Back in 2014, a scandal erupted when media reports confirmed what many had previously speculated about China’s banking system: namely that much of China’s staggering loan issuance had been built (literally) upon air and that billions (or trillions) in loan collateral had been “rehypothecated” between two, three or many more debtors – or never even existed – forcing banks to accept that they would never recover much if any of the pledged collateral – in most cases various commodities – if the economy were to suffer a hard-landing resulting in mass defaults. The most famous example involved collateral fraud at China’s 3rd largest port, Qingdao, where numerous borrowers were found to have “pledged” the same collateral of steel and copper to obtain funding from various banks.
So how extensive is the problem?
At risk of spoiling the surprise, what has been going on in China, either in conventional asset-backed lending, as well as among the more esoteric, complex commodity-funded deals, which we discussed extensively in the early part of 2013 is nothing less than pure fraud: in some cases, collateral that has been pledged simply doesn’t exist. In others, it disappears as borrowers in financial distress sell the assets. There are also instances in which the same collateral has been pledged to multiple lenders, i.e. rehypothecated. “One lawyer said he discovered that the same pile of steel was used to secure loans from 10 different lenders” Reuters reports.
And while China was able to brush off its “ghost collateral” problems three years ago when it still had substantial debt incurrence capacity, and debt/GDP was about 100% lower, now that it is becoming increasingly difficult to keep the Ponzi scheme – by definition – running, especially with the recent crackdown on shadow banking, the pervasive collateral problems are about to become a huge headache for Beijing again: with the mainland facing its slowest growth in over a quarter of a century, defaults are mounting as borrowers struggle to repay their loans.
It’s long been known that China’s economy is built, to some extent, on smoke and mirrors (even more so than our own economy). But it looks like it might be smoke and mirrors all the way down…
Considered including this in Friday’s LinkSwarm, but decided this panel with Steve Bannon and Reince Priebus at CPAC was important enough for a separate post.
A few points:
As previously reported, there’s none of the discord here between Bannon and Priebus that the mainstream media likes to ascribe to them. I’ve seen panels where the panelists were barely hiding their animosity with other panelists, and there’s none of that on display.
As for President Trump’s cabinet being the best cabinet in the history of cabinets: George Washington’s first cabinet included Thomas Jefferson and Alexander Hamilton, so no.
“The greatest public speaker in those large arenas since William Jennings Bryant.” Untrue. Martin Luther King, Jr. takes that crown, unless Bannon meant campaign speeches given in Presidential campaigns. There John F. Kennedy was a better speaker, but his venues tended to be smaller.
Priebus’ pick for biggest priority of the first 30 days of the Trump Administration: “Neil Gorsuch.”
Priebus’ pick for second and third biggest priorities: deregulation and immigration.
Bannon’s picks for same: Nations security/sovereignty, “economic nationalism,” and “deconstruction of the administrative state.” Suck it, Jacques Derrida!
I’m not sold on “fair trade” and economic nationalism, or how the Trump Administration will keep them from becoming protectionism and crony capitalism. Given their embrace of the Export-Import Bank, the answer appears to be “they won’t.” But it’s not beyond the realm of possibility that their vision of more bilateral trade deals can pan out better for American economic interest than the dog’s breakfast of Trans-Pacific Partnership would have. It’s “the devil’s in the details” question, and there are so many, many devils…
Bannon: “The rule of law is going to exist when you talk about sovereignty and you talk about immigration.”
The Trump Administration is clearly the most serious about deregulation of the economy since Reagan, and maybe the most serious ever.
Bannon: “If you think they [the mainstream media] is going to give you your country back without a fight, you are sadly mistaken. Every day it is going to be a fight.”
Bannon and Priebus use close synonyms to describe each other: “dogged” and “indefatigable.”
Also, everyone knew that Japan was going to take over the world.
Giant Japanese electronic companies like Sony, Toshiba and Fujitsu were leaders in their markets, Japan had a big export surplus, and Japanese companies were buying up iconic American assets like Rockafeller Center. Experts assured us that Japan was ascendant and that we needed to follow the “Japan Inc.” model of public/private partnerships, as well as the heavy vertical integration of the Japanese zaibatsu conglomerates, if we wanted to compete in the world market.
It turns out that almost all that just about every aspect of that prescription was horribly wrong:
Fast-forward 30 years. When one of Japan, Inc.’s leading corporations makes the news, as often as not it’s the result of an accounting scandal in which corporate profits were grossly overstated for years as a matter of policy–a policy intended to mask the stagnation in the company’s sales, product lines, competitive position and profits.
What happened to the often-copied, much-vaunted Japan, Inc.? Many observers see Japan’s core problem as demographics: as its birth rate has fallen below replacement levels, the population of Japan is aging rapidly. Since young people start households and spend money, economic growth depends largely on the spending of young people rather than the declining spending of older people.
While a decline in the youthful demographic certainly impacts growth, this view overlooks the larger problem: Japan, Inc.–its educational system, government, banking and corporate sector–was optimized for the mode of production that existed in the postwar world from the late 1940s to the late 1980s.
Now that the Digital-Industrial Revolution is remaking the way goods and services are produced and distributed, the system that worked wondrously well in 1960 no longer aligns with the needs of this emerging mode of production.
In the 1980s, Japan’s optimized-for-industrial-exports system reached its zenith, and many US pundits built careers predicting that Japan would soon eclipse the US in every economic and financial metric.
But the excesses of Japan’s banking sector and the rise of new technologies that didn’t lend themselves to gradual improvement and vertically integrated corporations disrupted the predictions of Japan’s global dominance.
Just as Sony ate the lunches of slower, less efficient American companies like RCA, soon the Japanese electronic giants found themselves being beaten by more nimble and disruptive international competitors like Apple and Samsung.
Toshiba is now so broke they may need to spin-off their semiconductor business, despite it being the most central and profitable business in their company, probably because building a new state-of-the-art 300mm wafer fabrication plant for 10nm process technology can now cost up to $14 billion.
In the five years since a $1.7bn accounting scandal was uncovered at Olympus, the number of improper accounting cases exposed each year in Japan has nearly doubled. It hit an all-time high of 58 cases in the 2015-16 fiscal year, according to Tokyo Shoko Research, which provides data on corporate failures.
In many cases, the revelations have shone a light on malpractice and subterfuge dating back years — the legacy of management terrified of failure but left fighting decades of economic stagnation, squeezed costs and a shrinking domestic market.
Children accounted for 12.8% of the population, the ministry said. By contrast, the ratio of people aged 65 or older was at a record high, making up 25.6% of the population. Jiji Press said that, of countries with a population of at least 40 million, Japan had the lowest ratio of children to the total population – compared with 19.5% for the United States and 16.4% for China…
The proportion of people aged 65 or over is forecast to reach nearly 40% in 2060, the government has warned.
Japan’s government has been running huge budget deficits since 2009, and debt now stands at about twice the size of the economy.
For a while, the South Korean chaebol looked like they were going to supplant the Japanese zaibatsu as world beaters, but Samsung and LG have started running into some of the same problems.
The lesson here is not “Merica, fark ye!”, it’s that capitalism works. The creative destruction of capitalism is necessary to keep economic progress moving forward. My biggest fear is that in his efforts to save American jobs, President Trump will prop up the GMs and Boeings of the world at the expense of smaller, nimbler competitors looking to supplant them.
For the country’s long-term economic well-being, government should get out of the business of picking winners and losers entirely.
President Donald Trump has withdrawn the United States from the Trans Pacific Trade Partnership agreement, as both he and Hillary Clinton promised to do on the campaign trail. (We can speculate that Clinton was just lying, and that she would happily flip-flop and sign TPP once safely ensconced in office, but the glorious thing is that now we’ll never know.)
Free trade is a good idea, and multinational free trade agreements do generally help grow the economy. My suspicion is that TPP probably would have provided a net benefit, albeit it one that might be hard to measure if you weren’t employed in an industry (like apparel) called out by TPP. Vietnam and Malaysia were included, so maybe my sneakers would have gotten slightly cheaper.
But the question of whether this particular free trade treaty was actually a good or bad thing requires actually analyzing and reading the thing, and I have to give that a pass. For the historical record, here’s the cached text of the Trans Pacific Trade Partnership agreement. I didn’t have time to read that gargantuan tome of trade minutia back when it was a going concern, and I’m certainly not going to now. It’s less a platonic ideal of free trade ripped from the quill of Adam Smith and more a vast dog’s breakfast of competing special interest requests that, on the whole, probably nudges trade in a slightly freer direction while scratching numerous well-heeled backs.
Trump is not necessarily opposed to trade agreements in principle, but seeks more bilateral trade agreements than multinational ones. There were real concerns about TPP (especially in the areas of copyright agreements, labor laws, environmental regulations, and enshrinement of certain dodgy foreign part content requirements into law) that could be addressed in smaller bilateral agreements. The Washington Examiner suggests that a bilateral trade agreement with the UK should be at the top of Trump’s list.
Trump invited a lot of union leaders to the White House to help dance on TPP’s grave, and he garnered lavish praise from the likes of the UAW and the Teamsters (the still-breathing Jimmy Hoffa the Younger) for the move.
Setting aside the fact that the UAW probably did far more than Japanese competition to cripple the U.S. auto industry, imagine if Trump were able to get private sector unions to not even flip their support to Republicans, but just significantly cut back their campaign donations to Democrats. That would cripple their fundraising at a time when they’re already hurting for being completely out of power and for alienating Jewish Americans (traditionally a key Democratic Party funding constituency) over Israel. That could be a big domestic political positive even if ditching TPP is theoretically a small net economic negative.
It’s been a long time since I compiled one of these, so this is going to be monstrously large. Also, just as I was finishing this up, the San Diego Chargers announced they were moving to Los Angeles. Hell, LA has proven in the past it’s incapable of adequately supporting one NFL franchise, much less two…
When you look at the full recession records, not just the last few years, Texas is still kicking California’s ass. “Over that time frame, Texas has grown more than THREE TIMES FASTER than California. Actually 3.4 times faster (Texas grew at a 4.1% annual rate vs. 1.2% for California).” (Hat tip: Pension Tsunami.)
“A just released study calculates the total state and local government debt in California as of June 30, 2015, at over $1.3 trillion.” (Hat tip: Pension Tsunami.)
California faces its first budget deficit since 2012. Or at least it’s first official deficit since then. (Hat tip: Pension Tsunami.)
Increasingly, inside the party, it’s been the furthest Left candidates that win. In the Democrat-only Sanchez vs. Harris race for the U.S. Senate, the more progressive candidate triumphed easily, with a more moderate Latina from Southern California decimated by the better funded lock-step, glamorous tool of the San Francisco gentry Left.
Gradually, the key swing group — the “business Democrats” — are being decimated, hounded by ultra-green San Francisco billionaire Tom Steyer and his minions. No restraint is being imposed on Gov. Brown’s increasingly obsessive climate change agenda, or on the public employee unions, whose pensions could sink the state’s finances, particularly in a downturn.
The interior parts of California already rank near the bottom, along with Los Angeles, in terms of standard of living — by incomes, as opposed to costs — in the nation. Compared to the Bay Area, which now rules the state, the more blue-collar, Latino and African American interior, as well as much of Los Angeles, account for six of the 15 worst areas in terms of living standard out of 106 metropolitan areas, according to a recent report by Center for Opportunity Urbanism demographer Wendell Cox.
Given the political trends here, it’s hard to see how things could get much better. The fact that most new jobs in Southern California are in lower-paying occupations is hardly promising. In contrast, generally better-paying jobs in manufacturing, home-building and warehousing face ever-growing regulatory strangulation.
Sadly, the ascendant Latino political leadership seems determined to accelerate this process. In both Riverside and San Bernardino, pro-business candidates, including San Bernardino Democrat Cheryl Brown, lost to green-backed Latino progressives.
For whatever reason, Latino voters and their elected officials fail to recognize that the increasingly harsh climate change agenda represents a mortal threat to their own prospects for upward mobility. Before this week’s election, California policy makers could look forward to Washington imposing such policies on the rest of the country; now our competitor regions — including Utah, Arizona, Nevada and Texas — can double down on growth. Expect to see more migration of ambitious Californians, particularly Latinos, to these areas.
California is on the road to a bifurcated, almost feudal, society, divided by geography, race and class. As is clear from the most recent Internal Revenue Service data, it’s not just the poor and ill-educated, as Brown apologists suggest, but, rather, primarily young families and the middle-aged, who are leaving. What will be left is a state dominated by a growing, but relatively small, upper class, many of them boomers; young singles and a massive, growing, increasingly marginalized “precariat” of low wage, often occasional, workers.
California is about to face the music as Donald Trump becomes 45th President of the United States. Their Sanctuary Cities violate federal law and after Jeff Sessions is confirmed as Attorney General (and he will be), they are going to either have to knock that off or have funding to their law enforcement and their government stripped away. Sessions can’t wait and I have to say, I will enjoy watching this showdown. Los Angeles Mayor Eric Garcetti said that Trump pulling 37% of federal funding for their governments would cause chaos and upheaval. Yes, it will… it will also cause California to go absolutely toes up bankrupt.
It’s simple. They can either follow the rule of law, or the free flow of money from DC gets cut off. In 2015, that amounted to about $93.6 billion. That’s a lot of money to turn away because you insist on not following the law. Let’s see how long that lasts. I love the thought of this. It’s about time Sanctuary Cities were stopped and this is an excellent way to do it. New York, Chicago and DC will all face the same choice by the way. Imagine the meltdown. Good times.
California has 39 million people — 43% larger than the 2nd largest state (Texas). Such GDP comparisons don’t tell us much in terms of the PROSPERITY of a nation. Or a state.
The proper comparison is PER CAPITA GDP. Using that more meaningful figure, CA is the 10th most prosperous state.
But an even MORE accurate comparison is to take the per capital GDP and adjust it for COL. Because of California’s high taxes, crazy utility laws, stifling regulations (paid by consumers) and sky-high housing costs, CA in 2014 ranked WAY down in 37th place. Only 13 states were worse.
Governor Jerry Brown announced today that the budget was $1.4 billion in deficit. At the end of last year, the state announced that it was giving state employees a raise which would cost taxpayers over $2 billion over the next four years. Do you think there is a connection?
A story ran locally in Southern California saying that over 105 employees in Santa Monica, a medium sized city, earn over $300,000 a year. The Governor of the state of California earns $174,000 per year. If you do the research, you will find that there are over 200 state employees that earn more than that
When I was deciding what I wanted to do in my younger years, my mother told me I should go to work for the government, good benefits she said. I knew I would be bored and would die young if I became a government drone. My little sister listened to her. Today, my little sister is retired on a great government pension, I still fight to pay my taxes. Given the pay that even the lowest government official receives, my mother was right.
Our government pension system is over $500 billion upside down. Retired state employee health benefits add an additional $300 billion or more to that deficit. The system is out of control. Pay and benefits to government employees at state and local levels is incomprehensible, and the government leaders still come to you and I and ask us to foot the bill for their indulgences.
What is even more evil about the system is that government unions, led by thugs who force people to pay union dues for the privilege of having a government job, take the money from the government employees and put it into the political system to pay for the campaigns of the Governor, statewide elected officials, legislators and city councils with whom these unions then negotiate for the out-of-control pay and benefits. If anyone tries to limit them, as I once tried by tying everybody’s salaries to the Governor’s salary, they are marked for political defeat. And the system perpetuates itself, taxes to employees to unions to politicians, as it did in the Soviet Union, until the whole system collapses.
Driven by rising out-migration and falling birth rates, California’s population growth has stalled, leading analysts to consider a possible forecast of a so-called “no-growth” period in the future.
Although Americans nationwide have been flooding south and west for years, the Golden State has become an exception. Nearly 62 percent of Americans lived in the two regions, Justin Fox observed from Census figures. “That’s up from 60.4 percent in the 2010 census, 58.1 percent in 2000, 55.6 percent in 1990 — and 44 percent in 1950. The big anomaly is California, which is very much in the West, yet has lost an estimated 383,344 residents to other states since 2010.”
“The state’s birth rate declined to 12.42 births per 1,000 population in 2016 — the lowest in California history,” the San Jose Mercury News noted, citing a state Department of Finance report. “In 2010, the last time figures were compiled, the birth rate was 13.69 per 1,000 population.”
Last week California’s progressive lawmakers announced that they’ve put former Attorney General Eric Holder, now a Covington & Burling partner, on retainer as the state’s outside counsel. “This is potentially the legal fight of a generation, and with Eric Holder we’ve added a world-class lawyer,’’ said Senate majority leader Kevin de León.
This is odd. Typically states hire outside counsel for help with specific cases, but the legislature is paying Mr. Holder $25,000 a month for three months under the initial contract, apparently for 40 hours a month and the privilege of his attention if something comes up.
At least one California assemblyman thinks that the Holder deal is illegal. “California courts have interpreted the civil service mandate of article VII of forbidding private contracting for services that are of a kind that persons selected through civil service could perform ‘adequately and competently.'”
“California state firefighters will receive substantial raises of up to 13.8 percent this year, according to newly released details from a proposed contract that their union negotiated just before Christmas.” Just the thing a state with a budget deficit needs…
“The evidence is clear that standards of living are substantially higher in Texas than in California, which has a model of excessive government.” More: “During the last decade, economic growth in the real private sector has increased by 29 percent in Texas compared with only 14 percent in California. Job creation increased by 1.2 million in California compared with 1.7 million in Texas, which has a labor force two-thirds of that in California. Remarkably, Texas’ job creation was roughly one-third of total civilian employment increases nationwide.”
CalPERs plans to sell $15 billion worth of equities over the next two years. Also: “CalPERS’ current portfolio is pegged to a 7.5% return and a 13% volatility rate” even though the most recent returns were “a 0.6% return for the fiscal year ended June 30 and a 2.4% return in fiscal 2015.”
Overseers of the nation’s largest pension trust fund, the California Public Employees Retirement System (CalPERS), last month reduced – albeit reluctantly – its projection of future earnings by a half-percentage point.
With earnings on investments the last two years barely exceeding zero, CalPERS has been compelled to sell assets to make its pension payments – which far outstrip contributions from state and local governments and their employees.
Reducing the “discount rate” to 7 percent will force employers, and perhaps employees, to kick billions of more dollars into the system to slow the growth of CalPERS’ “unfunded liabilities,” as the $150-plus billion debt is termed.
However, the extra contributions generated by lowering the discount rate will not erase that debt, which is likely to keep growing if CalPERS’ investment earnings continue to fall short, as many economists expect. In fact, CalPERS’ own advisers see a prolonged period of relatively low earnings, and say the system shouldn’t count on more than 6.2 percent.
Rationally, the discount rate should have been lowered by at least another full percentage point. But CalPERS has already increased its mandatory contributions by 50 percent to make up for investment losses during the Great Recession and other factors, and cutting the discount rate to 6 percent would probably mean bankruptcy for a number of local governments, especially some cities.
This is why the CalPERS board must do far more — starting with, on a large scale, finally embracing pension reforms and, on a smaller scale, shuttering an over-the-top corner of the CalPERS website that says it’s a myth that pension costs are crowding out “government services like police and libraries.”
It’s no myth. The Los Angeles Times reported last month that pensions and retirement health benefits now consume 20 percent of revenue in Los Angeles and Oakland and a stunning 28 percent in San Jose. While the state government is in better shape than most local governments, it’s beginning to feel the strain as well. On Wednesday, Bloomberg reported that beginning in April, the state will increase vehicle registration fees from $46 to $56 to help cover the soaring cost of pensions for California Highway Patrol officers. In 2000, the state had to pay about one-eighth of annual CHP pension costs. Now it must pay about half.
“Home values in San Francisco have doubled in a matter of four years. Since 2012 the typical San Francisco home went from $600,000 to $1,200,000. The Bay Area is under a tech based hypnotic spell and foreign money just can’t get enough of million dollar crap shacks in San Francisco. As we all know trees do not grow to the sky with unlimited potential and at a certain point the laws of reality have to hit. Only 11 percent of households in San Francisco can actually afford to purchase the typical $1.2 million crap shack.”
How America’s restaurant bubble is about to burst. Actually, the piece focuses mainly on the impossibility of running a profitable fine dining restaurant in San Francisco and other similarly expensive locales. (Hat tip: Zero Hedge.)
The Census bureau says that Texas continued to grow in 2016. “Another big gainer was Texas, whose addition of about 433,000 people accounted for 19% of the country’s growth. The state, with 27.9 million people, grew from a relatively strong flow of immigrants and people relocating there from other states.”
Texas experienced a net gain of out-of-state residents in 2015, with 107,689 more people moving to Texas than Texas residents moving out of state. This is a 4 percent increase in the net gain of Texas residents from 2014 (103,465 residents).
The total number of residents moving to Texas from out of state in 2015 increased 2.8 percent year-over-year to 553,032 incoming residents. The highest number of new Texans came from California (65,546), followed by Florida (33,670), Louisiana (31,044), New York (26,287) and Oklahoma (25,555).
Texas once again ranked third in the nation for number of residents moving out of state (445,343) in 2015. The most popular out-of-state relocation destinations for Texans were California (41,713), Florida (29,706), Oklahoma (28,642), Colorado (25,268), and Louisiana (19,863).
Arizona and Florida managed to dethrone Texas for the relocation top spot for the first time in a dozen years.
“Police in Kern County, California, have killed more people per capita than in any other American county in 2015.” Caveat the first: The Guardian. Caveat the second: Thanks ever so much for that full-frame background video designed to bring by computer to a screeching halt, Guardian…
Students at California law schools are doing horribly on the bar exam. “Law schools are admitting less and less qualified students in an effort to bolster their bottom lines. And why do their bottom lines need to be bolstered? Because they have too many faculty relative to student demand for the schools, and are either reluctant or unable to reduce the size of the faculty to “right size” the law school relative to present demand for the JD.” (Hat tip: Instapundit.)
Canadian apparel maker Gildan Activewear Inc. has won a bankruptcy auction for U.S. fashion retailer American Apparel LLC (curxq) after raising its offer to around $88 million, a person familiar with the matter said Monday.
Gildan’s takeover marks the end of an era for the iconic Los Angeles-based company, which was founded in 1998 by an eccentric Canadian university drop-out and grew to become a part of U.S. popular culture thanks to its racy advertising.
Gildan will not take any of American Apparel’s 110 stores, but will own its brand and assume some of its manufacturing operations, the source said. The deal is subject to a bankruptcy judge approving it on Thursday.
State of California: You can’t mention actresses ages, because Reasons. IMDB: Free speech. Bite me.
And if you hadn’t seen them already, two previous BattleSwarm stories that touch on the Texas vs. California issue:
The ongoing failure of socialism in Venezuela is one of those continuing stories that always threaten to turn post-worthy. This week’s Christmas season hook: the government’s Grinch-like seizure of toys:
Caracas, Venezuela (CNN)Venezuelan officials have confiscated nearly 4 million toys from a toy distributor, accusing the company of planning to sell them at inflated prices during the Christmas season.
On Saturday, the government initially said it had confiscated 4.8 million toys. It revised the figure Sunday, putting it at 3.821 million.
Critics say the consumer protection agency, which targeted the toy warehouse this week, has become “the Grinch that stole Christmas” because many families won’t be able to buy the confiscated toys for the holiday.
Agency head William Contreras disputed that, saying executives at toy distributor Kreisel-Venezuela, the largest of its kind in the country, “don’t care about our children’s right to have a merry Christmas.”
Lack of toys are not the biggest problem for children in Venezuela. Thanks to the Magic Power of Socialism™, a child’s scrapped knee can mean death. (Hat tip: Stephen Green at Instapundit.)
Except for Nicaragua in the 1980s, Venezuela has more wholly adopted Castro’s economic and ideological model than any other Latin American nation. The late Hugo Chávez took his cues from Castro on everything from his fondness for army fatigues to his 10-hour speeches. Chávez also adopted the Castro model of seizing private property, suppressing the independent media, hounding political opponents and making cause with rogues in Damascus and Tehran.
For a while Venezuela escaped some of the inevitable consequences thanks to a flood of petrodollars. That’s over. Inflation is forecast to reach 1,640% next year. Caracas is the world’s most violent city. Hospitals have run out of basic medicines, including antibiotics, leading to skyrocketing infant mortality. There are chronic and severe shortages of electricity, food and water, as well as ordinary consumer goods like diapers or beer. Nicolás Maduro, Chávez’s handpicked successor, has put his leading political opponents in jail.
And there’s hunger. An estimated 120,000 Venezuelans flooded into neighboring Colombia to buy food when Mr. Maduro briefly opened the border in July. Desperate Venezuelans are trekking through the Amazon hinterlands to make it to Brazil. And, like Cubans, they are taking to boats, risking their lives to make it to the nearby Dutch colony of Curaçao. Where there’s socialism there are boat people.
Zero Hedge has been keeping track of the twists and turns of Venezuela’s ongoing hyperinflation:
Then, following the moronic lead of Narendra Modi’s India, Venezuela announced that they were pulling 100 boliver notes from circulation, ahead of larger bills being available.
Next week come two joyous events: Christmas, and Donald Trump being confirmed President by the electoral college. The first is a time of family celebration, and the second means liberals can finally shut the hell up about their asinine cockamamie schemes to keep the duly-elect 45th President of the United States of America from taking office.
Enjoy a Friday LinkSwarm:
Speaking of the electoral college, publicity whore faithless elector Chris Suprun turns out to be a serial liar rather than a 9/11 first responder.
First, your ability to assemble a broad-based national coalition has collapsed. Do not be fooled into thinking otherwise by your popular vote “win”; that majority came entirely from the West Coast metroplex and disguises a large-scale collapse in popular support everywhere else in the U.S. Trump even achieved 30-40% support in blue states where he didn’t spend any money.
County-by-county psephological maps show that your base is now confined to two major coastal enclaves and a handful of university towns. Only 4 of 50 states have both a Democratic-controlled legislature and a Democratic governor. In 2018 that regionalization is going to get worse, not better; you will be defending 25 seats in areas where Trump took the popular vote, while the Republicans have to defend only 8 where Clinton won.
Your party leadership is geriatric, decades older than the average for their Republican counterparts. Years of steady losses at state level, masked by the personal popularity of Barack Obama, have left you without a bench to speak of – little young talent and basically no seasoned Presidential timber under retirement age. The fact that Joseph Biden, who will be 78 for the next Election Day, is being seriously mooted as the next Democratic candidate, speaks volumes – none of them good.
Your ideological lock on the elite media and show business has flipped from a powerful asset to a liability. Trump campaigned against that lock and won; his tactics can be and will be replicated. Worse, a self-created media bubble insulated you from grasping the actual concerns of the American public so completely that you didn’t realize the shit you were in until election night.
Your donor advantage didn’t help either. Clinton outspent Trump 2:1 and still lost.
Your “coalition of the ascendant” is sinking. Tell all the just-so stories you like, but the brute fact is that it failed to turn out to defeat the Republican candidate with the highest negatives in history. You thought all you had to do was wait for the old white men to die, but anybody who has studied the history of immigration in the U.S. could have told you that the political identities of immigrant ethnic groups do not remain stable as they assimilate. You weren’t going to own the Hispanics forever any more than you owned the Irish and the Italians forever. African-Americans, trained by decades of identity politics, simply failed to show up for a white candidate in the numbers you needed. The sexism card didn’t play either, as a bare majority of married women who actually went to the polls seem to have voted for Trump.
But your worst problem is less tangible. Trump has popped the preference bubble. The conservative majority in most of the U.S. (coastal enclaves excepted) now knows it’s a conservative majority. Before the election every pundit in sight pooh-poohed the idea that discouraged conservative voters, believing themselves isolated and powerless, had been sitting out several election cycles. But it turned out to be true, not least where I live in the swing state of Pennsylvania, where mid-state voters nobody knew were there put Trump over the top. Pretty much the same thing happened all through the Rust Belt.
That genie isn’t going to be stuffed back in the bottle. Those voters now know they can deliver the media and the coastal elites a gigantic fuck-you, and Republicans know the populist techniques to mobilize them to do that. Trump’s playbook was not exactly complicated.
Some Democrats are beginning to talk, tentatively, about reconnecting to the white working class. But your real problem is larger; you need to make the long journey back to the political center. Not the center you imagine exists, either; that’s an artifact of your media bubble. I’m pointing at the actual center revealed by psephological analysis of voter preferences.
First on his list of suggestions: Give up their suicidal gun control policies.
Still scratching their pointy heads over losing an election they were certain that history had preordained them to win, the Democrats are blaming everything except their own stupidity and arrogance.
The intersectional house of cards has fallen. Every maladjusted minoritarian mini-tyrant in the country is freaking the frick out that their ragged, patchwork coalition of misfits is crumbing before their eyes. From coast to coast, every HIV-positive mulatto one-armed transgender lesbian midget is suddenly worried that Trump and his supporters in the heartland will become “normalized.”
Huddled inside a rainbow-colored yet opaque bubble, it’s obvious that they have no idea what just hit them. Many overpaid and demonstrably clueless strategists seem to think that perchance they didn’t call people racists, sexists, homophobes, and Islamophobes enough. Maybe if they just verbally shat upon the stupid, uneducated, hateful, and soon-to-be-extinct white masses in flyover country who put Trump over the top, they could have shamed enough of these irredeemable rubes into voting for a party and an ideology that clearly hates their guts.
Not for a moment does it seem to have occurred to them that maybe it’s not so wise to play aggressively hostile identity politics when your designated opponent is still the demographic majority.
Listen up, dimwits: When you encourage racial pride in all groups except whites, you aren’t exactly making a case against “racism.” If you have even a semblance of a spine, sooner or later you’ll hear this nonstop sneering condescension about how you were born with a stain on your soul and say, “Hey, fuck you. I’ve done nothing wrong, but you’re really starting to bother me.”
I suspect that for perhaps the majority of those who voted for Trump, it had nothing to do with the stupid, juvenile, leftist catchall excuse of “hatred.” If you really think extraordinarily complex social conflicts over power and resources can be explained by a dumb word such as “hatred,” I hate you.
Instead, a large swath of voters grew so tired of being actively hated, they struck back and said “enough.” They didn’t “vote against their interests,” as is so often patronizingly alleged; they voted against the condescending, scolding, sheltered creampuffs who try to dictate their interests to them.
Lots of Democrats are pretty clear about the contempt they hold regular Americans in, but few are so stupid as to actually call America’s heartland “flyover country” in public.
Hillary Clinton didn’t win “America’s” vote, she won California’s:
California voters are alone responsible for Clinton’s “win” in the popular vote. The latest tally shows Clinton up by about 2.8 or so million votes. She’s won California by nearly 4.3 million votes. So, take away California and the rest of the country starts to look like… well, it looks like the rest of the country. California is weird, but if that’s what the Democrats want to elect a president of, then the only thing you can really say to them is, “Congrats, you already have Jerry Brown.”
Along with the selection of Mad Dog Mattis for Secretary of Defense, the selection of Michael Flynn for National Security Advisor signals that Trump is tossing political correctness out of the Pentagon. Good.
“Get ready for more Scott Walkers as Republicans control 25 state capitals: tax cuts, pension reform, right to work, school choice.” (Usual WSJ hoops apply.)
The parched branches of big banks are still fortunate. For unexplained reasons the RBI has supplied almost no new cash at all to India’s hundreds of smaller rural co-operative banks or to its 93,000 agricultural credit unions, so keeping millions of farmers from deposits that total some $46bn. It has also banned these institutions from competing with “pukkah” banks in exchanging old bills for new. With no cash flowing, farmers cannot even seek help from informal networks that in normal times account for more credit in rural areas than formal institutions. And although India’s 641,000 villages house two-thirds of its people, they contain fewer than a fifth of its ATMs. These are being slowly modified to supply the new notes, which unhelpfully are smaller than old ones; for now most stand idle.
Starved of cash, India’s rural economy is seizing up. A study by two economists at Delhi’s Indira Gandhi Institute of Development Research found that in the second week of the drought, deliveries of rice to rural wholesale markets were 61% below prior levels. Soyabeans were 77% down and maize 29%. Prices have also collapsed. In Bihar, Scroll’s reporters found desperate farmers selling cauliflower for 1 rupee ($0.01) a kilo, a twelfth of the prior price.
It is not only farm incomes that are pinched. An investigation by Business Standard, a financial daily, found that virtually none of the estimated 8m piece workers who hand-roll bidis, a kind of cigarette, has been paid since the cash ban. Another Indian daily, the Hindu, reports that more than half of the 600-odd ceramics factories in the town of Morbi, a centre of the tile industry in the state of Gujarat, with a combined output worth some $3.5bn a year, have temporarily closed because they cannot pay workers. In Agra, the hub of Indian shoemaking, some firms are paying workers with supermarket coupons to keep them on the job.
India’s wealthy few have servants to take their place in the still dismally long queues snaking outside banks, but the pain reaches even to the top. A dentist in a posh part of Delhi is shocked by a 70% fall in trade since the cash ban. “All my patients can pay with plastic so I assumed I was safe, but I guess people are just being careful about spending in general.” This does seem to be the case. A brokerage that surveys consumer-goods firms says November sales have fallen by 20-30% across the board. Property sales, which traditionally are made wholly or partly in cash, have plummeted even more.
Small wonder that Fitch, a ratings agency, on November 29th cut its forecast for India’s GDP growth for the year to March 2017 from 7.4% to 6.9%. That is in line with most financial institutions’ trimmed estimates, although some economists think the damage could be even worse. “There will be no or negative growth for the next two quarters,” predicts one Delhi economist who prefers anonymity. “Consumer spending was the one thing really driving this economy, and now we are looking at a negative wealth-effect where people feel poorer and spend less.”
Perhaps more embarrassingly for Mr Modi’s government, there are few signs that its harsh economic medicine is achieving the declared goal of flushing out vast hoards of undeclared wealth or “black” money. Officials had predicted that perhaps 20% of the pre-ban cash would not be deposited in banks, for fear of disclosure to the taxman. Yet within three weeks of the “demonetisation”—well before the deadline to dispose of old bills, December 30th—about two-thirds of the money had already found its way into “white” channels. Some of this is doubtless illicit: inspectors of Delhi’s bus system have found that the bulk of daily takings now mysteriously appears in the form of the banned bills, which public-sector firms can still deposit, rather than the usual small change. Reports from Maharashtra, in the centre of the country, suggest that brokers are offering to buy old notes with a face value of 10m rupees for 8.4m, suggesting that they have found ways of laundering them.
Speaking of phones, how long you have to work earn enough to buy an iPhone varies widely by country, from 24 hours in New York to 627 hours in Kiev, which is even more than Nairobi (468 hours).
When students inhabit liberal bubbles, they’re not learning much about their own country. To be fully educated, students should encounter not only Plato, but also Republicans.
We liberals are adept at pointing out the hypocrisies of Trump, but we should also address our own hypocrisy in terrain we govern, such as most universities: Too often, we embrace diversity of all kinds except for ideological.
“In 2015: 4,454 men died on the job (92.4% of the total) compared to only 367 women (7.6% of the total). The ‘gender occupational fatality gap‘ in 2015 was again considerable — more than 12 men died on the job last year for every woman who died while working.”
Llewellyn Rockwell of the Mises Institute explains Trump: “To get to where we want to go, the American political class has to be hit hard, and the media and the universities need to be exposed for the propaganda factories they are.”
The poll with the best track record over the last three presidential elections gave Donald Trump a 2-percentage-point edge over Hillary Clinton on Saturday.
The Investor’s Business Daily/TIPP tracking poll has Trump with 42.1 percent and Clinton at 39.7 percent.
Thoughts on #NeverTrump: “They are putting a great volume of energy into bringing about a disaster, for which they will not take any ownership.”
No one trusts the media anymore. “Only one in nine Americans believes that Hillary Clinton is ‘honest and trustworthy.’ They don’t trust the media’s cover-up of her misdeeds, and the cover-up of the cover-up of the cover-up.” (Hat tip: Director Blue.)
More than anything, I can’t sit idly by and allow these perpetrators of fraud to celebrate and leak tears of joy like they did when they helped elect Barack Obama in 2008. I have to know I weighed in not only in writing but in the voting booth. The media needs to be destroyed. And although voting for Trump won’t do it, it’s something. Essentially, I am voting for Trump because of the people who don’t want me to, and I believe I must register my disgust with Hillary Clinton.
Here’s a New Yorker piece on the failure of the Euro. It provides a good, but incomplete, overview of the Euro’s failure (nowhere does it note that Europe’s cradle-to-grave welfare state is unsustainable, and it fails to note that none of the nations practicing “austerity” in southern Europe have cut outlays to match receipts). And the myopic policy prescription offered is, of course, more central planning. But there are some good bits. Like this:
The U.S. unemployment rate hit ten per cent for a single month in 2009 and is now below five per cent; the eurozone unemployment rate hit ten per cent around the same time, and is still in double digits. In some European countries, youth unemployment is more than forty per cent. America’s economy is bigger than it was when the crisis hit. The eurozone’s is smaller. To take just one example, Italy, the third-largest economy in the eurozone, has a per-capita G.D.P. that’s lower than it was at the end of the last century.
Also this:
Stiglitz observes that if the countries that committed to the single currency in 1992 had known what they know now, and if people had had the chance to vote on the proposal, “it is hard to see how they could have supported it.” That’s a hell of an indictment.
Hey, remember how we were told California’s assisted suicide law would only apply to terminally ill people who wanted to die? Now insurance companies are enouraging suicide rather than pay for life-extending drug treatments.
But if you’re not sure yet what you want to do, then take time to decide before you spend $30,000, $50,000, or $100,000 you don’t have for something you don’t need. In the meantime, start working. You’ll probably only find low-paying, hard-working jobs at first, but guess what? If you go to college, you’ll be working those same jobs when you get out, only you’ll be four years older and fifty grand poorer.
Scientists at the Oak Ridge National Laboratory in Tennessee have discovered a chemical reaction to turn CO2 into ethanol. Better idea than corn subsidies…
For the last ten years you’ve been told that the LHC must see some new physics besides the Higgs because otherwise nature isn’t “natural” – a technical term invented to describe the degree of numerical coincidence of a theory. I’ve been laughed at when I explained that I don’t buy into naturalness because it’s a philosophical criterion, not a scientific one. But on that matter I got the last laugh: Nature, it turns out, doesn’t like to be told what’s presumably natural.
“Until blacks start changing these pathologies, the whole ‘Black Lives Matter’ movement, with its insistence that everyone has to change except for blacks themselves is nothing more than Progressive kabuki theater aimed at diverting attention from the fact that Democrats are facilitating self-destructive behaviors in the black community and that blacks are using the Democrat propaganda machine as an excuse to avoid the terrible (but not insurmountable) challenges that really claim black lives.” (Hat tip: Ace of Spades HQ.)
Who, exactly, is in charge of these cities and city agencies about which African Americans do have many legitimate complaints? Philadelphia, Cleveland, Detroit, Baltimore, Los Angeles, San Francisco, Chicago: Not exactly famous enclaves of conservative Republican political dominance. Because Dallas is in Texas, people sometimes forget that it is a city like any other American city, and Democrat-dominated. In Dallas, as in Philadelphia, Baltimore, and Detroit, that Democrat domination is due in great part to a black Democratic voting bloc.
Eventually, someone is going to figure out that the black progressives protesting municipal arrangements in places such as Baltimore are protesting the municipal arrangements created by black progressives working for the interests of the Democratic party. Dallas’s racial politics aren’t as one-sided as Detroit’s, and neither are its party politics; it is Democratic, but not as lopsidedly Democratic as, say, Philadelphia. It even has had a Republican mayor (the office is technically nonpartisan) within living memory. No doubt somebody in Dallas already is trying to figure out a way to blame that mayor for the murder of those five police officers.
“Friends and family tell us that Alton Sterling was a great guy. That may well be the case, but he is also a convicted sex offender felon with a violent temper, who had six arrests for battery, two domestic violence charges, multiple illegal weapons charges, and who had fought with police over weapons before.”
SuperGenius tries to rob gas station, ends up shooting himself in the groin. I also wonder if he’s the towering intellect that managed to clip his own driver’s side mirror at the pump in the video…
Yesterday’s Brexit roundup mentioned that Italian banks account for nearly half the bad loans for the entire Eurozone.
Italy is now the heads-on favorite as the most likely instigator of the next global economic crisis. Some analysts are calling it a perfect storm:
Italy’s bank bailout fund might not be enough to beat back the Brexit. More key Italian financial services firms are under pressure and face the potential need to raise capital, leaving Italian government officials and its banking system trying to steer clear of a crisis.
As Italian bank bonds and share prices are seeing their value slammed in the face of rising uncertainty, banks with substantial bad loans are facing greater pressure, with rates around the world slipping into negative territory.
And, of course, they’re blaming Brexit rather than all the myriad problems with the EU that caused the Brexit.
Italy’s bank bailout fund might not be enough to beat back the Brexit. More key Italian financial services firms are under pressure and face the potential need to raise capital, leaving Italian government officials and its banking system trying to steer clear of a crisis.
As Italian bank bonds and share prices are seeing their value slammed in the face of rising uncertainty, banks with substantial bad loans are facing greater pressure, with rates around the world slipping into negative territory. It’s an anxiety some in Italy and throughout the European Union may have been hoping would be eased by the Brexit vote last month — but then the U.K. referendum delivered the opposite outcome from the one they had sought.
“Market volatility following the U.K.’s EU referendum result hit the Italian bank sector particularly hard because it is one of Europe’s weakest,” Fitch Ratings analysts said in a July 4 report. “Asset quality pressure is a main driver for the negative outlooks on several large and medium-sized Italian banks.”
The Brexit vote, which calls for the United Kingdom to abandon a European Union that has careened for years from one crisis to another, could hasten weak Italian banks’ downfall. It was widely expected that European and U.K. banks will suffer the brunt of the vote in late June, and while British banks have been hard hit by the news — which brings with it tremendous regulatory uncertainty — EU banks have suffered as well.
Many banks in Italy, including its largest, UniCredit SpA, have seen share prices pounded; its stock is down more than 60 percent so far this year. A staffer at UniCredit could not provide comment when contacted.
Already, Italian officials and executives appear to be pulling out all the stops to stave off banking sector contagion. The lingering question for banks is whether they can continue to support lending operations at a time when creditors face potential losses and as some of the country’s leading financial services firms could be subject to shotgun M&A marriages by regulators.
Italian financial services firms earlier this year established a multi-billion dollar fund called Atlante to buy non-performing bank loans. But the fund, which is in the 4-billion euro to 6-billion euro range ($4.43 billion to $6.65 billion), one analyst said, is far too small to cover all the non-performing loans held by major Italian banks. However, the fund could still be leveraged in order to support loan purchases.
“The authorities need to get banks to remove a large portion of soured loans from their books so they can loan more,” said Julien Jarmoszko, senior research manager at S&P Global Market Intelligence. “If investors fear more Italian banks, this will raise their cost of capital and reduce lending as a result.”
Look for some sort of holding action for temporary recapitalization (including a “bail in” or some sort of ECB scheme) to let all the insiders dump their bad debts onto the European taxpayer, which was the real point of prolonging the Greek farce.
More news on that front:
Atlante already took control of Veneto Banca after “a €1bn capital increase demanded by EU bank regulators attracted zero interest.” And Atlante may have to tap pension funs for further recapitalization.
Italy has also banned short-selling of imploding Banca Monte dei Paschi di Siena SpA. That’s never a good sign, and it never works for long.
“It’s bad – non-performing bank loans have risen to 18%. At 10%, most banks are technically bankrupt. That’s the percentage of capital and pledged deposits they have against bad loans. Our pledged deposits, not theirs. At 18%, they’re no longer “technically” bankrupt. They ARE bankrupt! Greece still has bad or non-performing bank loans of 34%, Ireland 19% and Portugal 12%. And we haven’t seen the next serious financial crisis yet.”
And bank bailouts could hit Italian sovereign debt right in the bond ratings. “Italian ratings are already at BBB- for S&P, though we must also add that DBRS still ranks the country at AL. Still, if these ratings start to come under pressure from the agencies, this could lead to speculation that Italy may eventually fall out of the investment grade bucket. This would have a major impact – in the first place in terms of the eligibility of Italian bonds for the PSPP.” That’s the European Central Bank’s public sector purchase program.
Of course, when push comes to shove, we’re likely to see all sorts of banking rules get thrown out the window…