Thursday, January 18, 2018

Moon of Alabama — Syria - Tillerson Announces Occupation Goals - Erdogan Makes Empty Threats

I have yet to read one analyst who believes that the U.S. administration can achieve any of the wishes it announced. It is a hapless policy of "doing something" which will fail when resistance on the ground will ramp up and the political costs of the occupation will become apparent. The YPK Kurds in the north-east, who agreed to their occupation, will be the ones who will have to to bear the wrath. All other parties involved in Syria will hold them responsible.
Moon of Alabama
Syria - Tillerson Announces Occupation Goals - Erdogan Makes Empty Threats

Israel Rafalovich — Israel: On the Way to a Theocratic State

Liberal democracy, or theocratic apartheid state?
Until today the state of Israel has not decided whether it is a theocracy for Jews or a democratic sovereign state. The ultra-orthodox appear to be on the road to winning this fundamental battle of principles. Ultra-orthodox radicals are increasingly occupying key positions, thereby imposing their stamp on the secular majority. Israeli’s secular democrats are growing increasingly worried that Israel’s future may resemble Saudi Arabia and Iran more than Europe.
Israeli Jews increasingly interpret the identity of the state in religious terms, asserting the priority of Jewish over democratic values. Israel’s shift toward orthodoxy is not merely a religious one. Since the vast majority of Orthodox Jews are also against any agreement with the Palestinians, the chances of reaching a peace deal diminish with each passing day. Nor is time on the side of those who want a democratic Israel.
Israel defines itself as a “Jewish and democratic state.” However, because Israel has never created a system of checks and balances between these two sources of authority, they are closer than ever to a terrible clash.
Israel: On the Way to a Theocratic State
Israel Rafalovich, journalist and analyst based in Brussels, Belgium who covers European and international relations

Lenta — US Embassy caught funding Russian opposition

The Russian Foreign Ministry has accused the US Embassy in Moscow of concealing the transfer of money to opposition groups, to destabilize the political situation in Russia. This was stated by the Department of Information and Press of the Foreign Ministry.
"We urge the United States to stop this practice, return to decent behavior, renew responsible and orderly inter-state communication. We demand that the US authorities finally begin to follow their own national legislation and international obligations," it was reported.
Fort Russ
US Embassy caught funding Russian opposition
Lenta - translated by Inessa Sinchougova

See also

Backtracking on Russian information warfare
Paul Robinson | Professor, Graduate School of Public and International Affairs at the University of Ottawa

TF Metals Report — The New Cold War in 2018 -- A Discussion With Professor Stephen F. Cohen

Partial transcript and link to podcast.
A few days ago, we had the opportunity to visit with Professor Stephen F. Cohen. As regular readers know, we've been featuring his weekly podcasts with John Batchelor for the past four years so it was a real honor to speak with him directly regarding The New Cold War.
As mentioned at the beginning of this podcast, we are all indebted to John and Steve for their regular, weekly discussions. Their podcasts offer the only fair and balanced coverage of The New Cold War that you will find anywhere in the western media. Rather than a simple regurgitation of the War Party line, John and Steve consider the conflict from the historical perspective of each side. Thus, in listening to them over the past four years, I almost feel as if I have participated in a graduate-level Russian Studies class.
To be certain that this discussion is as widely-heard as possible, I've taken the additional step of transcribing portions of the audio. We begin with Professor Cohen providing some historical background regarding Ukraine, Russia and the run-up of this New Cold War.
TF Metals Report
The New Cold War in 2018 -- A Discussion With Professor Stephen F. Cohen
Turd Ferguson

Alexander Dugin — Globalisation and its Enemies

This is a longish and heavily intellectual analysis in the dialectical mode. However, it is a significant strand in thinking about geopolitics and geostrategy from a long term historical perspective and from a particular point of view.

Worth a look if you are into this sort of thing and think Dugin has something to say.

It's not necessary to agree with people to make them worth reading. A lot of people that one may not agree with exert an influence.

Dugin's influence over Putin is greatly exaggerated and even he says that it is nonexistent since his views and Putin's are quite different, Dugin being a Russian nationalist and Putin being a centrist in governing that personally leans liberal.

Globalisation and its Enemies
Main factors in the development of global processes: results and prognoses
Alexander Dugin

Ukraine heating up.

Fort RussWar is looking imminent.

Thomas Piketty's — 2018, the year of Europe

Piketty's view on what the EU needs to do in order to seize the opportunity that is presented by the withdrawal of US leadership under the Trump administration that is creating a vacuum.

Thomas Piketty's Blog at Le Monde
2018, the year of Europe
Thomas Piketty | Professor at EHESS and at the Paris School of Economics

Robert Skidelsky — How [Conventional] Economics Survived the Economic Crisis

How did conventional economics survive the crisis? Handwaving.

Criticism of Paul Krugman and New Keynesian economics, which is based on "rational behavior and market equilibrium as a baseline" (Krugman).

Skidelsky concludes, "Macroeconomics still needs to come up with a big new idea." 

I would rephrase that as "a new big idea." Theories are based on a "big idea" that constitutes the architecture of the framework. Rationality and equilibrium isn't it.

Project Syndicate
How [Conventional] Economics Survived the Economic CrisisRobert Skidelsky | Professor Emeritus of Political Economy at Warwick University, fellow of the British Academy in history and economics, member of the British House of Lords, and author of a three-volume biography of John Maynard Keynes

Tony Wikrent — The decline and fall of neoliberalism in the Democratic Party

Useful commentary and links.

Dean Baker — Apple Transfers $252 Billion in Citigroup Account from Irish Subsidiary to Parent Company

Dean Baker explains how international capital flow (capital flight and repatriation) is just a matter of switching account balances. There is no "cross-border" transfer of funds in "bringing back" dollars earned abroad.
This is what bringing money back to the United States means. Under the old tax law companies often attributed legal control of profits to foreign subsidiaries, so that they could defer paying taxes on this money. However the money was often actually held in the United States, since Apple could tell the subsidiary to keep the money wherever it wanted.
For this reason the economic significance of bringing the money back to the United States is almost zero. The legal change of ownership is leading to the collection of taxes, but this is in lieu of the considerably larger tax liability that Apple faced under the old law.
It would have been helpful if these points were made more clearly in this NYT piece. It does usefully point out that we don't know the extent to which the expansion plans announced by Apple would have occurred even without the tax cut.
Beat the Press
Apple Transfers $252 Billion in Citigroup Account from Irish Subsidiary to Parent Company
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C

Barry Eichengreen — The US is not ready for the next recession. Here's why.

Out of paradigm with MMT but useful as an analysis of how the elite is likely to act when faced with the next recession based on core beliefs with respect to contractions. Could get ugly under this scenario.

World Economic Forum
The US is not ready for the next recession. Here's why
Barry Eichengreen | Professor of Economics and Political Science, University of California, Berkeley

David F. Ruccio — Utopia—without classes

Good analysis of utopian versus utopianism. Short and important.

The difference is that between ideal and real. 

If the core assumptions are unrealistic and infeasible, then the consequent conceptual model will be "utopian" in the pejorative sense, and the project unachievable — "pie in the sky." If there is a disconnect between the ideal and the real, then it's utopianism.

If the assumptions are realistic and feasible, then the conceptual model will be "utopian" in the positive sense, and the project is achievable if implemented correctly.

If there is a disconnect between the ideal and the real, then it's utopianism.

Professor Ruccio explores how neoclassical economics and Marxian economics stack up in this regard.

Occasional Links & Commentary
Utopia—without classes
David F. Ruccio | Professor of Economics, University of Notre Dame

Chris Dillow — On Capitalist Hegemony

Asymmetrical power.

State capture by elites arises from asymmetrical power in societies rather than asymmetrical power being created by the state. "Might makes right." There are many factors involved in might other than physical force, but in the end, physical force is the ultimate enforcer. But in a cultured society, that is generally kept in the background and under liberalism, the elite has learned to be clever instead of brutal. But when push comes to shove....

Capitalism, like feudalism, is an economic system based on rent extraction. Asymmetrical power is the basis for rent extraction.

A wise man (one of my mentors) often said that to understand the world, study power.

Stumbling and Mumbling
Chris Dillow | Investors Chronicle

Alex Christoforou — De-dollarization and the rise of Bitcoin. Is there a connection between the two?

Is Bitcoin a Reaction to US Dollar Hegemony?
Like Mike has been saying for some time.

The Duran
De-dollarization and the rise of Bitcoin. Is there a connection between the two?
Alex Christoforou

Blockchain technology and the birth of the so-called cryptocurrencies finds deep roots in three contributing factors: the advance of technology: the manipulation of global economic and financial rules; and the persistent attempt to weaken the national economies of countries that geopolitically challenge the US power system. In this first article I address these issues from a financial point of view, in the next analysis I intend to dive into the geopolitical aspects and broader the perspective on how Russia, China and other nations are taking advantage of a decentralized financial system.
Strategic Culture Foundation
Is Bitcoin a Reaction to US Dollar Hegemony?Federico Pieraccini

See also

The iron fist of the US.
As the launch of new ‘petro’ cryptocurrency draws near, a US government agency declared that this newcomer to the digital financial market may represent a violation of sanctions imposed against Venezuela, its issuer.
Sputnik International
US Treasury Warns About Sanction Risks of Owning New Venezuelan Cryptocurrency

Trump looking at big fines against hacker China

More potential $billions repatriation from fining the premier USD zombie nation:

This interview will never be shown on TV again

What the Tories didn't want to hear.

The truth about Thersa May's government failure former met police officer Peter Kirkham told the truth liberals don't want to hear.
For the last decade the rise of these problems have not gone away and, cutting police numbers will not help the problem, what is needed is a long term solution to help, Ms May and her penny pinching government are not the ones who will provide more police and resources.

Wednesday, January 17, 2018

Deficit Watch: January 16th

Oh boy I can't wait to see how big the deficit is this month so far with all the tax cuts...

Lets see here in the Cash Basis DTS thru January 16th:

Total Withdrawals 636B - 440B Treasury Redemptions = 196B net withdrawals


Total Withdrawals 666B - 463B Treasury Issues = 203B net deposits

196B - 203B  equals..... wait for it .... -7B   ..... ie a SURPLUS!?!?!?

Say it aint so!!!!

Man-o-man.... How is the deficit going to ever get to $1.5T this year as EVERYBODY has been saying?

Hmmmmm...  withdrawals better get going and pronto...

Apple to pay $38B repatriation tax

USDs coming out of Apple offshore savings.  And the deficit is going to skyrocket to over $1.5T how ????

Bride prices in China shooting up

And guaranteed the prices are in USDs...

David Pilling — 5 ways GDP gets it totally wrong as a measure of our success

GDP's inventor Simon Kuznets was adamant that his measure had nothing to do with wellbeing. But too often we confuse the two. For seven decades, gross domestic product has been the global elite’s go-to number. Fast growth, as measured by GDP, has been considered a mark of success in its own right, rather than as a means to an end, no matter how the fruits of that growth are invested or shared. If something has to be sacrificed to get GDP growth moving, whether it be clean air, public services, or equality of opportunity, then so be it....
GDP is not a measure of “wealth” at all. It is a measure of income. It is a backward-looking “flow” measure that tells you the value of goods and services produced in a given period in the past. It tells you nothing about whether you can produce the same amount again next year. For that, you need a balance sheet - a measure of wealth. Companies have balance sheets as well as income statements. Nations don’t.…
Yes. GDP is an ingenious measure. It tells us something. It should definitely not be scrapped - it is still far too valuable a policy tool for that. And GDP growth can provide the wherewithal for the other things we want in life: health, education, security, opportunity, goods.
But we need to pay more attention to other measures to complete the picture, some of which already exist and some of which we may have to invent. Measures of wealth, equality, leisure, wellbeing and net domestic product, adjusted for negatives like pollution, are places to start.
Good post on GDP versus welfare. Worth reading in full.

World Economic Forum
5 ways GDP gets it totally wrong as a measure of our success
David Pilling | Africa Editor, The Financial Times

Dean Baker — Why Should the United States Be Concerned If China Stops "Manipulating" Its Currency?

The way China kept down the value of its currency was buy buying up government bonds with the dollars it acquired instead of just selling them in the open market. If China now decides to sell these bonds, it should mean that its currency will rise, thereby reducing the U.S. trade deficit. It's hard to see what the problem is here.
Well, one (pseudo) problem I can see here is that many in the US will freak out because the yuan is getting stronger than the dollar. 

If the strength of the yuan is under that of the dollar, China is manipulating its currency. If the yuan is stronger than the dollar, then the search will be on to blame someone for weakening the dollar.

It's an argument that can't be won. Damned if you do and damned if you don't.

Beat the Press
Why Should the United States Be Concerned If China Stops "Manipulating" Its Currency?
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C

Jason Smith — What to theorize when your theory's rejected

I was part of an epic Twitter thread yesterday, initially drawn in to a conversation about whether the word "mainstream" (vs "heterodox") was used in natural sciences (to which I said: not really, but the concept exists). There was one sub-thread that asked a question that is really more a history of science question (I am not a historian of science, so this is my own distillation of others' work as well a couple of my undergrad research papers).
Useful relative to philosophy of science and history of science, as well as foundations of economics. Philosophy of science makes use of the history of science.

It is also relevant to the orthodox and heterodox debate in economics.

Information Transfer Economics
What to theorize when your theory's rejected
Jason Smith

House conservatives say there are enough Republican opponents to reject GOP leaders' plan to prevent government shutdown.

Maybe time to consider euthanizing all the libertarians?  They are never going to change...

Tuesday, January 16, 2018

Tyler Prochazka — Professor argues for job guarantee over basic income

Universal Basic Income (UBI) is gaining more traction in mainstream discourse, but the academic debate has been heating up for years. One scholar with a sympathetic but critical eye towards basic income still believes it is not the best priority for activists.
Philip Harvey, a professor of law at Rutgers, wrote that a job guarantee could eliminate poverty for a fraction of the cost of UBI — $1.5 trillion less.
Harvey argued in 2006 that the focus on UBI may be crowding out more realistic policies that could achieve the same ends.
“[Basic Income Guarantee] advocates who argue that a society should provide its members the largest sustainable BIG it can afford – whether or not that guarantee would be large enough to eliminate poverty – are on shaky moral ground if the opportunity cost of providing such a BIG would be the exhaustion of society’s redistributive capacity without eliminating poverty when other foregone social welfare strategies could have been funded at far less cost that would have succeeded in achieving that goal.”
When I interviewed Harvey this month, he said his views have largely stayed the same and he still sees a fundamental difference between the advocates of UBI and job guarantee.
“The most important driver of that difference is the inherent attractiveness of the UBI idea. It really is an idea that captures the imagination and admiration of all kinds of interested parties with different kinds of agendas. The job guarantee idea, on the other hand, attracts people who are more into the weeds of policy analysis.”....
Professor argues for job guarantee over basic income
Tyler Prochazka

Paul Sagar — The real Adam Smith

Setting the record straight.

The real Adam Smith
Paul Sagar | lecturer in political theory in the Department of Political Economy, King’s College London

George Monbiot - The PFI bosses fleeced us all. Now watch them walk away

When contracts fail, the legal priority is still to pay firms like Carillion. Money is officially more valuable than life

The corporations want their cut and have their cronies in government. The market is fine for cans of beans, cars, computers, Hi -Fi, etc, where the price can be evaluated easily and seen whether they are fair, but when it comes to government services even the government can get ripped off. But do governments care when they are the agents of the corporations? The revolving door where government ministers go on to get good jobs working for the corporations. 

Excerpt - 

Again the “inefficient” state mops up the disasters caused by “efficient” private companies. Just as the army had to step in when G4S failed to provide security for the London 2012 Olympics, and the Treasury had to rescue the banks, the collapse of Carillion means that the fire service must stand by to deliver school meals.

Two hospitals, both urgently needed, that Carillion was supposed to be constructing, the Midland Metropolitan and the Royal Liverpool, are left in half-built limbo, awaiting state intervention. Another 450 contracts between Carillion and the state must be untangled, resolved and perhaps rescued by the government.

When you examine the claims made for the efficiency of the private sector, you soon discover that they boil down to the transfer of risk. Value for money hangs on the idea that companies shoulder risks the state would otherwise carry. But in cases like this, even when the company takes the first hit, the risk ultimately returns to the government. In these situations, the very notion of risk transfer is questionable.

The government claimed that the private sector, being more efficient, would provide services more cheaply than the private sector. PFI projects, Blair and Brown promised, would go ahead only if they proved to be cheaper than the “public sector comparator”.

But at the same time, the government told public bodies that state money was not an option: if they wanted new facilities, they would have to use the private finance initiative. In the words of the then health secretary, Alan Milburn: “It’s PFI or bust”. So, if you wanted a new hospital or bridge or classroomor army barracks, you had to demonstrate that PFI offered the best value for money. Otherwise, there would be no project. Public bodies immediately discovered a way to make the numbers add up: risk transfer.

The costing of risk is notoriously subjective. Because it involves the passage of a fiendishly complex contract through an unknowable future, you can make a case for almost any value. A study published in the British Medical Journal revealed that, before the risk was costed, every hospital scheme it investigated would have been built much more cheaply with public funds. But once the notional financial risks had been added, building them through PFI came out cheaper in every case, although sometimes by less than 0.1%.

Not only was this exercise (as some prominent civil servants warned) bogus, but the entire concept is negated by the fact that if collapse occurs, the risk ripples through the private sector and into the public. Companies like Carillion might not be too big to fail, but the services they deliver are. You cannot, in a nominal democracy, suddenly close a public hospital, let a bridge collapse, or fail to deliver school meals.

UKRAINE ON FIRE: The Real Story. Full Documentary by Oliver Stone (Original English version)


The Real News: How the US Helped Set 'Ukraine on Fire'

Aaron Maté interviews the film's director who says that the Neoconservatives and George Soros, who both use NGO's, are the biggest meddlers in other country's elections around the world. Interview starts at 3:28.

Basant Kumar Mohanty — Job scheme swells farm yields

JG at work.
In 2015, [neoliberal] Prime Minister Narendra Modi had described the programme as a "testimony to the failures of previous governments".
The Telegraph (India)
Job scheme swells farm yields
Basant Kumar Mohanty

Zero Hedge — China Downgrades US Credit Rating From A- To BBB+, Warns US Insolvency Would "Detonate Next Crisis"

In its latest reminder that China is a (for now) happy holder of some $1.2 trillion in US Treasurys, Chinese credit rating agency Dagong downgraded US sovereign ratings from A- to BBB+ overnight, citing "deficiencies in US political ecology" and tax cuts that "directly reduce the federal government's sources of debt repayment" weakening the base of the government's debt repayment.
Oh, and just to make sure the message is heard loud and clear, the ratings, which are now level with those of Peru, Colombia and Turkmenistan on the Beijing-based agency’s scale of creditworthiness, have also been put on a negative outlook....
The Chinese are sounding as nutty as the Americans.

Zero Hedge
China Downgrades US Credit Rating From A- To BBB+, Warns US Insolvency Would "Detonate Next Crisis"
Tyler Durden

Paul Grenier — Russia, America, and the Courage to Converse

Despite its claims to “open-ness,” liberalism in its late modern Western form becomes self-contained to the point of closure. Allied with such power constructs as the “liberal world order,” globalization (a word that came into common usage only after the fall of the Soviet Union) tends towards the homogenization of political space and the radical constriction of pluralism.
Notice a trend toward closure? It's affected conventional economics in addition to politics. Plurism, the hallmark of liberalism, is over — dead and buried.

The American Conservative
Russia, America, and the Courage to Converse
Paul Grenier, founder of the Simone Weil Center for Political Philosophy