News Deluge:
Just some highlights from August, so much in flux…
Economy: Nothing is as it appears…
Unmeasurable Inflation: On Aug. 9th, Adam Tooze asks, “Is inflation any longer even ‘a thing?’” in response to what Jon Sindreu wrote in The Wall Street Journal. Sindreu stated, “None of these scenarios [of runaway inflation] seems applicable to the U.S. right now. Just 10.5% of American wage and salary workers were union members in 2018, down from 20% in 1983. Without strong unions leading a coordinated push, an inflationary link between prices and wages is unlikely, no matter how low unemployment goes.”
A fundamental US economic assumption today should be that we are in deflationary times, the depths of which are unknown. As billionaire investor Stanley Druckenmiller explains, in a similar vein as a 1960s revolutionary, almost everything in our society is valued improperly.
Rebecca Spang, quoted in the Tooze tweet above, gives a phenomenal short history of the use of the word “inflation” throughout time in her article entitled The Rise of Inflation. Spang writes of the word “inflation” after it had been adopted in official economic discourse:
“Omitting [food and energy from the Federal Reserve Board’s (FRB) “core inflation” measurement,] therefore helps ensure that the FRB’s policies respond more to the needs of bankers, lawyers, and politicians — those wealthy enough to be comparatively little affected by the “volatility” of grapefruits and gasoline — than to those with lower disposable incomes.”
The squishiness of the ideas of “inflation” and “economics,” as a profession, continues to be revealed with every passing day in this post-2008-financial-collapse world. Neither is the written-in-stone-authority it was prior to the financial collapse. Broadly, inflation is having too much money floating around an economy, driving up prices. However, today, it’s becoming more evident by the day…that our problem today is that we have way too little currency in circulation and way too much of our limited money supply is pooled into the hands of too few powerful political and economic elites. Deflation is the scourge of our era, tied with climate change in the priority it deserves to be placed in by the federal government. The two concepts are really inextricably interlinked, climate & inequality (i.e. economy) go hand in hand these days.
Global Currency Proposal: The Financial Times (FT) is kind of a cornerstone of economic liberal news. Other comparable outlets include: New York Times, The Economist, The Wall Street Journal, and Foreign Policy. They cover “elite” (powerful, but let’s be honest, these days they’re pretty incompetent and corrupt) business and government institutions and are focused on free trade and protecting status quo power by any propaganda deemed necessary.
On Aug. 23rd, FT ran a story of UK Central Bank Chief Jay Carney calling for an international currency arrangement to replace the U.S. Dollar (USD) as the global, hegemonic currency. “The deficiencies of the international monetary and financial system have become increasingly potent,” Mr Carney said. “Even a passing acquaintance with monetary history suggests that this centre won’t hold.”
Carney stated that the US was 15 percent of global GDP and 10 percent of global trade, but the USD was used in half of all “ trade invoices and two-thirds of global securities issuance.” Carney claimed that the USD was just as “‘important as when Bretton-Woods collapsed’ in 1971.” (Bretton Woods was a conference to arrange an international financial system post-WWII. That rule based system was linked to the international gold standard, Nixon decoupled from the international standard in 1971 during a roe with Europe (primarily France & Germany at the time), which eventually resulted with the USD becoming the default currency to peg to. Yanis Varoufakis has a solid interpretation of events surrounding the decoupling from the international gold standard in his book And the Weak Suffer What They Must. Varoufakis supports a global currency regime other than the USD).
In the short term, Carney suggested boosting the International Monetary Fund by 3T over the next decade and to use the IMF to balance out the global economy rather that each 189 member states “self-insuring.”
Chris Giles, writing for the Financial Times states, “In the longer term, Mr Carney said the solution was to create a multipolar global economy rather than waiting for China’s renminbi to challenge the dollar.” Probably good advice considering the Chinese Communist Party fascist-like and expansionary at the moment, it might not be a good idea to have their currency serve as the default global currency. That’s probably true of the US too, though.
Many believe we should usher in an international mechanism or institution or set of institutions that serves to regulate a hegemonic currency and has enforcement authorities to hold member states accountable, getting there without a hegemonic country atop the project for the foreseeable future makes the entire endeavor difficult. However, it’s a worthwhile goal holding tremendous potential.
Seniors in the Second Gilded Age
The Financial Times reports, “According to the 2018 report based on the data, entitled “Graying of US Bankruptcy”, one in seven people who file [for bankruptcy] in the US are now aged 65 or older — an almost fivefold increase over just 25 years.”
This increase in senior bankruptcy claims is just one more manifestation of the staggering and unjust levels of inequality after thirty years of low taxes on the rich, mega-mergers and monopolization of companies, unchecked empire empire, and inequality. Debt driven economy + obscene levels of wealth concentration at the top = increase in bankruptcies of all kinds, especially seniors and fixed income people.
The Business Round Table Killed Shareholder Supremacy
In the latest acknowledgement that almost all economic and financial literacy of the last five decades is coming crashing down, the Business Round Table has killed the doctrine of shareholder supremacy popularized by long-dead economist, Milton Friedman. Friedman sat at the center of the destructive school of thought known as the Chicago School. I guess as of today the Chicago School of economic thought is on its way to finding itself where Friedman inevitably found himself: the grave.
Of course, as Bernie Sanders and Elizabeth Warren have said, it’s all just lip service without concrete, deep reforms with visible results…fast. In other words, it’s just public relations from Oligopolistic-Corporate America. Rather than making proclamations about economic doctrines, how about enforcing antitrust laws that are currently on the books and make some new ones? Or, maybe, raise taxes on all income over $10M to a 90% tax rate? How about shutting down tax havens? Lots to be done outside of re-killing Milton Friedman and killing the idea shareholder supremacy, much more needs to show up in practice.
Death by Chemicals: Opioids, Glyphosate, Talc, the Law & More…
Opioids:
Q: When companies poison populations for profit, what’s the proper punishment? Millions or billions in fines, bankruptcy, criminal charges? Lots of options.
A: Here is a quote from the Chief Exec at Johnson & Johnson regarding the Business Round Table’s statement on the purpose of a corporation: “This new statement better reflects the way corporations can and should operate today,” added Alex Gorsky, Chairman of the Board and Chief Executive Officer of Johnson & Johnson and Chair of the Business Roundtable Corporate Governance Committee. “It affirms the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders.”
In less inspiring news, on Aug. 26th, Johnson and Johnson was ordered to pay out $572M by an Oklahoma Federal District Court because of its “essential role” played in addicting millions and killing hundreds of thousands over decades of time. Guess the J&J corporate purpose statement is forward looking, ya know, how it “can and should operate” in the future, only after it gets rich killing hundreds of thousands through opioid poisoning. The New York Times provides a nice summary of the character of the folks running Johnson and Johnson here:
“Judge Balkman was harsh in his assessment of a company that has built its reputation as a responsible and family-friendly maker of soap, baby powder and Band-Aids.
In his ruling, he wrote that Johnson & Johnson had promulgated “false, misleading, and dangerous marketing campaigns” that had “caused exponentially increasing rates of addiction, overdose deaths” and babies born exposed to opioids.”
This was the first verdict reached in the opioid crisis. Within a few days, Purdue Pharma was publicly announcing it was likely to declare bankruptcy and pay 3 billion dollars directly from the family. The Purdue Pharma negotiations predated the J&J verdict, but no doubt the verdict likely struck a little fear in minds of the Sacklers — the owners of Purdue Pharma. If it didn’t strike fear, it at the very least made them have to rethink their broader legal strategy, many strategic doors were closed for the Sacklers with that J&J verdict.
The murderous pharmaceutical companies are likely to pay a price. Whether the companies could ever pay a high enough price for their behavior over the last two decades is a separate and more difficult question to answer. Keep in mind, these companies could have walked away with as much as a $17B judgment against them, so $572M is on the low end of possible judgments.
Glyphosate:
Mayors in France move to ban glyphosate, known carcinogen. Seattle bans use of glyphospate. Classaction.com has this nice explainer:
Long-term, widespread glyphosate usage has resulted in the chemical working its way through the food chain. Glyphosate is now found in a range of popular American foods, including cereal, pasta, granola, snack bars, crackers, soda, cookies, and beer. Scientific evidence suggests that probable harm to human health could begin at glyphosate levels as low as 0.1 parts per billion (ppb). Many foods tested have glyphosate concentrations many times above this amount. Glyphosate has also been found in tap water. One study found glyphosate in the urine of 93% of Americans tested.
The World Health Organization said glyphosate is probably cancerous. The FDA said it wasn’t. Considering the FDA and the US government more generally seems content with poisoning it’s people with opioids and many other chemical variants, I’m going to side with the WHO here. Glyphosate should be banned. Honestly, shouldn’t we at some point ask questions about whether those who have fought to get the chemical back in Roundup, in light of the science that it’s likely cancerous, should be prosecuted at some future date? We have relatively certain knowledge that glyphosate probably causes cancer. Other governments ban it. Yet, Trump and Corrupt Corporate America push to get the likely-cancer-causing drug back into use. It’s use will pollute the US citizenry, and will likely wind up on crops that get shipped around the world. Call them evil, stupid, unaware, in denial, cunning, etc…just don’t call the peeps working to keep this chemical in mass use “good”.
Talcum Powder:
When oligopolist Johnson & Johnson (JNJ) isn’t taking ire from the public for killing hundreds of thousands with opioids, it’s doing what it’s doing now: taking the ire from the public for giving people cancer with talcum powder. All of JNJ’s tribulations allow oligopolistic-bigag-bigchem-demon-company Bayer-Monsanto to take a break from dominating the bad headlines for killing people with its pesticides, as well as poisoning airways, waterways, and soils. It’s really kind of crazy what the US government allows Big Ag to get away with.
Always remember though, Bayer-Monsanto is pretty close to evil as a business model as it gets, they’re only outdone by Facebook and Google — both of whom are arguably evil. What’s worse: 1) Bayer-Monsanto poisoning the planet and populations or 2) Facebook and Google collaborating with the US Federal government (and both collab with various authoritarian governments around the world.) to create a modern surveillance state that should be dismantled because its existence in an affront to the notion of human rights. If big governments and corps have most the economic power and they know everything about the powerless due to their spying…you’ve got an untenable situation, you either smash the surveillance state or end any claim to being a human rights advocate.
Anyway, according to Bloomberg News, JNJ just convinced a Kentucky jury to find in their favor in a talc-asbestos case. Even though this case went for JNJ, many have gone against them, and with 15,000 cases in the queue there is no telling where this might all go. Between opioids, talc, and general legal costs of doing business…will JNJ go the way of Perdue Pharma? (Purdue is considering filing Chapter 11 bankruptcy and paying $3B of its own money to victims.). It’s really too early to tell.
Gilet Jaunes, Macron, and Reform
The Financial Times reported that President of France, Emmanual Macron, is attempting to shake his President of the Rich label by pushing out the old, entrenched, and sclerotic Senate in 2021. He wants to put the entire senate up for election, along with a bunch of additional reforms. Macron has put reforms forward to reduce the National Assembly from 577 members to 433 “and senators from 348 to 261.” He wants to put the entire senate up to a vote, rather than the norm — which is to put half of the Senate up to a vote every three years.
Climate:
Fire:
The real world’s lungs are ablaze and it should be setting off alarm bells inside the minds of people of conscious around the globe: Get serious about climate change. The Amazon and the Congo Basin forests are ablaze, the first and second largest tropical rainforests, respectively. Here is Ryan Grim, a journalist at The Intercept, explaining that a top Trump donor is linked to companies that are driving the deforestation of the Amazon rainforest, primarily by clearing forests to grow soy — a cash crop that needs to cease being a staple of the modern diet.
Modern BigAg is little more than an enterprise of environmental death and destruction, apparently from inception to harvest. Clearing wooded areas, genetically modifying seeds, gyphosate-harboring-human-killing Roundup and other pesticides, soil degradation, waterway poisoning…and the list literally goes on, and on, and on, and on…
Temperature:
July was the hottest month ever recorded according to the National Oceanic and Atmospheric Administration.
Hurricane:
Florida is bracing for Hurricane Dorian. A hurricane during hurricane season is par for the course. Have to follow up to see if many climate change narratives emerge out of this. Unusually large/strong storm surge? Was its strength comprable to storms that took a similar path in the past? Have storms taken similar paths in the past? Who knows, an infinite number of variables contribute to creating and sustaining a hurricane? (noaa.gov provides a lot of insights into these questions)
US Corporate State
The captured Environmental Protection Agency, under Donald J. Trump’s direction, is moving to increase the amount of methane in the atmosphere by decreasing regulations “that force companies to take strict precautions to avoid methane leaks while drilling for oil and gas.” Much of Oligopolistic-Corporate America is a death cult.
Jeffrey Epstein & David Koch
On Aug. 10, 2019 pedophile child-sex-trafficing-ring-operator Jeffrey Epstein died by suicide in early August in a NYC jail as he awaited court proceedings. Fossil fuel extracting and environment destroying David Koch died Aug. 23, 2019. Not really one to dance on graves. Somewhat paradoxically, and slightly hypocritically, I view the world as a better place without either of them. Not grave dancing, just making a pretty defensible statement. The catch is that both of there networks of power and dominion over other people and resources still remains relatively intact, so there really is no reason to dance.
