Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Month: June 2012

To point out the obvious on today’s Supreme Court Decision on the ACA

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On June 28, 2012

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Roberts voted how he did because health insurance companies are absolutely desperate for the money they will get from the mandate.  All of the legitimacy arguments are bullshit, about 70% of Americans opposed the mandate.(pdf)  This is more similar to TARP than anything else: it is a massive corporate giveaway, opposed by the majority of the population, and passed over their dissent.

Watching so-called progressives shilling for forcing people to buy shitty insurance to subsidize health insurance companies has been another example of why I don’t call myself a progressive.  Yes, a few people’s lives will be saved.  The cost will be many lives destroyed.

Update: to make the other obvious point, that government can force people to buy largely unregulated corporate products is an important precedent for the oligarchy.

Update 2: to point out more obvious which apparently isn’t:

  • Roberts struck down Medicaid expansion, which means he closed the hole to creeping single payer
  • the ACA is a subsidy from the young and healthy to the old and unhealthy.
  • The subsidies to help buy insurance (which are insufficient to begin with) will nonetheless quickly become one of the biggest budget items, and will be taken away in the future.

Change: Changed from 70% oppose Obamacare to 70% oppose the mandate, link added.  The mandate is what progressives wanted upheld.  Note the deafening silence on the fact that medicaid has been screwed—the part that helps the poor most.

Greek election consequences and the shape of the developed world’s future

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On June 17, 2012

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will be more years of austerity, people winding up on the street, suicides and outright starvation.  In this fertile ground, the neo-nazi right will rise.  The left will most likely not compete, because they will refuse to create an enforcer class to protect their own people.  The police in Greece voted about 50% for the Golden Dawn, they will not protect the left, either, but will enable the rise of the Golden Dawn.

Under these circumstances a coup of some variety, whether military or otherwise (remember, Hitler never won a majority) is very likely to occur.  By blocking the rise of the left so that Greece can be looted, the oligarchs have created their own doom.

In general terms, we are in a pre-revolutionary period.  The supreme court coup in Egypt, the outright refusal to obey even the letter of the law let alone the spirit in the case of Wikileaks and Assange, the reign of Obama, are teaching an entire generation that you cannot fix the system from within, through the mechanisms of the old system or through even semi-peaceful protest.  The Pacific free trade deal will enshrine even more draconian IP laws and will extend NAFTA style takings regulations which give multinational companies sovereignty over governments.

This will not stand.  There will be global war, and there will be global revolution.  We are on track for it.  The question is when and how.  I would guess in less than 20 years the world will fully convulse.  Many of the current generation of oligarchs will be dead by then and will win the death bet, but their heirs will reap the whirlwind.  As for the population, I expect a billion deaths or so over the next 25 years from famine, disease, war and environmental issues.

Both populations and the oligarchs have refused, over and over again, to do what is necessary to peacefully restructure the world economy, but instead have opted to kick the can down the road.  Each kicking of the can has led to more corrupt and sclerotic economics and politics.

In the period between now and the revolution, some nations will take control of their own destinies.  Offered a choice between austerity in the international system and nationalism, they will choose nationalism.  It will not be as comfortable as being a member of the old international order from before the financial collapse, but that is not being offered.  A few nations will be able to work wedges to stay in the system and not suffer too much (Germany, France).  But most developed world nations will continue to suffer real declines in their standard of living, driven by inequality and the resource trap which we refuse to restructure out of.  The electrical economy wants to happen, but it will not happen on a wide scale until after war and revolution.  Such is the choice both our elites and the regular population continue to make.

Stop bailing out banks

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On June 8, 2012

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The correct thing to do is to force them to take their losses, making the shareholders and bondholders eat it.  Kick out the management, cut the banks up into smaller entities then refloat.  It is cheaper, avoids moral hazard and leaves you with banks which are actually solvent and can lend.

The lengths to which we will go to avoid doing the right, smart, obvious thing are astonishing.

The Scott Walker recall fails

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On June 6, 2012

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Ordinary people hate other ordinary people who are doing better than them.  The politics of envy isn’t about the rich, whom ordinary people almost never see, but about their neighbours.  And Americans want a mean economy, one where everyone has to suffer like they do.  As long  as the union movement is about a few people keeping higher wages, it will continue to fail.  A union movement which is centered around public service unions cannot stand.

Oil Prices and the economy for the next year to a year and a half

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On June 5, 2012

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Quick note, given I think that the economy is going to roll off a cliff in the new year, and soften between now and then, that means I think that oil prices are going to drop further.  I won’t be surprised to see them go under $50/barrel, unless something stupid like war with Iran happens.

Bernanke’s going to have to do quantitative easing again (aka. give money to banks) and may have to bail out Europe, since Europe probably won’t bail themselves out.  If Romney wins, Bernanke stands a good chance of losing his job, and he really doesn’t want that.  The conservative inflationist who replaces him won’t be noticeably different for the rest of the world, but if Bernanke is fired it’ll be the end of his legacy.  Yes, his legacy is depression no matter what, but he doesn’t see it that way, he thinks he can move to a stable Japanification scenario.  He can’t, but eh.

Oil prices dropping further will cause widespread unrest in the oilarchies, so expect more uprisings.  Also expect more slaughters.  The lesson of Mubarak is that if you give up power, you’re going away for life, so you might as well fight.  Lower oil prices will push Canada’s economy into the dirt, as well, but Harper has years to go on his mandate, so whatever.  A lot of oil sands projects will go bankrupt or into hiatus.

How long will the downturn last?  I don’t know.  Dropping oil prices means that there is room for growth, but the oligarchs want austerity so they can buy up more public goods and services on the cheap.  Privatization is the order of the day, and bankrupt states are what they want.

China has lost patience with the West. If the West won’t stimulate, then China doesn’t see why it should be required to carry the rest of the world’s economy on its back.

Things are going to get FAR worse before they get better.  That doesn’t mean there won’t be recoveries, there may even be a bit of one this year, but none of them will last, and none of them will do much good for anyone earning less than 6 figures.

Yes, Canada has Dutch Disease

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On June 1, 2012

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Or at least, the Bank of Canada thinks so, though they’ll never call it by that name:

Nonetheless, Canada’s current account was in surplus for many years before the crisis, and is now expected to remain in deficit indefinitely.

The main reason? A currency at parity with the U.S. dollar means Canadian exports are at a disadvantage and will be for some time. Indeed, until companies do more to improve their efficiency to offset the effects of the higher loonie, they’ll remain at a competitive disadvantage. Bank of Canada Governor Mark Carney has highlighted this point for more than a year.

No, really, the oil sector is killing non-oil jobs.  And the Conservatives are bringing in foreign guest-workers to do oil jobs.

This is how the prosperity of a country can be destroyed.

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