Ian Welsh

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

Category: Trump Era Page 14 of 16

Trump and the Art of the Strongman

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On January 6, 2017

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Trump has now taken a number of firms to task, over Twitter, about moving jobs to Mexico. While there’s some disagreement, it seems that some critics have backed down.

“I know from talking to business people that no major firm wants to be a subject of a Trump tweet,” says Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics. He says companies realize Trump controls the Justice Department, the Defense Department, the IRS, the Treasury and regulatory agencies, and “the amount of control that intersects with what companies are doing is enormous.”

This is, first, an implicit rebuke to all the Presidents who did nothing, and to all the fools who said they could only do nothing.

But, it is also about the art of getting powerful people to bend to your will.

The classic method is to pick out someone, someone powerful, and break them. Humiliate them, destroy them, and do it publicly. Make them grovel.

You make an example of someone. In almost every case, and certainly in Trump’s case, were the powerful to band together, they could easily take you down. You must make sure they don’t do that.

So you make an example of someone, and then you treat others kindly.

“You can have tax cuts and beautiful labor law cuts and a privatizing stimulus, but in exchange I need you to keep jobs in America and bring some back.”

That’s the deal.

The problem is that many CEOs and billionaires will want to take all the goodies, and still move jobs overseas. Normally, in fact, that’s what has happened: Tax cuts were given, and the savings were used to accelerate offshoring and outsourcing and to do massive stock buy-backs to enrich executives.

So Trump is putting companies on notice that this won’t be tolerated, and I believe to really drive the lesson home, he will need to break someone.

Be very clear, this is easy to do. The President is fantastically powerful. Unleash the FBI, NSA, DOJ, and IRS on any major firm, and you will find offenses. Moreover, in almost every case, they will include criminal offenses–if you allow them to be.

Then, you charge executives with crimes rather than immunizing them with fines, and you tie them up in court for years. If they lose, you throw them into a maximum security prisons, and you let bad things happen to them.

Even before this sequence is through, people will get the message.

Presidents have chosen NOT to do this, even in cases of rampant corruption and criminality (Obama being the worst offender by far, with his wholesale immunization of fraud and racketeering in the financial industry).

But you don’t have to play the game that way, and I’m guessing Trump won’t. And that’s why executives are bowing, because they’re scared he will break someone to demonstrate his power, and they don’t want to be the executives he hauls out of the crowd, to whom he has his goons deliver a beat-down.

This is nasty pool, but I wouldn’t weep for whoever becomes the example. They’ll almost certainly have it coming. The injustice won’t be in what happens to them, but in the fact that all the others will be let-off so long as they kow-tow.

We’ll talk more about this principle, with regards to the Federal Reserve and the intelligence community, for now, watch for it.

(Trump gets his second term if he delivers enough for his base. This is existential for his administration.)

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2016 In Retrospect

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On January 3, 2017

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There seems to be a general belief that 2016 was a particularly bad year. Part of that is the twin political events of Brexit and Trump, and part of it seems to be that a number of particularly beloved celebrities died.

But unless you were in a few specific places, like parts of Syria, and certainly if you were in most of the developed world, your odds of having something bad happen to you were about the same as they had been in 2015.

Certainly Brexit and Trump are both, potentially, earthquakes, though their severity remains to be seen, and I regard both as consequences of decisions that were made over a period of decades.

What made them seem so severe, I think, is that they were, to the liberal classes, surprises. In both cases, polls indicated they wouldn’t happen; and it was conventional wisdom among certain groups that both events were absurd.  Trump, in particular, was treated as a grotesque joke when he announced his candidacy, and right up to the last moment, almost literally, icons such as 538 and the New York Times insisted he was almost certain not to win.

When he did, an entire world view went away.

Because they thought it had been impossible for Trump to win. He was a joke, according to that world view, and those who held it have seized, in particular, on “Russia did it!” It was a deus-ex-machina, because their world model simply cannot accept that it happened.

And, in both cases (Brexit and Trump), there is a great deal of shaming and othering of those who voted the “wrong” way. They are castigated as stupid and immoral, people who are too dumb to vote in their self interests, to understand how the world works, motivated almost entirely by racism.

Bad people.

So many liberals in America and Britain now believe they live in countries where half the voting population are evil, stupid racists and that those people are now in charge.

Oh, and the big, bad Russians are also responsible.

While some are willing to admit that perhaps, just perhaps, the policies that even they voted for and/or supported (under Blair, Clinton, Obama, and the EU) might have something to do with all of this, the metaphysics of most essentially boils down to the notion that bad people (Russia, racists) combined with stupid people, are destroying our world.

Because they can see little responsibility for themselves (either in past policy or in the specifics of the campaigns (Clinton’s was notably incompetent)), they have eviscerated their sense of their own power, and thus their ability to create change.

Responsibility and power are exactly equal to each other. You have exactly as much power as you have responsibility, any mismatch is a denial of reality, and if society abets you in denying that reality, as it often does, by giving you more credit or less blame than you deserve, it does not change either your responsibility or power.

It is also true that an accurate perception of blame enables correct action. When Clinton and her team completely fumbled their campaign, not removing them from all positions of power indicates a willingness to tolerate failure again and again. Indeed, after Clinton, the presumptive front-runner, was defeated by Obama in 2008, perhaps the realization should have dawned on us/her that she and hers were incompetent and that she should not be the presumptive candidate. She started with a vast advantage and lost it.

Meanwhile, in the eight years Obama has led the Democratic party, vast losses have occurred in State Houses and Congress.

As for policies which have lead to vast numbers of Britons and Americans being willing to vote for Brexit and Trump; well, I have written on those subjects more than enough.

Liberals and centrists, as a group, deny responsibility, and thus deny agency. They refuse to put the locus of responsibility in those areas over which they have control. Instead, they blame forces over which they have no control (Russia) or over which they have less control (the current racism that is ex-nihilo, completely unrelated to the policies they have championed for decades).

It is not the crisis, as such, that predicts the future, it is the response. I was able to accurately predict the shape of America and Europe’s economy because I saw the response to the crisis in ’09. The day the outlines of Obama’s stimulus were announced (he’d already fumbled the bailouts, by bailing out the rich rather than ordinary people), I wrote that American jobs and wages would not recover for 20 years. Eight years later, that’s still looking accurate. (The unemployment rate is not what matters here, the jobs/population ratio is.)

So, seeing the liberal response to 2016’s political crises, it is clear that, at least so far, liberals have not learned the necessary lessons. Thus, trends will continue in the wrong direction. Locating the problems as beyond their control, liberals have self-emasculated.

There is still time for that to change, and perhaps it will. So far, however…well…

Happy 2017.

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Trump Is the Next Stage of the Disease

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On December 22, 2016

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One of the more common mistakes regarding Trump is to see him as something that came out of the blue; unheralded and strange.

Trump is a kleptocrat. The US is a kleptocracy. It “formally” became a kleptocracy when the Supreme Court ruled in Citizen’s United that money was speech. (It is ironic that Trump won with less money, but it doesn’t change this fact.)

America was pragmatically a kleptocracy in 2009, when Obama entered office and continued his predecessor’s policy of bailing out bankers, taking houses away from little people and not prosecuting bankers for clear crimes.

Punish the people without money; let the people with money walk.

Trump is a walkimg emoluments violation: He should be impeached month two of his term for his refusal to sell his company.

But he won’t be (though he may eventually be impeached if Republicans decide they’d rather have Pence as President, and that they don’t think Trump’s followers will personally visit their houses to discuss the issue).

Kleptocracies are run for the benefit of the rich. It is that simple. A monarchical kleptocracy like Putin runs, and like Trump seems interested in running, makes sure the peasants get something, which means it may feel slightly better than what came before it. (Putin is very, very popular and was so even before the recent wars for the simple reason that Yeltsin was far, far worse.)

But they are still kleptocracies. Trump’s first order of business is tax cuts, mostly for the rich. There is a report that his team has asked for information on funding of environmental groups, and Trump plans on shutting down NASA’s climate change group.

These things get in the way of making money; and because environmentalism was pushed during a period in which the economy was, for too many people, a negative sum game, it is also unpopular with his base.

But these things are extensions of the already-existing Republican party orthodoxy. Tax cuts and fuck-environmentalism is where Trump stands in solid agreement with the kleptocracy that already ran the country. These things are not what make Trump interesting, or unique, they are what make him simply another stage of the disease.

Understand that what we had in 2016 was a crisis point. There were three options. Clinton was for the status quo kleptocracy. More or less the same, with a bit more help for those hurting the most, like students.

Trump was for monarchical kleptocracy, minus globalism: add tariffs and one-to-one trade deals to the mix, change up the foreign policy, make sure some more people get jobs, while gutting worker rights in general.

Sanders was an opportunity to actually change some of the key domestic policies away from kleptocracy: While not ideal, he was clearly a change from the status quo in a kinder direction, and he came fairly close to winning the Democratic primary, despite an active conspiracy by the DNC to stop him (no, no, it meets the actual definition of conspiracy).

Of those three options, Americans chose Trump: a new stage of the kleptocratic disease. Double down on transfers to the rich, but let’s give more scraps to the poor and fuck over some foreigners to get those scraps while burning up the world even faster. (Obama was not good on the environment; he was bad, but Trump will be much, much worse.)

I am not panicking, or running around screaming. I regarded something like Trump as nearly inevitable, with a small, but real, chance to avoid him by embracing the populist left (in this case, championed by Sanders).

In fact, Trump is not as bad as what I expected. His victory, a squeaker, may wind up precluding Trump 2.0, that is, the guy who would run next time, having learned from Trump what was possible, but far more disciplined, focused, and ideological than Trump.

Trump has the support of some powerful ideologues (most notably Bannon), and he has a world view, inchoate as it is, but he’s a very flawed man. Despite being very good at getting what he wants, it is undeniable that he lacks discipline, focus, and a broad base of understanding. Nor does he self-identify as being ideologically driven. Bannon may want to be the Lenin of the right, Trump does not.

More to the point, because the actions of US elites (and the world’s), along with the repeated votes of US voters, kept pushing America down this path, for decades, I regard running around screaming as pathetic. It’s like running full speed at an oncoming train for five minutes, with plenty of opportunities to veer off, then complaining when you get hit.

Many Americans, and the vast majority of their elites, affirmatively chose, repeatedly, to take actions and institute policies which were most likely to lead to Trump. Those who opposed those policies lost, and a huge chunk of the population sat on the sidelines doing nothing.

There were many, many opportunities to turn away from this path; the largest was to NOT bail out bankers in 2009.

In 2009, I wrote the US off. I knew that Obama had affirmatively made the choice to save oligarchy from itself (quite different from FDR saving capitalism, but not oligarchy). I knew then that something like Trump was the most likely outcome, but I expected worse than Trump, so far, seems to be.

So running around screaming is ridiculous. This was a choice, made affirmatively, repeatedly. If Trump had lost to Clinton, Trump 2.0 would have tried in 2020 and almost certainly won. The US is a kleptocracy, and eventually the disease would move to the next stage, if not reversed.

What I seek to do now, with regards to Trump, is two things. The first is simply to understand him and his movement. We’re going to be living in his America; it’s his world, for some time, so we’d best figure it out.

The second is to poke people who didn’t and still don’t get it, because until enough people do, we will keep losing to kleptocrats (whose number includes both Clintons) and people like Trump.

These two things are meant to support realistic assessment of Trump, the US, and the world so that effective action can be taken.

I have a friend who, as a result of Trump, is leaving the US with his two children. He has carefully looked at Trump, made his assessment of the US’s future and chosen a course of action. That is effective.

Make your assessment, take your action. Stop the hysterics. I strongly recommend that many people, who are most worked up, take two weeks off the internet, except for unavoidable work related tasks. Calm down, think, and decide what you need to do for yourself and your dependents. Heck, depending on who you are, you might even be one of the winners from Trump (they will exist).

Then decide what you’re going to do. Understand the consequences of your actions. Make your assessment. If you really think Trump = Hitler you should be getting the fuck out or preparing to fight, and I do mean fight. If you don’t, what do you think he is?

Get real.

In the meantime, I will continue to keep an eye on Trump and his team and try to provide analysis without hysterics or panic. Fear may be appropriate (it is for some people, for sure), panic is not.

But it will be vastly harder to fix this if people keep pretending it wasn’t affirmatively chosen, and not just by people who voted for Trump this time, but by everyone who supported the previous status quo, starting around 1980. Kleptocracy is neoliberalism’s child, its logical end-result, and Trump is just a new stage in kleptocracy, and yes, many people worked hard for this including most people who voted against Trump.

Understanding how and why you got here is necessary to get out of here–not in one piece (it’s too late for that), but without losing any body parts you’ll really miss (always choose to lose a leg–the prosthetics are great).

Trump: Just another stage in the disease of kleptocracy, made inevitable by neoliberalism and affirmatively chosen by modern “liberal” hero, Barack Obama.

Own it.

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Trump and the Taming of the Oligarchs

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On December 21, 2016

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Some years ago, I read an article about a Russian oligarch who had wanted to close a factory in a Russian town in which the factory provided the only real jobs.

The people complained to Putin, and some time later Putin appeared on stage in the town with the oligarch. With an eye on the oligarch, Putin explained that the jobs would be kept in the town.

Putin’s speech was described as being cold and contemptuous towards the oligarch.

When Trump convinced Carrier to keep some, not all, jobs, in America, he did so largely through bribes.

What will be interesting, however, is to see how much he makes people bow.

Putin broke some oligarchs and allied with others, but the important thing to understand about Putin’s relationship with Russian oligarchs is that Putin is the senior partner. He is in charge. They can do well, even very well, but if they challenge him, he will force them to bow–or break them.

(For the record, I have less than zero sympathy for the oligarchs; I know how they made their money.)

We all, I presume, remember the picture of Romney meeting Trump, begging for the Secretary of State job (which he didn’t get). I suspect Trump really did want to give the job to Romney, simply so he could force Romney to bow on a regular basis, but Trump’s loyalists hated Romney too much.

Meanwhile, the tech oligarchs have all also met with Trump. He was gracious, but they came to him, despite their clear opposition of him.

One of the issues in the US is that its oligarchs think they don’t have to serve the public good. Apple and other companies have billions stored overseas, they dodge taxes, and they move jobs overseas at the drop of a hat.

They also think they don’t have to bow to the President.

Now Trump cares somewhat about Issue (by which I mean jobs, not tax dodging), but he’s going to care a lot about Issue (bowing to the President). And Bannon cares a lot about both, because Bannon despises America’s oligarchs and wants to see them humbled.

Trump, well, Trump likes power. He wants to be loved by the mob, oh yes, but he values loyalty greatly, and, if crossed, he likes breaking people.

So I expect to see a number of oligarchs and other powerful people made examples of, forced to bow–indeed, forced to kneel.

If Trump wants to get his way, this is necessary. He needs these people to do some things they don’t want to do (make less money by bringing jobs back to the US), and they’ll need to be scared of him.

They need to be personally scared. They need to believe they personally aren’t immune from his power.

Trump will enjoy this. Bannon, if I read him correctly, will enjoy it even more.

Under Trump, oligarchs will do well, even very well. But not if they don’t bow. He wants some crumbs for ordinary Americans, and he needs the oligarchs to give them.

So one of the ways I will know if Trump is going to be successful (i.e., get his people enough goodies to get his second term, and the accompanying adulation) will be by watching the “kneeling to bribes” ratio, and seeing what Trump does to those companies who refuse to cooperate.

Be very clear on this, folks. This is something about which most people are complete idiots.

There is nowhere to go.

The rich cannot actually move their companies overseas. Where are they going to go? Europe will regulate them even harder (see all the problems Google is having). They don’t want to live in China or Russia, and China and Russia are the only countries strong enough to tell America to bugger off. Plus, of course, Putin and the Chinese Communist party won’t just make them kneel, they’ll make them get down on their bellies and grovel like worms.

No one else can stand up to America. Oh, Europe could, if it had its act together, but it doesn’t; and it wants regulation that repel oligarchs. Tax havens are a joke; they exist because the great powers want them to exist, and the second the Treasury cracks down on them, they will go away.

So if Trump wants to put the screws on, he can–especially if he’s smart about it. You make an example of a few people, you reward the others for cooperating, and soon they’re all bowing and scraping.

That’s how it works.

Let’s see if Trump knows how to play the game.

(And, for the record, no, this isn’t good. But the financial crisis proved we already have rule of men, and that this rule is to be used solely to enrich the few and immiserate the many. Rule of law will continue to disappear. I have no sympathy for most of the US’s oligarchs, because, while not as outright nasty as Russia’s oligarchs (on average–some of them are just as bad), they are almost all truly bad people who have strangled the US, and the world, to get where they are.)

The games are on, Caesarism continues its rise. It’s what Americans voted for and elites worked hard to create the conditions for it. Crying over it is like crying over physics.

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Trump’s Relationship with US Intelligence

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On December 20, 2016

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Trump, as has been reported many times, does not attend most daily intelligence briefings. The CIA, FBI, and NSA have said that Russia tried to elect Trump through hacking, and Trump has fired back at them.

Liberals are wringing their hands about Trump’s unprofessionalism and disrespect for the intelligence agencies.

Some of this is just embarrassing: Given how intelligence agencies performed in the Iraq war, and their dubious and incompetent behavior in many other episodes, and given the historically violent, anti-democratic nature of the CIA overseas, and the FBI and NSA domestically, anyone who is even slightly left of center should be deeply suspicious of anything they do.

But there is a deeper issue, which speaks (again) directly to the inability of most non-Trump people to understand the Trump argument about the world.

The CIA says bad things about Trump, and Trump answers the same way that a hard left-winger would, and that anyone sane should: “Whatever.” Then he points out what a “heck of a job” they did in Iraq.

Daily intelligence briefings are one of the ways that intelligence agencies and the Deep State control presidents. Such briefings set the frame; they create the reality within which Presidents operate, frame the available options, and so on. Start the day with one almost every day, and you will be influenced to see the world the way they do.

And then you become Obama: Handmaiden to the same intelligence agencies you criticized while running your campaign.

Intelligence briefings are dubious activities. If Trump wants specific information, he can ask for it. If an issue is genuinely urgent, the head of the agency can push it personally, but taking those briefings every day is a poison pill, and I am highly skeptical of the notion that it leads to better decision-making.

Instead, it is almost certain to lead to status quo thinking, plus the perpetuation of those activities intelligence agencies most enjoy. (Say hello to Obama’s massive ramp up of drone assassinations, and to his huge crack down on whistleblowers.)

This the same as Trump not bothering to talk to State about his Taiwan call. Of course State is going to say, “Don’t do it,” they are wedded to “One China,” and they’ll also leak like a seive (as they and the CIA and FBI have already been doing).

Why even bother to talk to them about it? Oh, one can make arguments, but if you’re sure you want to change things, and you know they disagree, all talking to them does is give your enemies more opportunities to sandbag you.

There’s a lot that Trump wants to do that I don’t agree with, but putting the Deep State in their place isn’t one of those things. They serve at the President and Congress’s pleasure; they are not part of the Constitution, they do not have to be consulted, and, given their abysmal performance during the last few decades, it’s hard to see why any particular respect should be given to them.

This is the world model that Trump (inasmuch as he ascribes to a “world model”) and Bannon live in, Bannon especially. They do not grant that the people who have been running government are smarter or more competent than they are, they believe the reverse.

So, no, they don’t respect the CIA’s opinion. To them, the Deep State is a potential adversary who needs to be brought to heel.

More about bringing people to heel in a later post.

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The Person Most Responsible for Clinton's Loss

Everything Cost Clinton the Election

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On December 17, 2016

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When the result (in popular vote margin in the key states) is as close as it was in the US election, every factor in play contributed to the result.

Did the Wikileaks release cost Clinton the election? Probably.

Did Comey’s last minute letter to Congress about Clinton’s email cost the election? Probably.

Did Clinton choosing not to campaign in Wisconsin cost the election? Probably.

Did Clinton’s neglect of the Rust belt cost the election? Probably.

Did the Clinton campaign’s refusal to listen to locals cost the election? Probably.

Did the Clinton campaign’s flawed model cost them the election? Probably.

Did Trump’s superiority in earned media cost the election? Probably.

Did Jared Kushner’s innovative ad campaign cost Clinton the election? Probably.

Did voter suppression cost Clinton the election? Probably.

Did calling a quarter of the electorate “deplorables” cost Clinton the election? Probably.

Right. Hopefully you have understood the point.

What is happening right now is hysteria. An attempt is being made to overthrow the election by saying Russia influenced it, through Wikileaks and Guccifer 2.0.

So far there is no hard evidence for this, and Wikileaks, at least denies it. That US intelligence believes it to be true is nice, but almost irrelevant to anyone with enough memory to remember what they believed in”high confidence” about Iraq.

I seriously suggest you READ the NIE on Iraq from 2002. It was essentially ALL WRONG.

So, if the intelligence community and Obama want to make this charge, they need to release the hard evidence. Their word is not good enough, especially that Putin was personally involved.

I point out, once more, that even if true, this amounts to “overturn the election because a foreign government helped release TRUE information about one of the candidates.”

If it actually occurred, I would regard it as a neoliberal coup, similar to the ones which occurred in Greece and Italy, meant to insure policy continuity in the face of someone who doesn’t agree with all the tenets of neoliberalism.

I don’t think faithless electors will throw the election (but who knows), however I note something else important: creating this as the primary storyline mitigates, hard, at looking at stuff which Democrats can actually control: like their own abysmal campaign, at virtually ever level from basics like canvassing (“we don’t need literature”, said the Clinton campaign), to their model, to their message “America is already great”, “deplorables”, to clearning the field so a candidate with huge negatives would be annointed the candidate.

If Democrats had gotten even one or two of the things listed above which were in their control right, and which did not depend on their opponents actions at all (and the list is incomplete) Clinton would almost certainly be President-elect today.

Running against Russia in the election was stupid; the act of a Goldwater girl who doesn’t understand that the USSR fell almost 30 years ago. Making them the primary actor in Clinton’s loss and Trump’s win pushes attention away from the things which can be fixed by Democrats unilaterally, and is dangerous to boot, both domestically, by degrading political norms even further, and internationally, by hyping a heavily nuclear armed state as an enemy when America has almost no actual interests in opposition to Russia’s. (Syria and the Ukraine are unimportant to the US’s interests. Period.)

Meanwhile, the Democrats have spent the last eight years being slaughtered at the State and local levels. In February of 2009, I wrote that Obama was planning to ditch the 50 state strategy, and received a torrent of abuse (mostly from Kossacks.) The Whitehouse said that was bullshit; their hero wouldn’t do that!

He did.

Self-goal. Something completely under the party’s control that they chose to do, which hurt them.

In the end, whether or not Russia released some derogatory–but true–information about Clinton and other Democratic candidates, that act was only one of many factors which cost Clinton the election.

Concentrating on it is stupid, demagogic, and dangerous and allows people whose fuck-ups were far more responsible for the loss to largely slide.

Democrats should concentrate on what they can control, and understand that, as the side with less guns, constitutional norms protect them more than they do the other side.

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The Course of Empire by Thomas Cole

The Lies at the Heart of Our Dying Order

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On December 16, 2016

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One should understand why people have lost trust in experts, the media, and politicians.

It is not difficult, it is the same reason people lost faith in Soviet Communism: Promises were made that turned out to be lies, those promises were not kept.

Soviet Communism was supposed to lead to a cornucopia and a withering away of the state. Instead it lead to a police state and a huge drought of consumer goods, and often enough, even food. Communism failed to meet its core promises.

The world order we live in was born in 1979 or 1980, with Thatcher and Reagan. It made a few core promises:

  • If the rich have more money, they will create more jobs.
  • Lower taxes will lead to more prosperity.
  • Increases in housing and stock market prices will increase prosperity for everyone.
  • Trade deals and globalization will make everyone better off.

The above core promises all turned out to be lies. It’s that simple. For the last 40-odd years, most of the population experienced either stagnation or decline.

Understand clearly: By 1979, people had lost faith in the post-WWII order. They were willing to try something new.
That “new” order has now betrayed too many people, and it is falling. It will continue to fail. We are in the twilight of neoliberalism (a longer article on that topic is forthcoming).

This is the reason why people are going for “fake news.” This is why people are willing to listen to demagogues. This is why people don’t trust the press–and why should they? The press has lied to them repeatedly, it is the original fake news. This is why people don’t listen when hundreds of economists say Brexit is bad–why should they? Most economists missed the housing bubble.

Neoliberalism has discredited everyone who bought in to it. Who didn’t buy into it? Well, the hard left and what people are now calling the “alt-right.”

So people are turning in those directions, though more to the right. Because people are ideologically and identity driven, and most are not intellectuals, what they look for are signifiers that someone is not like the people who screwed them, who lied to them for 40 years.

Trump does not talk like those people. Farrage does not talk like those people. On the left, Corbyn does not talk like those people and, to a large extent, neither did Sanders.

And so, people are turning to people who don’t parse like the “typical” elite. Many of those people are also selling them a bill of goods (Trump, to a large extent), or are nasty pieces of work (Trump, Alt-Right). To a lot of people, however, that doesn’t matter: They can’t take the pain any more. They are assured a long decline and they will take a flyer on anyone who might shake things up.

Lying is bad policy. It may get you what you want in the short run, or even the medium run, but it destroys the very basis of your power and legitimacy. Lying is what neoliberal politicians, journalists (yes, yes they are neoliberal), and their experts have done to themselves and they destroyed both their own power and legitimacy and that of the order they supported. No one with sense trusts them: If you trust these people, you have no sense, it is definitional. I always laugh when some idiot says, “But 90 percent of economists think X is bad.”
FAIL. They also missed the housing bubble. They lied or were “mistaken” about trade deals. Their opinion means nothing.

All this screaming about fake news is something I will take seriously when the New York Times, who helped sell the Iraq war based on “fake news,” is listed as fake.
The current order has very little credibility left, and they are losing more and more. Look at all the poll failures: Somehow, the polls almost always get it wrong against insurgents, not for them.
No, neoliberalism is dying, and its defenders are discredited, and both things deserve to be the case. That does not mean its death-throes will be pleasant (they won’t be) or that what replaces it will be better, just that it has run its course.

Those who supported it took their rewards: The top tier got filthy, stinking rich, their courtiers received good jobs and money, even as both disappeared for their victims. They will have to be satisfied with that, because posterity will be absolutely scathing to them, as it is to the generation leading up to World War I.
Lie repeatedly, fail to keep your promises, and things like Trump and Brexit will be the result. It is that simple.

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Federal Reserve Seal

Trump’s Coming Confrontation with Yellen and the Federal Reserve

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On December 15, 2016

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Okay, so the Federal Reserve, coincidentally, now that Trump has been elected, has decided that the economy is at full employment and they’ve raised rates.

The funny thing is, it’s true. Sort of. The unemployment rate (u-1) is low enough to be considered “full employment.” What that means is that the labor market is tight enough that, for the first time in Obama’s reign, workers actually got raises in 2015.

According to the economic policy regime which has run the Federal Reserve, and the US, since Greenspan, that can’t be allowed. The moment employment starts causing “wage push inflation” (wage increases faster than the general rate of inflation) it must be stopped.

Of course, out of Obama’s era, there has been only one good year so far (though 2016 will probably come in as decent), and the only reason the unemployment rate has improved is because millions of Americans gave up on finding a job. As a percentage of the population, there are about as many jobs as there were at the bottom of the last recession.

There was quite a bit of growth, but it didn’t make it into wages. The only way it will do so is if the labor market stays tight for years, because there are years (decades, really) to make up for almost all the gains going to the top few percent.

So, Yellen probably “should” have raised rates six months or so ago. She didn’t, probably because she’s Obama’s appointee–the same way that Bernanke didn’t when he “should” have because he was Bush’s appointee, and wanted a Republican to replace Bush.

Under Barack Obama, the deficit (how much the US pays on its debt) dropped, but the debt increased by $7.917 trillion (not including the first year, which he didn’t control). The deficit dropped because the Federal Reserve kept interests rates extremely low for years and years and bought up a pile of debt as well.

But the debt is higher than it has been, in relative terms, since the WWII debt splurge. And if Yellen raises rates, debt service charges will start to increase (not immediately, much of it is in longer term instruments).

More to the point, higher interest rates are meant to make sure that wages increases stop, the unemployment rate increases, and that (in effect) the economy never actually recovers from the financial crisis.

So Trump has a problem. He needs cheap money if he’s to have a good economy, and Yellen is ending the cheap money era–just as he’s been elected.

It’s not completely a coincidence, but it’s not entirely not a coincidence, and if I were Trump or his team, I’d be livid, and it looks like they are.

Worse, Trump has a big stimulus plan. It’s a bad plan, but it’ll still create some jobs, and Yellen has said:

“I would say at this point that fiscal policy is not obviously needed to provide stimulus to help us get back to full employment,” Yellen said.

That’s Fed speak for “spend the money if you want, but we’ll neutralize every dollar you spend.” Which, by the way, has been orthodox Fed policy since Greenspan and arguably Volcker–almost 40 years.

So, Trump (and Bannon) if they want a good economy and their stimulus to work, have a problem: Yellen and the Federal Reserve Board. And Yellen has stated she won’t step down till her term ends, in 2024.

They can do two things. The first is to wait, not for Yellen, but for the terms of other Federal Reserve members, to expire. Two slots of the six (seven with Yellen) are currently empty, he can fill those. That gives him two. One, Powell, is a Republican and may be amenable; and Fischer’s term expires June 2018. So by late 2018, Trump might have a Fed willing to cooperate with him–or at least not sandbag him.

BUT that’s quite a while, and assumes that Powell is amenable. It gives Trump only two years to make the economy work how he needs it to work, and means his first two years will be sandbagged by the Fed. Trump’s followers are not going to care what the reason is, they expect results.

The other option is hardball. Governors can be removed for cause. Trump can say they have performed badly (it’s not a hard case, and people who voted Trump and many others will agree) and remove them. This can then go to the Supreme Court, which, if Trump is smart, will then be firmly in Republican hands.

I will be frank: I would absolutely do this. I would have done it as Obama to Bernanke (if Obama had actually wanted a good economy, or to have banks go under) and I would do it as Trump. For four decades, the Federal Reserve has sandbagged wages and made sure the rich got richer. This is not even in question, and the financial crisis was only the largest proof of it, not nearly the only one.

I think this is coming. The Federal Reserve bows (and Yellen has been very clear she won’t) or the resisting Governors get booted.

There will be screams from Democrats and “liberals” and I will ignore most of them. As with ending the Trans-Pacific Partnership, this is the right thing to do, and it’s something that should have been done decades ago. Appointed technocrats sandbagging Congress’s fiscal policy and deliberately crushing wages was always evil.

Get out your popcorn, folks.

Oh, and these sort of stakes are why there is such a huge effort, abetted by the CIA (and opposed by the FBI) to make sure that Trump doesn’t take office.

Like it or hate it, he’s going to have to destroy much of how DC has done business for the last 40 years, and many people in power really, really don’t want this.

Don’t defend the Federal Reserve if you claim to care about workers, the middle class, or anyone under the top 10 percent or so. They have acted unutterably evil for decades, and if it takes another evil person to destroy their power, I’m fine with it. Frankly, the Federal Reserve should be placed under direct control of Congress with four year terms at most, and every central bank in the world should lose its “independence.” They have misused that independence to do little more than make the rich richer for decades and they are profoundly anti-democratic.

It’s a pity so much that has to be done will likely be done by someone like Trump, and that he’ll do much of it the wrong way to support terrible policies like tax cuts, but that’s what happens when the Left allows the Right to be the populist party, and chooses to be the party of bailouts and technocrats.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

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