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Archive for the ‘Economy [O/T]’ Category

Last week Putin began his blitzkrieg invasion of Ukraine. His war machine is using rockets and artillery against the much smaller, but more highly motivated, Ukrainian military.

In anticipation of economic sanctions, Putin built a war chest of USD630 Billion. That sounds like a lot of money, but wars have a funny way of outlasting the money available to pay for them. With the ruble no longer accepted anywhere in the west, and with Russia cut off from every advanced funds transfer system, he may not be able to use that money. But even if he could use it, would USD630 Billion be enough to make a difference for Putin?

For some historical context to answer to that question we can turn on the Wayback Machine and revisit an earlier conquest of a hostile little puppy state by a Great Empire with an overwhelming military machine: the Anglo-Boer War of 1899 to 1902 in South Africa.

In 1899, Great Britain was the preeminent economic and military power of the world. London had not yet ceded to New York the title of world financial center. The United States and Germany had been catching up to Great Britain both economically and militarily, and in the latter sphere Kaiser Wilhelm II was determined to challenge England for naval supremacy. But England was still heads above the rest, and when European nations considered important policy choices they gave a great deal of weight to how Whitehall might react to the change.

From a geographical perspective, Russia today sees Ukraine, part of its “near abroad,” as a territory that it must dominate, if not control. In 1899, South Africa held an importance for Great Britain similar to that of today’s Ukraine for Russia. South Africa was key to maintaining a reliable and defensible sea route between England and India. Cape Town was the re-coaling station for steamships on that route. And although by 1899 the Suez Canal had already been open for about thirty years, England could not rely on it: it was owned and operated by France. If, in a conflict, France were adverse to England (which had happened a few times in the past), access to India through the Suez Canal would be lost.

Natural resources ran a close second to global strategy concerns. Within the fifteen years preceding the outbreak of the Anglo-Boer War, gold had been discovered in the Transvaal, and diamonds in Witwatersrand, making South Africa one of the richest spots on the planet. South Africa had become the leading source of gold in the world. The world was on the gold standard then, and because London was the center of world finance, England had a keen interest in the volume of gold in circulation and held in government reserves. Too little gold would unduly constrain commercial and industrial access to capital, while too much would risk metallurgical inflation. Europe had endured that type of inflation back when Spain was its most powerful country. The massive quantities of gold and silver that Spain imported from its possessions in central and south America caused more than a few monetary problems.

Russia now claims that ethnic Russians are being mistreated by Ukraine’s government, which Russia views as illegitimate. By 1899, the Boers had declared the Transvaal and the Orange Free State to be independent republics not subject to rule from London. The many Englishmen extracting wealth from South Africa’s mines in these new Boer republics were second-class citizens, without voting and other civil rights.

Today Russia worries about the consequences of having a successful fledgling democracy like Ukraine on its doorstep because it might give Russian citizens the idea that democracy might be worth a try. Similarly, in 1899 Britain viewed the newly declared Boer republics as an affront to its sovereignty over South Africa, and it worried about the effect such new little breakaway states might have on its subjects in other British colonies around the world. Would they start breaking away too? This was an early domino theory.

Just like Putin’s propaganda about the benevolent nature of rule from Moscow, the British in 1899 thought that British rule was a divine gift to all the empire’s subjects, even if some of those subjects were trying to persuade the Brits to leave by shooting at them.

Russia looks down on the people of Ukraine in the same way that Great Britain looked down at the Boers. Both Russia and England thought they’d have a splendid little war, that it would be over quickly, and that they would easily squelch these little republics.

But every present-day Ukrainian, like every Boer back then, was armed to the teeth and ready to fight. Sure, the Boers were not a regular army with chains of command and discipline in the ranks, etc. But, like Ukrainians today, that strategic weakness becomes a tactical strength when the irregular force is highly motivated and fighting against an outside invader on its home turf. The Boers would attack some organized British column moving through the countryside, and then melt back into the wilderness. The Ukrainians have already ambushed some Russian motor convoys. The Russians will also have to fight Ukrainians in urban environments, which is a nightmare for an attacking force. Think Stalingrad.

So how does all this tie in to Putin’s USD630 Billion war chest?

Well, in October 1899, the government of Prime Minister Robert Cecil, Lord Salisbury, calculated that England’s fine little war against the Boers could be “put through” for 10 million British pounds.

By the time peace was finally negotiated in May 1902, the British government had spent more than 217 million British pounds on its war against the Boers. That was enough to bring down the government of Lord Salisbury, which was replaced by that of Arthur Balfour. To get an idea of how much money that was at the time, it represented 12% of the entire gross national product of the United Kingdom – then the world’s leading economy – for the preceding year.

Were we to apply that same percentage to the 2020 GDP of the United States, today’s leading economy, that would be 12% of USD20.94 Trillion, or about USD2.51 Trillion. That would be not quite twice Russia’s entire GDP of USD1.483 Trillion. So Tsar Vladimir could well find himself a bit short on funds as his Ukraine war drags on, and that’s without any consideration of what happens when no other country in the world accepts your currency.

If Putin had read up on the Anglo-Boer War, there’s no way to know whether he would have changed his mind about invading Ukraine. But at least he would have learned that it was possible, and even likely, that Russia would get Boer-ed.

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Pills

Diagnostic and Statistical Manual of Lockdown Disorders VII (DSM-VII)

Zoomarensis Nocturnitas
The most common variants of this disease take the form of delusions, hallucinations or nightmares in which the patient imagines he is surrounded by the disembodied heads of persons known in waking life, usually from the office. As these hallucinations progress, the talking heads appear to increase in number, and ultimately all of them begin to speak at once in a mass of unintelligible voices. Affiliated symptoms include cold sweats, respiratory difficulties, paranoia, delusions, and, when the sufferer finds that he cannot “mute” any of the talking heads, eventual insanity. The Lancet and the New England Journal of Medicine have reported mutations of this disease, such as googlehangoutatitis and retrograde skyperrhea. Extreme cases can result in unusual symptoms such as a pixelophobia, which is the acute fear of computer screens. No cure exists.

Primenesia Gravis
This disease is caused by the bezosia jeffus bacillus (definitely cone-shaped), which is thought to have made the jump to humans in the jungles of the Amazon. Teams from the Center for Disease Control theorize that bezosia jeffus entered the United States on the surface of a cardboard box left on someone’s front porch. Symptoms range from mild to severe, but all involve variants of the obsessive/compulsive ordering goods on the internet followed by a complete loss of memory of having ordered anything at all. The incubation period can be short as the time it takes to look at “Today’s Deals.” Some acute cases have resulted in creditcardiac arrest following subsequent delivery of regular mail.

Necrotizing Fascistitis
This virus was originally spread by television advertisements on Fox News for the sale of nutritional supplements and gold bullion, but has now been found to be readily transmissible by Fox News hosts, who can infect anybody. Once the human body has been infected, the virus swiftly infects all brain cells, eventually resulting in the clinical death of most of the host’s brain functions. In no case, however, has the victim’s desire or ability to buy guns and ammunition been impaired. The disease has a very short incubation period of around four hours, spread across prime time on weeknights. After the host becomes clinically brain-dead, they will suddenly be revitalized and will wake up and exhibit hyperactive, zombie-like behavior. This includes an intense desire to visit state legislatures while armed with M-16’s. If caught early enough, the progress of necrotizing fascistitis can be slowed, and in some cases reversed, by nightly injections of 50 cc’s of rachelmaddowsevir, or, in the alternative for bad cases, very small doses (5 milligrams or less) of the very powerful keitholbermanatastin.

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Places You'll Go

Note how young McGurk’s placement of elephants complies with CDC recommendations on social distancing.

Oh, the Places You Won’t Go!
by Paul G. Neilan (styled after Dr. Seuss)

You have brains in your head.
You have feet in your shoes.
And you thought you could go
Any direction you choose.

But then something happened
To up-end your plan:
Folks started dying
In a place called Wuhan.

With your shoes full of feet and your head full of brains,
You shouldn’t have to worry ’bout buses and planes.
In Wu-han things happen, and frequently do,
To folks who eat bats and pangolins too.

You never eat bat, so no need to take fright.
Kudlow said “We’ve contained this, pretty close to airtight.”
And the president asked “Why the long faces?
“It’s one guy from China, and just fifteen cases.
“I alone can fix it,” said Trump, like a hero.
“Inside of a week, I’ll bring that to zero.”
Our very stable genius said “Yes, we’re the best!
“And anybody who wants to can get their own test!”

Then Trump got real testy, and nasty, and grouchy
When warnings kept coming from Anthony Fauci.
Fauci said, “Of test kits we’ll need to get millions,
“Or the economy stands to lose multiple trillions.
But his warnings fell on deaf ears autocratic,
Which can happen when spreaders are a-symptomatic.

“Mr. Trump,” Fauci said, “it’s a danger, it’s a fact.
“You’ve got to trigger the Defense Production Act.
“I’m sorry to say, sir, but sadly, it’s true,
“That plagues and pandemics can happen to you.
“We’ll get all hung up in a prickle-ly perch
“With the GDP cratered and the Dow in a lurch.”

Then Trump said to Fauci “Don’t worry, don’t stew.
“Each year tens of thousands die from the flu.
“No,” said Trump, “you’re just a big whiner.
“I know what to do. I could do nothing finer,
“Than slap a big ban on travel from Chiner.

“Just look,” said Trump, “at that high S&P!
“And if things go south, I’ll just blame it on Xi.
“By April, you’ll see, when the weather gets right,
“This will all blow away like an old paper kite.”

Then he turned on his heels, pleased by his retort,
And flew off to play golf at a nice Trump Resort.

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Bezos

Amazon’s Jeff Bezos – An “Average” Guy

Last week Jeff Bezos, the richest man on Planet Earth with a reported $100 Billion in net worth, decided that Amazon would no longer consider building its Headquarters 2 Project (HQ2) in Long Island City, New York. Amazon had never made any commitment to build in New York, and in fact it’s still looking at locations in other states. But feelings of unrequited love have spurred critics on both the left and the right to complain. The right complains that the left is anti-business. For its part, the left is split: some complain about lost jobs (even though they didn’t exist yet), while others argue that the deal was a huge give-away and unnecessary to boot.

Based on public information, Amazon’s gross annual revenue for 2018 was $233 Billion, a 30.9% increase from 2017’s annual gross of $178 Billion. For our purposes, we’ll forget all about what Amazon may have earned, gross, in any prior year, and what it may have done with that money, whether pay it out in dividends, re-invest in the company, etc. We’ll give Amazon every benefit of the doubt by being conservative on its revenues, as well as conservative on what it was supposed to get from various New York public piggy banks.

Amazon canceled consideration of New York City as a home for its new HQ2 because of friction with various political players in NY who opposed the project. We’re told that opposition was due chiefly to the proposed economic incentives to Amazon that would be provided at public expense. So what was Amazon supposed to get in this deal? Reports over the last few days use a figure of $3.0 Billion, but according to news reports from last November, the real total appears closer to $2.6 Billion. Still a lot of money, but none of the current reports go into same detail as those from November. Based on the November reports, the gist of the deal was this:

  • $1,200,000,000: Amazon was going to receive $1.2 Billion in NY State tax credits through the Excelsior Jobs Program if it created 25,000 net new jobs in New York State with an average salary of $150,000 per job by June 30, 2028. Without reviewing the actual documents, we can’t say whether this 25,000 job/$150,000 average salary requirement was a condition precedent to Amazon’s receipt of the tax credits, or whether those credits had some kind of best efforts fudge factor. Giving Amazon the benefit of the doubt, we’ll assume this requirement is a condition precedent.
  • $505,000,000: New York State would give Amazon a grant of $505 Million to reimburse it for the cost of building its new office space in Long Island City. (Subtotal: $1,705,000,000).
  • $325,000,000, netted to zero (-0-): Another reported cash grant consists of $325 Million from the Empire State Development Program. Again, without having seen authoritative documents, it’s not clear whether this $325 Million is part of, or in addition to, the $505 million grant mentioned above. Giving Amazon the benefit of the doubt, we’ll regard it as part of the $505 million grant, and discount it entirely. (Subtotal: still $1,705,000,000).
  • $900,000,000: New York City, through its Relocation and Employment Assistance Program (REAP) would have added another $900 Million in grants. (Subtotal: $2,605,000,000).
  • – $-0- : New York State and New York City officials had promised to either rehab or build new infrastructure and mass transit facilities that serve the area Amazon would occupy in Long Island City. This would be public money as well, though review of the news reports did not disclose any definite dollar amount or commitment. Because these projects, if completed, would benefit the public at large and not just Amazon and its proposed new HQ2, we’ll give Amazon the benefit of the doubt and disregard any public dollar commitment public transportation and infrastructure improvements.

The total estimate of public dollars to be spent for Amazon’s benefit is thus $2,605,000,000; or just call it $2.6 Billion. The punditocracy would have us believe that Amazon nixed its Long Island City plans because of the difficulty of obtaining from New York (state and city) tax and other incentives that amounted to just a little over one percent (1%) of its gross revenues for each of the years 2018 and 2017.

Unlikely, but we’ll run with it anyway.

Some proponents of the Amazon project argue that this really isn’t public money. That is absurd. Tax abatements, tax credits and deductions, and grants from government agencies are all sourced, whether directly or indirectly, from public money. A state tax credit is public money of the state: it reduces a tax otherwise payable to the state on a dollar-for-dollar basis. Even the most ardent supporters of Amazon’s project have to admit that there’s no such thing as a free lunch.

Let’s do a little quick math. As Mark Twain said, there are lies, damn lies and statistics, so let’s revisit Amazon’s promise to provide an “average salary” of $150,000 for 25,000 net new jobs. The pundits bemoaning New York’s loss of Amazon’s HQ2 take this to mean 25,000 jobs paying $150,000 each. But remember that old joke about the statistician who had his head in an oven and his feet in a freezer. When asked if he was okay he replied, “On average, I’m just fine.”

The federal minimum wage is currently $7.25 per hour. That minimum wage rate hasn’t been increased since 2009. If a minimum wage employee works a full year (52 weeks/year), he or she will gross $15,080 per year.

Bezos will soon marry a woman who will be his second wife. Bezos could hire his new spouse as CEO of the New York City Division of Amazon at a salary of $3,385,000,000 ( net new employees = 1). She could have her paychecks direct deposited to their joint checking account, should she so wish. As a practical matter, that money would be coming back directly to Bezos.

That leaves Bezos with another 24,999 new employees to hire. He could hire every single one of them at the federal minimum wage of $7.25 (earning just $15,080 per year). By doing this, Bezos meets his requirement to create 25,000 net new jobs at an “average” salary of $150,000 per year. In fact, under that employment scenario he’s exceeded that threshhold by about $480 (the average salary would be $150,479.40, to be exact).

Would that happen? Maybe not. Amazon would need some high-level and mid-level management employees and non-management supervisors, etc.

Still, you can put those numbers on your calculator and play with them any way you like for as long as you like, and you can come up with numerous distributions of 25,000 salaries that keeps the vast majority of Amazon’s prospective Long Island City employees at minimum wage while still enabling Bezos to claim $1.2 Billion in NY State tax credits.

Next time we’ll take a look at corporate welfare for Amazon.

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elizabeth_warren

Sen. Elizabeth Warren (D-MA)

Senator Elizabeth Warren (D-Massachusetts) has suggested a wealth tax of 2 percent on assets above $50 million, and 3 percent on assets of more than $1 billion. She estimates that such a tax, which would by its nature be limited to the very rich, could generate $2.75 trillion in revenue over a decade. To paraphrase the late Everett Dirksen, a trillion here, a trillion there, and pretty soon you’re talking real money.

Starbucks billionaire Howard Schultz and former NYC mayor billionaire Michael Bloomberg have, of course, slammed Warren’s proposal as a gateway drug to Venezuela-Maduro style socialism. Continued critiques from Schultz, Bloomberg and the billionaire class will probably do more to garner support for Warren’s proposal than she herself could do with a thousand townhall meetings.

Schultz and Bloomberg apparently have forgotten that while they have ascended to levels of wealth that would make Croesus look like a homeless person, hundreds of millions of Americans (and Britons, and Europeans, etc.) have been undeniably left behind by the Great Prosperity of globalization and financialization of the economy. Wealth taxes have been proposed before, though not in the U.S.

Towards the end of the First World War, Great Britain considered imposing a wealth tax. Throughout the war, Great Britain not only had to equip and supply its own forces, it also had to advance funds to its allies France, Russia and Italy since none of them had enough cash to purchase necessary war matériel. By 1917, the cost of the war, including subsidies to allies, had put unprecedented strain on Britain’s national budget.

During the first three years of the war, taxation rates in Great Britain had increased significantly, and the levels of income to which the tax was applied were lowered. In consequence, many segments of the population that had never before paid income taxes were moved onto the tax rolls. This was accompanied by some erosion of civilian support for the war. In Parliament, Labor members argued that the working classes were bearing a disproportionate share of the war’s cost. Coal miners in South Wales even staged a tax strike in 1917. Labor proposed a tax on capital to ease the deficit, but the Tory constituencies opposed additional taxation generally, and a levy on capital in particular.

Ultimately, the British Treasury rejected any capital levy over concerns that it would cause a slump in asset prices because asset holders would try to raise capital by sales of those assets. That would depress capital markets and, most worrisome of all, possibly reduce the United States’ confidence in the soundness of Britain’s economy.

Of course today, despite nearly two decades of continuous foreign wars, the U.S. is not in the position Great Britain occupied in 1917.

 

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phonebooth

Traditional technology, superhuman application.

I was on the road yesterday and realized how we’ve come full circle on payphones, that ancient technology (before the era of the cellphone) that enabled everybody to stay in touch, more or less. It even gave rise to new idioms that are still in use, even though the machinery that gave rise to them is long gone. In the 21st Century, you can’t “drop the dime” on somebody (i.e., call the authorities to report somebody for a crime) because there’s nowhere to drop the dime. Payphones used to cost a dime, but where is there a payphone around now? The county jail?

In the old-style payphone, like the ones Superman used to avail himself of, you’d go into a phone booth and close the folding glass door to shut out a bit of the street noise. In other words, you’d rent the phone for a dime, and the booth was free. (Why did Clark Kent think that changing in a phone booth, with clear glass panes, would help maintain his secret identity? It’s one of the Great Mysteries of the 20th Century.)

phonebooth_2

Some people really liked phone booths. 

Then the booths went away and were replaced with phone kiosks: a payphone surrounded by a big metal hood that might give you a little protection from the rain, but not much.

Then came the era of the cellphone, and payphones gradually went the way of the crossbow, the walled city and the eight-track tape.

Now, we’re in the era of the road warrior, but even a warrior needs a quiet space for an important call every now and then. Enter the rent-a-quiet-booth business. In coffee shops and malls and airports you may see these brightly colored booths with plush seating, outlets for your charger and USB ports. They put the old-style phone booth to shame. You rent them by the hour, and they claim to be soundproof (or close to it).

And thus we’ve come full circle. In the old days the booth was free and you rent the phone. Now you rent the booth and bring your own phone. And it costs a lot more than a dime.

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Constantinople falls to Ottoman Ruler Mehmet II, 1453

Constantinople falls to Ottoman Ruler Mehmet II, 1453

For hundreds of years alum was mined in Smyrna, in Asia Minor, which back then went by the name of Anatolia. Anatolia was the breadbasket of Constantinople, the Queen of Cities, and was under the control of the Byzantine Emperors for nearly a millennium.

Alum was an essential commodity for the makers of fabrics and tapestries in Flanders and other cloth-making centers in northwest Europe. They used it to set the colors and make sure they did not run or fade too quickly. (The saying “These colors don’t run” might have been coined back then.)

In 1453, Constantinople fell to the Ottoman Turks. Then in 1455 the Ottomans occupied Smyrna and took control of its alum mines. Needless to say, this put quite a strain on the tapestry industries, cloth makers and dyers of Western Europe, who now had to pay through the nose to obtain this irreplaceable substance.

We in the contemporary United States get rather frosted when we consider that we have to buy petroleum from some countries who absolutely hate us, and who undoubtedly use some of that money to finance overseas terrorism in the West. We may question whether we’re financing a war against ourselves.

Western Europe had a similar problem. Having to pay the Ottomans for alum was particularly galling because there was a continuing low-intensity war between Christendom in the West and the Ottoman Empire in the East. The Ottomans continually probed into the Balkans and the Mediterranean. Think of Malta around 1565 or the gates of Vienna in the 1680’s. (Vienna had (and may still have) a residential district called the Turkenschanze, or Turkish Redoubt, which was where part of the old city’s walls faced the Turkish armies. It was Sigmund Freud’s neighborhood, until he left.) So, after the fall of Constantinople, Western Europe was in effect financing the war against itself.

Then, in the 1480s alum deposits were discovered in one of the Papal States in Italy. The Pope moved quickly to establish a monopoly on the alum trade. A papal bull (which doesn’t mean what you think it means) was issued prohibiting the purchase or importation of any Turkish alum under pain of excommunication and eternal damnation. In fact, the written text of the indulgences that were being sold to finance the Vatican’s wars (mostly against other Italian city-states like Florence) and its construction of St. Peter’s was revised to carve out the purchase of Turkish alum and make it a mortal sin that could not be absolved by any indulgence. These were the same indulgences which, a few decades later, really upset an Augustinian friar named Martin Luther.

Try to imagine what it must have been like for some cardinal or canon lawyer laboring in the bowels of the Vatican to come up with the theological underpinning for making the purchase of Turkish alum (but not the Pope’s alum) an unforgivable mortal sin.

Nowadays, there are threats to slap 35% or 50% tariffs on some goods manufactured overseas. Could we try a threat of eternal damnation for buying a Ford Escort assembled in Ciudad Juarez? The more things change….

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trump

The factors that went into the Hillary loss/Trump win will keep historians and political scientists busy writing books for a decade, if not more. Some will adopt a monocausal theory and blame the emails, or the combination of Comey and the emails. Others will view it as a more a generalized phenomenon of how dysfunctional our politics have become. My own view, as I said in my last post, is that his success owes to the lingering effects of the 2007-09 Great Recession, which for anyone not living in the Wall Street-Washington corridor or the West Coast, is really the 2007-2016 Continuing Great Recession. And while the Iraq War began a long time ago, even its erstwhile supporters (other than Dick Cheney) view it as perhaps the biggest foreign policy blunder in the history of the United States. The “elites” of both left and right have shown conclusively that they’re about as competent as Laurel and Hardy trying to move a piano up a flight of stairs.

DNC Leadership deciding the best way to get Hillary up all those steps.

DNC Leadership deciding the best way to get Hillary up all those steps.

Trump’s problem will begin not with his opposition from the left, but rather with his supporters on the far right. That may sound counter-intuitive, but the left at least has some idea of what to expect from a Trump Administration. The right, on the other hand, is in for some major disappointments. Though I don’t like to predict the future, I will make three predictions right now. First, there will never be a wall with Mexico. Second, there will never be a ban on entry of Muslims into the United States because they happen to be Muslim. Third, there will never be a deportation force running from house to house rounding up some 11 million undocumented (or illegal, if you prefer) immigrants. (And, by the way, Trump will not be locking up Hillary.)

The net effect of these and other unfulfilled promises will be to disappoint the neo-Nazi, KKK and alt-right types who supported Trump. Steve Bannon, an alt-right mouthpiece, will likewise lose a lot of support among his ilk. Economist Paul Krugman said that, during this election cycle, the problem with the left and the media was that they took Trump literally, but not seriously. A large majority of white voters, the “lost white voters,” many of whom are not racists, took him seriously but not literally. But to complete Krugman’s logic is to understand where Trump’s difficulties will begin: namely, with the people of the alt-right/white supremacist persuasion who took him both literally and seriously. That group comprises the racist element of the Republican right. When they learn, as they soon will, that there will be no wall, no deportation force, no ban on Muslims, etc., they will turn on him in a New York second. Everything costs something, and soon Trump will learn the high cost of the rhetoric that got him into the Oval Office.

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2016-election

Well, there it is. The candidate that no one would give credence to has won the Oval Office, and in about two months he’ll take the helm on the bridge on the S.S. United States. There are lots of things that can be said about the view off the bow, but we’ll limit this post to the view from the stern. There will be no reaching for apocalyptic metaphors from Bronze Age Biblical passages.

The roots of Trump’s victory date back to the major events of the 2007-09 Great Recession. The people have rejected, decisively, the power of the Wall Street-Washington Axis. Until last night, the United States was not a democracy; it was a corporatist state, one in which the unproductive financial capitalists of Wall Street ventriloquized Washington, D.C. and ran the country by themselves, for themselves.

Just look at the wake our ship of state has made. The U.S. Gov’t. made sure that all the AIG executives got their bonuses, even though it was they who almost drove the global economy into a bottomless abyss. The megabanks all got bailed out on the taxpayers’ dime, even though they had to be bailed out because they’d spent years packaging and selling trillions of dollars of collateralized debt obligations that they themselves didn’t understand, and knew were worthless. Meanwhile, those same taxpayers who bailed out Wall Street lost their jobs, then lost their homes, and, of course, lost their health care coverage.

For decades, the Wall Street-Washington Axis preached the gospel of Rugged Individualism and The Free Market, which was all a lie. Goldman Sachs perfectly exemplifies why: when the market turned on Goldman Sachs during the Great Recession, Lloyd Blankfein, its CEO, called his good old buddy, old chum, old fellow alumni Hank Paulson, who just happened to be U.S. Treasury Secretary. And, presto change-o, Goldman Sachs became a bank holding company with access to the Federal Reserve cash window before the weekend was over.

See? It pays to have friends in high places.

The Americans who voted yesterday don’t have friends in high places, and they’re sick and tired of seeing the country run for the exclusive benefit of those who do. Washington in 2007-09 refused to countenance an economic reckoning for Wall Street because that would have affected their compatriots (and the campaign donor class) in the banks. But in economics, one link forges the next, and the reckoning that should have happened in the markets was translated to the political sphere. Think Tea Party. Think Occupy Wall Street.

And not one banker ever went to prison. In fact, the best thing that happened to Wall Street during the Great Recession, the guy who did the world’s biggest favor for the banksters, was Bernie Madoff. Bernie may be the Platonic Form of Ponzi Schemer, but he had no connection whatsoever to the Wall Street madness that brought on the Great Recession. Still, he became the face of it.

Places like Westchester County, NY, and Fairfax County, VA, came out of the crisis more prosperous than they’d ever been. But it you were not within that Charmed Circle because you lived, say, in a place the Wall Street-Washington Axis labeled “Flyover Country,” you were financially doomed. The elites were not affected by the downturn. Out of sight, out of mind.

The Wall Street-Washington Axis sold themselves on the basis of merit, they convinced the country that they knew best. “If you let us bail out the banksters, we’ll be back to the boom times in no time!” But that didn’t happen. They were wrong. Take Alan Greenspan, once viewed as the Grand Poohbah of All Economics, given to cryptic utterances that verged on the unintelligible. Turns out that he was just an old Ayn Rand fanatic, a rooster claiming credit for the dawn.

These examples could be multiplied. The mistake of Establishment politicians was to think that people would just forget about all that. The political legitimacy of the Wall Street-Washington Axis is based on alleged merit. When that merit is shown to be a complete falsehood, their political legitimacy dissolves.

More than anything else, the Great Recession and how it was handled threw a decisive advantage into the scale on the populist side. Whatever faults Trump may have, he was sharp enough to see this when everyone in the Wall Street-Washington Axis did not. Sanders saw it too, which accounted for his relatively successful campaign, which also surprised the media.

I don’t attribute Hill’s loss to the private email server business, which most people didn’t understand, much less follow. Nor to Benghazi, a word that practically became a Republican mantra. Nor is it the trust/distrust factor.

No, the real issue is that, no matter how hard she tried, Hillary could never portray herself as an “agent of change,” to use an overused term. Forget exit polls, forget college-educated or not. All that’s just trivia and beside the point. She represented continuity with the unacceptable status quo, continuity with a way of governing that the American people want smashed into atom-sized pieces and rebuilt from the ground up.

Ergo Trump.

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Coal mine, early 20th century

Coal mine, early 20th century.

There are mines and there are trenches, but they’re not the same. The so-called war on coal is a great story, but it’s a complete fiction. If there’s a war on steam coal, then there has to be a war on nuclear generation as well because they’re both in the same wholesale electricity market. You don’t have to look far to see Exelon and other nuke operators begging their state legislatures for additional subsidies for their plants. When wholesale electricity market prices are favorable, then coal mines and coal-fired plants (and nukes) extol the survival of the fittest in the Free Market, where only the most efficient competitors survive. But when that market turns on them, all of a sudden “the market is flawed,” and customers are no longer just customers; they’re “stakeholders.”

Be very afraid when anyone in the energy business starts calling you a “stakeholder.” It’s code for “we need you to pay us more money, but our reasons are really bad, so we have to fool you into believing that we’re all in this together.”

Coal mines are not being shuttered by the EPA or Hillary Clinton. The straight-up fact is that shale play natural gas has brought power prices down to levels not seen in years. Allied to this is the continued weak demand in what the feds tell us is our country’s longest (and slowest) economic recovery. The consequence is that low market electricity prices have persisted for an extremely long time.

The mines are being closed, and coal companies are declaring bankruptcy, not because politicians are waging some sort of trench warfare, but simply because of the price of coal, which varies directly with the price of natural gas.

Without doubt, new environmental rules have played a part in reducing coal-fired generation. But if you kick in the door on a house that’s in the process of falling down, don’t expect to be paid for the demolition job. A small decrease in the price of natural gas has a disproportionately large impact on demand for steam coal, and thus on the question of whether to shut a coal-fired station.

There’s no war on coal, and Don Blankenship, contrary to his claim, is not a political prisoner.

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