Wednesday, December 13, 2017

The Pope's Long Con

This is an amazing piece of investigative journalism. Whatever you are doing, drop it and listen to the first three episodes. The fourth episode is coming Thursday.

Sunday, December 10, 2017

The End Of The "Islamic State."

There are two aspects of this debate, one about the term, "Islamic State," and the other about the its application. So, until about a month ago the entity calling itself " al-Dawla al Islamiyya fi al-Iraq wa al Sham(s)," was claiming to be the most important Muslim political entity in the world, the center of its "Caliphate" which claimed to be the only legitimate and supreme ruler and polltical state for the entire Islamic/Muslim world. As of this moment it remains unclear what the status of the self-proclaimed al-Khalifa, Abu-Bakr al Baghdadi. Rumors have had him dead while others say he remains alive and in charge of the remnants of his group.

Regarding its real world actual existence, well, I am posting this because about a month ago this group lost control of the last good sized town that it controlled, Abu Kamal, reported by the seriously ignorant western media as "Bukamel," about 40,000 in population, a town on the Euphrates River just over the border from Iraq on the Syrian side.  Apparently it now controls no town or city of any size, although supposedly it continues to operate in rural desert areas along the Syria/Iraq border. But as an entity that rules any sort of meaningful government as a "state," well, it has ceased to exist  as that as of the takeover of Abu Kamal by Syrian state forces backed by both Russia and  Iran as well as the US to a lesser degree, and has returned to its earlier roots as a guerrilla rebel movement, not a status as a "state," according to any serious definition of that term.

The second part of this involves mainstream western media.  Somehow somebody in control of these things decided and enforced that what al-Dawla al Islamiyya fi al-Iraq wa al Sham(s) would be known as "officially" in western mainstream media (to be specific the "papers of record," the New York Times and the Washington Post), would be the seriously misleading and ideologically/theocratically inaccurate term, "the Islamic State."

The term "Islamic State" in the eyes of many observers implies that indeed the entity follows the views of a variety of observers or dissidents oppressed,    It is the defining form of a state devoted to Islam; that its claim to represent a universal ruling caliphate of greater Islamic legitimacy in the entire world is correct.  No one knows which media maven decided that this was the term that should be used over all others, including ones used by the western population among themeelves. When even government officials spoke referring this group as the far more popularly used "ISIS," stories in the Washington Post and other such outlets relentlessly corrected such people by adding after their preferred term, "another term used to describe the Islamic State." These official guardians of official truth knew better than the masses, although some who defend their continuing usage even in the face of the collapse of any real rule over a state may have insisted on using this IS formulation over ISIS (or ISIL) because it is shorter and easier to read and understand.

Of course, "ISIS" has long been the most widely popularly used named for this outfit in at least the US, and it is not a bad translation of the Arabic acronym for "al-Dawla al Islamiyya fi al-Iraq wa al Sham(s)"   as "the Islamic State of Iraq and Syria." Calling it just "the Islamic State(IS)" cuts off everything in that name after "Islamiyya" and grants them implicitly their claim to be the one and only true Islamic state in the world, the real caliphate rejevanated since the end of the Ottoman Empire, whose long ruling Sultan claimed the title of Caliph, or "al Khalifa," the true successor of the Prophet Muhammed as the political-religious ruler and leader of the world Umma, the global Islamic community, implicitly even a family given that "Umm" is the word for "mother" in Arabic.

So even now with the end of any remote pretense that this group actually rules anything that can be called a "state" since the fall of Abu Kamal they continue with this incredibly misleading formulation that no identifiable party decided they should use when some official calls them "ISIS," that they are the "Islamic  State," with "ISIS another name used to describe the Islamic State."  I have seen this ridiculous and inaccurate formulation so many times I have lost my capacity to vomit.

Of course we have the minor but more accurate term, "ISIL" based on how to translate "al Sham(s)," which can mean "Syria" or "Greater Syria" or "the Levant," which is essentially Greater Syria, although with fuzzy borders but including certainly Lebanon as well as portions of Turkey, Jordan, and even Israel, "the Levant" being a western term from the French referring to the rising of the sun in the East, or "Near East" at the eastern end of the Mediterranean, an old term used by the English and French dating back a few centuries.  The Obama administration decided to use this "ISIL" as advised from some tiresome academics, although far better informed than the idiot journalists who for no good reason became propagandists for this nauseating entity by insisting that it was and remains "the Islamic State" or "IS."

Needless to say in most of the Arab world and among such well informed parties as Juan Cole, the preferred way to refer to this horrible entity was to Anglicize its Arabic acronym as Da'esh, or just "Daesh."  This how virtually all Arab spokespersons outside of the entity itself referred to it, wininng from the moronic western media the corrective when they did so, "Daesh, another name for the Islamic State," with this indeed having political significance as the Arabic acronym came to be rejected by the entity itself to the point that they killed anybody using it in territories under their control, despite its complete accuracy from the official name.  But these barbaric monsters wanted to be known as the official ruling global  Islamic caliphate, and the western media abetted this absurd and nonsensical and despicable claim on their part against the all-but universal claim among Arabs of the more accurate label, "Daesh."

Official western media may persist in this nonsense now that as even an unrecognized "state" that rules over any unwilling populace of any concentrated population in a city or even good sized town has ceased to exist.  But it is high time they ceased propagandizing for these horrendous criminals and joined Arabs and well informed western observers by calling them "Daesh," or at a minimum stopped correcting those who continue to use the more popularly know term "ISIS" or its slightly more esoteric variation "ISIL" with this now utter nonsense.  There is no longer an organized government ruling any real territory that deserves being called a "state," much less "the Islamic State."  That entity, despite its own demands to be called that, has ceased to exist in any meaningful form and has returned to being a purely guerrilla movement, even as many other groups inspired by it continue to kill people in places such as Nigeria and Yemen in its name.

The "Islamic State" is khalas, over, done, dead, and I do not wish that it Rest in Peace.

Barkley Rosser

Saturday, December 9, 2017

Max Zilch: A New Game for Three People

So for something not economics or politics, my oldest daughter and oldest grandson and I have invented a new game for three people, which we call Max Zilch.  it is a variation on the game known as Zilch or Oh Hell.  in those games, usually played with four people, you start out dealing out one card to each person, then two for the second round and on up.  At each round except the last (which is no trump) next card is turned up and determines trump suit (play is like Bridge).  At each round people bid the number of tricks they think they will take.  If they make their bid, they get 10 points plus the square of the number of tricks they bid.  If they miss either up or down, the lose the square of by how much they missed in points.  Dealer cannot bid amount that would make total tricks taken equal total tricks bid, so dealing moves around.  That is standard Zilch (a zero bid) or with some variation, Oh Hell.

Our variation is to play with three people and simply deal out all  the cards every hand.  There is then always a trump suit with the last card.  It removes the probability calculation over whether cards are out or not, making it more like Bridge.  It is quite challenging with 17 tricks.  We have really enjoyed playing it.  Good for holiday season and family gatherings.

Barkley Rosser

Monday, December 4, 2017

A First Step for Organizing Counterpower from Below

I’ve been posting a lot of critical stuff on gaps and faulty assumptions in the rhetoric and strategy (such as it is) of the US Left.  A reasonable person might say, OK, enough already.  We know what we’re doing isn’t working, but what would?  What’s the alternative?

Good question—I’m glad you asked.  Actually, for about 40+ years I’ve had the same idea, which I’ll now try out on you. 

First, consider the basic conundrum of organizing the Left.  On the one hand, what’s needed is structure on every scale from your neighborhood or workplace to the whole country.  We need to bring the millions of people who share our outlook, in some general sense, into a common organization.  Conservatives will always have more money to draw on; those on the other side have to rely on numbers—and not hypothetical or once-in-a-blue-moon election numbers, but everyday, signed up and available for mobilization numbers.  In other words, the organizational basis for ongoing collective action.

But here’s the thing: the Left has had only flashes of success at this game because it has a powerful tendency to factionalize.  Every time it looks like an organization is getting over the hump it breaks apart.  Why this is so is an interesting question, but I won’t go into it here.  In some ways the dissentious character of the Left is a good thing, since social change is complicated and we need many points of view.  Still, it gets in the way of solving the organizational dilemma, and I will assume this will remain the case.

So how to build a measure of organizational unity on a fractious base?  Scale down the scope of this hypothetical organization in order to scale up across differences in beliefs and strategy.  Imagine an organization with many of the characteristics organizations are supposed to have, like membership rosters, officers, budgets, facilities, and activities, but prohibit it from taking sides in any electoral, legislative or judicial dispute, or promulgate manifestos as an organization.  Make it so there is no political program to fight over, nothing to make members want to quit or drive out those who disagree.  Then allow it to succeed at a more limited role.

And what would this role be?  Above all, it would make visible, countable even, the existence of a massive Left constituency in America.  People would feel differently—they would have more self-confidence and be willing to take bolder action—if they knew they were not alone but part of a movement with millions of supporters.  They could begin to think in “we” terms, where “we” is a fairly well-defined group with game-changing potential.  In addition, such an organization could create opportunities for networking, incubating smaller groups centered on particular issues or ideologies or self-identities, free to be as political as they want, and facilitate media with a wider reach than what we currently have.  It could schedule debates and film series, organize festivals and commemorations, and foster other activities to keep people informed and connected to one another.  It would not do everything—we would still need explicit political organizations to take stands, lobby, organize protests and win elections—but it would be a giant step forward.

The issue of membership is crucial, because it essentially defines what it means to be on the Left.  Here I think the key move is to emphasize values and not means.  What makes someone part of the big family of the Left is not adherence to a particular system of ownership of the means of production or support for any single strategy for social change, but acceptance of democracy, freedom and equality as the primary criteria for valuing any of these.  Wording would be tricky, but I can imagine a short list of core values that the organization would stand for and that joining it would endorse.  It would probably be necessary to make the values binding in the sense that a clear pattern of violating them would be grounds for being denied membership.  White supremacists or other bigots, for instance, should not be permitted to infiltrate, nor others whose underlying philosophy indicates their purpose is disruption or domination rather than collaboration with broadly like-minded activists.

Dues should be kept as low as possible, perhaps on a sliding scale to remove economic status as a condition of membership.  But some payment is needed so that members are making at least a nominal commitment, with self-financing a crucial buffer against external influence.

There should be chapters of this organization at every scale, from a few city blocks to states and the whole country.  Officers would need to be elected to manage funds, coordinate activities, communicate to the media and guarantee the principles of the organization are being followed.  Of course, there should be transparent procedures for recalling officers who prove to be deficient—but again it is crucial that the organization be prohibited from taking sides in any political dispute so that battles over leadership are not about control over political orientation.

A useful alternative to manifestos and official statements of political position would be frequent polling of the membership.  If a reasonable hurdle, such as support from a minimum percent of the organization, could be met, polls would be conducted to convey the range and weight of views.  In this way majorities would not presume to speak for the whole, and minorities would not be silenced, but the existence of both would be acknowledged.

I don’t have all the details figured out.  Above all, I don’t see an obvious solution to the problem of media.  One of the main functions of such an organization should be to stimulate the growth of left-oriented publications and similar outlets.  These would need to be curated, since there is already a superabundance of material directed at those on the Left (and every other political stripe), and there is no point to simply piling on.  At the same time, to select the “best” or “most important” content is to apply judgment over which factions will tend to factionalize.  I don’t see an obvious solution.

The general principle is that what we need to do, what we always need to do, is take the next step.  The step must be large enough to be worth taking, but not much more than that, since if we succeed we’ll be in a better place to take another step, and then another.

Has Dean Baker Joined Team Republican?

The dishonesty ab out the Trump tax cut for the rich from certain Republican leading conservatives are been extensively noted so let’s not go there. But why is Dean Baker writing this?
There are two ways in which we can say that a deficit/debt is will hurt our children. The first is by slowing economic growth and therefore making the economy and our kids less wealthy in the future than they otherwise would be. The route through which this is supposed to happen is that deficit pushes up interest rates and crowds out investment, thereby slowing productivity growth. (We can also see a rise in the value of the dollar, which means larger trade deficits and more foreign debt.) There are no projections that show any substantial negative effect in this way. In fact, most projections show at least a modest positive boost to growth. So this one doesn't make any sense.
There are no projections that the Trump tax cuts for the rich will lower national savings? If not, there should be. We tried this back in 1981 and what was the result? A massive increase in real interest rates and a massive appreciation of the dollar. The former did crowd out investment and the latter did lead to large trade deficits. I’m sure Dean remembers this. I would assert that the proposed tax cut today is a lot like the 1981 tax cut. If Dean disagrees – might he tell us why.

The Great Awokening

There’s a theory about the sins and shortcomings of society: they are all due to our failures of consciousness.  If people were purer, given to understanding and following the true path, the problems of this world would cease to exist.  According to this view, poverty and inequality are the result of greed, wars occur because people fail to see the humanity in the “enemy”, and bigotry feeds on fear and ignorance.  The solution is to cleanse our consciousness and achieve enlightenment.  This is the way of religion, which has endeavored to perfect the world for thousands of years, with mixed results.

I’d like to think a more promising approach is to identify the structures in society—the laws, customs, institutions, and rules—that are responsible for these problems and change them.  This is the way of politics, preferably informed by deliberation and experience.  From a political perspective, trying to change people’s consciousness has some value as an end, but it is mainly important as a means, part of building a movement for collective action.

What I sense is that, for many on what considers itself the left, politics in the sense of the previous paragraph is a delusion, a repeating nightmare that one can only awake from, not transform.  Instead, passionate energy is funneled into demanding changes in language, personal behavior and conceptions of one’s identity.  Done right, that’s worth doing—better consciousness and behavior is better for all of us—but not as a substitute for politics.  And if you take politics seriously, battles over culture and consciousness should be strategic, taking into consideration how they can best contribute to collective action.

As I’ve tried to imply in my subtler moments, the biggest, hugest, screamingest problem we face is a grotesque imbalance of power, and amid all the chatter over policy, investigations and reports, and cultural struggles, hardly any work is going into the organizing we need to build a counterpower to that of the Right.  My fearless prediction is that, unless power is rebalanced, no accumulation of evidence, clever policy idea or righteous act of cultural subversion is going to make a damned bit of difference.

(Night thoughts on reading “The Koch Network and Republican Party Extremism” by Theda Skocpol and Alexander Hertel-Fernandez.  Image credit: Venngage.)

Saturday, December 2, 2017

Is Bitcoin A Speculative Bubble?

There are at least two definitions of a speculative bubble.  The first, and most widely accepted, is that it involves a price of an asset that rises substantially above its fundamental and then falls back towards that fundamental.  The other, not necessarily all that clearly distinguishable from the former, involves an asset price that rises due to people buying due to an expectation that they will get a capital gain from its expected future price rise, with this then happening due to a self-fulfilling prophecy, with eventually the price falling sharply, with this not necessarily involving a fall towards a fundamental because the asset may have no fundamental at all.

I note before proceeding futher that there is an enormous debate and literature on identifying fundamentals at all, even when they might theoretically exist.  There is a serious body of opinion dating from Flood and Garber a quarter of a century ago that one cannot identify them econometrically ("Tulipmania").  This has been shown to be false by me and many others in various papers, including particularly on closed-end funds where the net asset value of the fund minus taxes and fees is a fundamental, and when those soar to twice the value of the underlying net asset value, well, we are looking at a bubble. The lit is there and decisive.  I asked Garber to comment on a paper presented a long time ago at a conference on this point, but the chicken shit did not show up to admit that he was just plain wrong.  He had no legitimate excuse for his absence.

Of course Bob Shiller has made pretty reliable estimates regarding housing prices based on price to rent and price to income ratios.  His studies of these by 2005 were pretty decisive to anybody who was remotely paying attention (including at the Fed, Janet Yellen, the only one there to take this seriously at the time), that the US housing market was in a serious bubble that was going to crash big time.  The matter of forecasting how bad it would get with the Great Recession became a matter of who had figured out how deeply the financing for all that had gotten involved in world financial markets at a fundamental level, and very few did figure that out.

But then there are assets that have no fundamental at all, even theoretically, quite aside from all the horrendous econometric identification problems pointed out by such serious people as Jim Hamilton, for whom I have the deepest respect. The question for cryptocurrencies in general is whether they have a fundamental, and it may well be that they do not. If that is the case, then only the second definition of a speculative bubble may be relevant, and that is much harder to determine than the former, already admittedly a difficult matter.

How might bitcoin have a fundamental?  One reason might be for its use as a medium of exchange.  However, while it is certainly being used as that, for regular commodity transactions as of now it remains as a sometimes difficult alternative to cash dollars.  As near as I know there are no regular commodity transactions in the real economy that require it.  So, it may have no fundamental, and from what I have heard, this is widely accepted among the more sophisticated bitcoin traders.  This would make it like art, such as the recent sale for $450 million of the possibly faked "Salvator Mundi" supposedly by Leonardo da Vinci.  And, of course, there is good old gold that has a long had a value as a store of wealth about an order of magnitude above its likely strictly commercial fundamental value.

However, it may be that bitcoin has a fundamental value above zero, if wildly fluctuating and hard to estimate, far beyond the econometric difficulties identified by people such as Hamilton, much less Flood and Garber.  It is that to buy most of the other cryptocurrencies one must use bitcoins to do so.  Oh, this is really a gas.  The fundamental for one asset is based on its ability to purchase even more lacking in fundamentals and totally speculative assets one must own it.  Wow.

Thus we have that any real fundamental for bitcoin is a derived demand for any among the vast universe of other cryptocurrencies, and we should keep in mind that bitcoin itself is horrendously inefficient compared to others because of its accelererating and already very large "mining" costs.  As near as I can tell there are only two other cryptocurrencies that have any relation to the real world out of the multitude of crytpos. They are ethereum and ripple.  The first has been a matter of much speculation itself, given its potential for writing contracts, giving it a serious possibility of much longer use and actual usefulness in the real world.  This may yet occur, although for its future it would probably be better for it if it could be bought directly with cash/dollars from the real world rather than having to use the horribly socially inefficient bitcoin, a bad example of first mover advantage, or perhaps the ultimate proof that the first mover should be sent to last.

Which gets us to the quiet and most obscure member of the crypto world, ripple.  This cryptocurrency, which is the hardest to buy of them all, is probably the one with the most serious actual real world use, and thus possibly providing a real foundation for bitcoin to have a fundamental, although I confess at this point that I am not certain to what degree purchasing it does rely on using bitcoins.  I know that as of fairly recently one had to use bitcoins to buy ethereum, but I am not sure about ripple, which moves with bitcoin, but probably more weakly than any other of all the cryptocurrencies.

The source of its value is that has been adopted by a significant number of banks for their interbank transactions.  This now appears to be firmly established, not to go away whatever happens to bitcoin or any of the other cryptocurrencies.  Indeed, the underlying idea of blockchains is clearly a brilliant and useful forward movement in managing financial and economic transactions, assuming that is managed in a reasonable and efficient manner, without me remotely dealing with issues of transparency or legality.  But it seems that at least some banks have decided to use ripple, which I understand uses a more efficient mining technology.

So, there may well be a fundamental for bitcoin, despite what I understand to be the current consensus among smartass bitcoin traders.  But, of course, that fundie is probably way below the current price, as if that matters at all.

Barkley Rosser

Addendum, 12/2:  This has been picked up by Naked Capitalism where some commentators have pointed out that apparently one no longer needs bitcoin to buy other cryptocurrencies, especially ripple and etherium.  If anything it is etherium that is being used to buy other cryptos.  In any case, that reduces the case for bitcoin having a fundamental greater than zero.

Friday, December 1, 2017

Flynn Bails, but Don’t Get Your Hopes Up

I haven’t seen anything yet to convince me that the Putin-Trump collaboration was a big deal.  Ugly and unprincipled, sure, but politically consequential, probably not.

A contrary view, expressed by Harry Litman in today’s New York Times, is that this is the beginning of the end for the Trumpster.  The evidence is accumulating that, between his election in November of last year and his inauguration on January 20 of this one, Trump and his inner coterie worked back channels to undermine Obama’s foreign policy.  Litman characterizes these efforts as “abuses of power arguably well beyond those in the Watergate and Iran-contra affairs.”  He further sees the possibility that Trump will be cited for obstruction of justice in his attempts to keep these activities secret.

I’m not convinced.  On the face of it, Trump intervening in foreign policy after his election is less condemnable than Nixon’s secret disruption of a Vietnam peace deal during the 1968 campaign.  The Nixon escapade was an open secret almost from the beginning, and he got away with it.  Iran-Contra was nasty stuff, but Reagan made it through intact, as did his Nicaragua policy, and even the underlings caught red-handed survived and prospered.

But let’s not compare Trump to Nixon and Reagan; that just shows how old some of us are.  Let’s speculate on the political fallout from a potential prosecutor’s report that Trump cut deals with Putin before taking office.  Litman says this is something “that nobody on either side of the aisle could possibly defend.”  Why not?  What happens if the Republicans in the House and Senate say, hey, it’s just a bureaucratic detail, since he was already elected?  And why wouldn’t they say this?  How would that be any more outrageous than anything else they’ve said or done in recent memory?  Who would stop them?

The “who would stop them” thing is what it’s all about.  Modern movement conservatism is about winning, period.  To worry about honesty, consistency or any other check on your political options is to be a loser.  This is why we hear made-up stories about the effect of taxes and voter fraud laws, when the ones promulgating them know they’re false and know you and I know they’re false.  They don’t care, except about winning, which they’ve become good at.  Give me a scenario in which the Republican congressional establishment shrugs off a report against Trump, and some other force pushes Trump out anyway.  Oh right, there will be editorials in the New York Times screaming bloody murder; that should do it.

Trump is not invulnerable, and scandal may drag him down, but it won’t be over points of law that matter only to people who believe in the rule of law.  The 2018 election could change that, but only if it breaks a lot bluer than currently expected.  A damning report against Trump could influence the vote, but only if it appears in the last week or two of the campaign, before tribal cohesion reestablishes itself.

The underlying problem with the Times piece and similar obsessions with the l’Affaire Russe is that they are based on the belief that what we need is some additional bit of evidence—of foreign meddling, the effect of tax cuts on inequality and revenues, the impact of climate change on storms or our coastline, something the Right “can’t ignore”—to turn things around, but it won’t.  What our side needs is not more evidence but more power.  This is not to defend unscrupulousness—we do want to be on the side of the evidence—but simply to recognize the true deficit we face.

Sunday, November 26, 2017

Tolerance And Terrorism In Saudi Arabia

On the one hand this past week, Thomas Friedman at the New York Times has written a praising column about Crown Prince Muhammed bin Salman (MbS).  He is going to bring a new "wave of tolerance" into Saudi Arabia, along with more generally modernizing it.  This claim is not totally without  substance given his setting up for women to drive starting next June as well as letting them go to sports events with men and also curbing some of the excesses of the Mutaween, the religious police.  It is not clear what further liberalizations are in order, but Friedman assures they are coming.  A newly tolerant Saudi Arabia is on our doorstep, whoopee!

OTOH, it has since been announced that MbS is overseeing a rewriting of the criminal code of the Kingdom of Saudi Arabia (KSA).  A major part of this rewriting is to help the government combat terrorism, with the death penalty available for helping to aid in this.  Just as we all oppose corruption, which MbS fought by arresting 201 people, many of whom also seem to have been potential political rivals or critics, we all oppose terrorism.  But just as with corruption, terrorism can be stretched to mean many things.  And indeed, it turns out that one of the items appearing in the new criminal code is that criticizing the king is an act of terrorism, punishable by death. This is how one has tolerance while fighting terrorism at the same time in the new Saudi Arabia, whoopee!

Barkley Rosser

Friday, November 24, 2017

A Race To Suppress Academic Freedom?

The race is between the two nations competing for global dominance, the US and China.  This post is triggered by an unnamed editorial in today's Washington Post (probably authored by Fred Hiatt) criticizing China for imposing ideological limits on Chinese universities.  Since the recent party congress, 40 universities have set up centers for studyiing Xi Jinping Thought.  14 universities have come under attack for being "ideologically weak."  Joint operations between US and Chinese universities must appoint a party secretary as a vice chancellor.  There have also been restrictions on the internet and other matters.  Without doubt, putting restrictions on higher education will make it harder for China to move into a position of full global leadership.

Of course, the WaPo editorial did not notice trends in US academia that also may lead to suppression of research activity and threaten the current leading position of US higher ed in the world, although there have been reports and columns commenting on these trends.  Among them are the push for political correctness coming from students, but probably more important is the assault on higher ed coming from the Trump administration.  This is seen in the attack on tax breaks for students but also the push to distort funding for research on certain topics. While not directly on higher ed, probably the most damaging has been the attack on science in government agencies, especially the EPA, with such nonsense as banning scientists who have received funding from the agencies on their scientific advisory boards, even as those receiving funding from corporations at odds with goals of these agencies are allowed to be on those boards.

Really, it looks that the two most powerful nations on the planet are having a race to suppress academic freedom and suppress the free development of knowledge in this world at a time when we need more of that.

Barkley Rosser

Wednesday, November 22, 2017

Proposing A Judicial Coup Via A Tax Bill

On today's Washington Post editorial page in a column entitled "Packing the courts like a turducken" (a deboned duck within a deboned chicken within a deboned turkey, or something like that, all for Thanksgiving, thank you), Ronald A. Klain not only reports on the actual push to pack courts with lots of young, incompetent extremists that is going on after Congress sat on judicial nominees by Obama in recent years, but also a proposal coming from a co-founder of the Federalist Society, Steven Calabresi.  He both wants to expand the judiciary by 50% and have them all appointed in the next year, but to  replace the 158 administrative law judges with lifetime appointments by the president.  The latter are currently only appointed for one term and are civil service personnel passing on issues dealing with such agencies as the EPA and the SEC. 

Most particularly, he suggests that this be packed into the current tax bill, a true turducken. The only good thing about this is that it does not look like anybody in Congress is pushing it.  But if they did, this would put the US even more in the same category as nations like Turkey, Russia, and Hungary where executive authorities move vigorously to take direct control over formerly independent judiciaries.  It is bad enough the degree to which this sort of thing is actually happening as it is.

Tuesday, November 21, 2017

Two Powerful Women Losing Power

That would be respective Angela Merkel and Janet Yellen, both reported to have lost a lot of power in today's Washington Post.  During at least the last year, if not the last four, they have been probably the two most powerful women on the planet.

In the case of Merkel, what has happened is that she has failed to form a coalition government after last month's election, which put her and her party in the lead, but not enough so to allow her to push through to a coalition government, with the hard right Alternative for Democracy (AfD) getting the Bundestag.  She had been trying to form a "Jamaica" coalition with the Greens and the Free Democrats, but the latter withdrew from the negotiations for reasons the WaPo story did not clarify (quality of reporting at WaPo has been declining steadily for some time).  Apparently she then made a last gasp effort to negotiate another "grand coalition" with the Social Democrats, but having lost a lot of support due to having been in such an arrangement prior to the last election, they refused.

It looks like she will call for another round of elections in January, and the AfD is crowing with delight for an apparent triumph on their part.  I guess we shall see.  In the meantime, aside from her personal embarrassment, EU-Brexit negotiations are now reportedly in a stall pattern as nobody wants to sign on to anything without a definitely in-place government in Germany to approve or disapprove of it.   Merkel may yet regain her power if the January elections go more firmly her way, although she may well be forced to step aside as Kanzler der Bundes Deutsches Republik and more completely and thoroughly lose power. Many fear the results of the latter, although if it were to be due to a government led by the SocDems, many hear might cheer.

As for Janet Yellen, obviously she had already taken a hit with Donald Trump violating precedent by failing to reappoint her as Chair of the Board of Governors of the US Federal Reserve System, even though he had praised her job performance, but claimed that he needed to "make his mark."  I fear we have had all too much of that already.  In any case, while she could have remained as a governor until 2024, today's WaPo reports that she has sent a letter of resignation to Trump and will remove herself from the board when she steps down as Chair in February, thereby giving him yet another seat to fill on the board.

It is no secret that I am and long have been a great fan of Janet Yellen's, having been the very first person to call for her appointment as Chair all the way back in 2009.  I regret this decision, but understand that probably her husband, George Akerlof, is pleased and looking forward to moving back to the Berkeley hills.  I wish them both the best, even as I regret her departure.

While there may be a touch of sexism in Trump's decision, I do not think that has much to do with Merkel's current difficulties.  Nevertheless, I think it is unfortunate that these two very capable women who have wielded great power recently will not be doing so at least in the near future.

Barkley Rosser

Friday, November 17, 2017

ARAMCO CEO Is Delusional

Financial Times reported yesterday that Amin Nasser, the CEO of the Arabian American Oil Company (ARAMCO, currently 100% owned by the Saudi government, although originally founded by four former US oil company majors), has declared that investors should feel pleased that Crown Prince Muhammed bin Salman has arrested and purged over 200 Saudi princes, government officials, and private businessmen.  This is because this was strictly an anti-corruption move, and foreign investors can be assured that there will now be no corruption in the Kingdom. Really, he said this.

Now I declared in my post title that Nasser is delusional, but I doubt it.  I suspect that he is a very smart guy. The question is whether he can convince any potential buyers of the upcoming possibly $2 trillion Initial Public Offering of 5% of ARAMCO stock that indeed this purge sends a good signal to them about buying ARAMCO stock.  Wow, the nation will now be rid of corruption, and, no, future investor, you need have no fear of being arbitrarily arrested or having your assets seized by MbS, none whatsoever, not that you were worrying about those things previously, but now you really do not need to worry about them at all.

Of course on the very same page of the FT there was another article about how MbS's purge has rattled world oil markets, with oil prices now sharply falling after sharply rising after he made his purge.  Nobody knows what the implications are or what the heck is going on, but, hey, no problem, no need to worry, Inshallah bukra maalesh (God willing tomorrow no problem, a fave line in KSA).  In any case, Nasser's public statement will undoubtedly completely reassure everybody, and all will become extremely calm before we know it.

Oh, there is also the matter of where this IPO will happen, touted to be the largest in history.  New York and London stock exchanges have actually been competing with each other to host it, but in fact in the end this may not be such a good idea and they may not be in the running for real anyway.  According to the FT the Saudis are also considering Hong Kong and Tokyo, but at the end of the article it was floated what I have all along expected and predicted: that the IPO will be handled out of Riyadh's own exchange with specially targeted sales to specially targeted individuals, with a lot of them being local big money Saudis.  So maybe Nasser's speech was not for all the foolish foreigners, but for the well-off locals: buy when we tell you to or else you can join the officially designated-to-be-corrupt 200 plus..

Barkley Rosser

Monday, November 13, 2017

Stranded Assets Rewind

There’s a Dangerous Bubble in the Fossil-Fuel Economy, and the Trump Administration Is Making It Worse...
"In reversing many of Obama’s keystone climate and environmental policies, Pruitt and Trump are conveniently ignoring these market signals in order to help out the fossil-fuel millionaires and billionaires who put them in office. Their actions could have disastrous consequences, not only for the climate but also for the global economy."
Where are the economists on this? Oh, right -- talking about tax cuts and Fed rate hikes. Using Economist's View as my sample, I found no links whose title indicated it was about the stranded assets carbon bubble in the two weeks following publication of the above article by Carolyn Kormann in the New Yorker on October 19th. Zero. 

I actually think that Kormann is unduly optimistic in her analysis. My suspicion is that there was already a massive carbon bubble prior to the 2016 election that was being wound down excruciatingly slowly. The election of the coal-guzzling orange groper stopped that winding-down in its tracks and ushered in a fossil-fueled feeding frenzy at The Last Chance Texaco.

And where are the economists?