Inauguration Day Potpurri

I worked my behind off on yesterday's post about infrastructure.  Today is Inauguration Day.  Donald Trump has apparently said he doesn't plan on working this weekend even though it'll be his first days on the job, so I suppose I'm going to slack off today as well and just provide you with some good links.

First of all, as a result of the Affordable Care Act a/k/a Obamacare, more people are working part-time voluntarily as opposed to because they have no other choice.  I was genuinely surprised to learn this; it's definitely under-reported.

Here's an article on how the women who are marching on Washington and elsewhere this weekend can follow-up effectively so that their protest movement does not fizzle out as Occupy Wall Street did.

Perhaps you hate lawyers and think that most lawsuits are frivolous.  But if you don't, you'll be happy to know that the scumbags at Navient, the nation's largest servicer of student loans, are being sued.  The suit is being filed by the Consumer Financial Protection Bureau, a little-known and under-appreciated regulatory body which is likely to get the axe under the Trump administration.

Watching Donald Trump speak at the inauguration, it's amazing how little the "outsider" base speech has changed since Dick Nixon first spoke of the silent majority.  Outsiders.  Outsider billionaires.  They will help us take America back, somehow?

And here's something hilarious, in nearly real-time: stocks are slumping as Donald Trump talks about transferring power to the people.  As the kids say: LOL.

I really, truly, hope this works out for the best for all of us.  The games begin now.

Ben Bernanke's Article on the Fed, and General Infrastructure Talk

So today I'm going to break down Ben Bernanke's dry but very informative article on the Fed's reaction to the incoming Trump administration's plans.  It goes without saying I encourage you to read the article and draw your own conclusions.  That said, here are mine!  (Emphases added throughout is all mine.)

First of all, while the market has responded very positively to Trump's election, the Fed isn't necessarily buying it.  Given that "the market" as a whole tends to be irrational, this is not a big surprise.  

Here's what the market is seeing:

While it’s hard to know how much of the market’s optimism reflects expected policy changes under the new administration, the rise in equities, interest rates, and the dollar since the election is precisely the configuration that standard macroeconomics would predict in anticipation of a Trump-backed fiscal expansion. (A similar pattern occurred in the early Reagan years, which was dominated by tax cuts, increased military spending, higher deficits, and rate increases by the Federal Reserve.)

Here's what the Fed is seeing:

Notably, at the median, expected real growth was raised by only 0.1 percent for 2017, relative to the September projection, and no change was made for expected growth in 2018. No change at all was made to the median inflation projections for 2017 or 2018. The median path for the Fed’s policy interest rate included just one additional rate increase over the next two years—a small adjustment, probably reflecting changes by only a few participants.

But why?

For assessing the effects of a fiscal program on near-term growth, the details—few of which are currently available—matter a lot. According to the minutes, FOMC participants in the December meeting expressed considerable uncertainty about the “timing, size, and composition” of a prospective fiscal package. But I suspect that in thinking through possible fiscal scenarios, Fed policymakers saw many as suggesting a fiscal program with less near-term economic impact than markets appear to be assuming.

This in part reflects some uncertainty that a GOP-led Congress will want to foot a large infrastructure bill, given the GOP's adherence to "fiscal conservatism".  I personally have a lot of skepticism that the GOP Congress will stand up for their collective beliefs against the word of their President.  GOP fiscal conservatism didn't stop Reagan from spending big and running up a huge deficit, and I don't expect GOP fiscal conservatism will stop Trump from doing the same.  But for the Fed things it's enough of a possibility that there's reason for caution.

A more substantive Fed concern is this:

Alternatively, if Congress opts to reduce the deficit impact of an infrastructure program by financing it through tax credits and public-private partnerships, as candidate Trump proposed, the program might turn out to be relatively small. 

Indeed.  I'll go into this in much greater detail below, but let's just say there is a lot of reason to be skeptical of public-private partnerships, also known as P3s.

Tax-wise, personal tax cuts are expected to be a large part of the program.  Historically, personal tax cuts, especially for high-income households, have proven to be largely ineffective at driving economic growth (even though very creative arguments continue to circulate in their favor):

Based on what we’ve heard both from Trump and from congressional Republicans, personal tax cuts, especially for higher-income households, are likely to be a big part of the program, and probably the easiest part on which to reach agreement. However, whatever the longer-term benefits of tax reform, high-income consumers may save much of any tax cut they receive, implying that the effects on demand of such cuts are likely to be smaller than the effects of direct government spending.

There's also the issue of timing.  Infrastructure programs can take years to build, so expecting skyrocket growth right off the bat is not necessarily realistic.  Here's a good, short article on the "shovel-readiness" of the top 10 infrastructure plans currently in the planning stage.  (It is worth noting, from this article, that Barclays bank shares many of Bernanke's notes of caution regarding Trump's overall infrastructure plan.)

The Fed sees the danger of possible contradictions within Trump's overall plan.  Perhaps his infrastructure program will be good for economic growth, but perhaps his protectionist agenda will prove a drag on that very growth.

And let's never forget that a "stronger" dollar, as reassuring as the word "strong" may be, generally throws a damper on things:

Financial markets are forward-looking, and, as I’ve discussed, asset prices have already built in expectations of a strongly expansionary fiscal stance in the next few years. However, the changes in asset prices themselves may partially offset the effects of the eventual fiscal program on economic growth. For example, all else equal, the increase in longer-term interest rates since the election may reduce investment spending, including home construction, and the stronger dollar could prove a headwind for exports. (On the other hand, higher equity prices would tend to support higher rates of consumer and business spending.) In the Fed staff forecasts for the December meeting, according to the minutes, the positive effects of assumed fiscal changes on growth and inflation were “substantially counterbalanced” by the restraining effects of higher longer-term interest rates and the stronger dollar.

As noted above, perhaps economic headwinds will be offset by higher equity prices.  As a worker and consumer, I certainly hope they do!

So that's my take on Ben Bernanke's article.  Paul Krugman believes that little to no real investment is coming, for what his opinion is worth.  I am inclined to agree with that position, and to tell you why, we need to discuss P3s.

P3s are all the craze at the state level these days, and that's no surprise.  For nearly forty years now, we've had government either by a party that believes that "government is the problem" or another party that won't go that far, but believes "the era of big government is over".  Therefore a P3, in which a private investor takes on much of the risk and spending for a public infrastructure project, is right up everyone's ideological alley.

It also presents a short-term political benefit in that financial burdens undertaken by a private investor do not show up on the balance sheet of a state of local government.  So any ol' Mayor or Governor can get a big infrastructure project going and say to the voters, "Look, I didn't spend a dime!"

There's, of course, a few big problems with this approach:

Turning to private investors to finance public works isn’t free money. Investors expect to be paid back and earn a profit on their investment.

“In the highway community,” said Jones of the IBTTA, “private investment means toll roads.”

Tolls often enable investors to generate revenue and keep projects as close to revenue-neutral as possible.

But critics point out the perils of P3s relying too heavily on tolls and other user fees to generate revenue. Many private investors, for example, push for noncompete clauses that limit or ban the development and maintenance of surrounding projects.

The noncompete clauses are designed to assuage investors who fear the construction of similar public projects might cut into their revenue. But Kevin DeGood, director of infrastructure policy at the left-leaning Center for American Progress think tank, said they can tie the hands of public officials who may want to construct something for the common good.

Yes.  Freedom ain't free, kiddos.  If you want to keep your pesky socialism out of your dang highways, you're going to end up handing responsibility for public roads over to folks whose sole concern is to make a buck.  Private investors care about making money.  They do not care about the public good except insofar as those two interests might intersect, which they frequently do not:

And P3s may not work everywhere. For example, investors may ignore projects planned for less-populated areas if traffic on their roadways would not generate enough toll revenue.

“If I was a private toll road operator,” Jones acknowledged, “I don’t think I’d want to build a toll road in North Dakota or Wyoming, because I’m not likely to get a return on my investment.”

P3s may come up short in the revenue department, and when that happens, unlucky civilians may pay the price.  Just read this whole mess about the Capital Beltway HOT (High-Occupancy Toll) Lane Project.  What a mess:

In 2007, a private consortium reached a deal with the state of Virginia to construct HOT lanes on a 14-mile stretch of the Capital Beltway, long considered one of the most congested highways in the nation. The project increased the number of lanes on the highway and charged tolls in HOV lanes based on the level of traffic congestion.

In exchange for financing more than two-thirds of the $1.4 billion project, the private partners would collect toll revenue for the next 80 years. Construction was completed in late 2012, slightly ahead of schedule, but traffic in the HOT lanes was initially lower than projected. As a result, Transurban, the company responsible for processing tolls and violations, faced a deficit totaling hundreds of millions of dollars.

Following the lower-than-expected revenue, Transurban began charging excessive penalties for motorists who failed to pay toll fees, which resulted in a class-action lawsuit against the company.

According to court documents, Transurban allegedly pursued one plaintiff for $9,440.90 for 10 purported toll violations totaling approximately $20. Another plaintiff, despite having a positive balance on his EZ Pass account, received summonses for $15,000 for toll violations totaling $30.65.

Private sector efficiency!

So that's life with tolls ("user fees").  Now, acquaint yourself with the term "milestone payment", as you may be hearing a lot of it in coming years:

User fees are not the only way to support public-private partnerships for infrastructure projects. Another model is called “availability payment” agreements, in which a private investor takes on most of the debt for a project up front and the public partner provides payments to the private partner during and after construction of the project.

In Florida, for example, the Port of Miami Tunnel was constructed through such a partnership. The private partner assumed most of the financial burden up front and the state agreed to pay off the debt in milestone payments over the next several decades. The tunnel opened in 2014 and was ahead of schedule.

But Randal O’Toole, senior fellow at the libertarian Cato Institute, said availability payment P3s can exacerbate a state’s debt problems while simultaneously hiding them.

“I think most availability payment systems are ways for [government agencies] to get around their debt limit,” O’Toole said. “If a private partner borrows a billion dollars … the debt doesn’t show up on the public agency’s ledger, so it doesn’t have to worry about exceeding its debt limit.”

Which will Trump's P3 plan (assuming he sticks to his "deficit-neutral" guns) rely on more heavily: user fees (i.e., tolls) or milestone payments?  Probably a mix of both.  Either way, Pat Jones, CEO of the International Bridge, Tunnel and Turnpike Association (IBTTA), thinks that P3s won't cut it:

“You probably can’t satisfy all of [Trump’s $1 trillion plan] with private investment,” said Jones of the IBTTA. “I think it’s going to have to be a combination of private infrastructure spending and federal spending.”

This implies Trump and the GOP Congress will have to spend directly on infrastructure, i.e., socialism, if they want to stick to the $1 trillion infrastructure spend target.  Combined with massive tax cuts, this is highly unlikely to result in a deficit-neutral plan.  That doesn't bother me, but it should bother every "fiscal conservative" out there.

Lastly for now, as James Surowiecki points out, infrastructure program in this country tend to be victims of "mission creep," with actual costs far exceeding planned costs as scheming politicians hop on board, expanding planned projects far beyond their original scope.  And, of course, there's the "big, sexy project" factor - everyone wants one, even though the work that really needs to be done in this country is frequently far less glamorous:

A major cause of scope creep is the fact that infrastructure spending is at the mercy of political winds. Planners know that opportunities to build are limited, so when they do get a chance they tend to milk it for all it’s worth. Politicians, meanwhile, like big, splashy projects that will win headlines and capture the public’s attention. This is why we end up putting money into new projects while skimping on maintenance, even though the return on investment from simply keeping roads and bridges in good shape is usually higher.

...

Conservatives often reflexively dismiss infrastructure spending as a boondoggle, and liberals, perhaps in reaction, often reflexively defend it, no matter how wasteful. But the pool of dollars available for something like public transit is limited. The result of extravagant spending on subways and the like is that we end up with fewer of them than other cities. For the price of what New York spent on Calatrava’s PATH station alone, Stockholm is building nineteen kilometres of subway track and a six-kilometre commuter-rail tunnel. Worse, cost overruns fuel public skepticism toward government, making it harder to invest the next time around. It’s good for government to do big things, great things. But it’s better if it can do them under budget.

Boy! Long post today.  In case you're skimming all the way to the end, I'll try to sum it all up here:

• The market is stoked for Trump's infrastructure plan; the Fed isn't necessarily buying it.
• Trump's plan might be far smaller than anticipated.
• Trump's plan might take years to put into effect.
• Trump's plan might be subject to considerable cost overruns.
• Any economic boom from Trump's plan might be offset by the stronger dollar.
• There's just a tremendous amount of uncertainty, period.

I suspect for most people, the bottom line is jobs.  All the problems in the world will be irrelevant if we're all earning a good income.  In 2020, will we all be better off than we were four years ago? 

I certainly hope we will.  But there are a lot of very good reasons to be skeptical.  

Global Warming

Well: record setting heat for the third straight year.

You can spin the facts, but you can't escape them.

Call me a sap, but I think I just trust NASA more than I trust these guys:

The first piece of evidence that the warming over the past few decades isn’t part of a natural cycle is how fast the change is happening. The biggest temperature swings our planet has experienced in the past million years are the ice ages. Based on a combination of paleoclimate data and models, scientists estimate that when ice ages have ended in the past, it has taken about 5,000 years for the planet to warm between 4 and 7 degrees Celsius. The warming of the past century—0.7 degrees Celsius—is roughly eight times faster than the ice-age-recovery warming on average.

The second reason that scientists think the current warming is not from natural influences is that, over the past century, scientists from all over the world have been collecting data on natural factors that influence climate—things like changes in the Sun’s brightness, major volcanic eruptions, and cycles such as El Niño and the Pacific Decadal Oscillation. These observations have failed to show any long-term changes that could fully account for the recent, rapid warming of Earth’s temperature.

Finally, scientists know that carbon dioxide is a greenhouse gas and that it is released into the air when coal and other fossil fuels burn. Paleoclimate data show that atmospheric carbon dioxide levels are higher than they have been in the past 800,000 years. There is no plausible explanation for why such high levels of carbon dioxide would not cause the planet to warm.

You can, of course, find people who believe that climate change is not caused by man, that the whole thing is a hoax perpetuated by the likes of Al Gore and others to make money.  Of course, it is logically possible that Al Gore and his ilk can simultaneously make money and be correct about global climate change, just as it is possible that a company can make huge profits while paying its employees more.  Not to pick on climate change denier Larry Bell in particular (a man chosen at random by yours truly), but the reviews of his book, "Climate of Corruption: Politics are Power Behind the Global Warming Hoax," include a few gems that speak to the genre at large:

"Issues of debate cannot be resolved by claims that a consensus among authorities has settled the matters so long as a minority, even a small one, believes other-wise."

This quote is the crux.
Bell is unhinged. 

And:

There's nothing wrong with a critical look at the science supporting the global warming argument - but for me the author's credibility became suspect when he indicated that the global warming lobby is a socialist conspiracy of the UN, the EU, the WWF (including polar bears) which is determined to undermine capitalism and US world dominance.

Yup.  If you believe International Socialism is using global climate change fear mongering to the extent that NASA is in on a conspiracy to undermine capitalism, there is certainly nothing I can say that will change your mind.

Enough of that dead horse.  Here's a very dry but very informative article on recent Fed moves by former Fed chairman Ben Bernanke, a man who was slow to recognize the threat of the bubble that led to the Great Recession, but probably did more than any other political figure in the United States to combat its effects.

I urge you to read it, as dry as it is.  I'll be back tomorrow with a fuller analysis of it.  It deserves its own post.  In the meantime, in the off chance this sort of thing floats your boat, here's the trailer for the new Legend of Zelda game, which absolutely melts my eyes in a good way, and has nothing to do with climate change (although Hyrule is not looking so good, is it?).

Insurance for Everybody

Today I am simply documenting the times.  I have nothing very insightful to say that other, better writers have not already said better than I on the subject.  But how can I, in this blog about the Trump presidency, fail to document "insurance for everybody"?

We don't yet know how the Trump presidency is going to play out.  For now it appears that one of the three below options are most likely to be true:

1. Most of what Donald Trump says is baloney, but some of it isn't baloney, and that's a good thing;

2. Most of what Donald Trump says is baloney, but some of it isn't baloney, and that's a bad thing;

3. Donald Trump is going to be a conventional Republican President who just happens to say the first thing that comes out of his mouth at all times, posing grimly hilarious political scrambling and face-saving.

So far my money's on option # 3, but I'm certainly willing to be proven wrong.

I'd love to get "insurance for everybody".  That sounds optimal.  Make it happen, President-elect Trump!  You will win a lot of converts if you can pull that off.

The thing is - it will be hard going for your political party, which desperately wants to destroy "socialized medicine".  We know from this very history of this country that the free market does not lead to insurance for everybody.  It is quite simple to understand why: the main priority of a private insurance company is to make a profit.  It is not profitable to ensure people who will actually need medical treatment.  Profit can only be derived by taking in more money from those insured, on a monthly basis, than is doled out by covering those same people's medical expenses.

That is why the only system that can provide insurance for everybody is socialized medicine.  That's it!  Only when the profit incentive is completely replaced with the priority of insuring everybody does it actually make sense to insure everybody.  Rocket science this most certainly is not.

If I was running an insurance company, and I told the shareholders of that company that my goal was to set profit-making aside and, instead, provide insurance to all, I would be fired, and rightfully so, because it is the incentive of a CEO to make a profit for his or her company's shareholders.  I am not running a charity, am I?  I am running a business.  It might be nice to provide insurance to everybody but only if it won't eat into the profit margin.

Obamacare / the Affordable Care Act was a way to game the system, to maintain the bloated system of private insurance because heaven forfend we actually abandon the profit incentive at any point as a civilization!  That would be communism, wouldn't it?  Can't have that.

But even providing generous subsidies to individuals and then heavily penalizing them if they failed to purchase private insurance has been deemed too socialistic for Republicans, so putting Obamacare on the chopping block has been their Day One goal.

And yet, here is a President-elect of their own party not only saying he will provide insurance for everybody, but also saying that drug companies will be forced to negotiate lower Medicare and Medicaid prices!

There are only a few possible outcomes here:

1. Donald Trump pretends he never even said such a thing, and it dies as an issue;

2. Donald Trump pretends he never ever said such a thing, and it does not die as an issue;

3. The GOP actually ends up voting for a single-payer system, or something like it, because they've got to do what their President says.

I truly hope that option # 3 comes to pass.  Either way, it is going to be downright hilarious watching the GOP cope with Donald Trump's recent statements on healthcare.

As a reminder, let's not forget that just repealing Obamacare / the ACA and replacing it with nothing is likely to be a disaster for tens of millions:

The estimated increase of 32 million people without coverage in 2026 resulted from three changes, the budget office said. About 23 million fewer people would have coverage in the individual insurance market, it said. Roughly 19 million fewer people would have Medicaid coverage. And these changes would be partly offset by an increase in the number of people with employment-based insurance.

Overworked Americans and a Sports Hot Take

Friends! Countrymen. I am wiped. I work as a legal secretary and there are days that I work relentlessly from the minute I sit down until I leave, which is frequently many hours after I'm supposed to, getting up only to run to the printer, scarfing down lunch if I can but sometimes skipping that, etc., etc.  It's a familiar story.

Now, from one point of view, I should shut my lazy trap and accept that the hardest working, smartest people prosper. Sure, true! On the other hand, there is more to life than work.  And much of the fixation with working yourself to death may, in fact, be delusional - more about status than actual productivity.

The French - who live three years longer than us on the average - do not put up with being worked to death.  The reason they are able to secure as much freedom from work as they do is because they are good at collective action:

The reversal can be traced to union and collective-bargaining contracts, says Bruce Sacerdote, a professor of economics at Dartmouth College who has studied workplace trends in the U.S. and in European countries. As unemployment rose in France in the 1970s, French unions responded to the economic trouble in a way that was very different from the response to slowing growth in the U.S.: they advocated a policy of work sharing, in which individual workers’ hours would be reduced in response to the increasing number of people without jobs. Using catchphrases like “work less, work all,” they argued that society would benefit if the same amount of work could be done by a greater number of workers, with each working less.

These attractive policies caused the unions to become stronger and represent more workers. Eventually, they secured valuable time off — which, by the time the economic downturn had passed, had become the status quo in France. Once workers were given several weeks off in August, for instance, they understandably didn’t want to later give up that prized vacation time.

The article I linked to above is quite short, and well worth your time.  

Anyways, the point is, I am sufficiently overworked that I don't have time to delve into the many issues I'd like to touch on and that some of you have asked to touch on - the energy grid! our budget! how Obama looks in retrospect!  Further, I am going out of town tomorrow for three days.

So instead, I'm just going to lazily leave you with this "hot take" by Alex Pareene.  San Diego is losing its football team because its owner thinks he can make more dough in Los Angeles.  Football's just a game, so who cares, sure, whatever.  But I bet those people are bummed as hell.  As a Jets fan I'd love it if the people of Queens, where the team was originally based, would riot until Woody Johnson was forced to rescind control of the team somehow.  It'll never happen, but it's a nice fantasy.  There's really no better symbol of the undeserving rich man than the professional sports team owner, is there?

I'll see you guys and gals all next week!  Have a great Martin Luther King Jr. Day and never forget, though his image is often misused, MLK was not a soft man.  I'm a big fan of MLK and also LBJ and I thoroughly recommend this book if you want to take a stroll down collective memory lane.  It is not the only lane of memory you should stroll down!  But it is one worth taking.

Scandal and China

So, the incoming President has his own big sex scandal.  Allegedly, the President-elect, while in Moscow, hired two hookers to pee on each other.  I feel gross typing that sentence, but there you have it.

When it comes to scandals of this sort, neither the truth nor the weight of the scandal is what matters.  The assorted Clinton scandals did not destroy the Clinton Presidency; the assorted Obama scandals did not destroy the Obama Presidency.  I find all these scandals confusing and, worse, boring, and I refuse to articulate them here.  Google them if you wish.  I find this latest Trump scandal similarly boring (though definitively gross, if true).

Whether or not Whitewater or [insert Obama scandal here - he wasn't born in this country, right?] or this Russia hooker allegation is true is beside the point.  Far more substantive scandals have been thoroughly ignored in this recent election cycle.  The important thing is that now the President-elect has an albatross around his neck for the entire time he governs, just as Clinton and Obama did.  It will bog him down and distract him.  Whitewater and Monica Lewinsky and ACORN and you name it didn't prevent Clinton and Obama from being re-elected, but it sure did take the wind out of their sails from time to time.  Bad news for Donald Trump!

Meanwhile, in the world of substantive news, let's check in on China.

While President Trump seeks to Make America Great Again, China has publicly declared its intention to kick our behind when it comes to renewable energy.  Much of the below should be taken with a large hunk of salt, because rhetoric is rhetoric, but still (emphases added mine throughout):

China intends to spend more than $360 billion through 2020 on renewable power sources like solar and wind, the government’s energy agency said on Thursday.

The country’s National Energy Administration laid out a plan to dominate one of the world’s fastest-growing industries, just at a time when the United States is set to take the opposite tack as Donald J. Trump, a climate-change doubter, prepares to assume the presidency.

The agency said in a statement that China would create more than 13 million jobs in the renewable energy sector by 2020, curb the growth of greenhouse gasses that contribute to global warming and reduce the amount of soot that in recent days has blanketed Beijing and other Chinese cities in a noxious cloud of smog.

Damn.  That's real money.  That's not a joke.  China could go much, much bigger of course, than $90 billion a year on renewables.  But that's a lot more direct investment on renewables that the United States has put up, or is planning on putting up. 

There are problems of course.  Part of the reason coal consumption is down in China is because the economy is in a slump; if the economy picks up, coal consumption might skyrocket back up.  China, having a massive population, has correspondingly massive energy needs.  $360 billion might not cut it.

Still, this is the sort of big infrastructure plan that the world needs to be thinking about.  13 million new jobs!  If they pull it off, that'll be Making China Great Again, for sure.

As America prepares to build fences, China is, rhetorically at least, stepping up to the "global leader" plate, with President Xi Jinping attending the World Economic Forum at Davos, Switzerland for the first time.  All this really amounts to is networking on the highest level, but if America pulls back from "global leadership" and becomes more isolationist, it cedes this space logically to China and others.  Whether that is "good" or "bad" is a complex question with many interpretations (and a topic for another post sometime).

China cannot, factually, take over the #1 Superpower role without having a reserve currency that can challenge the dollar, something it does not have:

He pointed to China’s push in recent years to have the renminbi counted as an international currency. That has been undermined in the past year by efforts of the Chinese central bank, the People’s Bank of China, to withdraw large quantities of offshore renminbi from circulation. The bank has been doing that in order to try to prop up the value of the renminbi and limit capital flight from China, including the transfer of money to Hong Kong by wealthy Chinese.

“The People’s Bank of China continues to claim that renminbi internationalization is important, and of course, at Davos, President Xi may continue to pay verbal homage to that agenda because it would be an important sign of China’s ascendance on the world stage,” Mr. Shih said. “Yet, in the past year, we have seen renminbi deposits outside of mainland China decline by hundreds of billions of renminbi.”

The flexible, dependable dollar is still number one. (Incidentally, here's a very interesting, if meandering, look at what a reserve currency is and how it has functioned historically by Martin Armstrong, who may be a bit crazy in some regards, but certainly is smart, and who makes good points here.  The article on Armstrong is compelling reading which I may revisit sometime soon.)

With that said, China is sending its aircraft carrier out to make saber-rattling noises in the Taiwan Strait, and Taiwan is responding in kind.  China is not a mood to throw its weight around, and is not screwing around about it.

I find the unfolding tension in the Pacific and the civilizational race or win or lose the battle against global climate change a lot more thrilling than peeing on hookers, don't you?

See you tomorrow!

Surveillance

With Jeff Sessions well on his way to be being confirmed as Attorney General in all likelihood, it's time to think a little bit about the surveillance state.

I have to cop to the fact that this is not my area of expertise.  I have to admit I've sort of tuned out the issue of the surveillance state over the years.  My feeling is: well, governments always spy on their citizens.  Always have, always will.  Technological advances and overt legislation such as the Patriot Act can make this problem worse, but never does the game itself change.  We're not living in North Korea, but on the other hand, if some government spook wants a given individual to disappear, the odds are good it can make that individual disappear.  

Part of the reason why I've tuned surveillance state issued out is because the surveillance state is just so overwhelming.  It can be hard to digest.  

And now it's in the hands of a man who appears to bear numerous similarities to Richard Nixon.  They both stay up very late at night watching Patton.  They keep mental lists of enemies.  They both made their appeals over the heads of the media elites, to the "silent majority" of the country (not so silent these days!).

We all know how Dick Nixon turned out, and as such, we're all right to be a little concerned. We've yet to see if the Trump era will really be a full-blown turn to fascism as many are predicting.  I think that's a stretch.  But I think a thematic repeat of the Nixon years is not a stretch. Consider some of the things the Trump has already said (emphases added mine):

In one campaign speech, Trump said of the ability to hack his political enemies, “I wish I had that power. Man, that would be power.” He has also expressed support for the NSA’s collection of telephone metadata, which is now outlawed. “As far as I’m concerned, that would be fine,” Trump said in a December 2015 radio interview. “When you have the world looking at us and would like to destroy us as quickly as possible, I err on the side of security.” His recent picks for attorney general (Jeff Sessions) and head of the CIA (Mike Pompeo) agree. “Congress should pass a law re-establishing collection of all metadata, and combining it with publicly available financial and lifestyle information into a comprehensive, searchable database,” Pompeo wrote in the Wall Street Journal in January 2016. “Legal and bureaucratic impediments to surveillance should be removed.”

Trump has presented distressing views on spying that would target specific communities and individuals. “I want surveillance of certain mosques,” he told a rally in November 2015. He has called the Black Lives Matter movement a “threat” that, “[a]t a minimum, we’re going to have to be watching.” Also troubling are the repercussions that Trump’s opponents might face. Infamously, Trump said on Fox and Friends in 2013 that Snowden is “a terrible traitor” and, “You know, spies in the old days used to be executed.” Trump’s CIA pick favors exactly that course of action. “I think the proper outcome would be that [Snowden] would be given a death sentence,” Pompeo said on C-SPAN last February.

Boy.  It's one thing to want surveillance of radicalized Muslims; there are plenty of those that actually exist.  It's another thing to call Black Lives Matter a "threat".  A threat?  People who march are a threat?  Who speak up are a threat?  Maybe you don't like what they say, maybe you feel they shouldn't be marching, but a threat? On par with Islamic terrorism? That seems a bit unhinged.  This sort of judgment has echoes of the very bad old days and it's a bad sign.

We know Donald Trump has many enemies - will they be getting surveilled?  Or, will this vindictive talk all turn out to be a lot of hot air, with surveillance continuing along a "default" path?

We'll find out!