Sunday, November 27, 2016

Today's Links

1--Incoming Trump administration prepares assault on federal workers

2--Trump has a plan for government workers. They’re not going to like it

(Trump will use his blue collar revolt to attack working people and increase economic insecurity) 
Trump has promised that in his first 100 days in office he will freeze hiring by not replacing employees who leave. The military and employees in public health and safety roles would be exempt, according to the president-elect’s Contract with the American Voter.
He has pledged to eliminate two regulations for every new one passed and shut down the Education Department and parts of the Environmental Protection Agency.
But he also wants a military with more ships, planes and troops. He has said he wants to triple the number of immigration enforcement agents and beef up the Border Patrol by thousands....

President-elect Donald Trump and the Republican-controlled Congress are drawing up plans to take on the government bureaucracy they have long railed against, by eroding job protections and grinding down benefits that federal workers have received for a generation.

Hiring freezes, an end to automatic raises, a green light to fire poor performers, a ban on union business on the government’s dime and less generous pensions — these are the contours of the blueprint emerging under Republican control of Washington in January.

These changes were once unthinkable to federal employees, their unions and their supporters in Congress. But Trump’s election as an outsider promising to shake up a system he told voters is awash in “waste, fraud and abuse” has conservatives optimistic that they could do now what Republicans have been unable to do in the 133 years since the modern civil service was created

3--More Than Half Of New Yorkers Are One Paycheck Away From Homelessness, Says Study

4--Election of Donald Trump foreshadows trade war in Asia

The TPP was never a “free trade” agreement. It was the means by which Washington sought to undermine Chinese economic influence and consolidate its own dominance in Asia and internationally. As Obama declared, the TPP was to ensure that the US, not China, wrote the rules for the 21st century global economy. It included the protection of US intellectual property, provisions for American corporations to sue governments if national regulations cut into their profits, and measures against state-owned enterprises.

The TPP has always been integral to the Obama administration’s diplomatic offensive and military preparations in the Asia Pacific for war with China. Obama’s defence secretary Ashton Carter underscored its strategic significance by declaring that the “TPP is as important to me as another aircraft carrier.” The US military build-up in Asia has included the strengthening of alliances throughout the region, new basing arrangements in Australia, the Philippines and Singapore, and plans to station 60 percent of naval and air assets in the Asia Pacific by 2020.

Far from pulling back, Trump is preparing a trade war against China that will greatly intensify tensions throughout Asia and heighten the danger of war. He has threatened to name China as a “currency manipulator,” enabling the imposition of penalty tariffs of up to 45 percent on Chinese exports to the US. An editorial in the hawkish Chinese state-owned Global Times has suggested in retaliation: “A batch of Boeing orders will be replaced by Airbus, US auto and iPhone sales in China will suffer a setback, and US soybean and maize imports will be halted...

5--Macroeconomics in Germany: The forgotten lesson of Hjalmar Schacht

(The banker who created Hitler)

6--Uniquely Talented: Only the Democrats Could Have Lost to Trump

7--The rise of Mussolini; Economy of Italy under fascism

First steps:  Economic policy in the first few years was largely classical liberal, with the Ministry of Finance controlled by the old liberal Alberto De Stefani. The government undertook a low-key laissez-faire program — the tax system was restructured (February 1925 law, 23 June 1927 decree-law, etc.), there were attempts to attract foreign investment and establish trade agreements, and efforts were made to balance the budget and cut subsidies. The 10% tax on capital invested in banking and industrial sectors was repealed, while the tax on directors and administrators of anonymous companies (SA) was cut down by half. All foreign capital was exonerated of taxes, while the luxury tax was also repealed.[8] Mussolini also opposed municipalization of enterprises....

In 1925, the Italian state abandoned its monopoly on telephones' infrastructure, while the state production of matches was handed over to a private "Consortium of matches' productors....

(bank bailouts without gov control)  Furthermore, various banking and industrial companies were financially supported by the state. One of Mussolini's first acts was to fund the metallurgical trust Ansaldo to the height of 400 millions Lire. Following the deflation crisis which started in 1926, banks such as the Banco di Roma, the Banco di Napoli or the Banco di Sicilia were also assisted by the state.[10] In 1924, the Unione Radiofonica Italiana (URI) was formed by private entrepreneurs and part of the Marconi group, and granted the same year a monopoly of radio broadcasts. URI became the RAI after the war....

On a wider scale the Fascist economic policy pushed the country towards the "corporative state", an effort which lasted well into the war. The idea was to create a national community where the interests of all parts of the economy were integrated into a class-transcending unity. Some see the move to corporatism in two phases. First the workers were brought to heel over 1925-27

The corporative phase---  1937, over two-thirds of cartels authorized by the state, many of which crossed sectors of the economy, had started after the founding of the Council, resulting in the noticeable increase in commercial-industrial cartelization. Cartels generally undermined the corporative agencies that were meant to ensure they operated according to Fascist principles and in the national interest, but the heads were able to show that cartel representatives had total control over the individual firms in the distribution of resources, prices, salaries and construction. Businessmen usually argued in favour of 'collective self-regulation' being within Fascist ideological lines when forming cartels, subtly undermining corporative principles...

Not long after the creation of the Institute of Industrial Reconstruction (IRI), Mussolini boasted in a 1934 speech to his Chamber of Deputies that “Three-fourths of Italian economy, industrial and agricultural, is in the hands of the state.".[17][18] As Italy continued to nationalization its economy, the IRI “became the owner not only of the three most important Italian banks, which were clearly too big to fail, but also of the lion’s share of the Italian industries.”[19]
During this period, Mussolini identified his economic policies with “state capitalism” and “state socialism,” which later was described as “economic dirigisme,” an economic system where the state has the power to direct economic production and allocation of resources.[20]
By 1939, Fascist Italy attained the highest rate of state–ownership of an economy in the world other than the Soviet Union.[21] where the Italian state “controlled over four-fifths of Italy’s shipping and shipbuilding, three-quarters of its pig iron production and almost half that of steel..

In 1929-39 the Italian economy grew by 16%, roughly half the growth rate of the earlier liberal period. ...

8--Trump-Mussolini parallels-- anticipating state-run capitalism after the next financial crisis

The state under Mussolini intervened not to abolish capitalism but to save it.....The state controlled most of the heavy industry. It also directly controlled the banking sector and gave it orders as to who they should grant loans to. Thus failing companies were kept alive and new ones were also built.

The banking crisis that erupted in 1931, starting with the collapse of the Austrian Creditanstalt, quickly spread across the whole of Europe, leading to a collapse of the pound. In Italy this meant the banks saw credit from abroad suddenly drying up, provoking a banking crisis in the country, which only the state could do anything about. Thus a massive bank bail-out was put in place.

From here onwards the state began to assume a huge role in the economy. At one point the state controlled 70% of the banks in Italy. All this culminated in the first few months of 1933 in the creation of the IRI (Institute for Industrial Reconstruction), a kind of State Enterprise Board, whereby the state took upon itself direct responsibility for production in several key areas...

Thus Mussolini was able to boast that he controlled three quarters of the Italian economy. These are the words of Mussolini on May 26, 1934: “Three-fourths of Italian economy, industrial and agricultural, is in the hands of the state.”
Of course this is not to be taken literally as the state actually owning directly three quarters of the economy. Trotsky actually refers to Mussolini’s statement in the Revolution Betrayed and explains that there was a difference between Mussolini’s policy and what existed in the Soviet Union. Mussolini’s policy was not aimed at expropriating the capitalist class but saving it in times of crisis....

The Italian economy in the period that goes from the post-1929 situation right through to the 1990s, shows that you can have a capitalist economy with a dominant state sector. A large public sector does not automatically determine the nature of the system. Today in Iran 80% of the economy is state-owned, but no-one in their right mind would define Iran as “socialist”.

The state under Mussolini intervened not to abolish capitalism but to save it. But if we look at many aspects of the Italian economy under Mussolini we see some striking similarities with the economy in China today. Small and medium scale industries were in private hands. The state controlled most of the heavy industry. It also directly controlled the banking sector and gave it orders as to who they should grant loans to. Thus failing companies were kept alive and new ones were also built.

9--U .S. Stocks Close at New Highs-- Dow Jones Industrial Average breached 19000 for the first time this week

(Wall Street celebrates Trump's promise of lifting rules, pumping money into economy and more stock buybacks--from repatriated funds $2 trillion)

U.S. stocks notched fresh records, capping a week when the Dow Jones Industrial Average breached 19000 for the first time.
It is the third consecutive week of gains for stocks as investors have bet on expectations for reduced corporate taxation and regulation and greater infrastructure spending. Thanks to these past three weeks, the Dow industrials are on track to end the year with 9.9% gains, which would mark their best annual finish since 2013...

Since the U.S. presidential election on Nov. 8, the Dow industrials are up 4.5%. It has reached eight new records in that period. Small-company index Russell 2000 has closed at a fresh record every trading session since Nov. 14...

Now, “there is a lot of enthusiasm out there” surrounding the election and what policies President-elect Donald Trump may push to implement, including spending on infrastructure, loosening regulation for big banks and cutting taxes, said Mr. Wren.

10--Trade War’s Biggest Loser—Stocks -- If Donald Trump acts tough on trade, corporate profits would be hit hardest, threatening heady stock market

Trade plays a massive role in the U.S. economy and for U.S. companies. Combined, exports and imports now amount to 27% of gross domestic product, versus 17% 30 years ago. S&P Dow Jones Indices calculates that companies in the S&P 500 generate about 44% of their sales abroad.

Mr. Trump will have significant latitude on trade, including the power to terminate trade agreements without congressional approval. He appears set to push for substantial changes to the North American Free Trade Agreement. Likewise, Mr. Trump wouldn’t need approval to significantly raise tariffs and impose quotas, though he could run into legal fights in the U.S. or at the World Trade Organization...

...Many U.S. companies are global players that rely on good economic relations with other countries. In 2014—the last year with available Commerce Department data—the majority-owned overseas affiliates of U.S. multinationals booked $4.1 trillion in sales. And at many multinationals, overseas operations count for the bulk of business. 3M, for example, booked 60% of its sales outside the U.S. in 2015. For McDonald’s, it was 66%. For Colgate-Palmolive, 74%.
Mr. Trump may be trying to win a few trade concessions and prompt manufacturers to add a bit more to their U.S. workforces. That appears to be what happened with Ford . But investors may want to think a little harder before putting too much stock in that rosy scenario.

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