Tuesday, March 28, 2017

Bill Mitchell — Front National – seems confused on its monetary proposals

Please do not interpret in what follows any hint of support for FN from this blog other than as a ‘cat among the pigeons’ force in European politics, anything that upsets the right-wing, neo-liberal, corporatist elites that run the show is to be welcome.…
FN’s policy proposals are outlined in its – 144 Engagements Présidentiels (144-point manifesto).
The opening statements talk about regaining France’s freedom and mastery over their own destiny (“Retrouver notre liberté et la maîtrise de notre destin en restituant au peuple français” and defines sovereignty in terms of “monétaire, législative, territoriale, économique”, which would suggest a return to its own currency.
Critics seem to characterise those who advocate a return to national currency sovereignty as ‘small vision’ as opposed to the European Union which is claimed to be ‘big’.  It is big on corporatism and anti-democratic bullying and certainly big on the unemployment it has created.
My view is that a return to national currency sovereignty, that is exiting the Eurozone and floating one’s currency is a grand vision for full employment and reduced inequality.
Of course, the neo-liberals can take control of a nation that is sovereign in its own currency (as in Australia or the UK at present) and use the capacity that currency independence brings to bad effect.
But a truly progressive government cannot really exist in the Eurozone or in a nation that pegs its currency or accepts legal dictates from an undemocratic bloc (such as the EU)....
Bill Mitchell – billy blog
Front National – seems confused on its monetary proposals
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Miami Herald — Were the hackers who broke into the DNC’s email really Russian?


Is the narrative breaking down owing to lack of evidence?

Miami Herald
Were the hackers who broke into the DNC’s email really Russian?
Glenn Garvin

Ramanan — Article 50 To Be Triggered. Nicky Kaldor Would Have Been Happy


Kaldor quote.

The Case for Concerted Action
Article 50 To Be Triggered. Nicky Kaldor Would Have Been Happy
V. Ramanan

Ray McGovern — The Surveillance State Behind Russia-gate

Although many details are still hazy because of secrecy – and further befogged by politics – it appears House Intelligence Committee Chairman Devin Nunes was informed last week about invasive electronic surveillance of senior U.S. government officials and, in turn, passed that information onto President Trump.

This news presents Trump with an unwelcome but unavoidable choice: confront those who have kept him in the dark about such rogue activities or live fearfully in their shadow. (The latter was the path chosen by President Obama. Will Trump choose the road less traveled?)
What President Trump decides will largely determine the freedom of action he enjoys as president on many key security and other issues. But even more so, his choice may decide whether there is a future for this constitutional republic. Either he can acquiesce to or fight against a Deep State of intelligence officials who have a myriad of ways to spy on politicians (and other citizens) and thus amass derogatory material that can be easily transformed into blackmail.…
Consortium News
The Surveillance State Behind Russia-gate
Ray McGovern, CIA analyst for 27 years and in charge of one-on-one briefings of the President’s Daily Brief under Ronald Reagan from 1981 to 1985, and Bill Binney, former Technical Director, World Geopolitical & Military Analysis, NSA, and co-founder of NSA’s SIGINT Automation Research Center.

Sputnik — Cheney Seeks to Manipulate Trump 'Splashing Gasoline' Into Election 'Scandal'


Pavel Svyatenkov gets it right.
Political scientist Pavel Svyatenkov told Radio Sputnik that the US politician wants to "splash gasoline" in the election scandal to manipulate Donald Trump.

Svyatenkov recalled that Dick Cheney previously worked in the administrations of Republican presidents George Bush Sr. and George W. Bush.
"This is when a part of the Republican elite that is associated with the Bush group — both the elder and the younger — comes into the game," the expert said.
According to the expert, Cheney played an important role in the Bush administration — he held the post of defense minister and vice president and many believed him to be an extremely influential "shadow ruler" of America.
"Therefore, the fact that now Cheney makes such statements means that there is an attempt to pour gasoline into the scandal, and a serious split among the Republican elite,"Svyatenkov noted....
"Shadow ruler." I like it.

Asher Schechter — Richard Posner: “The Real Corruption is the Ownership of Congress by the Rich”


Judge Posner has some harsh words for the contemporary American political and judicial systems.

ProMarket — The blog of the Stigler Center at the University of Chicago Booth School of Business
Richard Posner: “The Real Corruption is the Ownership of Congress by the Rich”
Asher Schechter

Edward Harrison — Subprime auto delinquency rate at highest level since financial crisis

Why it matters: The big three areas of credit expansion this cycle – energy, auto and student loans – are not of the magnitude of the housing sector in the last cycle. Not only is the mortgage sector bigger, it was international in scope, adding significantly to systemic risk by undermining the balance sheets of European banks as well as American ones.
Nevertheless, increased delinquencies in the auto sector will spell trouble given the high LTVs of loans and lower credit scores of borrowers. And I am troubled by the OCC’s depiction of the commercial real estate sector; we could see heavy loan losses there in the next downturn.
 On autos, High LTVs mean lower recovery values for a depreciating asset. And this will be compounded by falling prices given the glut of production, now buoyed by subprime auto financing. And this will have a negative impact on the auto sector and the US economy. The question on a pullback in auto loans is timing; it’s not if, it is when and how hard — and how much this will impact bank balance sheets and the economy.
Credit Writedowns
Subprime auto delinquency rate at highest level since financial crisis
Edward Harrison

Ramanan — Robots, Globalization, Unemployment, Etc

Economists have played down the notion of technological unemployment. If production is constant and productivity rises, there’s a fall in employment because less labour is required to produce the same output. So output has to rise to keep employment from falling because of “automation”. In Post-Keynesian economics, the principle of effective demand matters both in the short run and the long run. So technological unemployment is a real possibility. New Consensus economists concede that John Maynard Keynes rules in the short run but assume that Jean-Baptiste Say rules in the long run. The irony hence is that New Consensus economists seem to show worry about automation these days.
In my opinion, this is because the sacred tenet of free trade must be defended by economists at all costs. So they make a concession about loss of employment to robots. Unfortunately that’s not right either. Globalization—both because of competition by international producers and offshoring of jobs via global supply chains—has led to the loss of livelihood for many in the Western world....
Tradeoffs.

Automation and robotization increase productivity, reducing the need for labor, which reduces worker incomes in developed countries. Globalization increases the available work force in open economies, increasing competition among workers in the global labor pool and reducing worker incomes in developed countries. Reduction in worker incomes undeveloped countries reduces effective demand, leading to excess capacity and potential oversupply, unless lagging demand is addressed by government fiscal policy.

Both globalization, which benefits emerging world workers, and automation and robotics, which increases productivity across the board, should be welcomed as an emergent opportunity and addressed simultaneously as an emergent challenge. Government that are currency sovereigns have tool for this, and global economy policy aimed at win-win can be achieved through concerted action rather than harmful competition and a beggar-thy-neighbor approach.

The developing world can be lifted up without necessarily dragging down the developed world.

The Case for Concerted Action
Robots, Globalization, Unemployment, Etc
V. Ramanan

Warren Mosler — Border tax comments, Redbook retail sales, International trade, Consumer confidence


Warren presents a simple model of international trade and taxation to illustrate Trumponomics.

The Center of the Universe
Border tax comments, Redbook retail sales, International trade, Consumer confidence
Warren Mosler

Chris Dillow — Keynes' flaws

Michael Roberts reminds us of something important – that Keynesian economics has severe shortcomings. I agree.
For me, the problem with Keynes was what he didn’t say. He was largely silent about three related issues: class, power and profits, or least he dismissed them lightly:
the problem of want and poverty and the economic struggle between classes and nations, is nothing but a frightful muddle, a transitory and an unnecessary muddle. (Preface to Essays in Persuasion)
It’s no accident that it should have been so easy to find a Keynesian-neoclassical synthesis, as both schools of thought ignored these matters.
This omission, however, has had several baleful effects....
Stumbling and Mumbling
Keynes' flaws
Chris Dillow | Investors Chronicle

John Ross — The economic logic behind Trump's foreign policy - why the key countries are Germany and China

This article was published in Chinese before the recent summit between Chancellor Merkel and President Trump - which strongly confirmed its analysis.
The first steps by Trump as US President confirmed that he will pursue an anti-China policy but also that he will use different tactics to Obama and Clinton. Simultaneously Trump has launched a serious conflict with Germany, supporting countries leaving the EU and demanding European states rapidly increase their military spending – policies rejected by Merkel at the recent Munich Security Conference. What, therefore, is the internal logic uniting such apparently different actions as:
Maybe Trump is playing 4-D chess? Is Trump just taking a different approach to US dominance rather than flailing about wildly as it appears to many?

Socialist Economic Bulletin
John Ross

Bill Mitchell — Why are CEOs now supporting basic income guarantees?


Must read on the basic income guarantee and why it sucks.
Recall that Marx wrote in his 1844 work A Contribution to the Critique of Hegel’s Philosophy of Right. that “Die Religion ist der Seufzer der bedrängten Kreatur, das Gemüth einer herzlosen Welt, wie sie der Geist geistloser Zustände ist. Sie ist das Opium des Volks” (Religion is the sigh of the oppressed creature, the heart of a heartless world, just as it is the spirit of a spiritless situation. It is the opium of the people).
Religion was a major vehicle for social control used by capital to divert attention away from what they were up to – suppressing wages and worker autonomy and advancing their own interests.
Think about the role the Roman Catholic church played in Latin America as stark examples of the more subtle processes that operate in more advanced nations.
As the hold of religion lessened over time, capital found mass consumption as the next effective way to sustain a docile, compliant working class.
Please read my blog – The mass consumption era and the rise of neo-liberalism – for more discussion on this point.
But that meant allowing the standard of living of workers to increase through real wages growth in line with productivity growth and a more equitable distribution of national income.
As neo-liberalism has become more refined (not in quality but in its ability to attack the living standards of workers), the mass consumption strategy has become more involved.
Capital worked out that it could suppress real wages through labour market deregulation, take the gap generated by productivity growth for itself (redistribute national income in favour of profits), and then maintain mass consumption by pushing massive debt onto households, via the relaxing of credit standards and the corruption of banking, allowed for by the simultaneous deregulation of the financial markets.
Neat.
Major lobbying was expended to make this seemingly perfect solution operational.
Except greed got in the way and the GFC came along because the debt that was being pushed onto households was no longer subject to satisfactory prudential standards and the NINJAs finally couldn’t pay.
At that point, a new form of social control was needed to cope with the mass unemployment that has been created around the world.
Enter the next ‘you-beaut-plan’ – the CEO-advocated BIG.
And the progressives who are pushing for the BIG don’t know what day it is!
So our conception of humanity is of a bare minimum consumption unit – where society only has a responsibility to provide a small capacity to ensure this consumption is enabled.
End of story. We keep people in their boxes with just enough food and other things to keep them alive – just so they don’t rebel and challenge the capacity of the top-end-of-town to go on their merry way pillaging national resources and generated income.
Social control – BIG time.
If they want a better material existence then they can do a bit of work! But haven’t the robots taken all the jobs?...
Bill Mitchell – billy blog
Why are CEOs now supporting basic income guarantees?
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Monday, March 27, 2017

James Hamilton — How the Federal Reserve controls interest rates


Good short summary of how central banks manage interest rates within a corridor with a floor rate and a ceiling rate. Hamilton compares and contrasts ECB and Fed operations.

Econobrowser
How the Federal Reserve controls interest rates
James Hamilton | Professor of Economics, UCSD

Matthew Rozsa — He’s a Keynesian now: Donald Trump tells New York Times he wants to “prime the pump”

“We’re also going to prime the pump,” President Trump told Robert Draper of The New York Times Magazine. “You know what I mean by ‘prime the pump’? In order to get this [the economy] going, and going big league, and having the jobs coming in and the taxes that will be cut very substantially and the regulations that’ll be going, we’re going to have to prime the pump to some extent. In other words: Spend money to make a lot more money in the future. And that’ll happen.”
Pulling a Nixon.

Salon
He’s a Keynesian now: Donald Trump tells New York Times he wants to “prime the pump”
Matthew Rozsa

Voice of America — Cyber Firm Rewrites Part of Disputed Russian Hacking Report

Voice of America
Cyber Firm Rewrites Part of Disputed Russian Hacking Report
Oleksiy Kuzmenko and Pete Cobus – WASHINGTON, March 25, 2017

U.S. #cybersecurity firm #CrowdStrike has revised and retracted statements it used to buttress claims of #Russian #hacking during last year’s American presidential election campaign. The shift followed a VOA report that the company misrepresented data published by an influential British think tank.
In December, CrowdStrike said it found evidence that Russians hacked into a Ukrainian artillery app, contributing to heavy losses of howitzers in Ukraine’s war with pro-Russian separatists.
VOA reported Tuesday that the International Institute for Strategic Studies (IISS), which publishes an annual reference estimating the strength of world armed forces, disavowed the CrowdStrike report and said it had never been contacted by the company.
Ukraine’s Ministry of Defense also has stated that the combat losses and hacking never happened.
CrowdStrike was first to link hacks of Democratic Party computers to Russian actors last year, but some cybersecurity experts have questioned its evidence. The company has come under fire from some Republicans who say charges of Kremlin meddling in the election are overblown.
After CrowdStrike released its Ukraine report, company co-founder Dmitri Alperovitch claimed it provided added evidence of Russian election interference. In both hacks, he said, the company found malware used by “Fancy Bear,” a group with ties to Russian intelligence agencies.
CrowdStrike’s claims of heavy Ukrainian artillery losses were widely circulated in U.S. media.
On Thursday, CrowdStrike walked back key parts of its Ukraine report.
The company removed language that said Ukraine’s artillery lost 80 percent of the Soviet-era D-30 howitzers, which used aiming software that purportedly was hacked. Instead, the revised report cites figures of 15 to 20 percent losses in combat operations, attributing the figures to IISS.
The original CrowdStrike report was dated Dec. 22, 2016, and the updated report was dated March 23, 2017.
The company also removed language saying Ukraine’s howitzers suffered “the highest percentage of loss of any … artillery pieces in Ukraine’s arsenal.”
Finally, CrowdStrike deleted a statement saying “deployment of this malware-infected application may have contributed to the high-loss nature of this platform” – meaning the howitzers – and excised a link sourcing its IISS data to a blogger in Russia-occupied Crimea.
In an email, CrowdStrike spokeswoman Ilina Dmitrova said the new estimates of Ukrainian artillery losses resulted from conversations with Henry Boyd, an IISS research associate for defense and military analysis. She declined to say what prompted the contact.
“This update does not in any way impact the core premise of the report that the FANCY BEAR threat actor implanted malware into a D-30 targeting application developed by a Ukrainian military officer,” Dmitrova wrote.
This is apparently a false claim:

"Crowdstrike, along with FireEye and other cybersecurity companies, have long propagated the claim that Fancy Bear and all of its affiliated monikers (APT28, Sednit, Sofacy, Strontium, Tsar Team, Pawn Storm, etc.) were the exclusive developers and users of X-Agent. We now know that is false.

"ESET was able to obtain the complete source code for X-Agent (aka Xagent) for the Linux OS with a compilation date of July 2015. [5]

"A hacker known as RUH8 aka Sean Townsend with the Ukrainian Cyber Alliance has informed me that he has also obtained the source code for X-Agent Linux. [11]

"If both a security company and a hacker collective have the X-Agent source code, then so do others, and attribution to APT28/Fancy Bear/GRU based solely upon the presumption of “exclusive use” must be thrown out.

"This doesn’t mean that the Russian government may not choose to use it. In fact, Sean Townsend believes that the Russian security services DO use it but he also knows that they aren’t the only ones."

Reached by VOA, the IISS confirmed providing CrowdStrike with new information about combat losses, but declined to comment on CrowdStrike’s hacking assertions.
“We don’t think the current version of the [CrowdStrike] report draws conclusions with regard to our data, other than quoting the clarification we provided to them,” IISS told VOA.
Dmitrova noted that the FBI and the U.S. intelligence community have also concluded that Russia was behind the hacks of the Democratic National Committee, Democratic Congressional Campaign Committee and the email account of John Podesta, Hillary Clinton’s campaign manager.
Note: The FBI and US Intelligence community has said that it relied on the Crowdstrike report without investigating and that they were also denied access to the DNC server that was allegedly hacked. In addition, there is reason to think that the incident was the result of an insider leak rather than a cyber hack.
The release of embarrassing Democratic emails during last year’s U.S. political campaign, and the subsequent finding by intelligence agencies that the hacks were meant to help then-candidate Donald Trump, have led to investigations by the FBI and intelligence committees in both the House and Senate.
Trump and White House officials have denied colluding with Russians.
See also

Fabius Maximus
Exposing the farcical claims about Russian hacking of the election
Editor

Matt Bruenig — Against Chelsea Clinton


A chip off the old blocks. Taking nepotism to a new level.

Jacobin

Dean Baker — National Income Accounting for Robert Samuelson and Friends


Dean Baker does sectoral balance analysis but obliquely without mentioning it specifically.

Beat the Press
National Income Accounting for Robert Samuelson and Friends
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C

Salman Rafi Sheikh — Trump’s Syria Strategy is in Place Now

Here a question also rises about the nature and the extent of objectives the US is pursuing in Syria. Clearly, there are no “short term” objectives and corollary to this is the fact there is no short term presence either.
Deployment of forces in Syria means that the US is certainly not looking at restroing Syria to its pre-war political situation. While the question of removing Assad from power doesn’t seem to be on the cards, what is very much on the cards is a division of Syria into zones and thus render Assad as the president in name only.
The plan, as some reports of the western media have suggested, should be the “creation of several autonomous zones within an otherwise still-centralized state.” These zones, according to this plan, will directly engage with, and be dependent upon, the international community for all types of “aid”, leaving potentially nothing in Assad’s hands and instead forcing him into quitting his role.
The plan also places the onus of responsibility of maintaining peace and conducting terror operations in Syria on the US/NATO forces which, by any means, have no legitimate and justifiable presence in Syria in the first place. Accordingly, Russia and Syrian forces are reduced to playing a second fiddle to the US and Iranian forces are completely removed from the Syrian territory.
The plan, in simple words, is to pave the way for a deep entrenchment of the US forces in Syria. The creation of “zones” in Syria thus makes perfect sense when seen against this background.
It only then that the US can reverse the setbacks it had to suffer in Syria during the Obama administration. It is only then that the US can prevent Russia and Iran from having an overwhelming presence and thus stabilize Syria under President Assad. On the contrary, creation of long-term “zones” in Syria means Iran will always remain vulnerable to its Arab rivals’ plans of defeating and destabilizing the Islamic Republic and establish their own hegemony fully backed by the US and Israel. 
NEO
Trump’s Syria Strategy is in Place Now
Salman Rafi Sheikh

Sunday, March 26, 2017

Branko Milanovic — The welfare state in the age of globalization

In my previous post that looked at policies to reduce inequality in the 21st century, I mentioned that I will next discuss the welfare state. Here it is...
Global Inequality
The welfare state in the age of globalization
Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Luxembourg Income Study (LIS), and formerly lead economist in the World Bank's research department and senior associate at Carnegie Endowment for International Peace

China Daily — Central bank: Boost economy using fiscal policy

The cycle of global quantitative easing is coming to an end and policymakers should rely more on fiscal policy to stimulate growth, Zhou Xiaochuan, China's central bank governor, said on Sunday.
Zhou warned about the overreliance on monetary easing and said that policy is not "a panacea that can cure all kinds of illness".
"The direction is to see the limit (of monetary policy) and to consider very carefully how to get out of the period of monetary easing," Zhou said at a panel discussion at the Boao Forum for Asia.
In addition, governments should improve balance sheets and fiscal positions to create more room for fiscal policy, he said....

The central bank governor said China has the flexibility in fiscal policy, as the debt level of the central government is not very high, and added the country needs to streamline the relationship between the central and local governments to ensure fiscal policy fits the local conditions.
Zhou saw inflation and asset bubbles as the "unintended consequence" of the monetary easing....
The central bank launched mortgage rules to cool the property market. Among them, raising the down payment requirement for buyers of a second home in Beijing to 60 percent of the price.
China.org.cn
Central bank: Boost economy using fiscal policy
China Daily

Also

China will be more open to foreign investment in its financial sectors, but the level of openness depends on compromises of all parties concerned during bilateral investment treaty (BIT) negotiations, said People's Bank of China governor Zhou Xiaochuan on Sunday.
Speaking during the Boao Forum for Asia, Zhou stated China has prepared, in its BIT negotiations with the US and its trade talks with European and ASEAN countries, to take even more significant steps to open up its banking, insurance, investment banking, securities and payments sectors.
However, he noted that China hopes Chinese investors, particularly those in private sectors, can gain fair treatment overseas after it opens up its financial sectors. The governor added that China's attempts to import high-technology in at least civilian sectors should be allowed.
"Each party should make some compromises. Only then can globalization move forward and all benefit from it," said Zhou.
China will substantially cut the number of sectors on the negative list which are not open to foreign investment and offer foreign investors fair treatment in its 11 free trade zones, according to Zhou.
The governor also mentioned U.S. President Donald Trump's call for a "big border tax" on imports or the Border Adjustment Tax (BAT), which has been a topic of much discussion around the world. It is believed that BAT will lead to the appreciation of the U.S. dollar by 20 to 25 percent.
Bai Chongen, a Tsinghua University professor and member of the central bank monetary policy committee, suggested further openness in foreign direct investment be considered to reduce the negative impact of the U.S. tax reform on China.
Zhou indicated that it remains to be seen whether or not the U.S. will implement BAT in its tax reform. He said China has prepared for further openness in recent years, but its openness is not directly connected with the foreign exchange rate.
The governor noted that China is waiting to see how the Trump administration approaches trade and investment negotiations. Meanwhile, China is actively negotiating with Japan, European and ASEAN countries to achieve positive results as early as possible.

Michael Roberts reviews Fred Moseley, 'Money and totality'


This pertains especially to those interested in Marx, Marxist and Marxian economics and the controversies thereof. However, being about "money," it is also of interest to those interested in MMT.

Fred Moseley debunks the major critiques of Marx's Das Capital as being without foundation.

Weekly Worker
Consistent, realistic, verifiable – Michael Roberts reviews: Fred Moseley, 'Money and totality'

There is a shorter review at Michael Robert blog.

Fred Moseley and Marx’s macro-monetary theory

Jared McKinney — Why America—and Its Political Leaders—Should Think Twice about Poking China


Good response to a hawkish approach to China in the South China Sea. While the author is responding to an article in The National Interest, it is an argument that is commonly made that is based on dodgy assumptions and poor logic.

Someone needs to write a companion piece at The National Interest about similar assumptions about Russia that are equally dubious.

The National Interest
Why America—and Its Political Leaders—Should Think Twice about Poking China
Jared McKinney, nonresident fellow at the Pangoal Institution (Beijing) and a PhD Student at the S. Rajaratnam School of International Studies, Nanyang Technological University (Singapore)

Freedom Caucus now in contrition on the Tax Cuts


Giving "the deficit!' some "freedom!" to expand (to them).  Bullish.





Peter Cooper — The Confidence Fairy and Formation of Demand Expectations Under Uncertainty

From a broadly Keynesian viewpoint, output is demand determined. This suggests that fiscal policy, by affecting demand, can affect output and employment. At the same time, however, many Keynesians emphasize fundamental uncertainty. Firms’ output decisions depend upon expectations of future demand, and these expectations must be formulated under conditions of uncertainty. It can be wondered how the efficacy of fiscal policy squares with the presence of uncertainty....
heteconomist
The Confidence Fairy and Formation of Demand Expectations Under Uncertainty
Peter Cooper

Right starting to strike back...


Some recent altercations where we can see the right starting to get even.

This weekend in Cali; guy in the visor gets a right counter in over the top early:




Cops getting more confident and putting the dogs on them:




"Stickman" breaking his stick over the one guys head this one went viral a few weeks ago:






Building up...


Peter Dorman — Economics: Part of the Rot, Part of the Treatment, or Some of Each?


Peter Dorman puts his finger on what wrong with economists. Econ 101 aka "economism" (James Kwak). As Paul Krugman has said on multiple occasions the framework of conventional economists (neoclassical) is rational optimization and equilibrium.

Peter Dorman submits that this framework guiding conventional economists is not empirically based and is simply assumed as the way that market economies actually work or should work if markets are left to themselves.

These fundamental assumptions that distinguish conventional (neoclassical) economics from so-called heterodox approaches are never questioned even when facts run counter to it.

Econospeak
Economics: Part of the Rot, Part of the Treatment, or Some of Each?
Peter Dorman | Professor of Political Economy, The Evergreen State College

Rush to Judgment— The evidence that the Russians hacked the DNC is collapsing

To begin with, Crowdstrike initially gauged its certainty as to the identity of the hackers with “medium confidence.” However, a later development, announced in late December and touted by the Washington Post, boosted this to “high confidence.” The reason for this newfound near-certainty was their discovery that “Fancy Bear” had also infected an application used by the Ukrainian military to target separatist artillery in the Ukrainian civil war.…

The definitive “evidence” cited by Alperovitch is now effectively debunked: indeed, it was debunked by Carr late last year, but that was ignored in the media’s rush to “prove” the Russians hacked the DNC in order to further Trump’s presidential ambitions. The exposure by the Voice of America of Crowdstrike’s falsification of Ukrainian battlefield losses – the supposedly solid “proof” of attributing the hack to the GRU – is the final nail in Crowdstrike’s coffin. They didn’t bother to verify their analysis of IISS’s data with IISS – they simply took as gospel the allegations of a pro-Russian blogger. They didn’t contact the Ukrainian military, either: instead, their confirmation bias dictated that they shaped the “facts” to fit their predetermined conclusion.
Now why do you suppose that is? Why were they married so early – after a single day – to the conclusion that it was the Russians who were behind the hacking of the DNC?...
Crowdstrike founder Alperovitch is a Nonresident Senior Fellow of the Atlantic Council, and head honcho of its “Cyber Statecraft Initiative” – of which his role in promoting the “Putin did it” scenario is a Exhibit A. James Carden, writing in The Nation, makes the trenchant point that “The connection between Alperovitch and the Atlantic Council has gone largely unremarked upon, but it is relevant given that the Atlantic Council – which is funded in part by the US State Department, NATO, the governments of Latvia and Lithuania, the Ukrainian World Congress, and the Ukrainian oligarch Victor Pinchuk – has been among the loudest voices calling for a new Cold War with Russia.” Adam Johnson, writing on the FAIR blog, adds to our knowledge by noting that the Council’s budget is also supplemented by “a consortium of Western corporations (Qualcomm, Coca-Cola, The Blackstone Group), including weapons manufacturers (Lockheed Martin, Raytheon, Northrop Grumman) and oil companies (ExxonMobil, Shell, Chevron, BP).”
Johnson also notes that CrowdStrike currently has a $150,000 / year, no-bid contract with the FBI for “systems analysis.”...
AnitWar

Global Macro Monitor A Few Thoughts On Why Health Care Went Down


Amplifies on the reasons that the AHCA crashed in flames and what to expect next.

Global Macro Monitor
A Few Thoughts On Why Health Care Went Down
ht Zero Hedge

Alexander Mercouris — Protests in Moscow and across Russia fail to shake the Kremlin

The protests were called by the Russian neoliberal ‘non-system’ activist and ‘anti-corruption’ campaigner Alexey Navalny, purportedly in order to protest against the alleged corruption of Russia’s Prime Minister and former President Dmitry Medvedev.
Medvedev seems an unlikely target for these protests. His time as President from 2008 to 2012 is sometimes seen as a sort of liberal heyday, and it is indeed a fact that in the last weeks of his Presidency he rushed through a series of liberalisation measures in response to the protests which took place in Moscow and elsewhere following the 2011 Duma elections. The fact that the very same liberals who whilst he was President hailed Medvedev as their hero and who are the main beneficiaries of his liberalisation of the political system should now turn on him does rather seem like a case of of them biting the hand that fed them.….
As I discussed recently in an article written immediately after last autumn’s parliamentary elections in Russia, Parnas – the party with which Navalny is most closely associated – only won 0.70% of the vote in that election, whilst the combined vote of all the anti-government liberal parties in that election came to no more than 2.56%. That this is a totally insufficient electoral base from which to launch a serious bid for the Presidency should not need explaining.
It is in fact highly doubtful that Navalny genuinely believes that he can win the Presidential election next year, or that he seriously aims to. However he has to show to his supporters and funders – both those in Russia, and more importantly, those in the West – that he is an active force in Russian politics and that he is providing some value for all the backing they are giving him. That leads him to make wild allegations against people like Medvedev, to announce a bid to stand in an election he cannot win, and to call a protest in Moscow and across Russia which on any objection assessment simply highlights the absence of widespread support for him.
It is this need to retain attention which explains why Navalny not only called the protest today but insisted on holding it in the form of an unsanctioned march along Tverskaya in central Moscow rather than in the various locations offered him. Through this act of seeming ‘defiance’ Navalny is able to strike a heroic (though fake) pose (since he knows nothing will actually be done to him), provoke conflict – including his own arrest – and disguise the fact that only a few thousand people turned up to support him (the police in Moscow put the number between 7,000 to 8,000) by mixing his supporters up with ordinary pedestrian traffic and the large number of onlookers who might normally be expected on a Sunday in what is Moscow’s main and busiest thoroughfare....

Clarice Feldman — Obama Did Wiretap Trump: It’s Like Putting Together a Russian Nesting Doll


A conservative summary/interpretation of what happened and "who done it." Fills in some details.

The American Thinker
Obama Did Wiretap Trump: It’s Like Putting Together a Russian Nesting Doll
Clarice Feldman

Some good news for University bound US students


will help US students in the admissions process but perhaps threaten revenue of the academe.




Trump issues an Invoice to Merkel


Trump reportedly provided a $200B invoice to Merkel for services rendered which she doesn't want to pay.



President Trump reportedly gave German Chancellor Angela Merkel an invoice for over £300 billion in what he deems to be owed contributions to NATO, per The Times of London. 
Using 2002 as a starting point — the year Merkel's predecessor Gerhard Schröder pledged to increase defense spending — U.S. officials allegedly calculated the extent to which German defense spending had fallen short of the 2% of GDP target that NATO requires, added the amount together, and then charged interest. 
Trump has also reportedly asked his staff to prepare similar calculations for all other NATO members below the 2% target.



If she doesn't pay, all Trump has to do is debit the Germany securities account at the US Fed for the $70B here to the credit of the TGA and tell them all to stick it sideways.

He would at least get that much back against the amount he views as in arrears for Germany as well as any other NATO member with a surplus USD balance identified here:







Daniel Marans — Bernie Sanders, Top Progressives Announce New ‘Medicare For All’ Push

In the wake of the Republican failure to repeal the Affordable Care Act on Friday, leading figures in the progressive wing of the Democratic Party are rallying behind a single-payer health insurance and a raft of other bold reforms.

These lawmakers and grassroots leaders have long believed that the problems plaguing the Affordable Care Act, also known as Obamacare, are rooted in the original health care law’s attempt to accommodate, rather than gradually replace, the private, for-profit health insurance system.

Now that efforts to eliminate the law wholesale are effectively dead, they are again arguing that the best way to improve the country’s health care system is to confront the power of corporate health care provider more directly.…
The Huffington Post
Bernie Sanders, Top Progressives Announce New ‘Medicare For All’ Push
Daniel Marans

Xinhua — China rolls out plan to revitalize traditional crafts


Speaking of creating employment opportunities.
The Chinese government has rolled out a revitalization plan for traditional craftsmanship amid efforts to protect intangible cultural heritage and meet needs such as employment and poverty alleviation.
By 2020, China will have seen a "significant enhancement" of the ability to carry on traditional crafts with better industry management and market compatibility, according to the plan issued by the ministries of culture, industry and information technology and finance.
The incomes of those involved will be increased and employment promoted significantly, according to the plan posted on the website of China's cabinet, the State Council.
Among 1,372 items on the national list of intangible cultural heritage, more than 300 are traditional crafts, mainly concerning fine arts, traditional Chinese medicine and ethnic clothing.
The government will formulate a revitalization list to support key projects which have great development potential and will help employment.
Young people will be encouraged to participate. Universities, enterprises and other organizations will step up training and research.
International exchange and cooperation will also be promoted, according to the plan.
Some enterprises have set up workshops in areas with rich resources of traditional crafts to help local craftsmen improve product quality. As sales are expanding, more people have found jobs and shaken off poverty, said an official with the Ministry of Culture.
China.org.cn
China rolls out plan to revitalize traditional crafts
Xinhua

Neil Wilson — Jobs and Vacancies


Another good one on unemployment from Neil on how the JG solves an unrecognized issue in analysis of employment and the dynamics of the labor market.

Modern Money Matters
Jobs and Vacancies
Neil Wilson

Brian Romanchuk — Canadian Federal Government Rejoins Reality


Canada-centric but interesting from the MMT POV.

Bond Economics
Canadian Federal Government Rejoins Reality
Brian Romanchuk

Saturday, March 25, 2017

Xinhua — China court overturns iPhone sale ban

A Chinese court has ruled in favor of Apple Inc. in design patent disputes between it and a domestic phone-maker, overturning a ban on selling iPhone 6 and iPhone 6 Plus phones in China.
Last May, a Beijing patent regulator ordered Apple's Chinese subsidiary and a local retailer Zoomflight to stop selling the said phones after Shenzhen Baili Marketing services Co. (Shenzhen Baili) lodged a complaint to it, claiming that the patent for the design of its mobile phone 100c was being infringed upon by the iPhone sales.
Apple and Zoomflight took the Beijing Intellectual Property Office's banning order to court.
The Beijing Intellectual Property Court on Friday revoked the ban, saying Apple and Zoomflight did not violate Shenzhen Baili's design patent for 100c phones.
The court ruled that the regulator did not follow due procedures in ordering the ban while there is no sufficient proof to claim the designs constitute violation of intellectual property rights.
Representatives of Beijing Intellectual Property Office and Shenzhen Baili said they would take time to decide whether to appeal the ruling.
In another related ruling, the same court denied a request by Apple to demand stripping Shenzhen Baili of its design patent for 100c phones. Apple first filed the request to the Patent Reexamination Board of State Intellectual Property Office. The board rejected the request, but Apple lodged a lawsuit against the rejection to court.
The Beijing Intellectual Property Court on Friday ruled to maintain the board's decision. It remains not immediately clear if Apple will appeal....
China.org.cn
China court overturns iPhone sale ban
Xinhua

David Haggith — Trump Obamacare Repeal Blew Up Bigly Because of a House Divided Against Itself


David Haggith explains how the three factions of the Congressional GOP could not arrive at compromise and perhaps never will be able to do so.
It is hard to say exactly who was in each group because no vote was taken to put members on record, but this appears to be generally how things fell apart:
1) By far the largest group would have consisted of the house’s largest conservative faction (172 members), known as the Republican Study Committee, probably joined by members of the House Republican Conference who do not identify with any particular faction. I’m talking here about the group that solidly supported President Trump and Speaker of the House Paul Ryan on the AHCA as originally drafted.
The Republican Study Committee — formed in 1973 to keep an eye on the party’s moderate leadership during the Nixon-Ford years — is the House’s oldest active faction....
2) The smallest, rewest, and most conservative faction of the House Republican Conference, called the “Freedom Caucus,” was established in 2015 to battle then Speaker John Boehner, particularly to fight his approval of Obamacare (the Affordable Care Act). These members of congress can be seen as the present rabble rousers because this is the faction that was willing to shut down the government in the original fight against Obamacare. ...
3) A larger faction of the House Republican Conference consists of about fifty people, who are the left-most Republicans in the House of Representatives (meaning only that they are moderates since no one in the Republican party is a leftist). This group was established in 1994 as the “Tuesday Group” when Republicans took control of the House under the more conservative leadership of Newt Gingrich. Gingrich rallied Republicans around his Contract with America. The Tuesday Group formed to resist Gingrich’s more conservative positioning of the Republican party.
The actual battle went like this: Unquestionably, those aligned with the Freedom Caucus felt the original AHCA bill, as proposed by Paul Ryan, did not go far enough in repealing Obamacare. Therefore, the group of Republicans who were with Trump and Ryan modified the bill to strip out more of Obamacare by taking down some of its Medicaid provisions and other benefits in order go gain some of the more conservative votes. That resulted in those aligned with the Tuesday Group (the most moderate Republicans) feeling the bill now went further right than they could tolerate. As a result, the Republicans lost some moderate votes when they compromised to pick up more conservative votes, and they never gained all of the conservative votes. So, they could not find a majority that could agree on any bill, and they had already thumbed their noses at Democrats completely, so they certainly wouldn’t get any help there....

Ken Jacobson — Whose Corporations? Our Corporations!

Historically, corporations were understood to be responsible to a complex web of constituencies, including employees, communities, society at large, suppliers, and shareholders. But in the era of deregulation, the interests of shareholders began to trump all the others. How can we get corporations to recognize their responsibilities beyond this narrow focus? It begins in remembering that the philosophy of putting shareholder profits over all else is a matter of ideology which is not grounded in American law or tradition. In fact, it is no more than a dangerous fad. 
AlterNet
Whose Corporations? Our Corporations!
Ken Jacobson | senior editor for the newsletter Manufacturing & Technology News

also

3 Corporate Myths that Threaten the Wealth of the Nation



Paul Robinson — From Russia with love – lessons for today from a revolution 100 years ago

In liberal thought, legitimacy derives from elections, the state’s respect for its citizens’ human rights, open and transparent government, a free press and so on. According to these criteria, the provisional government ought to have been more legitimate than the unpopular monarchy it replaced. But it wasn’t. The legitimacy of the state proved to be inseparable from the person of the czar.
To understand why, one must look to an alternative concept of legitimacy. This sees legitimacy as deriving from history, tradition, nationalism and religion, as well as from force rather than from popularity and individual freedoms. Russians had regarded the czar as legitimate because the monarchy embodied centuries of Russian history, a sense of the Russian nation, and the idea of Orthodoxy. The monarchy was also feared. When it was gone, all that was left was an abstract commitment to liberal values. This was not sufficient. The result was the eventual triumph of Bolshevism.

This story continues to be repeated in countries across the globe today: Again and again, regime change leads not to liberal democracy but instead to civil war.
Despite this, many in the West continue to believe in the value of overthrowing what they consider to be corrupt or autocratic regimes, without in many cases taking due regard of the ways in which existing regimes have a form of legitimacy which is not easily replaced.
Too often, a mere public commitment to Western values proves to be an insufficient replacement for power, tradition, religion or nationalism. Unless we can redefine our understanding of legitimacy in order to take such factors into consideration, our efforts to reshape the world are all too likely to continue to end up creating only chaos.
Ottawa Citizen
Robinson: From Russia with love – lessons for today from a revolution 100 years ago
Paul Robinson | Professor, Graduate School of Public and International Affairs at the University of Ottawa

Dennis Kucinich — Yes, a call from a member’s office was intercepted


An open letter to members of Congress
The Hill
Yes, a call from a member’s office was intercepted
Former Rep. Dennis Kucinich (D-Ohio)

Ryan Avent — How Automation with a Robust Safety Net Increases Productivity


Workers replaced by technology don't drop out of the labor market because then the would face poverty, alone with bankruptcy and seizure of assets if they are indebted, as most workers are. So workers replaced by technological innovation have to seek reemployment. This drives down the wage and employment conditions that workers in general are willing to accept.
So there you are: continued high levels of employment with weak growth in wages and productivity is not evidence of disappointing technological progress; it is what you’d expect to see if technological progress were occurring rapidly in a world where thin safety nets mean that dropping out of the labour force leads to a life of poverty.
Technological innovation that increases productivity provides the opportunity for increased leisure but this doesn't mean that this opportunity will be distributed, especially when the benefits accrue chiefly to owners, top management, and highly skilled workers associate with the technology.

Evonomics
How Automation with a Robust Safety Net Increases Productivity
Ryan Avent | senior editor and economics columnist at The Economist

Robert Parry — How US Flooded the World with Psyops

Newly declassified documents from the Reagan presidential library help explain how the U.S. government developed its sophisticated psychological operations capabilities that – over the past three decades – have created an alternative reality both for people in targeted countries and for American citizens, a structure that expanded U.S. influence abroad and quieted dissent at home.

The documents reveal the formation of a psyops bureaucracy under the direction of Walter Raymond Jr., a senior CIA covert operations specialist who was assigned to President Reagan’s National Security Council staff to enhance the importance of propaganda and psyops in undermining U.S. adversaries around the world and ensuring sufficient public support for foreign policies inside the United States....
Until the 1980s, psyops were normally regarded as a military technique for undermining the will of an enemy force by spreading lies, confusion and terror....
Essentially, the psyops idea was to play on the cultural weaknesses of a target population so they could be more easily manipulated and controlled. But the challenges facing the Reagan administration in the 1980s led to its determination that peacetime psyops were also needed and that the target populations had to include the American public.
The Reagan administration was obsessed with the problems left behind by the 1970s’ disclosures of government lying about the Vietnam War and revelations about CIA abuses both in overthrowing democratically elected governments and spying on American dissidents. This so-called “Vietnam Syndrome” produced profound skepticism from regular American citizens as well as journalists and politicians when President Reagan tried to sell his plans for intervention in the civil wars then underway in Central America, Africa and elsewhere.…
The more recently released documents – declassified between 2013 and 2017 – show how these earlier Casey-Raymond efforts merged with the creation of a formal psyop bureaucracy in 1986 also under the control of Raymond’s NSC operation. The combination of the propaganda and psyop programs underscored the powerful capability that the U.S. government developed more than three decades ago for planting slanted, distorted or fake news. (Casey died in 1987; Raymond died in 2003.) 
Over those several decades, even as the White House changed hands from Republicans to Democrats to Republicans to Democrats, the momentum created by William Casey and Walter Raymond continued to push these “perception management/psyops” strategies forward. In more recent years, the wording has changed, giving way to more pleasing euphemisms, like “smart power” and “strategic communications.” But the idea is still the same: how you can use propaganda to sell U.S. government policies abroad and at home.
I've left out the details, which are extremely interesting and involve names that most Americans with memories extending to the Reagan years will recognize. Many of them are still active.

Consortium News
How US Flooded the World with Psyops
Robert Parry

Brian Romanchuk — Can't Anybody Here Play This Game?

 
Is this cycle topping out?

Bond Economics

Friday, March 24, 2017

Michael J. Sainato — Bernie Sanders’ Economic Advisor [Stephanie Kelton] Shreds Trumponomics


Stephanie Kelton.

Counterpunch
Bernie Sanders’ Economic Advisor Shreds Trumponomics
Michael J. Sainato

Publius Tacitus — Was this a Soft Coup?

Mr. Nunes received information earlier this week from a whistleblower, but not you typical whistleblower. The "normal" whistleblower takes information, usually classified, to a member of the press in order to bring attention to wrong doing or lies by the government. He or she goes outside of channels. In this regard the Nunes' whistleblower is different. This person passed classified material to a person cleared for the classified material, i.e. Nunes [as chair of the House Intelligence Committee].…

… there will be more information coming out today that will buttress the claims Nunes made earlier this week. This could be the start of the worm turning and former member of the Obama intelligence community and White House staff could find themselves facing legal peril.….
Who is lawyering up?

Sic Semper Tyrannis 
Was this a Soft Coup?
Publius Tacitus

Hayley Peterson — The retail apocalypse has officially descended on America

Visits to shopping malls have been declining for years with the rise of e-commerce and titanic shifts in how shoppers spend their money. Visits declined by 50% between 2010 and 2013, according to the real-estate research firm Cushman & Wakefield.
Not just Sears.

Business Insider
The retail apocalypse has officially descended on America
Hayley Peterson

John Helmer — The US War Has Been Good for President Vladimir Putin, and the Russian Economy Looks Stable Through the Presidential Election. So if You Are a Us Warfighter, What Is the Regime Change Opportunity Now?


A look at the relationship between the Russian economy and Russian politics.

Russian economic policy seems to be too focused on fighting inflation and not enough on addressing demand. Inflation in Russia is not running at about 4.5% and the central bank's target is 4%. The fiscal stance is tight since the Russian government appears to think it has to get rubles when it actually issues the ruble.

Dances with Bears
The US War Has Been Good for President Vladimir Putin, and the Russian Economy Looks Stable Through the Presidential Election. So if You Are a Us Warfighter, What Is the Regime Change Opportunity Now?
John Helmer

Surveillance State Goes After Trump — Dennis J Bernstein interviews Coleen Rowley

Dennis Bernstein: A former high-level FBI whistleblower says Trump is vindicated on his claims of being surveilled by the previous administration. Joining us to take a close look at what’s been going on, what’s been unfolding in Washington, D.C. is Coleen Rowley. She’s a former FBI special agent and division council. She wrote a May 2002 memo to the FBI director that exposed some of the FBI’s pre-9/11 failures, major failures. She was Time magazine’s person of the year in 2002. … Help us explain what chairman Nunes reported in terms of the collecting process and Trumps innocence or guilt?...
Consortium News
Surveillance State Goes After Trump
Dennis J Bernstein, host of “Flashpoints”, interviews ex-FBI special agent Coleen Rowley

Gabriel Sherman — Why Steve Bannon Might Be the Winner of the GOP’s Health-Care Civil War

The failure to repeal and replace Obamacare would be a stinging defeat for Trump. But it would be an even bigger defeat for Paul Ryan, who has all but staked his Speakership on passing this bill. And in the hall of mirrors that is Washington, the big winner to emerge out of the health-care debacle could be Steve Bannon. That’s because Bannon has been waging war against Ryan for years. For Bannon, Ryan is the embodiment of the “globalist-corporatist” Republican elite. A failed bill would be Bannon’s best chance yet to topple Ryan and advance his nationalist-populist economic agenda.…
Palace intrigue.

New York Magazine
Why Steve Bannon Might Be the Winner of the GOP’s Health-Care Civil War
Gabriel Sherman

Joel B. Pollak — Health Care Bill’s Failure: Just Part of the ‘Art of the Deal’


You see, the Great Dealmaker planned to appear to lose this round in crafting the deal.

Breitbart News
Health Care Bill’s Failure: Just Part of the ‘Art of the Deal’
Joel B. Pollak | Senior Editor-at-Large at Breitbart News

Also

Report: Steve Bannon Says American Health Care Act ‘Written by the Insurance Industry’

Charlie Spiering — Donald Trump Blames Democrats for Health Care Failure, Promises Better Plan in the Future

President Donald Trump signaled he was finished with trying to repeal and replace Obamacare, telling reporters at the White House he was ready to move to tax reform.
The purpose of the Ryan Plan was supposedly to make space for tax reform.

Breitbart News
Donald Trump Blames Democrats for Health Care Failure, Promises Better Plan in the Future
Charlie Spiering

Also

Exclusive — Discussion About GOP Replacement to Paul Ryan as Speaker of the House Intensifies in White House, Congress
Matthew Boyle

Asia Unhedged — Russian central bank cuts rates against expectations

Despite analyst expectations that the Russian central bank (CBR) would hold steady, the bank cut the key rate by 25bps to 9.5%.…
Asia Times
Russian central bank cuts rates against expectations
Asia Unhedged

Jon Perr — CBO: GOP Health Care "Plans" May Not Count as "Insurance"

As Vox and The Hill among others have reported, Republicans are trying to reduce premiums by eliminating the ACA's list of 10 mandated benefits insurers must provide. These provisions regarding prescription drug coverage, hospitalization, out-patient treatment, mental health care, pregnancy and maternity care and much more not only set a baseline for insurance offerings under Obamacare, but also help spread the risk for insurers across a much larger pool of policyholders. And that, CBO warned Obamacare repealers in December, is a big problem as far as the agency is concerned...
PERRspectives
CBO: GOP Health Care "Plans" May Not Count as "Insurance"
Jon Perr

Don Quijones — Italy’s Multi-Headed Hydra Predicament

Unlike many other Eurozone economies like Spain, Ireland Portugal, Italy did not experience a real estate or stock market bubble in the 2000s; nor were its banks heavily exposed to the financial derivatives that helped spread the fallout from the U.S. subprime crisis all around the world. As such, Italy has not had cause to bail out its financial system — until now.… 
Italy’s current predicament is a multi-headed hydra: a banking crisis, an economic crisis, a debt crisis, and a political crisis all rolled into one, and all coming to a head at the same time. It’s the reason why economists including Deutsche Bank AG’s Marco Stringa are calling Italy, not France or Greece, the “main risk” to euro-area stability....
Wolf Street
Italy’s Multi-Headed Hydra Predicament
Don Quijones, Spain & Mexico, editor at WOLF STREET

Andrew Jackson — Reflections on the Social Democratic Tradition


The purpose of this paper is to provide a political history, overview and critical evaluation of the social democratic tradition in Western politics with some reference to the Canadian experience. It serves as a starting point for the Broadbent Institute’s new initiative exploring social democratic renewal in Canada, a project that will feature essays from a wide range of left perspectives on the future of social democracy in this critical moment of upheaval, inequality and erosion in democracies around the globe.
Broadbent Institute
Reflections on the Social Democratic Tradition
Andrew Jackson | Senior Policy Advisor to the Broadbent Institute

Brad DeLong — Caitlin MacNeal: Mulvaney: If Your State Doesn’t Mandate Maternity Care, Change Your State


I am starting to think that the politics in the US is so divisive ideologically that it may be necessary to subdivide with those more oriented toward the welfare state moving to places like the West Coast and New England, and those more oriented toward the market state moving to the South and West, with the Midwest proving a middle ground.

There would still be the question of funding, however, with the federal government as the currency issuer. Perhaps the way to deal with this is to break the US into several countries issuing their own currency and operating on different economic policy.

Otherwise permanent paralysis or even civil war? 

Actually, the US is returning to a political situation similar to that which led up to the Civil War.

WCEG
Caitlin MacNeal: Mulvaney: If Your State Doesn’t Mandate Maternity Care, Change Your State
Brad DeLong | Professor of Economics, UCAL Berkeley


Yilmaz Akyuz — How to Understand Globalization: Not Nations, But Class

South Centre Chief Economist Yilmaz Akyuz explains why a correct understanding of contemporary globalization requires class, rather than nation, as the central unit of analysis.
The global ownership class is vacuuming up the bulk of income and wealth. This is inherent in the institutional design of capitalism, which favors owners (capital) over workers (labor) and the environment (land).

Triple Crisis
How to Understand Globalization: Not Nations, But Class
Yilmaz Akyuz | South Centre Chief Economist 

Rick Salutin — Can we come out now that deficit hysteria is over?


Another news article on MMT. Positive.

The Star (Canada)
Can we come out now that deficit hysteria is over? Salutin
Rick Salutin, columnist

Miguel Navascués— The huge fallacy of the Modern Monetary Theory: money is not free


Critique of MMT by a Bank of Spain economist.

The Corner (Spain)
The huge fallacy of the Modern Monetary Theory: money is not free
Miguel Navascués, economist at the Bank of Spain for 30 years, focusing on international and monetary economics

Fed now holds record amount of Treasuries. There was no "avalanche of selling" like so many Wall St. morons predicted.

When the Fed started raising interest rates 15 months ago you had a lot of Wall Street idiots predicting massive Treasury sales. One dope, Scott Minerd, predicted $1 trillion in sales. I wrote about that stupid call, here.

The Fed is currently holding a record amount of Treasuries, with the new heights in its holdings coming recently, after not one, not two, BUT THREE RATE HIKES!

These dopes don't understand that the Fed pays interest on reserves, making the need to manage reserves in order to maintain their target rate, a thing of the past.

Malpractice. That's what they idiots engage in. All the time. If it were any other industry they'd be sued or shut down. And networks like CNBC disseminate their crap, regularly.

Fed holdings of Treasuries: $2.463974 trillion.


Thursday, March 23, 2017

Michael J. Sainato — Cybersecurity Firm That Attributed DNC Hacks to Russia May Have Fabricated Russia Hacking in Ukraine

The cyber security firm outsourced by the Democratic National Committee, CrowdStrike, reportedly misread data, falsely attributing a hacking in Ukraine to the Russians in December 2016.…
The report sheds further skepticism on CrowdStrike’s findings and objectivity in their conclusions, which several cyber security experts and former CIA and NSA officials have cast doubt on, especially given that several media outlets reported in early January 2017 that the DNC never allowed the FBI to examine their servers themselves, rather the FBI relied on forensic data gathered by CrowdStrike.
The investigation methods used to come to the conclusion that the Russian Government led the hacks of the DNC, Clinton Campaign Chair John Podesta, and the DCCC were further called into question by a recent BuzzFeed report by Jason Leopold, who has developed a notable reputation from leading several non-partisan Freedom of Information Act lawsuits for investigative journalism purposes. On March 15 that the Department of Homeland Security released just two heavily redacted pages of unclassified information in response to an FOIA request for definitive evidence of Russian election interference allegations. Leopold wrote, “what the agency turned over to us and Ryan Shapiro, a PhD candidate at MIT and a research affiliate at Harvard University, is truly bizarre: a two-page intelligence assessment of the incident, dated Aug. 22, 2016, that contains information DHS culled from the internet. It’s all unclassified — yet DHS covered nearly everything in wide swaths of black ink. Why? Not because it would threaten national security, but because it would reveal the methods DHS uses to gather intelligence, methods that may amount to little more than using Google.”
In lieu of substantive evidence provided to the public that the alleged hacks which led to Wikileaks releases of DNC and Clinton Campaign Manager John Podesta’s emails were orchestrated by the Russian Government, CrowdStrike’s bias has been cited as undependable in its own assessment, in addition to its skeptical methods and conclusions. The firm’s CTO and co-founder, Dmitri Alperovitch, is a senior fellow at the Atlantic Council, a think tank with openly anti-Russian sentiments that is funded by Ukrainian billionaire Victor Pinchuk, who also happened to donate at least $10 million to the Clinton Foundation.
In 2013, the Atlantic Council awarded Hillary Clinton it’s Distinguished International Leadership Award. In 2014, the Atlantic Council hosted one of several events with former Ukrainian Prime Minister Arseniy Yatsenyuk, who took over after pro-Russian President Viktor Yanukovych was ousted in early 2014...
Counterpunch
Cybersecurity Firm That Attributed DNC Hacks to Russia May Have Fabricated Russia Hacking in Ukraine
Michael J. Sainato

Michael Hudson — Wall Street First

Trump is Obama’s Legacy. Will this Break up the Democratic Party?
Michael Hudson
Wall Street First
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

Reuters — Uncertain fate of Obamacare causes some hospitals to halt projects, hiring —

Uncertainty surrounding the Republican plan to replace Obamacare is forcing some U.S. hospitals to delay expansion plans, cut costs, or take on added risk to borrow money for capital investment projects, dealing an economic blow to these facilities and the towns they call home.…Across the country, hospitals are shifting to a more conservative stance as they await sweeping changes to the nation's healthcare law that for the first time in U.S. history would reverse a government healthcare entitlement program. The Affordable Care Act, commonly known as Obamacare, provided coverage to 20 million Americans and brought higher revenues to many hospitals. 

The law's likely overhaul puts many hospitals in a uniquely daunting position of being unable to predict how many of their patients will be insured and what type of coverage they will have in the future. As a result, many are more wary than in years past to invest in expensive capital projects, issue debt, or expand into new regions, said healthcare experts and hospital executives....
Hospital jobs increased after the Affordable Care Act expanded coverage. Now, amid increasing uncertainty around the nation’s healthcare law, hospital jobs are on the decline.
But, but, but, we are "saving money."

Reuters
Uncertain fate of Obamacare causes some hospitals to halt projects, hiring

Matthew Allen — Greece to Surrender Gold, Utilities and Real Estate in Exchange For Pieces of Paper Printed in Brussels

It’s official: The Germans will not allow debt relief for Greece. Instead, Berlin wants to send in the repo man.
The untold story of the Greek “bailouts” is that it wasn’t a “bailout” — it was an auction of Greek assets. Real, tangible things with real, tangible value were seized in exchange for pieces of paper that guarantee Athens will be chained to Berlin and Brussels for the foreseeable future.
It’s your basic extortion racket....
A bit too melodramatic? We forgot — we are supposed to use the friendly neoliberal term for this policy of national enslavement and communal suicide: “voluntary privatization.”...
Events prove Michael Hudson right again about predatory lending funneling assets from the periphery to the core. Neoliberalism implies neo-imperialism and neocolonialism.
A perfect crime. After all, Deutsche Bank and Goldman Sachs helped cook the books so Greece could join the eurozone.
This really is a golden age for international criminal cabals. Al Capone was a chump.
Defend Democracy Press
Greece to Surrender Gold, Utilities and Real Estate in Exchange For Pieces of Paper Printed in Brussels
Matthew Allen

Kevin Robillard — Koch network pledges to defend Republicans who vote against GOP health bill

The Koch brothers' network of well-funded outside groups says it will spend millions to protect Republicans who oppose the party's health care bill from political fallout.
Americans for Prosperity and Freedom Partners, the Koch network's big budget grass-roots activism and advertising groups, are teaming up to create a "seven-figure" reserve fund to support lawmakers who buck President Donald Trump and House Speaker Paul Ryan on the health care vote, as the threat of primaries looms over some opponents of the bill. The Koch groups will spend the money on paid media, direct mail and grass-roots canvassing.

Freedom Partners called the GOP bill "Obamacare 2.0" and said it falls short of truly repealing the 2010 law....
The Koch groups argue that the GOP's bills refundable tax credits to make health coverage more affordable are a new entitlement….
The GOP goes to war with itself over purity versus practicality.

Politico
Kevin Robillard


Philip Arestis and Malcolm Sawyer — Quantitative Easing vs. Fiscal Policy

… when people pay taxes their bank accounts are debited and correspondingly the government account at the central bank is replenished. During an accounting period, government expenditure will have been funded by tax revenues received, sale of bonds to the private sector, plus the increase in central bank money....
I am not sure from reading this whether the authors hold that taxes fund spending and debt issuance finances deficits in the accounting sense of "fund" and "finance," or that such funding/financing is operationally necessary before spending can take place. The former is consistent with the MMT view, but not the latter.

From the MMT point of view, the central bank creates government liabilities by crediting accounts with bank reserves, which increases the monetary base. Funds in the Treasury's general account (TGA) do not count toward either the monetary base or the money supply. 

In the US, when the Treasury spends in accordance with appropriations, it directs the Fed to credit bank's account in the payments system with settlement balances aka "bank reserves." This increases base money. When taxes are paid, base money is reduced by that amount and taxpayers deposit accounts at banks are reduced. The spending and taxation are reflected in the government fiscal balance.

Similarly, when government securities are issues, the auction is paid for with settlement balances, the monetary base is reduced by that amount, and purchasers's deposit accounts at banks are reduced.

This simply involves crediting and debiting various accounts on the government's books (Treasury and central bank), banks' books, and bank customers books. There is no operational need for funding for the government to spend prior to spending than for banks to secure funding before extending credit by making loans and crediting deposit accounts. 

In the process, the LHS and RHS balance, which is what "funding" means in an accounting sense. For banks, the corresponding entry in a deposit account "funds" the loan. For government, the entries in accounts recording tax payments and debt issuance "fund" spending. 

With respect to government, the ratio between money creation that adds to the monetary base and money withdrawal through taxation and securities issuance that reduces the money base determines the fiscal balance. 

The difference between taxation and securities issuance is that taxation "destroys" money in the sense  that the monetary based and M1 are reduced, decreasing non-government net financial wealth in aggregate, while securities issuance shifts funds from the monetary base and deposit accounts to government securities without changing non-government net financial wealth in aggregate. Only the term changes and not the amount. 

MMT calls the issuance of government securities "draining the monetary base." It is a monetary operation that is not necessary operationally, but rather it is an optional tool operationally that is convenient for conducting monetary policy when the central bank chooses to set the interest rate above zero and is not paying interest on excess reserves. Draining the monetary base with securities issuance reduces the needs to open market operations (OMO) using repurchase agreements (repo).

However, instead of the Treasury issuing securities, the central bank could simply book loans to the Treasury directly. This is permitted in some jurisdiction, but it is prohibited politically in the US. This is a voluntary political choice that doesn't involve the US government needing to obtain funding from nongovernment in order to spend. In actuality, spending funds both tax payments in aggregate and securities purchases in aggregate, since the funds that government spends are offset on the governments' books by taxes and sale of government securities, both of which reduce the monetary base. The monetary base consists of government liabilities that only the central bank can create and that must already be available for tax payment and securities purchases. 

In this sense, government spends first which creates the funding for it similar to the way that the extension of a loan as an account receivable that is bank asset creates the corresponding funding in the form of a credit to a customer deposit account, which is a bank liability. Similarly, when government spends, the money base as a liability of the central bank increases and the TGA is debited. Debiting the TGA doesn't affect any of the measures of money.  When taxes are paid, monetary based decreases, which is the same as saying that the central banks' liabilities decrease. The TGA is credited but this credit doesn't count toward any measure of money. Thus tax payments "destroy money." The Treasury does not have money to spend. It simply has a credit that is used in determining the fiscal balance.

Based on spending appropriations and tax policy determined by the fiscal authority, generally the legislative branch, the Treasury and central bank coordinate operations to accommodate both the fiscal operations of the Treasury conducted by the central bank as the government's fiscal agent with the monetary operations of the central bank. This is coordinated so that all accounts stay in balance, which means that spending is always funded using government liabilities as the spending occurs.

The key to understanding this is that "the government neither has not does not have money." The government as monetary and fiscal authority issues the currency, determines monetary and fiscal policy, using its agents, the Treasury and central banks to carry it out in accordance with law and regulation.

Central banks are usually delegated as the fiscal agent of government having the authority and responsibility for issuing the currency. This means that the central bank is not limited in the amount it can credit to its liabilities. That is, as the currency issuer the central bank does not have to get money elsewhere. 

The Treasury does not have money either since credits to its account at the central bank do not count toward any measure of money. Moreover, the doesn't have to get money from the central bank to spend. The Treasury directs the central bank to credit non-government accounts in accordance with the government appropriations. Like the liabilities of the central bank that constitute bank reserves, the numbers in the TGA are simply accounting entries used to compute the fiscal balance from the income statement and balance sheet and show sources and uses of funding. 

The Treasury and central bank coordinate operations to ensure that accounts balance as operations are conducted. From the logical point of view, spending must precede taxation and securities purchases, since government only accepts its own liabilities in the payments system operated by the central bank. Currency users have to get these liabilities, whereas government is the currency issuer. From the temporal point of view, accounts are debited and credited simultaneously so that they are always in balance. There is some intra-day leeway but all accounts must balance at the close. 

Another key point is that government liabilities held by non-government are non-government financial assets. Since the liability is on the side of government, these financial assets held by non-government constitute non-government net financial assets in aggregate, that is to say, non-government financial wealth the funding of which is government liabilities.

Triple Crisis
Quantitative Easing vs. Fiscal Policy
Philip Arestis and Malcolm Sawyer