Month: March 2017 Page 2 of 3

The Fed Hikes

On March 16, 2017

So, the Fed has raised its rate by .25 percent. This is bad policy, and it is bad politics.

Employment Population Ratio

The unemployment rate is at 4.7 percent. As I have discussed before, the primary use for the unemployment rate is to determine wage push pressure, not whether people can get jobs (they can’t, and have given up).

Even by that policy, whose intention and largely successful result has been to keep employees from getting raises much higher than inflation, thus flushing money to the rich, 4.7 percent is not full employment. This raise is early.

That leads us to the politics. Yellen has been quite clear in her opposition to Trump’s avowed economic policies and that she intends to use Federal Reserve policy to neuter them. Given Trump hasn’t done anything yet but make promises he may well break, this seems premature, but the perception on the right will be, and possibly accurately, that Yellen, who barely raised at all in eight years of Obama’s economy, is suddenly raising when a Republican is President.

It’s not a good look, and I don’t see any reason to give Yellen the benefit of the doubt. Americans have only barely begun to get raises that put their income higher than before the financial collapse, with millions still unable to find work, and she raises rates?

The Federal Reserve is both irredeemably corrupt and anti-democratic, as well as an incompetent tool of the rich. At the least it needs to be brought back under Democratic control, a wing of the Treasury department, as it was before 1951.

In the meantime, this is another spike in Trump’s chances of a good Presidency, another spike in the jobless coffins of too many Americans, and another way of making sure that the rich get all the gains while everyone else eats their scraps.

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Trump Couldn’t Buy Coverage Like This

By Ian Welsh

On March 13, 2017

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All the semi-scandals don’t add up to one cover like this.

As for Trump’s program, I am so far largely unimpressed, not as a matter of ideological opposition, but of pragmatics. His health care plan is bad, and will hurt people who voted for him in ways they will notice: increased cost, less health care, and more suffering and death. It’s not the sort of chintzing which can be waved off.

So far he has no solid stimulus proposal (and such as the one he had was, it wasn’t very good). He hasn’t acted on free trade, beyond cancelling the TPP, which wasn’t in effect anyway. His proposed cuts to the non-military budget will have a negative trickle down and will not be good for the economy. Bannon’s okay with that, he has an ideological desire to destroy the post-WWII state, but Trump needs his people to feel good.

The one perhaps clever thing Trump has done is his asked for a 54 billion dollar increase to the military budget. Jobs created this way will tend to go to Trump supporters and communities. If you’re dedicated to slashing the rest of the bureaucracy, this is an excellent offset.

Well, it could be, depending on how many jobs it produces. The dollars/job correlation on defense funding is pretty lousy, and if I were Trump/Bannon I’d be leaning hard on the Pentagon to spend this in ways which will actually produce jobs, whether directly in the military, outsourced, or manufacturing.

Much remains undetermined, but so far Trump’s made only one potentially smart economic move. Let’s wait and see, within a couple months we should have a fuller picture and thus a better idea of his likely fate.

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Arctic Permafrost Defrosting and the Age of War and Revolution

By Ian Welsh

On March 10, 2017

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Globe on Fire For well over a decade, I have written that we are past the point of no return on climate change. My reasoning was that hothouse gasses already in the atmosphere, or which were for sure going to enter the atmosphere given our lack of action, were enough to trigger massive carbon and methane releases.

Methane is a far more potent greenhouse gas than carbon…

We’ve seen that methane, which accounts for only 14 percent of emissions worldwide, traps up to 100 times more heat than carbon dioxide over a five-year period. This means that even though carbon dioxide molecules outnumber methane 5 to 1, this comparatively smaller amount of methane is still 19 times greater a problem for climate change over a five year period, and four times greater over a 100 year period.

It is even more potent in the short run. Meanwhile, the arctic circle was about 30 degrees warmer this year than normal, and permafrost is un-perma-ing.

Huge slabs of Arctic permafrost in northwest Canada are slumping and disintegrating, sending large amounts of carbon-rich mud and silt into streams and rivers. A new study that analyzed nearly a half-million square miles in northwest Canada found that this permafrost decay is affecting 52,000 square miles of that vast stretch of earth—an expanse the size of Alabama…

…Similar large-scale landscape changes are evident across the Arctic including in Alaska, Siberia, and Scandinavia

There is no way we are avoiding near-worst case scenarios for climate change without aggressive geo-engineering (completly unproven, and requires political willpower). We will see temperature increases in some parts of the world which are currently highly populated. These increases will make those places uninhabitable outside of air conditioning. Changes in rainfall patterns will large current agricultural powerhouses to fail; an effect which will be compounded by the fact that we have vastly drained and polluted our groundwater in prime agricultural areas.

Later on, we will see vast rises in the ocean level. Virtually every city sitting on a seashore today will be gone in a hundred years, some of them a lot sooner.

This stuff is baked into the cake. It is essentially unavoidable. It has been effectively and politically unavoidable for quite some time now.

Do not expect the political, economic, and social arrangements you favor to survive this. The waves of refugees will be magnitudes larger than those currently shaking the Middle East and Europe. There will be water wars; people will not sit still while they are dying, they will fight. Some of those wars will involve, at the least, the use of tactical nukes.

Capitalism, Democracy, the Chinese Communist Party, etc…any system and group of people who can reasonably be blamed for this, will likely be on the block. When hundreds of millions to billions start dying, they will not go gently into that long dark night. No, they and those they leave behind will look for people, ideologies, and organizations to blame, and they will plenty of them, because everyone and everything who had any power has failed to prevent an entirely forseen and largely preventable disaster.

Our failure will not be considered acceptable to those who pay the bill, and our “capitalism” and “democracy” and “corporations” and “free trade” and everything else you can think of will be on the block, liable for destruction.

This is coming on faster than many expected. Added to ecosphere collapse, the current cyclical capitalist sclerosis, and vast arsenals, it is going to be immensely damaging.

If you aren’t old, or sick, you’re going to suffer some of this. If you’re young, you’re going to suffer a lot of this, assuming you aren’t an early casualty.

So it is. So it shall be. We were warned, we chose not to act, because corporations needed profits or something.

So be it.

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So Trump and Republicans Are STILL More Popular than Clinton and Dems

By Ian Welsh

On March 8, 2017

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After the last month and a half, after endless brouhaha and constantly “losing the media,” here are the favourability ratings according to the Suffolk poll.

Pence 47/35% +13

Trump 45/47 -2

GOP 37/48 -11

Media 37/50-13

Dem Party 36/ -16

Hillary 35/55 -20

Congress 26/52 -26

As Matt Stoller points out, it is also fascinating that 39 percent of union households approve of Democrats, while 50 percent disapprove.

Takeaways:

Trump isn’t losing his war with the media, and he’s not wrong to attack them.
Trump should be scared of Pence, because the population would rather have him as president, and, by all reports, so would most Congressional Republicans.
People may not like Trump much, but they aren’t wishing they’d had Clinton in charge (though doubtless some of the disapproval is from Democrats angry she lost).
Trump is more popular than the Republican party, he has room to use that to get them to do what he wants.
Pence aside, if Republicans try to impeach Trump, they’ll have problems.

I think it’s fairly remarkable that after all the mini-scandals about Russia, the screaming about immigration, and so on, that Trump’s numbers are still this high. It simply hasn’t penetrated; people are going to give him time to prove himself.

What will matter is Trump’s results. So far he’s not moving in the right direction on that (as with the new healthcare bill), but he still has time to course correct.

What he should take away from this is to take the media less seriously. By all means, de-legitimize them as much as possible, but don’t let them rile him. Work on his most important promises: a better healthcare bill (still possible, though the current one is in trouble) and a better economy.

Little else really matters, it’s just a distraction.

And keep an eye on Pence.

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Brazil’s Economic Tumble

By Ian Welsh

On March 8, 2017

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No surprise, but…

Brazil’s economy has fallen further into its worst ever recession, contracting by 3.6 percent in 2016…

…Brazil’s economy is now eight percent smaller than it was in December 2014.

Recently, there was a legislative coup in Brazil, but that was a symptom, not a cause, as are Venezuela’s problems, the electoral reversal in Argentina, and so on.

All that is required to understand what is happening is this chart of commodity prices.

Bloomberg 5 years commodity index March 8 2017

We have a very foolish economy. The developed world has been in austerity since 2008, China does not have a rich enough middle class to take up demand. Without demand for goods and services in the developed world, commodity prices have crashed.

Our lords and masters don’t want growth they can’t capture, and they value low wages and debt-slavery more than they do a thriving economy. As a result, the economies which prospered by supplying commodities to China and other manufacturers have stumbled and crashed out. This simple fact is behind many headlines which seem unrelated to it, including virtually every change of government in South America.

A globalized economy is moronic. It makes countries dependent on policies over which they have no control. There is virtually nothing that Brazil’s government can do about this (though engaging in austerity of their own is stupid); nor was there a damn thing Venezuela could do about it (though, yes, the Bolivarian economy was mismanaged, something I said as far back as 2004).

This is by design. Our elites don’t want national elites to be able to make policy. As a result, there are only two nations which approach full sovereignty in the world: the United States and China. Only they are powerful enough and rich enough to make unilateral moves without suffering vast consequences (and maybe not even them). The EU could almost be sovereign, if it wasn’t run by ideological morons, but it isn’t, and Russia has enough resources and military power to have some sovereignty, and that’s basically it.

And so, the Brazilians will suffer what they must, because however large and rich they think they are, they are still a non-sovereign state in the ways that matter in our world.

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The GOP Healthcare Plan

By Ian Welsh

On March 7, 2017

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This is a good overview.

I’m not going to waste a lot of time on it. Other than the changes to state-based regulations, the removal of the individual mandate and the removal of the tax on good healthcare plans (so-called gold-plated plans), as it stands, this plan is slightly worse than Obamacare in pretty much every way.

It is not an improvement, it is not what Trump promised in his speeches, though it’s not far from what was in his policy documents. It is also not a disaster, but it certainly won’t be a win for Trump or make his followers feel better off and it was one of two ways he could, or can, do so. The other would be to improve their economy.

This matters far more to Trump’s future, and his presidency, than all the noise over immigration or Russia. He should have pushed hard for something simple that was an obvious win; something Democrats would find it hard to oppose.

This is not a win for his supporters, or for him.

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The Myth of Balder

By Ian Welsh

On March 6, 2017

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by Christoffer Wilhelm Eckersberg (1817)

Once upon a time, in a far away world, there was born to the Allfather and the Goddess of Wisdom, a boy they named Balder.

Balder is called the Shining One, but what matters is that he was he was the gentlest of all the Gods, and the most beloved, for he was the God of Peace.

His mother, Frigg, loving him greatly, sought to ensure he could never die, and went to all the worlds and asked every living thing for its promise not to harm Balder. The only one she did not receive a promise from was mistletoe, for it was young.

And so, when the Loki, the God of Mischief, decided to kill Balder, he tipped an arrow with Mistletoe and tricked a blind God into shooting Balder, and so died the Shining God, The God of Peace, and the most beloved God of all.

His mother, Frigg, bereft, went to the Goddess of the dead and asked that he be allowed to leave the land of the dead, and live again. Hel was willing to allow it, so long as everyone who lived agreed.

And so Frigg went, again, to all who lived on all the worlds, and asked their permission. All agreed save one, though none agree who that one was: Loki, or the Willow, whom he tricked, and who has wept ever since that it was so.

And so Balder stayed dead, the most beloved of all the Gods, and he will not live again, until after the final battle of Ragnarok.

Please consider the meaning of this story before continuing…

Peace is the most precious and beloved of all things, and the most fragile. All it takes to kill peace, is one person who does not agree to keep the peace. And peace cannot be restored so long as even one person does not want it restored.

Obviously this is not quite true, but it nonetheless contains a great truth worth thinking on.

We live in a world where we have de-mythologized and, as such, we rarely consider the truth behind many myths or what they were trying to say.

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The Wild 2020/2024 Elections

By Ian Welsh

On March 3, 2017

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So, Facebook CEO Zuckerberg and Oprah are both reputedly interested in being President. Zuckerberg is supposedly lining up for 2024, and has certainly been acting like it.

George Clooney’s name has been bandied about.

So has a more normal candidate, New York Governor Andrew Cuomo, a neoliberal’s neoliberal and near-complete asshole.

2016 didn’t just teach aspirants that right-wing authoritarian populism could work, it told celebrities, who know Trump mostly as a celebrity (which is reasonable; he’s not a big time billionaire, nothing compared to Zuckerberg or Bezos and Thiel and so on), that if a second rate celebrity with serious personality issues can make it to the President’s chair, so can they.

I’ve seen some political operatives bemoaning this, but I’ll be frank: I’d take Oprah or Clooney in a heartbeat over Cuomo. I know he’s a right-wing tard who does the very minimal good stuff he has to to stay elected.

(Zuckerberg, on the other hand, I’ll pass on–as he himself said: Anyone who trusts him is an idiot.)

Unlike many, I don’t see this is bad, per se. It is bad that the political class has failed so badly that they are no longer trusted and people are looking outside the political class. It is bad that the US and the world has created so many vastly rich people that they can do this, not needing to have a political party firmly behind them.

But given that we live in an oligarchy and a celebrity state, and given that the politicians have failed and failed and failed, it’s quite reasonable for Americans to try to pull from different pools.

And, as I say, I’d take Oprah or Clooney over any neoliberal in a heartbeat.

This is where we are, it is where the decision of the political class to sell out to money has led us, and there’s little point in bemoaning it, though one should certainly note it.

It is as it is.

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