Friday, January 22, 2016

Today's links

1--A Scared World Is Taking Its Money and Running Back Home—and to the U.S.

A tide of money went out to emerging markets for more than a decade, pushed by accommodative monetary policy in the U.S. and pulled by the promise of robust growth.

Now that tide is coming back in as investors seek to repatriate funds or flock to U.S.-dollar denominated assets as a safe haven amid sluggish economic growth and global market turmoil.

2--Blackstone CEO Surprised American Voters Are Unhappy With Economy, Politics, Life, Forbes

America is the richest and most unequal nation in the world — at least when you look at the wealth in 55 of the more conventionally developed countries. Median income has largely fallen behind economic growth as corporations continue to retain a bigger share of the benefits, turning into a reverse of what is usually claimed as the danger of income redistribution.


But whether there are long term changes coming or not of their own accord is immaterial in this case. People in the U.S. don’t tend to think that way. What many perceive now is a basic economic unfairness. They work hard, play by the rules as they’ve learned them, and keep getting further behind. The debt funding for college and large purchases seems to be never ending for large portions of the populace, which cements in a sense of unending inequality.

 3--In Emerging Markets, Capital Controls Are Ratcheted Up to Stem Outflow of Funds

4--Remember this??  Obama, 2003 (with video)

I happen to be a proponent of a single payer universal health care program. [applause I see no reason why the United States of America, the wealthiest country in the history of the world, spending 14 percent of its Gross National Product on health care cannot provide basic health insurance to everybody. And that’s what Jim is talking about when he says everybody in, nobody out. A single payer health care plan, a universal health care plan. And that’s what I’d like to see. But as all of you know, we may not get there immediately. Because first we have to take back the White House, we have to take back the Senate, and we have to take back the House.”

Obama, 2007

This is a two trillion dollar part of our economy and it is my belief that it’s not just politically but economically it is better for us to start getting a system in place–a universal healthcare system signed into law by the end of my first term as president and build off that system to further to make it more rational….

By the way, Canada did not start immediately with a single payer system. They had a similar transition step.

5--Obama Helped Avert Economic Collapse, but Full Recovery Is Distant, Dean Baker, NYT

It was Obama's decision to “pivot to deficit reduction” immediately after the stimulus passed and to appoint two deficit hawks, Alan Simpson and Erskine Bowles to head his deficit commission. And, it was his decision to both keep the major banks alive with low interest loans and to block efforts to use Dodd-Frank to break them up.

6--The Fed's role in stock buybacks: The putrid smell of corruption and greed.

It’s tough out there, in the oil and gas sector. The company reported that revenues in the fourth quarter plunged 39% year-over-year, income from continuing operations plunged 58%, earnings per share plunged 57%. This includes North America, where revenue plunged 55% and operating income plunged 84%. If I use “plunge” a lot, it’s because it was that kind of earnings report.

After it was all said and done, the company had a net loss for the quarter of $1.01 billion.

To make those bitter results go down better, and to add that special little extra that Wall Street analysts like to hear, it offered a good swig of financial engineering: a new share repurchase program of $10 billion.

That’s on top of the repurchase program of $10 billion that was started in Q3 2013, and which “is about to be completed.” It was that buyback program that helped propel SLB from just over $90 a share in late 2013 to $120 in mid-2014, before it all came unglued. Shares have now lost nearly half their value since then, closing today at $61.45.....

And it offered another special little extra that Wall Street analysts fawn over: it’s going to ax and additional 10,000 people.

That’s on top of the 20,000 job cuts it had announced last year. This brings total layoff announcements to 30,000. For 2015, its “workforce reduction” expenses amounted to $920 million. Cutting expenses this way can get expensive....

But those share repurchases are coming under fire. They’re an outgrowth of QE. Easy credit didn’t lead to corporate investment and economic growth, but to share buybacks, according to Natixis, one of the largest asset managers in the world. Since they’ve caused companies to load up their balance sheet with debt, they’re now increasing financial instability. And they’re among the top reasons QE is a net-negative for the economy

7--The Fed's zero rate like a pervert "handing out candy on the playground.", Bill Bonner

There’s a reality, as well as a myth. Reality is that resources are limited. Prices tell us what we’ve got to work with. Falsify prices and you get errors of omission and commission. After a while, the system suffers from things it shouldna, oughtna done.

As Hjalmar Schacht, Germany’s minister of economics in the 1930s, put it: “I don’t want a low rate. I don’t want a high rate. I want a true rate.”

An honest interest rate tells the truth about how much savings are available and at what price. People still make mistakes; they still get up to some pretty weird stuff. But at least the perverts aren’t handing out candy on the playground.

8--The Fed Rate Hike and the 2016 Economy , Dean Baker

In assessing the prospects for growth the first place to look is always consumption, which accounts for 70 percent of GDP. Consumption grew by slightly more than 3.0 percent over the last year. This was fueled in part by healthy job growth and in part by the plunge in energy prices that freed up more than $100 billion (0.6% of GDP) for spending in other areas.

It is difficult to see how this pace of consumption growth can be sustained in 2016. Job growth was likely to slow even without the Fed raising rates. This could be offset by more rapid growth in wages, but there is not much reason to expect much of a pickup here.


In sum, the cumulative picture makes it look like 2016 will be weaker than 2015. We may well see a growth rate under 2.0 percent and it is easy to envision scenarios, for example a collapse in office construction, in which growth will be closer to 1.0 percent.

This is not a question of guessing scores in a football game. Weaker GDP growth will translate into fewer jobs. That means both the suffering of the unemployed and less bargaining power for workers who have jobs, and therefore smaller wage gains. In short, the Fed should be much more concerned about the economy’s continuing weakness rather than the prospect its strength will lead to spiraling inflation. Last week’s rate hike should be the last one for a long time

9-- The lies never stop: Iran was moving towards producing nukes, Kerry claims


10--US media admits Russia winning in Syria, MoA

Being confronted with reality the U.S. media is now changing its false narrative. The LA Times writes:

The Latakia attack mirrors similar government gains across the country, as forces loyal to President Bashar Assad, backed by Russian air power, have been on the offensive.
It's a dramatic shift for the forces of Assad, who less than six months ago had warned supporters that the government would have to "give up areas" after a string of humiliating setbacks.
The gains have strengthened the government's position in the run-up to Syrian peace negotiations scheduled to begin next week in Geneva..... 

A source in the office of the Prime Minister Haidar al-Abadi said, “The United States delay of its support to Baghdad was not a coincidence or an unintentional lazy reaction. It was a strategic decision to: Teach Iraq a lesson for rejecting U.S military bases; To observe the Iranian military capability and inability of Tehran to use air power and intelligence gathering to defeat ISIS; To submit Baghdad to its will and dictate its conditions”.

That the U.S. used the ISIS phenomenon to again achieve regime change and U.S. control in Iraq was confirmed by Obama in an interview with Thomas Friedman:

The reason, the president added, “that we did not just start taking a bunch of airstrikes all across Iraq as soon as ISIL came in was because that would have taken the pressure off of [Prime Minister Nuri Kamal] al-Maliki. ...

11--Boots or no boots on the ground: Which is it?

We're looking for opportunities to do more, and there will be boots on the ground — I want to be clear about that — but it's a strategic question, whether you are enabling local forces to take and hold, rather than trying to substitute for them," Carter said...

Last October, US President Barack Obama reaffirmed that the United States would not send ground troops to Syria to join operations against the Daesh. The same month, US Defense Secretary Ashton Carter said that the Pentagon had not ruled out conducting ground attacks against Daesh.

12--Turkish invasion threat escalates Syrian conflict

The Syrian government has formally appealed to the United Nations over incursions into its territory by Turkish troops. The protest at the UN came amid reports that Turkish soldiers have crossed the border and entered the Syrian town of Jarablus on the western bank of the Euphrates River.

Turkish military action inside Syria threatens to escalate the internal conflict in that country and increase the threat of a confrontation between Turkey and Russia

Any move to secure the border will inevitably be accompanied by a Turkish intervention to halt a Kurdish advance, either through direct Turkish military occupation or through control over the area by other Al Qaeda-linked militias such as the al-Nusra Front, Ahrar al-Sham or Jaish al-Islam, all of which have enjoyed Turkish support.

The mounting conflicts threaten to upend talks scheduled in Geneva next Monday for the ostensible purpose of achieving a negotiated end to the nearly five-year-old civil war that has claimed the lives of roughly a quarter of a million Syrians and turned millions more into refugees

13--The Flint water crisis and the criminality of American capitalism

The poisoning of Flint is linked to the 2013-14 Detroit bankruptcy, which was carried out with the backing of the Obama administration. The pensions and health benefits of city workers were slashed and public assets were sold off or privatized, including the treasures of the Detroit Institute of Arts and the city’s century-old public water system. This led to sharp increases in water prices in Detroit, Flint and other cities, and mass water shutoffs of working-class customers.

The modus operandi of the conspiracy of politicians and corporate holders of city bonds to plunder the incomes of city workers and seize public assets in Detroit has become a model for similar attacks across Michigan, in other US states and now in Puerto Rico. Municipalities and school districts have been starved of resources by federal, state and local authorities, forced to take on immense levels of debt, and then put under financial dictators who do the bidding of the banks.

.....During the 2009 restructuring of GM, the Obama administration worked with the UAW to shut more plants and halve the wages of all new-hires, while granting legal immunity to GM in any future lawsuits over pollution or defective vehicles. The company has taken in billions in profits and spent them, not on the people of Flint, but on stock buybacks and dividend payments to its biggest shareholders, which includes the UAW....

As for Flint, the president who has allocated trillions to bail out the Wall Street criminals and fund illegal wars has approved a derisory $5 million in federal aid for the city’s people. The government of “the most powerful country in the world” is no less indifferent to working people in Flint than its predecessor was to Hurricane Katrina-ravaged New Orleans

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