Listen, Liberal, which explains with characteristic verve, facts, and candor how the “New Democrats” made the New Deal, labor, and the working class their targets for attack and ridicule. The book explains why the New Democrats’ policies, which adopted traditional Republican policies, proved so destructive to labor and the working class.
The New Democrats cannot claim to be shocked that many members of the working class and labor eventually responded to the New Democrats’ contempt and policy betrayals and the terrible harms those policies inflicted upon the working class by increasingly refusing to support such Democratic candidates. Frank’s books show that the contempt of the New Democrats for the New Deal, labor, and the working class was and is palpable.…
New Economic Perspectives
The Terrible Cost to Democrats and Our Nation of Ignoring Tom Frank’s Warnings
William K. Black | Associate Professor of Economics and Law, UMKC

Winterspeak — Brexit and markets

Note that all of this [market madness] has no connection to the UK and EU. Individual countries, particularly those as large as the UK, can survive perfectly well whether they are part of a broader agreement or not. Canada and the US trade is a good model for the UK and the EU.
The economic prospects for the UK depends on how well it can stimulate it's economy, through deficit spending, and return to something closer to full employment. That will probably help make the national mood there more generous as well.
Brexit and markets

Lord Keynes — Demographics of Brexit

Interesting. A value of a referendum is that it displays the demographics on a single issue, which voting for a party in a general election does not. But it is also telling about the parties.

Social Democracy For The 21St Century: A Post Keynesian Perspective
Demographics of Brexit
Lord Keynes

Safe Arnoldsi — What Putin Says and What Putin Does

Putin the IR (international relations) realist. Short and informative.

Fort Russ
What Putin Says and What Putin Does
Jafe Arnoldsi

Jason Furman — Productivity, Inequality, and Economic Rents

Productivity growth—a necessary (though not sufficient) condition for rising incomes in the long run—has slowed since 1973, growing at a 1.8 percent annual rate, as compared to a 2.8 percent annual rate in the 25 years prior to 1973. At the same time, inequality in the United States is higher and, in recent decades, has risen faster than in other major advanced economies. In 2014, the top 1 percent captured 18 percent of income, up from 8 percent in 1973. These two major trends have been the major causes of the slowdown in income growth for the median household.
These dual trends—that is, the slowdown in productivity growth and the increase in inequality in recent decades—have many distinct sources, but insofar as they have some causes in common, there is the potential to address these causes in ways that simultaneously improve efficiency and equity. To this end, the evidence that a rise in rents is contributing to both phenomena is important.… 
Trumpet fanfare.

This is a no brainer. Productivity is broadly a function of investment, and rent extraction is broadly a function of asymmetric market power. Economic rent extracts surplus from the circular flow that would otherwise be directed to consumption or investment, but instead gets saved (hoarded) by those with the power to do so. This results in amplifying social, political and economic asymmetries that distort the functioning of the economy and the society.
The good news is that to the degree that the “rents” interpretation is correct, it suggests that it is possible to reduce inequality and promote productivity growth without hurting efficiency by changing how rents are divided—or even that it is possible to do both while increasingefficiency by acting to reduce rents in the economy. Policies that raise the minimum wage and provide greater support for collective bargaining can help level the playing field for workers in negotiations with employers, in turn changing the way that rents are divided. Measures that would rationalize licensing requirements for employment, reduce zoning and other land-use restrictions, appropriately balance intellectual property regimes, and change the incentives that have led to the expansion of the financial sector as a share of the economy would all help curb excessive rents.

Additional measures that would reduce the scope and unequal distribution of economic rents include the promotion of competition through rulemaking and regulations, as well as the elimination of regulatory barriers to competition. A recent Executive Order signed by the President aims to do just that, by instructing departments and agencies of the federal government to identify specific actions that they can take to foster greater competition in the marketplace, with the actions grounded not in traditional antitrust enforcement (which is a law enforcement issue) but in a broader space that includes policies like freeing up set-top cable boxes from being tied to cable providers and freeing up more airline slots at airports.

The bad news, however, is that rents have beneficiaries and these beneficiaries fight hard to keep and expand their rents. As a result, political reforms and other steps aimed at curbing the influence of regulatory lobbying are important for reducing the ability of people and corporations to seek rents successfully. Such actions would help ensure that economic growth in the decades ahead is robust, sustainable, and widely shared.
Good that the chief economists knows this but the response is not overwhelming, not that this is his fault. As he notes, its complicated, and many of the issues are political hot potatoes. But at least he has laid the issues squarely on the table.

Pro Market
Productivity, Inequality, and Economic Rents
Jason Furman | 28th Chairman of the Council of Economic Advisers, a role in which he serves as President Obama’s Chief Economist and as a Member of the President’s Cabinet. This post originally appeared in RegBlog, an online source of regulatory news, analysis, and opinion affiliated with the Penn Program on Regulation.
ht Mark Thoma at Economist's View

Lars P. Syll — People who have their heads fuddled with nonsense

The Conservative belief that there is some law of nature which prevents men from being employed, that it is “rash” to employ men, and that it is financially ‘sound’ to maintain a tenth of the population in idleness for an indefinite period, is crazily improbable – the sort of thing which no man could believe who had not had his head fuddled with nonsense for years and years … Our main task, therefore, will be to confirm the reader’s instinct that what seems sensible is sensible, and what seems nonsense is nonsense.
The is the key principle of genuine Keynesian approaches to economic and political economy, including MMT.

Lars P. Syll’s Blog
People who have their heads fuddled with nonsense
Lars P. Syll | Professor, Malmo University

Bill Mitchell — When journalists allow dangerous economic myths to pervade

In this post Bill summarizes the MMT position that  there is no financial crisis so deep that cannot be dealt with by public spending.
As I explained in this blog – There is no financial crisis so deep that cannot be dealt with by public spending – still! – the statement that – “There is no financial crisis so deep that cannot be dealt with by public spending” – does not mean that fiscal policy can bail an economy out of any problem.
As an aside, the title of that blog was the title of a paper I published in 2009 – you can read the Working Paper version for free (fairly close to the final publication). It reflects a basic insight that is derived from MMT once you fully understand that school of thought – its scope and its limitations.
When I say (and the other leading MMT writers say) – “There is no financial crisis so deep that cannot be dealt with by public spending” I do not mean the following:
  • That fiscal policy can overcome the real losses to a nation’s standard of living that are associated with a major fall in its currency when there is a significant dependency on real imported goods and services.
  • That fiscal policy can ensure that debts denominated in foreign-currency (public or private) can be honoured at all times.
What the statement means is that a situation can always be improved from where it is as a result of the operations of a crisis in the private financial markets.
It doesn’t mean the state reached after the fiscal intervention will be perfect. It means things can always be made better.
A nation has to ultimately confront its real resource constraints. Fiscal policy in the short-term cannot ease those constraints although it can ensure that the real resources available are utilised more fully.
A nation with heavy import dependencies (that is, real resource shortages) is also likely to suffer if its exchange rate collapses or world export markets for its goods and services slow appreciably. Fiscal policy can help to attenuate the losses but cannot ‘create food out of thin air’ like it can public spending capacity (money).
So in appraising what the statement means we should avoid setting up red-herrings or straw persons.
The bottom line is that a sovereign government like Australia can never run out of money and never needs to issue public debt as a matter of necessity. The public debt issuance is entirely voluntary and such voluntary actions have a habit of being quickly changed if they present too many ‘political’ problems.…
Bill Mitchell – billy blog
When journalists allow dangerous economic myths to pervadeBill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

There they go again. Jerks at S&P and Fitch downgrade Britain's credit rating.

S&P, Fitch

Haven't we seen this movie before?

Remember when the idiots at S&P downgraded the U.S. credit rating in 2011? I was on TV that morning and was pounding the table telling people to buy Treasuries.

Now you have the same idiot, S&P, plus a new idiot, Fitch, downgrading Britain's credit rating because of Brexit.

Hey you morons at the credit rating agencies...a sovereign nation that spends in its own currency and where all its obligations are denominated in that currency cannot become insolvent. There can never be an inability to pay its debts.

What idiots.

Buy gilts.

Monday, June 27, 2016

Zero Hedge — President Of The European Parliament: "It Is Not The EU Philosophy That The Crowd Can Decide Its Fate" [satire]

If anyone needs another confirmation that the European Union is fundamentally the most anti-democratic entity currently in existence, then the following statement by European Parliament Martin Schultz should put all confusion to rest.

Schulz: "The British have violated the rules. It is not the EU philosophy that the crowd can decide its fate".
It appears this is satire.

From the same post:

Deutsche Bank —
So there's no escaping the fact that this is a class war. Whether its globalisation, immigration, inequality, poor economic growth or a combination of all of them it's quite clear from this and other anti-establishment movements that the status quo can't last in a democracy. Eventually you'll have a reaction

Zero Hedge
President Of The European Parliament: "It Is Not The EU Philosophy That The Crowd Can Decide Its Fate"
Tyler Durden

Zero Hedge — Greenspan Warns A Crisis Is Imminent, Urges A Return To The Gold Standard

This is not a joke. He really means it.

If the world listened to his advice, it would result in a Great Great Depression. aka the grandmother of all depressions.

David Cameron Exposed and More Taxes On the Mega Rich

In this clip David Cameron is exposed as that the fraud he is. His adviser Jess Armstrong describes how Cameron can barely despise his contempt for working class people.

Well, I'm South London and working class but I might have a hard time too, with some them anyway, as I'm not right wing and and don't share their disdain for people on benefits or their xenophobia. I worked with working class people and most voted Labour, but some were very vocal about politics and were working class Tories who hated the welfare state, at least the way that some unfortunate people needed to use it, (but you will always get some scallywags abusing the system, but it's peanuts compared to the £gazillions the aristocracy steal from the state every year). And these working class Tories were very anti union too, despite how unions had given them good pensions, good sick pay, and five weeks holiday a year. But sadly, not many of my colleagues would ever argue with them, which made me feel isolated as it seemed that I was the only real Leftie left, because everyone else had had their minds taken over by the neoliberals.  It's The Matrix, The Invasion of the Body Snatchers.

I also found it maddening how most people seemed to have very little idea about politics because they mainly just read the tabloid press, which would go on and on about taxes like a old stuck gramophone record, and would go on constantly about welfare benefit cheats, and the cost of public services. But in fact with MMT, Labour should become the low tax party while the Conservatives would have become high tax, but low public spending austerity party. What sort of deal is that?

But these high taxes stops capitalism from working properly because most people have far less money to spend than they should, so perhaps the very rich should pay most of the taxes instead? Milton Friedman and his Chicago School economics doesn't work, so maybe it's time to try something else. New Labour and Bill Clinton went on and on about the Third Way and said whatever works? So come on, let's give it a go, let's push it through Parliament and Congress that only the mega rich pay taxes. I bet it works!

Anyway, here's that scallywag, David Cameron.

George Monbiot — We’re Not as Selfish as Economists Think We Are. Here’s the Proof.

In complex adaptive systems, optimization involves adaptation through feedback and learning, as well as taking into account return on coordination. This happens naturally and spontaneously not only cognitively but also affectively since it a positive evolutionary trait. Evolutionary success involves a combination of competition and cooperation through coordination, as in teamwork. Homo socialis is the reality rather than homo economicus.

We’re Not as Selfish as Economists Think We Are. Here’s the Proof.
George Monbiot

John Ross — Studying the real forces driving innovation is vital for China

Important as the other side of the coin. MMT reveals how to do the funding, but the funding has to be directed in real terms. The contributions of the state in promoting education and R&D are fundamental to fostering innovation. Moreover, investment is the driver.

Ross also provides a useful economic summary of the economic factors involved in innovation.
Economic fundamentals illustrate clearly why innovation is so critical for China. Analyzing in terms of classical "growth accounting," an economy's supply side inputs are capital, labour and "total factor productivity" (TFP) – the latter being all growth that can't be explained by increases in capital and labor. More precise versions add "intermediate products" – the inputs of one economic sector into another produced by increasing division of labour and specialization. Innovation's effects are measured as part of the TFP.
In most economies the most powerful forces of economic development are, in descending order of importance, intermediate products, fixed investment, labour inputs and TFP. This applies during periods of high innovation.
Garage startups as the source of innovation is a myth, along with individuals' creativity and ingenuity being all there is to it. In fact, the "garage" is the state, as Mariana Mazzucato showed in The Entrepreneurial State, and the state provides incubation for creativity and ingenuity, which don't come out of nowhere. People have to be trained and basic research and development funded. China is well-poised to take advantage of this. The leadership understands the opportunities and challenges and has the tools to deal with them.
Studying the real forces driving innovation is vital for China
John Ross, columnist with

See also
Heiko Khoo, columnist with

Alexander Mercouris — Russia Arrests its only Liberal Regional Governor

Of course, the West will see this sting as persecution, as it has the conviction of many other corrupt liberal oligarchs and politicians. Not to imply that Russian liberals have a monopoly on corruption in Russia.
Inevitably there are already claims that the arrest and prosecution of Russia’s only liberal governor is politically motivated – supposedly as a tightening up exercise in light of the forthcoming parliamentary elections. The Russian authorities of course deny this, and the reasons for supposing a political motive are not obvious. Belykh is hardly a popular figure and as governor of the remote and underpopulated Kirov Region he is hardly a threat to the authorities in Moscow. If he was they would have presumably dismissed him before now. As it happens Belykh is the third Russian regional governor to be arrested on corruption charges this year, which suggests that he has simply fallen foul of an ongoing anti-corruption campaign.…
Belykh’s political longevity notwithstanding the scandals of his administration and his all-too obvious administrative incompetence is an indication of how Russian liberals – far from being the persecuted minority they claim to be – in reality enjoy extraordinary privileges in a country where they are widely disliked. His arrest however suggests that his incompetence and/or corruption have finally caught up with him.
Russia recently appointed an independent investigator whose reputation for honesty and effectiveness is high to lead the offensive against endemic corruption. Xi Jinping has acted similarly in China, since corrupt is a major drag there as well as it Russia. Needless to say, the West sees this as an ominous sign of political repression. Damned if you do, damned if you don't.

The Duran
Russia Arrests its only Liberal Regional Governor
Alexander Mercouris

Alex Christoforou — Erdogan Folds, Apologizes to Putin

President Erdogan said he is willing to deal with the crisis in relations between Russia and Turkey. According to Kremlin spokesman Dmitry Peskov, Erdogan said that Turkey…
“shares the pain of downed Su-24 pilot’s death with his family” and “sees it as Turkey’s pain”
It’s no secret that Turkey’s economy has been beaten and battered by Russia’s sanction, especially in the tourism sector where Turkish hotels (once the primary destination for Russian summer travellers) remain completely abandoned and empty.
Let’s not even mention Syria, where Erdogan’s once grand ambition to overthrow Assad, and get a Saudi/Qatari pipeline flowing through Turkey on route to Europe, has been obliterated by Russia’s targeting of Turkey/NATO trained ISIS and Al Nusra forces.…
The Duran
Erdogan Folds, Apologizes to Putin
Alex Christoforou

Steve Cecchetti and Kim Schoenholtz — A Primer on Helicopter Money

Helicopter money is not monetary policy. It is a fiscal policy carried out with the cooperation of the central bank. That is, if the Fed were to drop $100 bills out of helicopters, it would be doing the Treasury’s bidding.
We are wary of joining the cacophony of commentators on helicopter money, but our sense is that the discussion could use a bit of structure. So, as textbook authors, we aim to provide some pedagogy. (For the record, here are links to Ben Bernanke’s excellent blog post, to a summary of Vox posts, and to Willem Buiter’s technical paper.)
To understand why helicopter money is not just another version of unconventional monetary policy, we need to describe both a bit of economic theory and some relevant operational practice. We use simple balance sheets of the central bank and the government to explain.…
Money & Banking
A Primer on Helicopter Money
Steve Cecchetti and Kim Schoenholtz

Neil Wilson — Move to Medium

Most of my written stuff is probably going to appear on Medium now. It's a lot easier platform to write on than Blogger, and much easier to manage.
So catch up with me over there.
Move to Medium
Neil Wilson

Bill Black — BREXIT: Populism and Democracy: Part 1

The UK vote in favor of BREXIT has stoked the fears of the New York Times to a fevered pitch. Their greatest collective fear is the rise of “populism.” The NYT fashions itself the last redoubt of “serious people” under siege by the rabble. BREXIT is an opportunity to drive home to the rabble the folly of failing to fall in line with the policies of the serious people featured in the NYT. The moral of the story is a simple one – when the electorate in a democratic election ignores the technocrats the result is an economic and social catastrophe.
Even for the NYT, however, their attacks on the UK electorate for daring to vote for BREXIT were extraordinary in their intensity and multiplicity. At least seven articles, each of them negative about the UK voters, were featured in today’s paper. (I had no strong views on the vote. I think reasonable UK voters could disagree on the desirability of BREXIT.)
This is the first in a seven-part series discussing each of these seven articles decrying BREXIT. I focus on the unintended aspect of each article, for each demonstrates the contempt that a broad range of elites have for the voters and democracy.…
New Economic Perspectives
BREXIT: Populism and Democracy: Part 1
William K. Black | Associate Professor of Economics and Law, UMKC

Bill Mitchell — Why the Leave victory is a great outcome

The class struggle is back! Who would have thought. After years of being told by the likes of John Major and then Tony Blair that “the class war is over” (Blair) and the we now all live in “the classless society” (Major) the working class has fought back, albeit under the motivation of the looney, populist Right rather than a progressive left, who remain a voice for capital. Remember when we were told that the Left-Right continuum was irrelevant now in this global world where nation states had given way to grand communities (like the EU) and that, in this new post-modern world, we could all be entrepreneurs (meaning we sell our labour to a capitalist!). And now we know that class never went away. It might have been hi-jacked by the Right but it is there – and it is powerful. Planet Earth to British Labour – do something about it or wither away and make way for a progressive new organised working class movement.…
Bill Mitchell – billy blog
Why the Leave victory is a great outcome
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Brexit buy signal. Jim Rogers says this will be the worst recession in our lifetime.

This hysterical clown is making another "bold" prediction. He says that Brexit will lead to the worst recession in our lifetimes.

You just got your buy signal.

Sunday, June 26, 2016

The Guardian — Boris Johnson breaks silence to set out leadership platform

Boris Johnson has broken cover for the first time since reacting to the vote for Brexit to set out how the country may look if he wins the race to succeed David Cameron as prime minister.
Amid clamour for the leave campaign’s leaders to set out what happens next, Johnson claimed Britain will be able to introduce a points-based immigration system while maintaining access to the European single market.
Johnson sought to reassure remain voters the UK will continue to intensify cooperation with the EU and told his fellow leave supporters they must accept the 52-48 referendum win was “not entirely overwhelming”.…
The Guardian
Boris Johnson breaks silence to set out leadership platform

France24 — Spain's conservatives [sic] win general election, but fail to get a majority

Spanish elections delivered a hung parliament for the second time in six months on Sunday, adding to political uncertainty in Europe after last week’s shock Brexit vote and piling intense pressure on Spain’s warring politicians to form a government.
Acting Prime Minister Mariano Rajoy’s centre-right People’s Party (PP) again emerged with the single biggest bloc of seats but fell short of a majority, leaving the euro zone’s fourth-largest economy at risk of another lengthy political stalemate.
Spain in political limbo.

Spain's consernatives win general election, but fail to get a majority

Steve Randy Waldman — Attributions of causality

On Brexit, but more important for the thoughts on causes versus conditions and factors.

Attributions of causality
Steve Randy Waldman

Xinhua — Chinese growth philosophy to help navigate through new industrial revolution: Klaus Schwab

China's 13th Five-Year Plan reflects its ability to embrace the new industrial revolution and its growth philosophy will help it play a leading role in the process, World Economic Forum founder and executive chair Klaus Schwab said Saturday. [Special coverage]
The Fourth Industrial Revolution is not science fiction -- we are already in the midst of it, he told Xinhua in an exclusive interview ahead of the upcoming Annual Meeting of the New Champions 2016, also known as the Summer Davos Forum.
"It will not only change what we are doing and how we communicate, but the whole of society and our identity," he said.
More than half of the Chinese population are prepared for the Fourth Industrial Revolution and the 13th Five-Year Plan reflects this ability, he added. The blueprint, released last year, outlines China's development path for the next five years, with growth driven by innovation, coordination, green development, opening up and sharing.
Schwab expects the five principles to be beneficial to China's future economic growth, and among them, innovation is the most important principle to the progress of the Fourth Industrial Revolution.
The new wave of technological developments will not only bring opportunities such as increased productivity, but might widen the gap between the rich and the poor due to exposure to the latest tools, he pointed out.
Therefore, sharing is important. Governments should ensure the benefits of new technology are shared domestically and globally, he said.
There might be some layoffs due to technology such as robotics. The process will be a kind of destructive creation, with old jobs reduced and new jobs created. The challenges lies in the different speeds of the two process, he said, adding that the government and business communities should ensure people are retrained and new jobs created.
Building a green economy should be the goal of all efforts, and that will take coordination and synergy between governments and the business community. More than that, there needs to be more networking, not only within a country, but also on a global scale, thus, underscoring the need to continue to open up, Schwab said.
China is one of the largest markets for robots and is supplying the world in many other technological areas, said Schwab, who was impressed with the flexibility and reliability of the latest drone product developed by the Shenzhen-based technology firm DJI, a leading manufacturer of commercial and recreational drones for aerial photography and videography.
"I think China can play a leading role in shaping the Fourth Industrial Revolution," he said.
Meanwhile, as China is part of the global economy, it should facilitate global dialogue and cooperation to manage development within a fair environment, Schwab added.
Klaus Schwab is German engineer and economist, best known as the founder and executive chairman of the World Economic Forum. His wife and former secretary, Hilde, co-founded the Schwab Foundation for Social Entrepreneurship. — Wikipedia
The first of the achievements is that the SCO has advocated and put into practice the pioneering Shanghai Spirit, which features mutual trust, mutual benefit, equality, consultation, respect for diverse civilizations and pursuit of common development, said the Chinese president.

Now what? Brexit aftermath. What we're facing.

Ambrose Evans-Pritchard — Parliament must decide what Brexit means in the interests of the whole Kingdom

Ambrose Evans-Pritchard previously wrote a stirring essay supporting Leave for reasons of preserving national sovereignty that was linked to at MNE. AEP is well-connected and this piece sets forth the presumable maneuvers now taking place behind the scenes in London and the major EU capitals. It's going to be a negotiated settlement.

The Telegraph
Parliament must decide what Brexit means in the interests of the whole Kingdom
Ambrose Evans-Pritchard

Andrew Batson — What is nationalism anyway, and why is it so powerful?

I would say that looking for a definition in terms of an essence is the wrong approach since terms that are not defined technically or operationally often have different senses dependent on their use in a context that gives them their meaning in that context.

However, Professor Gellner brings out an important meaning of "nationalism" in relation to national sovereignty, which is key in popular sovereignty as the basis of the modern concept of liberal democracy. Andrew riffs off that.

The historical development of nations from clans and tribes adds the element of kinship, which connects the concept of a nation with evolutionary theory in addition to political theory, anthropology, sociology, and history.

We are going to be hearing a lot more about this as the historical dialectic between the opposing forces of nationalism and internationalism deepens.

Andrew Batson's Blog 

Brian Romanchuk — Brexit - A Cautious Panic

Calm down, this is not happening overnight, says Brian.
For those of us outside the United Kingdom, the "Leave" victory in the referendum is not enough to cause worries about the real economy. We have entered the thin summer market period, so some form of financial turbulence is likely, but until some defaults occur it is not going to matter for non-levered investors. For the U.K., the most likely outcome is going to be an extremely long period of technical negotiations, which will eventually be pushed out of the news cycle by news about the Royal Family and football.
Bond Economics
Brexit - A Cautious Panic
Brian Romanchuk

Tom Hickey — Summary on the reaction to Brexit

1. Social

The “little people” as they are called in the US, or “lower classes,” asserted their right to rule as the majority in a democracy. This was unforeseen by pundits and the elite in general, who believed that the media could influence the public to vote as usual with the elite. The result is surprise and even shock reverberating in the bubble. The flood of punditry pouring out now is masking confusion resulting from the disruption of the social order since who the winners and losers will be is unclear. Everyone is trying to rescue what they can by getting head of the curve in shaping the narrative, which is in flux. This is not revolution yet, but it is major disruption and signals trouble ahead for elites, who depend on maintaining the social order that privileges them. Some are actually scared, as are some in the US over the rise of populism and dissatisfaction with inequality.

2. Political

The majority of the political commentary from the side of the elite, which owns the media, is critical of the referendum as an instrument of direct democracy. Pundits agree that the people (Greek demos) cannot be trusted to vote even in their own real interest, let alone of the country as whole. Therefore, the elite concludes that the use of the referendum needs to be abolished or at least hobbled, for example, by requiring a supermajority such as 60% rather than a simple majority:  This cannot be permitted to happen again and it was foolish to let it happen in the first place. The rise of the rabble is the worst fear of conservatives, who assume that the people should be ruled by "their betters."

3. Economic

Being unexpected by elites that predominantly control markets, who were taken by surprise even though polling was close, the result produced a shock that sent markets into a tailspin. Whether this will spread to the real economy is unclear, as are the intermediate and long term economic effects of the referendum. Since voting for leaving is not actually leaving, which will take years if it happens at all, powerful forces are gathering in the UK, Europe and the US to ensure it doesn’t, since taking apart existing arrangements and replacing them would be a mess that would likely be terrible for business and finance with uncertainty undermining confidence. Moreover, this is a direct blow struck at the internationalist world order that Western liberal elites have been pursuing since the end of WWII to extend transnational capitalism globally.

4. International

The vote is being denounced as a blow to the liberal world order fashioned since WWII in order to "spread freedom and democracy" and "end all wars." While this is the advertised goal of liberal internationalism as well as to neoconservatism, both are really based on spreading “freedom and democracy” as a euphemism for liberalization, privatization and deregulation as a means to reduce the size and influence of government on business and finance, and to transfer public assets to private ownership under transnational capitalism controlled by the West and the US in particular. The world order under neoliberal globalization is perceived as threatened politically by rising nationalism asserting itself a presence for  national sovereignty and democracy over internationalism and economically by a demand for distributive justice over transnational capitalism. The leave vote has ratcheted this up several notches.


Brexit is an elite nightmare all around. Expect a strong reaction to reverse course and return to the status quo, or if this not possible to salvage what can be salvaged of the internationalists' project for neoliberal globalization under Western liberal leadership and control. The immediate objective is to prevent contagion.

Michael Brune — TransCanada Files NAFTA Suit Demanding More Than $15 Billion for Keystone XL Rejection

On June 24, foreign oil company TransCanada filed a lawsuit against the U.S. under NAFTA, the North American Free Trade Agreement, arguing that the U.S. rejection of the Keystone XL pipeline violated NAFTA’s broad rights for foreign investors by thwarting the company’s “expectations.” As compensation, TransCanada is demanding more than $15 billion from U.S. taxpayers.
TransCanada’s case will be heard in a private tribunal of three lawyers who are not accountable to any domestic legal system, thanks to NAFTA’s “investor-state” system, which is also included in the proposed Trans-Pacific Partnership (TPP). The controversial TPP would empower thousands of additional corporations, including major polluters, to follow TransCanada’s example and use this private tribunal system to challenge U.S. climate and environmental policies.…
Oh what the heck, it isn't "taxpayer money" – just government on the hook. (snark)

TransCanada Files NAFTA Suit Demanding More Than $15 Billion for Keystone XL Rejection
Michael Brune
ht Dan Crawford at Angry Bear

Consensus: Fed on Hold due to Brexit

If consensus view on rates materializes, it means continued US fiscal drag via Fed policies. Then you have to wonder if this becomes semi-permanent policy as each European nation goes thru their own Brexit-like catharsis now over a the next year.

Saturday, June 25, 2016

EU Bankster Contagion — Chris Hedges interviews Michael Hudson

Summary: Great Britain’s decision to leave the EU presages a global financial meltdown that could resemble the 1930s. Banks will demand massive bailouts. We will be forced, if the banks are bailed out again, to endure harsher austerity and a prolonged depression.
Michale Hudson
EU Bankster Contagion
Chris Hedges interviews Michael Hudson

How Western Military Interventions Shaped the Brexit Vote — Gregory Wilpert interviews Michael Hudson

Michael Hudson argues that military interventions in the Middle East created refugee streams to Europe that were in turn used by the anti-immigrant right to stir up xenophobia.
Actually, Michael Hudson sees much more than immigration at work. But immigration was probably the final straw.

Not just the UK.
Europe is sort of like the Soviet Union in the ‘30s and ‘40s. There was an argument, is it reformable or not? There is a feeling, and I think it’s correct, that the European Union, the eurozone, and the euro, is not reformable, as a result of the Lisbon treaties and the other treaties that have created the euro. Europe has to be taken apart in order to be put together not on a right-wing, neoliberal basis, but on a more social basis.
Now, ironically, the parties who call themselves socialists are now moved to the ultra-right, to the neoliberal. The French socialists, the German social democrats. But you’re having real radical parties arise in Italy, Spain, Portugal, and potentially in Greece, again, that are going to say, well, the key of any government, of any national government, has to be the ability to issue our own money, to run a deficit, spending into the economy to make the economy recover. We cannot recover under the Lisbon agreements, under the eurozone, where the central bank will only create money to give to banks, not money to spend into the economy, to actually finance new investment and new employment. And we cannot be part of a eurozone that insists that pensions have to be cut back in order to make the banks whole and save the one percent losing money.…
The Real News Network
How Western Military Interventions Shaped the Brexit Vote
Gregory Wilpert interviews Michael Hudson