Friday, July 31, 2015

Boston Leads The Way (again)

I was absolutely ecstatic when I heard that Boston dropped its bid for the 2024 Olympics.  Finally, a city rose above its politicians and their cronies and said 'no'!  The Olympics, like most mega-projects, are a money-losing proposition and the citizens are left with paying off the debt.  In my opinion, like zoos, the Olympics are an anachronism and are simply a cash spigot for special interests, especially politicians.  Sep Blatter's running of FIFA is not the exception: it's the rule as far as such organizations go.  Here's David Boaz saying much of the same thing in Modern Tea Party Tosses Olympics:

Boston, the home of the original American tax revolt, has just dodged a big tax bill by dropping its bid to host the 2024 Summer Olympics.

The Boston Tea Party in 1773 expressed Americans’ growing resentment of British control and their demand for “no taxation without representation.”

After Americans got a sense of what taxation could be like even in a democracy, a tax revolt swept the country, from California’s Proposition 13 in 1978 to Massachusetts’ Proposition 2½ in 1980.

And now Bostonians have once again said “No” to their ruling elite.

As usual, Boston’s Olympics bid was supported by business leaders, construction companies, university presidents, the mayor and other establishment figures.

The opposition was led largely by three young professionals who set up the No Boston Olympics organization. The construction magnate who headed the local Olympic committee dismissed the group early on, asking: “Who are they and what currency do they have?”

Even at the press conference on the day the city’s bid ended, Mayor Marty Walsh grumbled, “The opposition for the most part is about 10 people on Twitter.”

Apparently those 10 people did a lot of tweeting, to significant effect. After the bid collapsed, WBUR radio noted, “No Boston Olympics was persistent with its message that hosting the games was risky, expensive and would leave taxpayers footing the bill with no economic gains.”

In the station’s monthly polls, opposition to the Olympics rose steadily over the spring from 33 percent to 53 percent.

Some planners and politicos were beside themselves at the withdrawal of the bid. Thomas J. Whalen, a political historian at Boston University, told The New York Times that it sent a discouraging message:

“The time of big dreams, big accomplishments, is over. ‘Think small,’ that’s the mantra for Massachusetts. ‘Limit your dreams’ ” he said. Worse, he said, the end of the bid took away a great opportunity for a “master development plan for Boston.” That is, it took away an opportunity for planners and moguls to tell the people of Boston where and how to live.

The head of the bid committee once lamented that “what bothers me a lot is the decline of pride, of patriotism and love of our country.”

No doubt the East India Company and King George III felt the same way in 1773.

The critics knew something that the Olympic enthusiasts tried to forget: Megaprojects like the Olympics are enormously expensive, always over budget, and disruptive. They leave cities with unused stadiums and other waste.

E.M. Swift, who covered the Olympics for Sports Illustrated for more than 30 years, wrote on the Cognoscenti blog a few years ago that Olympic budgets “always soar.”

“Montreal is the poster child for cost overruns, running a whopping 796 percent over budget in 1976, accumulating a deficit that took 30 years to repay. In 1996 the Atlanta Games came in 147 percent over budget. Sydney was 90 percent over its projected budget in 2000. And the
Athens Games cost $12.8 billion, 60 percent over what the government projected.”

Bent Flyvbjerg of Oxford University, the world’s leading expert on megaprojects, and his co-author Allison Stewart found that Olympic Games differ from other such large projects in two ways: They always exceed their budgets, and the cost overruns are significantly larger than other megaprojects. Adjusted for inflation, the average cost overrun for an Olympics is 179 percent.

Bostonians, of course, had memories of the Big Dig, a huge and hugely disruptive highway and tunnel project that over the course of 15 years produced a cost overrun of 190 percent.

Columnist Anne Applebaum predicted a year ago that future Olympics would likely be held only in “authoritarian countries where the voters’ views will not be taken into account” — such as the two bidders for the 2022 Winter Olympics, Beijing and Almaty, Kazakhstan.

Fortunately, Boston is not such a place. The voters’ views can be ignored and dismissed for only so long.

The success of the “10 people on Twitter” and the three young organizers of No Boston Olympics should encourage taxpayers in other cities to take up the fight against megaprojects and boondoggles — stadiums, arenas, master plans, transit projects, and indeed other Olympic Games.
If you're interested in knowing more about the incredibly poor record on megaprojects, listen to this podcast with Bent Flyvbjerg, who's mentioned in the article above.  Very interesting stuff indeed. 

Quote of the Day

GMU Professor Don Boudreaux is the source of today's QOTD via his Quotation of the Day ...:
… is from page 113 of the 1997 Johns Hopkins University Press edition of H.L. Mencken’s 1956 collection, Minority Report:
Of all varieties of men, the one who is least comprehensible to me is the fellow who immolates himself upon the alter of what he conceives to be the public interest – in other words, the reformer, the uplifter, the man, so-called, of public spirit.  What I am chiefly unable to understand is his oafish certainty that he is right – his almost pathological inability to grasp the notion that, after all, he may be wrong.

Thursday, July 30, 2015

The Clusterfu*k Known as "Social Security"

David Stockman at his best in The 2015 Untrustworthies Report - Why Social Security Could Be Bankrupt In 12 Years: [emphasis in original, and as an editorial note: the government lies and deceives]
The so-called “trustees” of the social security system issued their annual report last week and the stenographers of the financial press dutifully reported that the day of reckoning when the trust funds run dry has been put off another year - until 2034.

So take a breath and kick the can. That’s five Presidential elections away!

Except that is not what the report really says. On a cash basis, the OASDI (retirement and disability) funds spent $859 billion during 2014 but took in only $786 billion in taxes, thereby generating $73 billion in red ink.  And by the trustees’ own reckoning, the OASDI funds will spew a cumulative cash deficit of $1.6 trillion during the 12-years covering 2015-2026.

So measured by the only thing that matters - hard cash income and outgo - the social security system has already gone bust. What’s more, even under the White House’s rosy scenario budget forecasts, general fund outlays will exceed general revenues ex-payroll taxes by $8 trillion over the next twelve years.

Needless to say, this means there will be no general fund surplus to pay the OASDI shortfall. Uncle Sam will finance the entire $1.6 trillion cash deficit by adding to the public debt. That is, Washington plans to make social security ends meet by burying unborn taxpayers even deeper in national debt in order to fund unaffordable entitlements for the current generation of retirees.

The question thus recurs. How did the untrustworthies led by Treasury Secretary Jacob Lew, who signed the 2015 report, manage to turn today’s river of red ink into another 20 years of respite for our cowardly beltway politicians?

They did it, in a word, by redeeming phony assets; booking phony interest income on those non-existent assets; and projecting implausible GDP growth and phantom payroll tax revenues.

And that’s only the half of it!

The fact is, the whole rigmarole of trust fund accounting enables these phony assumptions to compound one another, thereby obfuscating the fast approaching bankruptcy of the system. And, as will be demonstrated below, that’s what’s really happening - even if you give credit to the $2.79 trillion of so-called “assets” which were in the OASDI funds at the end of 2014.

Stated differently, the OASDI trust funds could be empty as soon as 2026, thereby triggering a devastating 33% across the board cut in benefits to affluent duffers living on Florida golf courses and destitute widows alike. Needless to say, the army of beneficiaries projected for the middle of the next decade—what will amount to the 8th largest nation on the planet - would not take that lying down.

There would be blood in the streets in Washington and eventually staggering tax increases to fund the shortfall. Such desperate measures, of course, would sink once and for all whatever faint impulse of economic growth and job creation that remained alive in the US economy at the time.

In short, this year’s untrustworthies report amounts to an accounting and forecasting house of cards that is camouflaging an impending social, political and economic crisis of a magnitude not seen since the Great Depression or even the Civil War.  So here follows an unpacking of the phony accounting edifice that obscures the imminent danger.

The place to start is with the one data series in the report that is rock solid. Namely, the projected cost of $15.5 trillion over the next 12 years to pay for retirement and disability benefits and the related (minor) administrative costs.

This staggering figure is derived from the fact that the number of beneficiaries will grow from 59 million to 79 million over the next twelve years, and that each and every one of these citizens has a payroll record that entitles them to an exact monthly benefit as a matter of law. Even the assumed COLA adjustment between 2-3% each year is pretty hard to argue with - since it is nearly dead-on the actual CPI increase average since the year 2000.

By contrast, the funny money aspect comes in on the funding side. The latter starts with the $2.79 trillion of “assets” sitting in the OASDI trust funds at the end of 2014.

In truth, there is nothing there except government accounting confetti. This figure allegedly represents the accumulated excess of trust fund income over outgo historically, but every dime of that was spent long ago on aircraft carriers, cotton subsidies, green energy boondoggles, prison facilities for pot smokers, education grants, NSA’s cellphone monitors, space launches and the rest of Washington’s general government spending machine.

So when the untrustworthies claim that that social security is “solvent” until 2034 the only thing they are really saying is that this $2.79 trillion accounting artifact has not yet been liquidated according to the rules of trust fund arithmetic. And under those “rules” its pretty hard to actually accomplish that - not the least due to the compounding of phantom interest on these phantom assets.

To wit, the 2015 report says that the OASDI funds will earn $1.2 trillion of interest income during the next twelve years. To be sure, the nation’s retirees and savers might well ask how Washington’s bookkeepers could manage to get the assumed 3.5% interest rate on the government’s assets compared to the 0.3% ordinary citizens earn on a bank account or even 2.2% on a 10-year treasury bond.

But that’s not the real scam. The skunk in the woodpile is actually an utterly arbitrary and unjustifiable assumption about the rate of nominal GDP growth and therefore the associated gain in projected payroll tax revenues coming into the trust fund.

What the untrustworthies have done here is indulge in the perfidious game of goal-seeked forecasting. That is, they have backed into a GDP growth rate sufficient to keep payroll tax revenues close to the level of benefit payouts, thereby minimizing the annual cash deficit.

This, in turn, ensures that the trust fund asset balance stays close to its current $2.7 trillion level in the years just ahead, and, mirabile dictu, permits it to earn upwards of $100 billion of “interest” each year. Too be sure, beneficiaries could not actually pay for their groceries and rent with this sort of trust fund “income”, but it does keep the asset balance high and the solvency can bouncing down the road a few more years.

But here’s the thing. Plug in a realistic figure for GDP growth and payroll tax revenue increases and the whole trust fund accounting scheme collapses; the bouncing can runs smack dab into a wall of trust fund insolvency.

To wit, the untrustworthies who wrote the report assumed that nominal GDP would grow at a 5.1% annual rate for the next 12 years. Yet the actual growth rate has never come close to that during the entire 21st century to date. At best these people are dreaming, but the truth is they are either lying or stupid.

Given the self-evident headwinds everywhere in the world, and year after year of failed “escape velocity” at home, no one paying a modicum of attention would expect US GDP to suddenly get up on its hind legs and race forward as far as the eye can see. Yet that’s exactly what the social security untrustworthies have done by assuming nominal GDP growth 35% higher than the actual 3.8% compound growth rate since the year 2000.

But its actually worse. Since reaching peak debt just prior to the financial crisis, the US rate of GDP growth has decelerated even more. And going forward, there is no meaningful prospect of recovery in the face of the growing deflationary tide in the global economy and the unavoidable necessity for the Fed and other central banks to normalize interest rates in the decade ahead. Failing that they will literally blow-up the world’s monetary system in a devastating currency race to the bottom.

Thus, during Q1 2008, which marked the end of the domestic credit binge, nominal GDP posted at $14.67 trillion, and during the most recent quarter it came in at $17.69 trillion.

That amounts to an seven-year gain of just $3 trillion and an annual growth rate of 2.7%.

Now surely there will be another recession before 2026. If not, we will end up with 200 straight quarters of business cycle expansion - a preposterous prospect never remotely experienced previously. Indeed, in our modern central bank driven world, where both recessions this century have resulted from the bursting of financial bubbles, the proposition is even starker. Namely, no bursting bubbles or market crashes for 18 years!

No, the historical business cycle expansions depicted below make clear that there will be another business cycle downturn. After all, contrary to the untrustworthies assumption that the current business cycle will last forever, and, in the analysis at hand for 200 months through the end of 2026, the average expansion has lasted just 39 months and the longest ever was only 119 months.

During the last business cycle contraction, in fact, nominal GDP declined by 3.4% between Q3 2008 and Q2 2009. And when you average that in with the 3.3% nominal GDP growth rate which we have had during the so-called recovery of the last four years, you not only get the aforementioned 2.7% trend rate of nominal GDP growth, but you are also hard-pressed to say how it can be bested in the years ahead.


Indeed, there is a now an unprecedented deflationary tide rolling through the world economy owing to the last 15 years of rampant money printing and financial repression by the central banks. By collectively monetizing upwards of $20 trillion of public debt and other existing securities and driving interest rates toward the zero bound in nominal terms and deep into negative territory in real terms, they have generated two massive, deflationary distortions that have now sunk deep roots in the world economy.

First, credit market debt outstanding has soared from $85 trillion to $200 trillion. This means future economic growth practically everywhere on the planet will be freighted-down by unprecedented, debilitating debt service costs.

At the same time, massive overinvestment in mining, energy, shipping and manufacturing spurred by central bank enabled cheap capital has generated a huge overhang of excess capacity. This is already fueling a downward spiral of commodity and industrial prices and profit margins, and there is no end in sight.

Iron ore prices which peaked at $200 per ton a few years back, for example, are now under $50 and heading for $30. Likewise, met coal prices which peaked at $400 per ton are heading under $100, while crude oil is heading for a retest of the $35 level hit during the financial crisis, and copper is on track to plunge from its recent peak of $4/pound toward $1.

These deflationary currents will suppress nominal income growth for a decade or longer owing to a now commencing counter-trend of low capital investment, shrinking industrial profits, tepid wage growth and falling prices for tradable goods and services.

Accordingly, even maintaining the average nominal GDP growth rate of 2.7% realized over the last seven years will be a tall order for the US economy.

Needless to say, the law of compound arithmetic can be a brutal thing if you start with a delusional hockey stick and seek to bend it back to earth. In this case, the trustee report’s 5.1% GDP growth rate assumption results in $31 trillion of GDP by 2026. Stated differently, compared to only $3 trillion of nominal GDP growth in the last 7 years we are purportedly going to get $14 trillion in the next 12 years.

But let’s see. If we stay on the current 2.7% growth track, then GDP will come in at $24 trillion in 2026. Since OASDI payroll taxes amount to about 4.5% of GDP, it doesn’t take a lot of figuring to see that trust fund income would be dramatically lower in a $7 trillion smaller economy.

To be exact, the untrustworthies have goal-seeked their report to generate $1.425 trillion of payroll tax revenue 12-years from now. Yet based on a simple continuation of the deeply embedded GDP growth trend of the last seven years, payroll revenue would come in at only $1.1 trillion in 2026 or $325 billion lower in that year alone.

And here’s where the self-feeding illusion of trust fund accounting rears its ugly head. What counts is not simply the end-year delta, but the entire area of difference under the curve. That’s because every cumulative dollar of payroll tax shortfall not only reduces the reserve asset balance, but also the phantom interest income earned on it.

So what happens under a scenario of lower payroll tax revenues is that the $2.7 trillion of current trust fund “assets” begins circling the  accounting drain with increasing velocity as time passes. In effect, the permission granted to Washington to kick the can by this year’s untrustworthies report gets revoked, and right fast.

To wit, instead of a cumulative total of $13.2 trillion of payroll tax revenue over the next 12 years, the actual, demonstrated GDP growth path of the present era would generate only $11.2 trillion during that period. That $2 trillion revenue difference not only ionizes most of the so-called trust fund assets, but also reduces the ending balance so rapidly that by the final year interest income computes to only $25 billion, not $100 billion as under the current report.

In short, by 2026 trust fund revenue would be $400 billion per year lower owing to lower taxes and less phantom interest. Accordingly, the current modest projected trust fund deficit of $150 billion would explode to upwards of $600 billion after the last of the phony interest income was booked.

Needless to say, that massive shortfall would amount to nearly 33% of the projected OASDI outgo of $1.8 trillion for 2026. More importantly, instead of a healthy cushion of $2.4 trillion of assets (or two year’s outgo) as the untrustworthies projected last week, the fund balance would be down to just $80 billion at year-end 2026.

Now that’s about 15 days of the next year’s OASDI outlays. The system would go tilt. Benefits would be automatically cut back to the level of tax revenue or by 33%. The greatest social crisis of the century would be storming out of every hill and dale in the land.

Yes, Jacob Lew is a Washington-Wall Street apparatchik who wouldn’t grasp the self-destructing flaws of trust fund accounting if they smacked him in the forehead. And the same is apparently true for the other trustees.

But here’s where the venality comes in. In order to goal-seek to 5% nominal GDP growth, the trustees report assumes that real GDP will average 3.1% per year through the year 2020.

Now, c’mon folks. Since the pre-crisis peak in late 2007, real GDP growth has averaged only 1.2% annually, and only 1.8% per year during the entire 15-years of this century.

Anybody who signed up for 3.1% real growth through 2020 - that is, for scorching growth during month 67 through month 140 of a tepid business cycle expansion which is already long-in-the-tooth by historical standards—-is flat-out irresponsible and dishonest.

Calling their mendacious handiwork the “untrustworthies report” is actually more flattering than they deserve.

Boy Asks His Dad "What is Politics?"

Apparently this is an old joke, but I hadn't heard it before, but I like it:
A little boy goes to his dad and asks, "What is politics?"

Dad says, "Well son, let me try to explain it this way: I’m the breadwinner of the family, so let’s call me capitalism. Your Mom, she’s the administrator of the money, so we’ll call her the Government. We’re here to take care of your needs, so we’ll call you the people. The nanny, we’ll consider her the Working Class. And your baby brother, we’ll call him the Future. Now, think about that and see if that makes sense,"

So the little boy goes off to bed thinking about what dad had said. Later that night, he hears his baby brother crying, so he gets up to check on him. He finds that the baby has severely soiled his diaper. So the little boy goes to his parents’ room and finds his mother sound asleep. Not wanting to wake her, he goes to the nanny’s room. Finding the door locked, he peeks in the keyhole and sees his father in bed with the nanny. He gives up and goes back to bed.

The next morning, the little boy says to his father, "Dad, I think I Understand the concept of politics now." The father says, "Good son, tell me in your own words what you think politics is all about." The little boy replies, "Well, while Capitalism is screwing the Working Class, the Government is sound asleep, the People are being ignored and the Future is in deep s**t."
HT: Newmark's Door

Wednesday, July 29, 2015

WTF Headlines

Teen Boy Shot and Killed by Cop for Flashing Headlights and Flexing Rights.  Listen, I know cops put up with a lot of shit, yet, killing someone over a fucking traffic stop is just so wrong, on every level.  Given what this kid did up to the point where the video cut off, it boggles the mind that he would then decide to "attack" the cop.

More WTF comes with the death of Sandra Bland, which likewise started with a fucking traffic stop.  She's arrested and then, according to police, commits suicide in jail by hanging herself.  Really?  All over a traffic stop, in this case, failing to signal a turn.  Read Why Was Sandra Bland Arrested? and Sandra Bland's Death in Jail: All For Not Putting out a Cigarette When Illegitimately Ordered to by Cop and Sandra Bland Jailhouse Hanging Being Investigated as a Possible Murder.  I simply do not know how I could contain myself if I had a loved one essentially murdered over a traffic stop.  A traffic stop.  There are times when there are no words ...

Let's not let this one go by without a good "WTF"!  Asthmatic Father Dies After Police Hogtie Him Face Down on Disorderly Conduct Charge.

July 22, 2015: how about being killed because your car was missing one of two required license plates, and by a college police force cop nonetheless!  University of Cincinnati Police Officer Shoots and Kills Driver That May Have Been Speeding Away.
Update on July 29, 2015: University of Cincinnati Cop Ray Tensing Indicted in Murder of Samuel Dubose

Quote of the Day (and a damn fine question too)

"[T] Obama administration just made a deal with Iran that could lift those sanctions. That raises a question:

If unfettered commerce in oil is fine for Iran, then why not for America?"
Don Boudreaux, Lift U.S. Ban On Oil Exports

Ex-IM Bank is Bank (as expected)

But that doesn't mean I'm any less pissed off about it.  It was reauthorized in the Senate via an amendment to another bill, which is unto itself, a clusterfu*k, the Transportation Bill.  It goes to the House, but it too will cave in and give new life to this monument of crony-capitalism.  Here's a brief snippet, Senate Votes to Reauthorize Ex-Im Bank:
Is it utterly impossible to get rid of any federal program, no matter how corrupt or cronyist or useless? The Senate has voted today to amend a highway funding bill that must be passed by the end of the month in order to resurrect the Export-Import Bank, whose federal authorization expired at the top of the month.

Prior to the vote, several senators took to the floor to "Well, I never!" at Sen. Ted Cruz's (R-Texas) speech on Friday accusing Senate Majority Leader Mitch McConnell (R-Kentucky) of lying about a deal to bring the bank amendment to vote (After defending bringing the amendment to a vote, McConnell voted against it). There was lots of huffing about decorum and impugning people's character that you can read about here. This all came, incidentally, just minutes after Sen. Harry Reid (D-Nevada) took to the floor to accuse anybody against the reauthorization of the Export-Import Bank of being servants of the Koch brothers.

Anyway, this doesn't necessarily mean the Export-Import Bank is definitely back, because they still have to get the conservatives of the House on board. Remember, it was the stubbornness of House conservatives (working with Democrats) that helped sunset Section 215 of the PATRIOT Act, one of the regulations used to authorize mass domestic surveillance.

More on the terrible Export-Import Bank here.
The Ex-IM bank does NOTHING for the country: it does everything for a handful of companies, namely Boeing and GE.

Additional Reading on this Clusterfu*k:

Should the US Export-Import Bank Be Reauthorized? by Veronique de Rugy, Nita Ghei, Michael Wilt

Must Read: The Political Necessity of Having Someone to Hate (It Pays)

As I've mentioned many times, the lesson learned by politicians after the collapse of the USSR was a simple one: peace doesn't pay!  So, what the country's political elite did was create another enemy to hate, and one that can never be defeated: terrorism.  The power of money, especially that of the military-industrial-congressional-security (MICS) complex is vast and it alone is the poster child for crony capitalism.  Dan Sanchez says it so much better than I can in his latest post, A Foreign Bogeygoat is a Tyrant’s Best Friend:
The recent Iran nuclear deal represents a thaw in the American cold war

The recent Iran nuclear deal represents a thaw in the American cold war against that country. It is a welcome sequel to the Obama administration’s partial normalization with Cuba announced late last year.

Hardliners denounce these policies as “going soft” on theocracy and communism. Yet, it is such critics’ own hardline, hawkish policies that have done the most to ossify and strengthen such regimes.

That is because war, including cold war, is the health of the state. Antagonistic imperial policies — economic warfare, saber-rattling, clandestine interventions, and full-blown attacks — make the citizens of targeted “rogue states” feel under siege.

This activates what Randolph Bourne called their “herd mind,” inducing them to rally around their governments in a militaristic stampede so as to create the national unity of purpose deemed necessary to defend the homeland against the foreign menace. When you lay siege to an entire country, don’t be surprised when it starts to look and act like a barracks.

Rogue state governments eagerly amplify and exploit this siege effect through propaganda, taking on the mantle of foremost defender of the nation against the “Yankee Imperialist” or “Great Satan.” Amid the atmosphere of crisis, public resistance against domestic oppression by the now indispensable “guardian class” goes by the board. “Quit your complaining. Don’t you know there’s a cold war on? Don’t you know we’re under siege?”

Moreover, cold wars make it easy for rogue state governments to shift the blame for domestic troubles away from their own misrule, and onto the foreign bogeyman/scapegoat (“bogeygoat?”) instead. This is especially easy for being to some extent correct, especially with regard to economic blockades and other crippling sanctions.

Imperial governments like to pretend that affairs are quite the reverse, adopting the essentially terrorist rationale that waging war against the civilian populace of a rogue state will pressure them to blame and turn against their governments. In reality, it only tends to bolster public support for the regime.

The imperial “bogeygoat” is an essential prop for the power of petty tyrants, just as rogue state bogeymen are essential props for the power of grand tyrants like our own. Thus, it should be no surprise that the staunchest opponents to the Iran nuclear deal include both American and Iranian hardliners. Just as there is a “symbiosis of savagery” between imperial hawks and anti-imperial terrorists (as I explain here), there is a similar symbiotic relationship between imperial and rogue state hardliners.

The last thing hardliners want is the loss of their cherished bogeygoat. Once an emergency foreign threat recedes, and the fog of war hysteria lifts, people are then more capable of clearly seeing their “guardians” as the domestic threat that they are, and more likely to feel that they can afford to address that threat without exposing themselves to foreign danger. This tends to impel governments to become less oppressive, and may even lead to their loss of power.

Thus after Nixon normalized with communist China and belatedly ended the war on communist Vietnam, both of those countries greatly liberalized and became more prosperous. Even Soviet reforms and the ultimate dissolution of the Soviet Union only arose following American detente.

Simultaneously, as the American cold wars against communist Cuba and communist North Korea continued without stint for decades, providing the Castros and Kims the ultimate bogeygoat to feature in their propaganda, the impoverishing authoritarian grip of those regimes on their besieged people only strengthened.

Similarly, ever since the 1979 Islamic Revolution overthrew the puppet dictator that the CIA had installed over Iran in a 1953 coup, the Ayatollahs have been able to exploit ongoing hostility from the American “Great Satan” to retain and consolidate its repressive theocratic power.

All this is an object lesson for US relations with Putin’s Russia, Chavista Venezuela, and beyond. Disastrously, it is being unheeded.

Even while thawing relations with Iran, the Obama administration has triggered a new cold war with Russia over Ukraine. This has only made Russian President Vladimir Putin more domestically popular than ever.

And even while normalizing relations with Cuba, Obama recently declared Venezuela a national security threat, imposing new sanctions. As journalist Alexandra Ulmer argued, these sanctions “may be godsend for struggling Venezuelan leader,” President Nicolas Maduro. As Ulmer wrote in Reuters:
“Suddenly, the unpopular leader has an excuse to crank up the revolutionary rhetoric and try to fire up supporters, copying a tactic used skillfully for more than a decade by his mentor and predecessor, the late socialist firebrand Hugo Chavez.

A new fight with the enemy to the north may also help unite disparate ruling Socialist Party factions and distract Venezuelans from relentless and depressing talk about their day-to-day economic problems.”
A Venzuelan woman walks by anti-American graffiti and a portrait of Hugo Chavez in Caracas.
The horrors inflicted on the people of North Korea, as well as the oppression and impoverishment of the people of Iran, Cuba, Russia, and Venezuela, are a damning indictment of the regimes of those countries. Yet the blame must also be laid at the colossal feet of the US empire: the aggressive and fearsome global hegemon that has driven those people into such abusive arms in the first place.

Cold wars freeze into place a solid foundation for despotism. As cold wars are allowed to thaw, the indispensable crisis footing of despots melts away, leaving them with nothing to stand on. If you are not merely trying to acquire power through fearmongering, and you sincerely want to see tyrants weaken and ultimately fall (without leading to something even worse), stop waging war against their subjects.

Good Luck 'Wit 'Dat

Wanted: Small-Government Republicans from Michael Tanner:  [emphasis is mine, and by the way, politicians are pigs and what pig wants a smaller trough?  Seriously, one might as well just keeping looking for a unicorn.]
For anyone hoping that the next president will get serious about reducing the size and cost of government, the early days of the campaign have been disappointing, to say the least. The Democrats, of course, have been campaigning as if Greece were a model rather than a warning. But what else can one expect from a party that has moved to the left of Barack Obama? The real disappointment has come from Republicans who seem intent on returning to the big-spending ways of the George W. Bush administration.

Start with the candidate of the moment, Donald Trump. Trump has made it clear that government spending in his administration would be, as The Donald would say, “yuuuge!” Trump’s answer to just about any problem facing the country is for the federal government to spend more money, which would be just fine because he would be the one spending it, and he knows how to do it right. For example, in the wake of the McCain “war hero” dustup, Trump penned an op-ed for USA Today promising to fix the problems with the VA hospitals. His solution: “I will build the finest and most modern veterans’ hospitals in the world.” Where would the money come from to build more hospitals? Trump doesn’t say.

Trump opposes any cuts to Social Security and Medicare — and Medicaid, for that matter. In April, at the New Hampshire Republican Leadership Summit, Trump criticized his fellow Republicans for proposing reforms of the entitlement programs that are bankrupting the country: “Every Republican wants to do a big number on Social Security, they want to do it on Medicare, they want to do it on Medicaid. And we can’t do that.” Medicare and Social Security alone face more than $69.1 trillion in unfunded liabilities, but Trump insists that the programs can be saved without cuts. “All these other people want to cut the hell out of it,” Trump said of Social Security. “I’m not going to cut it at all. I’m going to bring money in, and we’re going to save it.”

Trump also wants to spend more on infrastructure. In the wake of the Philadelphia Amtrak crash in May, Trump blasted America’s “horrible infrastructure” and said: “We have to rebuild our infrastructure: our bridges, our roadways, our airports.” Yes, this means more spending, but don’t worry, because “Nobody can do that like me. Believe me.”

Nor should we forget that in the past Trump has supported all sorts of cockamamie big-government programs, including a Canadian-style single-payer health-care system. One can imagine that such a program just might cost a little bit of money.

Even Trump’s signature issue — building a wall along the border with Mexico — would cost a pile of money. Although projections vary widely, some studies have put the cost as high as $49 billion — and we should note that current attempts to seal parts of the border have run far above estimates. And no matter how good a negotiator Trump thinks he is, Mexico is not going to pay for it.

So where would Trump get the money for all this new spending? Cutting back on immigration will not save nearly enough. (Besides, immigrants, including illegals, are actually a net plus for Social Security and Medicare in the short term.) Perhaps that’s why Trump has been so open to new taxes. In the past he has called not only for new business taxes, but also for a 14.25 percent wealth tax on people with a net worth of more than $10 million.

Unfortunately, Trump’s opponents have not been models of fiscal rectitude. For example, Mike Huckabee, who has been trying to match Trump’s rhetorical flourishes, is also matching his commitment to not cut Social Security or Medicare. Nor should one forget that, as governor of Arkansas, Huckabee had one of the worst spending records of any recent GOP governor. He earned a final overall grade of D on Cato’s fiscal report card, and the Club for Growth says that he increased state spending by 65.3 percent — three times the rate of inflation — and he increased the number of state government workers by 20 percent.

Other Republican candidates have been better on spending, but only somewhat. For example, both Marco Rubio and Ted Cruz have been open to entitlement reform and have called for cuts in government spending. But when the rubber met the road, both of these senators voted against pairing increases in defense spending with offsetting cuts in domestic programs. Instead, they backed defense increases that would have added almost $40 billion to the deficit. (Although Cruz voted against the amendment to offset defense hikes, it should be noted that he ultimately voted against the budget resolution as a whole.) And Rubio has joined all the GOP candidates except Cruz and Rand Paul in pledging fealty to farm-price supports.

Jeb Bush has also brought up the need for entitlement reform and promised to be a budget cutter. Recently he pledged to cut the federal workforce by 10 percent within five years, by imposing a freeze on new hiring and replacing only one of every three federal workers who retire. This is a typical Bush proposal: a tiny step in the right direction, from a candidate who often seems temperamentally unwilling to push big ideas. And Bush’s spending record as governor of Florida was decidedly mediocre. As Chris Edwards, Cato’s fiscal analyst, has noted: “Jeb Bush was a prolific tax cutter, but he let spending rise quickly toward the end of his tenure… . Jeb was good on taxes, but apparently not so good on spending.” On Cato’s fiscal report card, he started off earning A’s and B’s, but had fallen to a C by the end of his second term.

Chris Christie has made the need for entitlement reform a centerpiece of his campaign, but spending in New Jersey has gone up during his time in office, increasing 15 percent from fiscal year 2011 to fiscal year 2015. New Jersey also has the fifth-highest debt and unfunded pension liabilities per capita in the nation. And it has spent $5 billion in economic-development subsidies since Christie took office. Scott Walker has a decent but not unblemished spending record in Wisconsin (state spending increased by 15 percent from 2012 to 2015), but lately he seems to be taking fewer specific positions on issues than Hillary Clinton. John Kasich was a budget hawk in Congress, but as governor of Ohio he has increased spending for everything from Medicaid expansion to education to job training. Ohio general-revenue spending has risen 18 percent during Kasich’s tenure. That leaves Rand Paul, who, as would be expected from a libertarianish candidate, has been a staunch opponent of government spending; however, he has seemed determined to talk about anything but spending during this campaign.

In short, the 2016 campaign is still waiting for a budget cutter. That’s not going to be Donald Trump. And, so far, it hasn’t been anyone else either.

An Interesting Path for Greece (Which It Will Likley Not Take)

Keith Weiner's Open Letter to Alexis Tsipras: [emphasis mine]
Dear Prime Minister Tsipras,

First, congratulations for mustering the popular support to say “no” to the troika. The euro has long offered Greece a perverse incentive to borrow, and now your country is trapped in debt. By any conventional means, Greece cannot repay (I propose an unconventional way, below). The sooner everyone acknowledges this simple fact the better.

While I don’t claim to know why you agreed to a bailout deal this weekend, I can guess. The troika threatened to maximize the costs of leaving the euro. They can shut off access to further credit; including the Emergency Liquidity Assistance, European Stability Mechanism loans, liability transfers via TARGET2, and bond buying programs. They could do more, such as refuse to clear payments to and from Greece.

That would utterly destroy the Greek banking system. In turn, that will wipe out all Greek savers and employers who haven’t already transferred their bank balances out of the country. Defaults of all euro denominated liabilities will cascade throughout Greece, including insurance, annuities, corporate bonds, business credit lines, personal loans, and mortgages. Every liability is someone else’s asset, and few creditors would survive. The government will collapse when no one can pay taxes. Greece will end, a failed state.

The troika wants you to accept another bailout deal, to service Greek debts a while longer. Since bailouts mean borrowing more, you cannot avoid default in the end. Going deeper into debt is no good for anyone.

Should you choose to default instead, you will not be able to continue using the euro. Even if the troika doesn’t immediately act, the threat is real. No one would lend to the Greek government, or even businesses, with that Sword of Damocles hanging over you. However, you need outside capital to restart production and trade. Otherwise, your industries will be shuttered, even including exports.

Some economists advise you to create a currency board. This is a new monetary authority that maintains a fixed exchange rate, by holding euros and issuing Greek currency. It’s nothing more than using the euro, though indirectly. It has all of the flaws and risks I just described.

Greece has no future, so long as it clings to the euro.

Adopting the dollar might seem less bad. At least, the Federal Reserve isn’t likely to stop you. Greek businesses and banks could even attract some dollar-based credit. Once you leave the euro, Greeks will probably end up using the dollar, with or without legal tender law. What a wasted opportunity.

You could create a new drachma and redenominate all debts in the currency. Lamentably, even Nigel Farage offered you this advice at the European Parliament. It’s tempting to think that Greece can just print its way out of debt, but it’s a trap. Don’t do it.

It’s obvious that the purpose of a new drachma is to fall. No one outside Greece will hold it. Few Greeks will hold it either, so the drachma will not find a bid. It may get you out of debt, but at the cost of the further destruction of businesses and jobs. Greece will become the next Zimbabwe.

You can’t stay with the euro. Switching to the dollar isn’t much of a move forward. Imposing a new drachma will only harm the long-suffering Greek people. By the logic of Aristotle, that leaves one other option. Adopt gold as money.

You have an historic opportunity to create another golden age for Greece.

Begin by allowing the Greek people to use gold, free from legal tender laws and taxes on gold. Your people will begin accumulating savings again, which they desperately need to rebuild businesses. And speaking of building businesses, if you want to attract capital from the rest of the world, gold will do it like nothing else. Dollar denominated bonds will attract tepid investment, at best. With gold bonds, Greece can raise unlimited amounts. At least it can get as much honest credit as it needs. Honest means that the borrower has the means and intent to repay. It means credit is financing productive enterprise that generates income to amortize the debt.

I said that no conventional approach will let Greece get out of debt. Let me briefly outline an approach to use gold to get out of debt without default or hyperinflation (I refer you to my paper, an entry to the 2012 Wolfson Prize, for the full explanation).

Greece should issue gold bonds.

These are not conventional bonds backed or collateralized with gold, but bonds that have the principal and interest denominated and paid in gold. There is one twist. Buyers don’t pay in euros, or any paper currency. Instead, they pay by redeeming outstanding Greek bonds. For example, to buy a 1000oz gold bond, a bidder might be willing to bring you €500,000 worth of existing Greek government bonds.

This is the only mechanism that lets Greece get out of debt cleanly.
Greece will exploit a rising euro to gold exchange rate (i.e. gold price). With each new tranche issued, the price of gold will be higher. It will take less gold to retire more debt. And believe me, the gold price will begin rising once the markets realize that gold is being remonetized. Greece will be the first country, the leader, in using gold bonds to avert financial Armageddon. Many others will follow.

With each new tranche, the paper bond to gold bond exchange rate will also be rising. As buyers realize that the value of gold does not erode, they will prefer a future gold payment to one in a paper currency. Gold bonds will sell for a premium over the gold price, compared to paper bonds. This premium will rise.

You will find that the market will happily buy long term bonds, giving you the opportunity to pay off your debt without having to constantly roll short-term liabilities.

If you can buy the time to let this strategy play out, you will get out of debt completely, avoid default, and end with the best credit rating. You will immediately attract capital, and then industry, and jobs to Greece.

At this point, Mr. Tsipras, you have nothing to lose. Why not win the future?

Keith Weiner, PhD
Chairman, The Gold Standard Institute

This article is from Keith Weiner’s weekly column, called The Gold Standard, at the Swiss National Bank and Swiss Franc Blog

As Pigs Go, So Goes China

Think I'm kidding? The Fate Of China's Monetary Policy Is Now In The Hands Of Pigs:
It seems China's efforts to stabilize their economy stock market knows no bounds - nowhere better exemplified than the 5% spike in an hour last night after injecting $100bn into the sovereign (rescue) fund - and western observers applaud the efforts as if they are costlessly saving the world. However, there are costs to all this leveraged asset bubble creation (and maintenance) and, as China People's Daily reports, nowhere is that more evident than the surging price of pork (on if China's main CPI components). As Deutsche Bank warns, in the past 15 years, the PBoC has never cut interest rates when inflation was picking up (whether driven by food or more broad-based); so the fate of an 'easy money' inspired stock market bubble remains in the hands hoofs of pigs as the policy stance will be forced to turn from loosening to neutral in Q4 as inflation rises.

Just keep pumping money in right?

Well there are consequences... (via China People's Daily)
The price of pork in China has been rising for a couple of months now, with a new uplift record in 3 years. According to the National Bureau of Statistics (NBS), starting in March, the price of pork has been rising for 4 months with a total of a 5.7 yuan rise. In China, the price on pork is closely related to the CPI (Consumer Price Index). Experts interpret that the price of pork will keep on rising and drive the rise of CPI at the same time. Consequently, the CPI of the latter half of the year is expected to be a little higher than the first half of the year, but there is no strong sign of inflation.

Statistics of NBS show that from March 18 to July 20, the price of pork has risen almost 50 percent. The current price on pork ranks the highest since the year of 2012. Based on previous experience, the price on pork usually would have an "outburst" every 2 to 3 years. The last "pork cycle" happened during June 2010 to June 2011. It seems like a new round of the “pork cycle” is around the corner. Because of being under the oversupply for a long period of time, many small and medium-sized farmers' quit their jobs- a major driver of appreciation.

In China, the price of pork is one of the main components of the CPI. In 2010, the rise in the price of pork and vegetables was taken as the dominant factor that caused the rise of CPI in the fourth quarter.
And, as Deutsche's Jim Reid notes, there are actions after those consequences...
Yesterday our economics team in China highlighted the recent surge in pork prices for the country in recent weeks. They noted that having stayed negative for 14 consecutive months since the beginning of 2014 (averaging -4.2% in the time), the yoy growth of pork prices turned positive in March (+2%) and averaged nearly 7% in Q2 (8.3% in April, 5.3% in May and 7.0% in June). Pork prices have typically been the driving force for CPI in past cycles and they expect prices to remain on the rise for the next 6 to 12 months, reinforcing their view that CPI will be on an upward trend in H2.

Our colleagues also point that in the past 15 years, the PBoC has never cut interest rates when inflation was picking up (whether driven by food or more broad-based) and so believe that this could constrain the room for further easing beyond one cut (and one further RRR cut) in Q3 this year.

They then expect the policy stance to turn from loosening to neutral in Q4 as inflation rises and growth picks up slightly.

Furthermore, considering all factors, we believe recent development raises the probability for the government to cut growth target for 2016 to 6.5% from 7%.
*  *  *
So, simply put, the fate of China's economy, stock market, and monetary policy is in the hands of pigs (the porcine type, not the humane type)... just as it forced PBoC's hand in 2011... so be careful what you wish for.

Something's Very Wrong ...

Seriously, what's being transported if the industries making up the DJIA are doing so poorly?

Here's some more "wrongness" - Shanghai Containerized Freight Index Plunges to New Low:
The Shanghai Containerized Freight Index (SCFI), a measure that tracks spot rates (not contractual rates) of shipping containers from Shanghai to 15 major destinations around the world, is volatile. But the trend since February has been a pure rout. And for last week, the SCFI plunged 7.4% to a new record low.

The 44-point drop brought the index to 548.77, down 45% from where it had been during the Financial Crisis: it was set at 1,000 on October 16, 2009. And it’s down 51% from February this year. This is what the terrible plunge looks like:

Monday, July 27, 2015

Japanese Economy - Abenomics

Latest Updates Below, in RED:

Recall how Japanese recycled Prime Minister Shinzo Abe has printed stimulated the Japanese economy to the tune of $116B, all with the goal of course of ending Japan's journey through the economic doldrums (recession), which has been underway now for at least 30 years.  Of course, Abe said that "this time it would be different" as the stimulus would be "targeted" not on infrastructure, but on innovation and technology.  Well, all is not well and this time will be no different (well, at least if you're not counting being worse than before as 'different') than from the other failures in the past: Keynesianism does not work and you cannot borrow or print your way out-of-debt. 

So Abe-san, how's that stimulus working out for 'ya?

Why "This Time Won't Be Different" For Japan In Two Charts by Tyler Durden  [especially interesting is the impact of Japan's decision to shutdown all but one of its nuclear power plants after the tsunami]

Abe Says Fears Of Hyperinflation Are "Mostly" Unfounded As He Urges Companies To Hike Wages by Tyler Durden [last few sentences are all that need to be said]

Japan Food Prices Set To Soar As Government Hikes Wholesale Wheat Prices By 10% by Tyler Durden:
If the past three months have been any indication of what Japan has to look forward to from Abenomics, we have a feeling his tenure will be as short, if not shorter, than all of his recent (and numerous, among which he, himself) predecessors. Because while the stock market may have risen in lock step with the plunge in the Yen, what has also soared are costs. And while a very select few benefit from the transitory surge in the Nikkei, the rising costs, i.e., inflation, hit everyone equally.
But while the "no free lunch" reality has until now mostly been felt by those who need energy, as shown in "You Wanted Inflation, You Got It: Japanese Gasoline Price Rises To Eight Month High" the inflationary impact on Chinese imports is about to hit everyone like a sledgehammer right where it hurts the most: in the stomach, as the inevitable has finally happened, and the agriculture ministry announced that wholesale wheat prices are set to rise by a near-record 9.7% in April, which will shortly thereafter send regular food prices soaring.
And just like that Japan is about to learn that soaring stock prices always have a trade off, a lesson which even GETCO's S&P ramping algos will not be exempt from when the latest bout of soaring food inflation results in central banks scrambling to withdraw liquidity, just as they did in early 2011. The results will naturally be the same.

As for how long Abe's government will remain in power after energy and food inflation sweep through the net importing nation, that is anyone's guess.

Japan: Front-Runner Of Outright Monetization by Ryutaro Kono of BNP Paribas

Japanese Welfare Recipients Hit All-Time High by Tyler Durden

The Abenomics Farce Continues by Tyler Durden

Abenomics Tries To Make Sure Japan Is Going Down Swinging by Wolf Richter

Abenomics Utter Fail: Japan’s Crazy Exploding Trade Deficit  by Wolf Richter

Abenomics Wins: Budget And Inflation Both Jump (Over The Cliff) by Wolf Richter

“We Don’t Feel Any Impact Of Abenomics Here”  by Wolf Richter

Japan’s Frantic Redo Of An Artificial Boom Followed By A Bust  by Wolf Richter

BNP Warns Only 10% Chance That Abenomics "Ends Well" by Tyler Durden

Japanese Consumers, Hammered By Abenomics, Get Gloomier   by Wolf Richter

Cheered on by the OECD, Japan Announces Higher VAT Rate to Enable Bigger Government by Dan Mitchell

What Will It Take To Blow Up The Entire Japanese Banking System? (Not Much, According To The Bank of Japan)  by Wolf Richter

Chart Of The Day: "Japan Has No Alternative But To Print And Print And Print" by Tyler Durden

Abenomics One Year Later by Tyler Durden

Dismal Abenomics Leads To 16th Consecutive Decline In Japanese Wages by Tyler Durden

The Japanese Feel The Heat From The Big Lie Of Abenomics by Wolf Richter  [last for 2013]

*******************   2014 *******************************

Crazy Abenomics Orgy In Japan Is Ending Already – Pounding Hangover Next by Wolf Richter

The Madness Of Abenomics In One (Crazy) Chart by Wolf Richter

Total Abenomics Fail Slams Japan Where It Hurts Most by Wolf Richter

Double Data Whammy For Japan As PMI Tumbles & Industrial Production Misses By Most Since Abenomics by Tyler Durden

The Economic Catastrophe That Is Abenomics Sends Japanese Gas Prices To Five Year Highs by Tyler Durden

Abenomics At Work: Largest Ever Trade Deficit Slams Domestic Wages, Gooses Overseas Corporate Profits by Mike Mish Shedlock

Abenomics At Work: Japanese Consumer Confidence Plummets Due To Rising Prices, Stagnant Wages by Pater Tenebrarum

Abenomics Down The Memory Hole: Maniac Money Printing Has Not Stopped Japan’s Falling Wages by Jeffrey P. Snider

Abenomics At Work: Japan’s April Output And Orders Fall Sharply by Mike Mish Shedlock

Japan’s 10th Round Of QE: Still A Flat-Out Failure by Jeffrey P. Snider

Abenomics: Japan’s Live Fire Test Of Keynesian Central Banking Is A Growing Disaster by David Stockman

Abenomics' Legacy: Japan's Greatest "Misery" In 33 Years by Tyler Durden

Abenomics Nails Japan’s Workers: April Real Wages Down 3% Y/Y by Jeffrey P. Snider

Japan’s Great Keynesian Rebuke: Abenomics Has Wiped Out ItsTrade Accounts—-Exactly Opposite The Theory by Jeffrey P. Snider

The Essence Of Abenomics: Swapping Japan’s Historical Trade Mercantilism For Keynesian Financialization by Jeffrey P. Snider

The Wrath of Abenomics: Sales Collapse, Inflation Soars by Wolf Richter

Abe's Worst Nightmare: Household Spending Collapses As Inflation Spikes by Tyler Durden

Printing Press “Prosperity”: The Complete And Utter Failure Of Abenomics by Andy Sirkis

Japan’s ‘Surge’ Undone: The Abenomics Rebuke To Keynesian Money Printers by Jeffrey P. Snider

The Flame-Out Of Abenomics, in One Crucial Chart by Wolf Richter

 Pity The Japanese: They’ve Been Turned Into Keynesian Lab Rats  by Jeffrey P. Snider

 What Japan’s June Trade Disaster Really Means: Abenomics Is Flaming-Out by Wolf Richter

Abenomics Is Working: Japanese Households On Welfare Rise To Record by Tyler Durden 

The Raging “Success” of Abenomics in one Crucial Chart  by Wolf Richter

Japan’s Keynesian Money Printing Experiment Continues To Fail: Jobs, Real Incomes And Spending Plunge Again from ZeroHedge

Keynesian Central Banking Is An Economic Scourge: More Evidence From Japan from Jeffrey P. Snider

The Wrath of Abenomics Crushes Japanese Consumers, Eviscerates Economy by Wolf Richter:
So the hapless Japanese consumers are in the nightmarish situation of having to watch how the government that they themselves elected into power is executing its plan that had been part of its election platform. That plan is now destroying their earnings power and their life savings at a rate that middle-aged Japanese have only read about in history books.

Abenomics Crushes Sony: Electronics Giant Forced To Cancel Dividend For First Time Ever by Tyler Durden

Miraculous Impact of Abenomics on Trade, in One Chart by Wolf Richter

Prime Minister Abe’s Keynesian Delusions  by Jeffrey P. Snider

Japanese Stocks Tumble After BoJ Bond-Buying Operation Fails For First Time Since Abenomics from ZeroHedge

In Memoriam: Abenomics from ZeroHedge

Keynesian Yen Trashers At Work: Abenomics Triggers Soaring Bankruptcies In Japan from ZeroHedge 

QE Is Clearly Destroying Japan, So BoJ Panics Into More by Jeffrey P. Snider

The BOJ Jumps The Monetary Shark—–Now The Machines, Madmen And Morons Are Raging by David Stockman 

Kuroda’s Madness Intensifies: New Yen Flood Was Designed To Counter Slumping Oil Prices! by Raúl Ilargi Meijer 

Abe Approval Tumbles As Majority Say Japan's "Banzainomics" QE Will Have Negative Effects from ZeroHedge

Abenomics Creates "Potential For Economic Collapse Triggered By Bond Market Crash", Warns Richard Koo from ZeroHedge 

"Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game... Taxpayers May Revolt" from ZeroHedge 

Japan’s Last Stand - Portent Of Keynesian Collapse from ZeroHedge

The Inevitable End—–Statist Economics Are Destroying Japan  by Jeffrey P. Snider 

The Abenomics Death Spiral  by Peter Schiff

PROOF: While The Bank Of Japan Goes 'Full-QE-Retard', Japanese Investors Are Hoarding Physical Gold

The Abenomics Devastation: Japanese Real Wages Decline For Record 16 Consecutive Months from Zero Hedge

Crashing Yen Leads To Record Number Of Japanese Bankruptcies from ZeroHedge

The BOJ’s Relentless Bid: Why Japan’s Financial System Is Heading For Chaos by Wolf Richter

Japan’s Latest GDP Drop: Proves, Again, Keynesians Don’t Know Difference Between Healthy Growth And Destructive Redistribution by Jeffrey P. Snider

Abenomics—-A Policy Disaster Designed For Japan’s Emerging Scarecrow Economy from ZeroHedge 

The Curse Of Keynesian Dogma: Japan’s Lemmings March Toward The Cliff Chanting “Abenomics” by David Stockman

Further Proof That Abenomics Is A Total Disaster: Japan Car Lobby Admits "Sense Of Panic" from ZeroHedge 

Keynesian Madness At Work: Heading For Bankruptcy, Japan Wastes Another $29B On ‘Stimulus’

The Keynesian End Game Crystalizes In Japan’s Monetary Madness by David Stockman  

Faith In Abenomics Falters: Foreign Investor Flows Collapse 94% In 2014 from ZeroHedge

Abenomics Delivers A Gut-Punch: Japan Imports 60% Of Its Calories, Imported Food Prices Soaring by Mia Tahara-Stubbs 

Krugman's Japanese Legacy: Record Households On Welfare, Corporate Bankruptcies Soar, Majority Of Households Worse Off from ZeroHedge

The Next SNB? Goldman Warns Bank Of Japan "At Risk Of Losing Credibility" from ZeroHedge 

Architect Of Abenomics Says No More BOJ Easing from ZeroHedge

Abenomics On The Ropes: Nothing Good On The Trade Front And Still More Excuses On “Recovery” Timetable by Jeffrey P. Snider

"We Just Need To Print More Money" Bank Of Japan's New Board Member Clarifies Endgame

2 Years Of Abenomics Later: Joblessness Jumps As Retail & Household Spending Slump

Mutiny At The BoJ: Board Member Warns Of "Dire Consequences"

Japan Shocked To Find Abenomics Is Destroying Its Middle Class

Abenomics Is 2 Years Old - Households Even Deeper In The Hole

It's Official: The BoJ Has Broken The Japanese Stock Market 

New ... and the Last One:  Abenomics End Game: Thousands Protest In Downtown Tokyo, Demand Abe's Resignation As PM Disapproval Soars 

Friday, July 24, 2015

Yes, Please, Go Ahead and Admit It Already

Admit it, Dems: Hillary Could Strangle a Puppy on Live TV, and You’d Still Back Her (UPDATED: It's worse than you think).  This nation's next president ...   :
A quick recap: Hillary Clinton, as Secretary of State, violated guidelines from the National Archives and her own State Department by using her own private email server for professional correspondence, and then destroying whatever messages she deemed destructible.

At first Clinton claimed that she needed a single non-governmental email account for "convenience," because she only had one phone. That claim turned out to be provably false. Next, she claimed that it didn’t matter much, because "The vast majority of my work emails went to government employees at their government addresses, which meant they were captured and preserved immediately on the system at the State Department."

The latter half of that claim turned out to be provably false, too. She further insisted that none of the emails contained classified information, a claim that many people with intimate knowledge of such things—such as a former senior State Department official—described with phrases like "hard to imagine." And her assertion in a CNN interview this month that she went "above and beyond" the email disclosure requirements was—wait for it—false.

In sum, the Democratic Party's 2016 presidential frontrunner brazenly violated government transparency policy, made a mockery of the Freedom of Information Act, placed her sensitive communications above the law, and then just lied about it, again and again. Now comes word that, unsurprisingly, two inspectors general are recommending that the Department of Justice open a criminal inquiry into the matter. One of their findings was that the private server, contrary to Clinton's repeated claims, contained "hundreds of potentially classified emails."*

So how much do Democrats value basic transparency, accountability, and honesty in their presidential candidates? Not bloody much, if you go by the handy polls over at RealClearPolitics. The six national polls taken this January and February, before the email scandal first broke, averaged out to a whopping 43 percentage-point lead for Hillary Clinton. How about the next six, in March and April? Plus 50. The 11 polls in May and June, when Berniementum first started sweeping the country, came in at +48, and the most recent five in July stand at +41.

Do Democrats have any aversion left to Nixonian non-transparency, which had been so anathema to them during the presidency of George W. Bush? Here's a possible bellwether: Key Nixon-administration turncoat John W. Dean, who wrote a 2004 book entitled Worse Than Watergate: The Secret Presidency of George W. Bush, reacted to the latest Clinton story by tweeting "Leaking This Makes It Pure Politics," and "GOP Behind False Charges In NYT. It's gonna be a long 16 months.

President Barack Obama never paid any political price for pulling a complete 180 on his vows to have the most transparent administration ever, so none of this reaction should be surprising. Still, it's worth stressing that with Hillary Clinton, Democrats have dropped even the pretense of giving a shit about transparency. And if you think that language is unduly harsh, don't take my word for it, take Paul Begala's:  
Voters do not give a shit. They do not even give a fart… Find me one persuadable voter who agrees with HRC on the issues but will vote against her because she has a non-archival-compliant email system and I'll kiss your ass in Macy's window and say it smells like roses.
Mark Hemingway wrote about this and other transparency obstacles in "When Open Government Slams Shut."

* UPDATE: The Wall Street Journal is now reporting that, contrary to Clinton's statements, not only were some of the emails classified, they were classified at the time they were sent, which would mean yet another defensive explanation (about retroactive classifications) has bitten the dust. Excerpt:
In a letter to members of Congress on Thursday, the Inspector General of the Intelligence Community concluded that Mrs. Clinton's email contains material from the intelligence community that should have been considered "secret" at the time it was sent, the second-highest level of classification. A copy of the letter to Congress was provided to The Wall Street Journal by a spokeswoman for the Inspector General.

The four emails in question "were classified when they were sent and are classified now," said Andrea Williams, a spokeswoman for the inspector general. The inspector general reviewed just a small sample totaling about 40 emails in Mrs. Clinton's inbox—meaning that many more in the trove of more than 30,000 may contain potentially secret or top-secret information. [...]

"None of the emails we reviewed had classification or dissemination markings, but some included IC-derived classified information and should have been handled as classified, appropriately marked, and transmitted via a secure network," wrote Inspector General I. Charles McCullough in the letter to Congress.
It's worth rehasing, as the WSJ does, the lie Hillary Clinton told reporters in March:
I did not email any classified material to anyone on my email. There is no classified material...I'm certainly aware of the classified requirements and did not send classified material.