Sunday, July 24, 2016

Today's Links

The Defense Planning Guidance, drafted by the Department of Defense in February 1992, unambiguously asserted the hegemonic ambitions of US imperialism:

There are other potential nations or coalitions that could, in the further future, develop strategic aims and a defense posture of region-wide or global domination. Our strategy must now refocus on precluding the emergence of any potential future global competitor.


1--Six Consecutive Quarters Of Declining Earnings

How the S&P500 can be trading at all time highs despite what now appears to be 6 consecutive quarters of earnings decline?

According to the latest weekly update from Factset, as of this moment consensus estimates now expect the third quarter to be the sixth consecutive quarter of declining earnings, with Q3 EPS forecasts just turning negative for the first time, down from +0.4% to -0.1%...

Here is the detail from Factset:
Year-Over-Year Earnings Decline (-0.1%) Now Projected for S&P 500 for Q3 2016

As of today, the blended earnings decline for the second quarter for the S&P 500 stands at -3.7%. Factoring in the average improvement in earnings growth during a typical earnings season due to upside earnings surprises, it still appears likely the S&P 500 will report a year-over-year decline in earnings for the second quarter. If the index does report a year-over-year decline in earnings for the second quarter, it will mark the first time the index has reported five consecutive quarters of year-over-year declines in earnings since Q3 2008 through Q3 2009.

. even as the Bureau of Labor Services dutifully follows the instructions from the administration and "reports" of continued major job gains and rising wages. Because only under the most ludicrous propaganda narrative, can a late-cycle economy, one which is already the 4th longest "recovery" in history, continue to see rising wages and continued job gains while corporate profit margins soar to record highs despite 3 consecutive years of declining revenues

2-- Russian diplomacy aims to accelerate Syrian endgame

Bizarre as it may sound, ‘regime change’ agenda in Syria is now predicated on overthrow of Erdogan first. For Turkey, Russia’s goodwill is vital for preventing the emergence of a Kurdish enclave along its border, which is a core issue....

Foreign Minister Lavrov said on Friday that development of relations between Russia and Turkey will depend on their cooperation on Syria and on Ankara’s readiness to “take steps against those who finance terrorists in Syria”. To quote Lavrov,
  • Much will depend on how we will cooperate on the settlement of the Syrian crisis… During discussions of the Syrian crisis, we provided many facts that prove that Turkish territory is used for providing supplies to terrorists and sending militants to Syria. These facts remain on the table. Now that we’ve restored our relations, it will be hard to ignore the facts that we provided, and we hope that our Turkish partners will now start answering these questions, will take measures to stop their territory being used for supporting the fratricidal war in Syria.
Lavrov hinted that this is also Iran’s expectation. He stressed the urgency:
  • All the more so because the situation in Syria has changed over the past few months, and conditions are being created for defeating terrorists and launching a genuine intra-Syrian dialogue....
Washington has run out of options in Syria and Moscow cannot be oblivious of that.The Obama administration cannot afford to overlook the intelligence reports that Nusra Front, al-Qaeda’s affiliate in Syria, is planning to attack targets in the West. Simply put, the Russian prognosis is coming true.
However, it is the failed coup in Turkey that becomes a god-sent opportunity for Russia to connect the dots and accelerate the endgame in Syria.

Russian diplomacy will be in top gear in Laos on Monday when Lavrov and Kerry sit down to assemble the joint mechanism to fight terrorism in Syria under the ‘Moscow Agreements’, and to transfer synergy thereof to a trilateral meeting of US, Russian and UN officials in Geneva later in the week to kick start peace talks even as August 1 deadline draws closer.
Putin hopes to receive Erdogan for a ‘bilateral’ soon thereafter.

3--G20 will use 'all policy tools' to lift growth as Brexit weighs

Trump has singlehandedly changed the agenda of the worlds biggest economies (anti free trade)
(G-20 promises to distribute wealth more equitably even while they strengthen the policies that shift wealth to the 1 percenters)

The world's biggest economies will work to support global growth and better share the benefits of trade, policymakers said on Sunday after a meeting dominated by the impact of Britain's exit from Europe and fears of rising protectionism....

"In light of recent developments, we reiterate our determination to use all policy tools – monetary, fiscal and structural – individually and collectively to achieve our goal of strong, sustainable, balanced and inclusive growth."....

There was broad consensus that the global economy needed more growth, U.S. Treasury Secretary Jack Lew told reporters, while Chinese Finance Minister Lou Jiwei said it had been easier to forge consensus because the global recovery remained weak.
The specter of protectionism, highlighted not only by Brexit but also by U.S. Republican presidential candidate Donald Trump's "America First" rhetoric and talk of pulling out of trade agreements, was also a focus for the policymakers....

So-called "helicopter money" was not discussed, said Bank of Japan Governor Haruhiko Kuroda, who has repeatedly said helicopter money was not under consideration.
"This G20 meeting did not discuss things seen as helicopter money, or even the word helicopter money at all," he said.
Japanese markets have risen this month on speculation that authorities, battling to revive an economy dogged by decades of anemic inflation, will resort to using helicopter money, possibly issuing perpetual bonds to underwrite public debt.

4--Share of income spent on rent is at generational highs: In Los Angeles the amount spent on rent remains near 50 percent of income.

5--Neoliberalism is a political project  Today's "must read"

I’ve always treated neoliberalism as a political project carried out by the corporate capitalist class as they felt intensely threatened both politically and economically towards the end of the 1960s into the 1970s. They desperately wanted to launch a political project that would curb the power of labor.

In many respects the project was a counterrevolutionary project. It would nip in the bud what, at that time, were revolutionary movements in much of the developing world — Mozambique, Angola, China etc. — but also a rising tide of communist influences in countries like Italy and France and, to a lesser degree, the threat of a revival of that in Spain.

Even in the United States, trade unions had produced a Democratic Congress that was quite radical in its intent. In the early 1970s they, along with other social movements, forced a slew of reforms and reformist initiatives which were anti-corporate: the Environmental Protection Agency, the Occupational Safety and Health Administration, consumer protections, and a whole set of things around empowering labor even more than it had been empowered before.

So in that situation there was, in effect, a global threat to the power of the corporate capitalist class and therefore the question was, “What to do?”. The ruling class wasn’t omniscient but they recognized that there were a number of fronts on which they had to struggle: the ideological front, the political front, and above all they had to struggle to curb the power of labor by whatever means possible. Out of this there emerged a political project which I would call neoliberalism....

The objective: To crush labor

With respect to labor, the challenge was to make domestic labor competitive with global labor. One way was to open up immigration....At the same time, ideological projects to privatize and deregulate created unemployment. So, unemployment at home and offshoring taking the jobs abroad, and a third component: technological change, deindustrialization through automation and robotization. That was the strategy to squash labor....

One of big moves of neoliberalization was throwing out all the Keynesians from the World Bank and the International Monetary Fund in 1982 — a total clean-out of all the economic advisers who held Keynesian views.
They were replaced by neoclassical supply-side theorists and the first thing they did was decide that from then on the IMF should follow a policy of structural adjustment whenever there’s a crisis anywhere...

6--Post-Putsch Narratives and Turkey's Curious Coup

7--Hillary and Tim Kaine: a Match Made on Wall Street

8---Trump, Trade and Working Class Discontent

...the president of the biggest and most influential U.S. business lobbying group, the Business Roundtable’s John Engler, a former governor of Michigan, in a recent interview stated “There’s a great sense of frustration here.” Trump’s views on trade are ”diametrically opposite” and a “cause for great concern” to the Roundtable, whose corporate members collectively represent more than US$7 trillion in annual revenues and employ 16 million workers. “Everything has been upended,” according to Engler....

If corporations and investors benefit on both ends of the trade exchange, the same is not necessarily so their respective working classes. Free trade theory conveniently ignores income distribution effects. However, that doesn’t deter mainstream economists treating it like a “holy grail” of neoliberal economics nonetheless.

Trade and Working-Class Incomes

The record of U.S. free trade policies for working and middle-class America reveals devastation, not benefit. For example, total U.S. employment since NAFTA and China trade the past two decades has witnessed a loss of more than 6 million U.S. manufacturing jobs. Perhaps as many as two thirds of which have been due to free trade alone, according to studies. Additional millions of jobs have been lost in communications, professional services, and other non-manufacturing industries. For the jobs that remain, moreover, wages in U.S. companies that export more have risen less than wages have fallen in companies harmed by the rise in imports. The net result is that both jobs and wages—and therefore median working-class incomes—are both negative. And that’s due to direct export-import effects. There’s more....

In the past two decades, and especially since 2009, U.S. workers have become more informed and conscious of the negative impact of trade on their jobs, incomes, and living standards. They see the wealthiest 1 percent of household take 95 percent of all the net income gains since 2010, while their wages and incomes decline. They see high paying manufacturing jobs disappear to other countries, while more than half of the jobs that have been created in the United States since 2010 have been low paying, part time, temp jobs averaging less than US$36,000 a year. And they sense even less opportunity for their children. Recent reports project that more than 90 percent of new jobs created in the next decade will earn about the same US$36,000 a year. Due to all this, they are, legitimately, pissed off.

Trump has identified and played to this discontent. That Trump is popular and leading in polls in states with a high concentration of white, middle age and up, male, non-college educated working-class voters is not surprising, given his aggressive criticism of U.S. trade policies and their devastating effects. Trump has embraced the trade issue in no uncertain terms, and his attack on U.S. trade policies have resonated deeply with this working-class segment—i.e. a voting bloc in key swing states and a group who cares little what Trump says on other non-economic issues, however outrageous, whether on race, ethnic, gender, foreign policy, or other subjects. Trump speaks to their “rage” at being ignored by U.S. political and economic elites now for decades, and especially since the 2008-09 recession, the recovery from which has mostly passed them by, as well as to their fears for future prospects for their children. The more that U.S. economic elites, in whichever party, attack Trump the more this working class bloc is convinced he, Trump, must be for real because they’re attacking him....

Trump: A pseudo-populist from the "right"?

We had our pseudo-populist from the “left,” Barack Obama, elected eight years ago promising to reform free trade treaties. And he became the biggest free trade advocate in U.S. economic history. In Trump, we have our Obama analog, a pseudo-populist this time from the “right,” promising the same. And who then will do the same. To paraphrase an ancient saying, U.S. voters now considering voting for Trump based on his anti-trade views would do well to “Beware Billionaires Bearing Gifts.”

9--Hillary picks Kaine and tells Sanders supporters, "Up yours!"

“Hillary Clinton could have sent a strong signal to the millions of people who voted for moving beyond decades of neo-liberal policies that have produced massive inequality in wealth, employment, health care, and education, as well as racial and gender disparities and an escalating climate crisis,” Burger told Common Dreams in a statement. “Selecting Tim Kaine sends the opposite message, continue to accept the status quo and lower your expectations for real change or a future we can believe in.”
According to Ruth Conniff, editor-in-chief of The Progressive magazine speaking to MSNBC‘s Chris Hayes when the news broke on Friday, the choice of Kaine will do nothing to excite people who voted for Bernie Sanders.

“It’s just a sign that Hillary does not feel like she has to do anything for the progressive wing of the party,” lamented Conniff. “And that’s unfortunate.”
In the last week alone, Kaine is on the record as pushing for new rounds of Wall Street deregulation and voicing active support for the Trans-Pacific Partnership (TPP) trade agreement—both in direct contradiction to what grassroots progressives have been demanding....

As we saw in Donald Trump’s speech last night, Republicans will run hard against Democrats on trade this year,” Taylor declared. “Unfortunately, since Tim Kaine voted to fast track the Trans-Pacific Partnership, Republicans now have a new opening to attack Democrats on this economic populist issue.”...

William K. Black, associate professor of economics and law at the University of Missouri-Kansas City, lamented Kaine’s choice along economic lines.
By picking Kaine, Black said in a statement, the presuptive Democratic nominee has revealed her preferences when it comes to the financial industry and the economy at large.
“It’s not what you say, it’s what you do,” said Black. “Clinton can talk about caring about the U.S. public, but this choice cuts through the rhetoric. Kaine, like Clinton herself, is a quintessential ‘New Democrat’—meaning they are allies of Wall Street. They embrace a neoliberal, pro-corporate outlook that has done incredible damage to the vast majority of Americans.”

10--Gallup: Who are Trump's supporters?

Most who have a favorable opinion of Trump do not hold a bachelor's degree, and this rate is somewhat higher than non-supporters (73% vs. 65%). Available government data show weak income growth for this group.[1] Likewise, Trump supporters are about 50% more likely to work in the blue collar occupations that have been exposed to competition with immigrants and foreign workers (defined here as production, installation, maintenance, repair, transportation or construction) compared with non-supporters. This applies to 14% of all Trump supporters and 22% of male Trump supporters.

In summary, the individual-level data on the relative economic hardship endured by Trump supporters are mixed. Even after controlling for an extensive set of demographic measures, the analysis finds that working in blue collar occupations predicts a more favorable view of Trump, as does being unemployed, but so does earning a higher household income....

Is It the Place or the People in the Place?
Using county primary election voting data, journalists and researchers have noted that Trump voting in the GOP primaries was higher in counties with a high share of jobs in industries like manufacturing, construction and agriculture. ...

Bottom Line
Trump's popularity cannot be neatly linked to economic hardship. Those who do not view Trump favorably appear to have been just as exposed as others, if not more so, to competition with immigrants and foreign workers, and yet are no more likely to say they have a favorable opinion of Trump than others. At the same time, those with a favorable view of Trump do have, to some degree, a lower socio-economic status.

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