Friday, August 4, 2017

Today's links

1---Central Banks Stumped As Global Inflation Hits Lowest Level Since 2009

(Central Banks locate the Holy Grail of neoliberal economics: Huge profits and stagnant wages) 

While global economic growth appears to be picking up in 2017 after a disappointing 2016, one ingredient for a sustained pickup in inflation is still missing: an acceleration in wages.
Central bankers in developed economies are puzzled by the sluggish pace of pay rises, given continuing declines in jobless rates. However, they believe that economic growth will ultimately eliminate the gap between what their economies can produce and what they are now producing, supporting wages and prices....

The Organization for Economic Cooperation and Development said Thursday that consumer prices across the G-20—the countries that account for most of the world’s economic activity—were 2% higher than a year earlier. The last time inflation was lower was in October 2009, when it stood at 1.7%, as the world started to emerge from the sharp economic downturn that followed the global financial crisis.


The contrast between then and now highlights the mystery facing central bankers in developed economies as they attempt to raise inflation to their targets, which they have persistently undershot in recent years.


According to central bankers, inflation is generated by the gap between the demand for goods and services and the economy’s ability to supply them. As the economy grows and demand strengthens, that output gap should narrow and prices should rise.


Right now, the reverse appears to be happening. Across the G-20, economic growth firmed in the final three months of 2016 and stayed at that faster pace in the first three months of 2017.


Growth figures for the second quarter are incomplete, but those available for the U.S., the eurozone and China don’t point to a slowdown. Indeed, Capital Economics estimates that on an annualized basis, global economic growth picked up to 3.7% in the three months to June from 3.2% in the first quarter.


Central bankers in developed economies are puzzled by the sluggish pace of pay rises, given continuing declines in jobless rates. However, they believe that economic growth will ultimately eliminate the gap between what their economies can produce and what they are now producing, supporting wages and prices...

However, some Fed officials have expressed concern in recent weeks about pushing ahead with rate increases in light of softening inflation data.

“Despite further falls in unemployment across a number of countries, wage growth and global inflation remain relatively subdued,” the Bank of England said in its latest economic outlook report, published Thursday.

The bank joined its peers at the ECB and the Fed in signaling it would likely raise its key interest rate in the coming years. However, the U.K. is in the unusual position of having inflation that is above its central bank’s 2% target. This is due to the pound’s large depreciation since the June 2016 vote to leave the European Union, which has raised prices of imported goods and services

2--Special Counsel Robert Mueller Impanels Washington Grand Jury in Russia Probe -- Expansion beyond Flynn grand jury is a sign the investigation in election meddling is ramping up

3--Looneybird Bolton contemplates war with Korea  -- The Military Options for North Korea   Some sort of strike is likely unavoidable unless China agrees to regime change in Pyongyang.

Washington could pre-emptively strike at Pyongyang’s known nuclear facilities, ballistic-missile factories and launch sites, and submarine bases. There are innumerable variations, starting at the low end with sabotage, cyberattacks and general disruption. The high end could involve using air- and sea-based power to eliminate the entire program as American analysts understand it....

the U.S. could use airstrikes or special forces to decapitate North Korea’s national command authority, sowing chaos, and then sweep in on the ground from South Korea to seize Pyongyang, nuclear assets, key military sites and other territory...

For decades the U.S. has opposed attempts by any state without nuclear weapons to develop them. Washington has consistently failed to achieve that objective, and the world has become increasingly nuclearized. Stopping North Korea and Iran may be the last chance to act before nuclear weapons become a global commonplace.

4-- Mega-Banks Blow 100% of Earnings on Share-Buybacks & Dividends, Crimp Lending, Constrain Economy

in the first quarter, the 10 largest bank holding companies in the US plowed over 100% of their earnings into share buybacks and dividends, he wrote. If they had retained more of their income, they could have boosted lending by $1 trillion....

In his “Dear Fellow Shareholders” letter in April, Jamie Dimon wrote under the heading “Regulatory Reform,” among many other things:
“It is clear that the banks have too much capital.”
“And we think it’s clear that banks can use more of their capital to finance the economy without sacrificing safety and soundness. Had they been less afraid of potential CCAR stress losses, banks probably would have been more aggressive in making some small business loans, lower rated middle market loans and near-prime mortgages....

So Hoenig supplied some numbers in his letter.

The largest bank on his list, JPMorgan Chase, earned $26 billion over the four quarters. But it plowed $27.6 billion – or 106% of its income – into share-buybacks and dividends. If it had retained that income, it would have raised its capital by that amount, and it would have been enough to make an additional $250 billion of loans under current capital rules.

In total, the 10 largest banks combined, on an annualized basis, will plow 99% of their earnings into share-buybacks and dividends. Share-buybacks alone amount to $83 billion (not counting dividends). Under existing capital rules, if the banks were to retain this capital instead of buying their own shares with it, they could have increased commercial and consumer loans by $741 billion.

And they could have still paid out their big dividends. If they cut their dividend payments some, they could have boosted their lending by over $1 trillion.
“I can only caution against relaxing current capital requirements and allowing the largest banks to increase their already highly leveraged positions,” Hoenig wrote. “The real economy has little to gain, and much to lose, by doing so.”

“While distributing all of today’s income to shareholders may be received well in the short run, it can undermine their future returns and weaken the growth outlook for the larger economy,” he wrote.

“I recognize that dividends are an important factor for investors and they should be rewarded for the risks they take. But it is also true that funding business growth, assuring future economic success, and promoting capitalism depend upon the retention of earnings,” he wrote.

5--Google's Mission Censorship-- Google blocked every one of the WSWS’s 45 top search terms

The WSWS has been blacklisted in searches dealing with history, and in particular historical topics related to the revolutionary struggles of the 20th century. These include the terms “Russian revolution,” “Bolshevik revolution” and “October revolution,” all of which returned results in the top 50 in April

An intensive review of Internet data has established that Google has severed links between the World Socialist Web Site and the 45 most popular search terms that previously directed readers to the WSWS. The physical censorship implemented by Google is so extensive that of the top 150 search terms that, as late as April 2017, connected the WSWS with readers, 145 no longer do so.

These findings make clear that the decline in Google search traffic to the WSWS is not the result of some technical issue, but a deliberate policy of censorship. The fall took place in the three months since Google announced on April 25 plans to promote “authoritative web sites” above those containing “offensive” content and “conspiracy theories.”

Because of these measures, the WSWS’s search traffic from Google has fallen by two-thirds since April.

The WSWS has analyzed tens of thousands of search terms, and identified those key phrases and words that had been most likely to place the WSWS on the first or second page of search results. The top 45 search terms previously included “socialism,” “Russian revolution,” “Flint Michigan,” “proletariat,” and “UAW [United Auto Workers].” The top 150 results included the terms “UAW contract,” “rendition” and “Bolshevik revolution.” All of these terms are now blocked....

In a live webcast Wednesday, John Mueller, a webmaster trends analyst at Google, was asked whether these evaluators could affect “web site reputation.” Mueller gave what could only be called a non-denial denial, declaring that the actions of evaluators “could theoretically include something like reputation of a web site in general.”
This was effectively an admission that Google’s army of censors has the capability to blackball individual sites by demoting their “reputation.”
The list of search terms blocked by Google indicate what the government and corporate oligarchy do not want the population to know about.

6-- Trump makes an appeal to the fascistic right

The visit to Huntington is the latest in a series of public appearances through which the White House has carried out a step-by-step campaign to mobilize support from the police, the military, Christian fundamentalists, white racists and outright fascists....

Miller’s re-emergence Wednesday, after being sidelined for several months due to the initial debacle of Trump’s anti-Muslim travel ban, brought the most openly authoritarian of Trump’s top aides before the public and the press once more. He engaged in a widely publicized clash with Jim Acosta of CNN, in the course of which Miller inadvertently revealed the direct connection between the Trump White House and the fascist right.

In an exchange involving the famous poem by Emma Lazarus, embossed on the Statue of Liberty (which includes the line, “Give me your tired, your poor, your huddled masses yearning to breathe free”), Miller declared that the poem “was added later, is not actually a part of the original Statue of Liberty.” As both the Washington Post and the Jewish Daily Forward have pointed out, Miller’s remark was not original to him, but reproduces positions circulating in the fascist and neo-Nazi right, voiced at different times this year by Rush Limbaugh of talk radio, Ku Klux Klan leader David Duke, and white supremacist Richard Spencer.

Trump and his closest aides are seeking to exploit the widespread hostility to the Democratic Party as the party of the liberal economic elite, including large sections of Wall Street, with an entirely bogus posture as the advocate of the “forgotten man”, as Trump put it during the election campaign and again on Thursday night. But Trump lacks even the semblance of an economic program to address the spread of mass impoverishment and social misery.

The Democrats are saying nothing about Trump’s fascistic appeals. Instead, they are doubling down on their anti-Russia campaign. There were reports Thursday that independent counsel Robert Mueller has convened a special grand jury in his investigation into alleged Russian interference in the 2016 elections and Trump campaign collusion with Moscow.

7--Dow at 22,000: A new high for parasitism

In the early decades of the post-World War II period, a rise in the US stock market reflected a general strengthening of the American economy, which was powered by huge industrial corporations that embodied the overall superiority of American production methods. Those days have long since passed. The rise of the stock market today is an expression of the immense and growing chasm between the financial markets and the underlying real economy.

The jubilation in corporate boardrooms, official Washington and the mass media over the Dow’s surge above the 22,000 mark coincided with Depression-like scenes of tens of thousands of workers, young and old, in economically devastated cities and towns across the US, lining up for job applications with the online retailer Amazon in the hope of securing positions at just $12.50 an hour....

The International Monetary Fund has projected global growth to be 3.5 percent this year. While this represents a slight increase over previous assessments, it is well below the levels achieved before the global financial crisis. All major global economic institutions, such as the IMF, the World Bank and the Organisation for Economic Cooperation and Development, point to continuing low rates of investment in the real economy as a drag on productivity growth.

The IMF last month downwardly revised its estimates for US economic expansion for 2017 to 2.1 percent, compared to its forecast of 2.5 percent growth a year ago. The organisation all but ruled out any return to a 3 percent growth rate for the US economy, which the Trump administration claims will be achieved as a result of its program of tax breaks for corporations, business deregulation and a government-sponsored profit windfall packaged as infrastructure investment.
Rather than reflecting growing strength in the US economy, the share market upsurge is the outcome of increasingly parasitic forms of profit-accumulation that have become ever more pervasive in recent decades, accelerating in the aftermath of the 2008 global financial crisis.

The various forms of parasitism are reflected in the main driving forces behind the relentless rise in stock market valuations. One of the key components of the increase in the Dow has been a surge in bank shares in anticipation of the gutting of the already minimal regulations imposed on banks by the Dodd-Frank Act, which was passed in 2010 in response to the financial crisis. The banks received a further helping hand when it was announced last month that they had passed stress tests organised by the Federal Reserve, allowing them to launch massive dividend hikes and stock buybacks to boost their share values...

These firms claim that their monopoly-based prices are needed to fund new research. But in fact, the funds are used to finance share buybacks enabling wealthy investors to make a killing on the market. Apple is one of a series of major companies, dubbed by the business channel CNBC as “buyback monsters,” that have been using their profits not for productive investment but to carry out “financial engineering” to boost share values.

Recent research has shown that from 2006 to 2015, the 18 drug companies in the S&P 500 index spent $516 billion on buybacks and dividends, some 11 percent more than their outlays on research and development. In other words, more than half a trillion dollars that could have been used in myriad ways to advance health education and other vital social services was deployed instead for the sole purpose of boosting the wealth of the ultra-rich. It is estimated that each year, firms in the S&P 500 index spend between $500 billion and $600 billion a year on share buybacks.

These operations, which shovel billions of dollars into the hands of the ultra-wealthy, have been underwritten by the US Federal Reserve. It poured trillions of dollars into the financial markets after the 2008 financial crisis, keeping interest rates on the borrowed funds used for such “financial engineering” at historic low levels.

Contrary to the claims in the mainstream media, the rise of the Dow is not an expression of the growing health of the US economy, but rather a fever chart of the spread of decay and parasitism.

Ultimately, this process of social plunder must be paid for—at the expense of the jobs and living standards of the working class, the producer of all value through its labour. The vast inflation of financial assets is like an inverted pyramid resting on an increasingly narrow base of real values generated by productive investment and the expansion of the productive forces

8--Has Seymour Hersh Debunked ‘Russia-gate’?

--Hersh says Seth Rich contacted WikiLeaks

“And so what the report says is that sometime in late spring, we’re talking June you know summers in June 21st, late spring would be after, I presume, I don’t know, I’d just say late spring, early summer and he makes contact with WikiLeaks. That’s in his computer and he makes contact.”

Hersh notes that the last DNC/Podesta emails posted by WikiLeaks are from late May 2016, or “early summer,” a timeline that fits in with the sequence of events: his contact with WikiLeaks followed by his death in what appears to be a random shooting. Hersh continues:

“So, they found what he’d done. He had submitted a series of documents, of emails. Some juicy emails from the DNC, and you know, by the way all this shit about the DNC, um, you know, whether it was hacked or wasn’t hacked, whatever happened, the democrats themselves wrote this shit, you know what I mean? All I know is that he [Seth] offered a sample, an extensive sample, you know I’m sure dozens of emails and said ‘I want money.’”...

The “Russia-gate” conspiracy theory never had any real evidence to support it aside from the arbitrary assertions of three US intelligence agencies: the “proof” they submitted to the public was laughable, as Jeffrey Carr and other cyber-warfare experts have pointed out. Yet we don’t have the actual evidence to support Hersh’s contentions, although if he’s right there is indeed a paper trail: the warrant, the FBI and NSA reports, and probably more....

Hersh, who has been around the block several times, and is intimately familiar with how the intelligence community operates – as well as being personally familiar with the individuals involved – is onto the game that’s being play here. In his words:

“I have a narrative of how that whole fucking thing began, it’s a Brennan operation, it was an American disinformation and fucking the fucking President, at one point when they, they even started telling the press, they were back briefing the press, the head of the NSA was going and telling the press, fucking cock-sucker Rogers, was telling the press that we even know who in the GRU, the Russian Military Intelligence Service, who leaked it. I mean [it’s] all bullshit…. Trump’s not wrong to think they all fucking lie about him.”

It’s all bullshit: Russia-gate, the “collusion” gambit, and the whole avalanche of fake “news” that purports to describe a Russian conspiracy to “undermine our democracy.” It’s a lie, pure and simple. More than that: it’s an exact inversion of the truth. Because what’s happening is that a vast intelligence-gathering apparatus is being utilized to undermine an elected President and undertake what is in effect a “legal” coup d’etat. But then again, projection has always been an essential element of the War Party’s methodology....

it looks like Hersh didn’t know he was being recorded, because the recording directly contradicts both Hersh and what NPR is reporting. An email exchange between Butowsky and Hersh, in which the former pleads with the famous journalist to go public, has been published, and when a reporter called him for comment Hersh clammed up:
“‘I’m not going to comment about that stuff, I mean, come on, I live in the real world.’
“When asked to confirm that it was him speaking on the bombshell audio recording, he stated, ‘I’m not going to talk to anybody about that. No comment.’”

9-- Trump wiretappedThe Washington Post published Thursday two leaked confidential transcripts of President Trump's phone calls with foreign leaders.

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