Germany to Jump to Russia – U.S. Deep State has Lost

The latest rumblings from Berlin suggest that the SDP is going to cave, once again, and become the junior partner in Merkel's CDU-run government. This comes after the collapse of the so-called Jamaican coalition talks (CDU, Greens, and FDP.) You could smell that fiasco in the middle of North America. But that attempt comes after the SPD and CSU lost significant fractions of their vote in the last election and needed new blood. But Greens and FDP? That would be like Bernie Bros hooking up with the Koch brothers. (It seems to me that any coalition named for Jamaica should be negotiated to the sweets sounds of Bob Marley and good Ganja and the Krauts probably tried it with polka, bier, und schnapps.)

Of course, the interesting question is whether the German government will keep pursuing their hopelessly stupid neoliberal agenda because that is what the crooks at Deutsche Bank want, or will they begin catering to the industrial interests that really keep the economy going. (Producers vs Predators, ja) The problem with running a Producer agenda is that it is exactly what the EU and USA does not want.

My take is that while an economic realignment is seriously overdue, it will face major hurdles. The Neoliberals will not give up easily. On the other hand, there are elements in the German psychic that really like doing business in Russia and so this may lead to Germany abandoning sanctions. Luongo below has thoughts on this.

The Non-Partisan League dramatized

Based on the diaries of a former Non-Partisan League organizer, 94 yo Henry Martinson, Northern Lights is an exquisite examination of the hardships and challenges of organizing arguably USA’s most successful economically progressive movement. Filmed in NW North Dakota by John Hanson in 1978, it would win the Caméra d’Or award (best first feature) at the 1980 Cannes Film Festival.

Only four of the actors in this film were professional. The rest were locals. As someone who once lived less than 50 miles from where this film was shot, I can assure everyone that they are very authentic. One of my favorite films—EVAH!

(Sorry, they took down the linked video. Apparently there's a reason a copy of this film is so hard to find.)

This ain't no new fight - The Nonpartisan League, 1919

1919 cover of the Nonpartisan League’s newspaper, The Nonpartisan Leader, portraying “organized farmers and workers” standing tall against big business interests. (Wikimedia Commons).

Something I can give thanks for is the many episodes of history Jon has brought to my attention. One of the most relevant for our time, with our desperate need to reform and revitalize the political system of the USA, is the Nonpartisan League of the upper plains states. The NPL gained political control of North Dakota in the 1910s, and created a lasting legacy which includes the only state owned bank in the country; the largest flour mill in the country, also state owned; and the best rate of internet access in the country.

This evening I found that some scans of the League's newspaper, The Nonpartisan Leader, on Google Books. I thought it would be a wonderful Thanksgiving post, which will hopefully encourage more people to read about the League. A number of pages of Robert Morlan's excellent book, Political Prairie Fire, are also available on Google Books. In July 2016, Bill Moyers' website featured the League in an article entitled, How to Make a Political Revolution, which includes an important description of how the League's legacy is still improving the lives of people today.

The League was heavily slandered, so be discerning as you research more.

On Veblen and Puritanism

Well, folks, I keep trying. Someone whose stated qualifications for interest in Veblen was that he had been assigned to read The Theory of the Leisure Class in college, asked me to address his little group of the socially and politically interested called the Minnesota Branch of the Sons and Daughters of the Pilgrims (I am NOT making this up.) Apparently, to be a member one has to be able to trace his or her genetic roots to the Mayflower.

This didn't sound like a good match but I gave the prospective appearance a good faith effort. I drove the event coordinator around the Veblen house and Valley Grove cemetery for almost three hours. Because the meeting site had no AV equipment, I got real 8 x 10 color photos produced. He even informed me I had to wear a jacket and wonders, I found one in a dusty corner of my closet. By this time, I had invested so much time and energy that I arranged for a friend with a NICE camera to record my efforts—a move that was allowed only with great reluctance and promises that the members would not be photographed.

As the proceedings got under way, I began to understand why these good children of Pilgrims didn't want to be identified. They had a quasi-religious ritual that included the Lord's Prayer and the Pledge of Allegiance. I come from a religious background but I had never seen these two combined in one ceremony. Most of the people I know would consider this blasphemy (along with a being a serious violation of the separation of church and state.) It reminded me of the scene in the 2006 movie called the Good Shepard where the Skull and Bones crowd gathered to control the world. They also mixed in Christianity with Angelina Jolie as the Senator's daughter noting that it was first Bones THEN God. I guess it is just easier to run the world if you think that God is on your side.

The guy sitting next to me informed me that he was going to be especially skeptical about my presentation because he was a BIG fan of von Hayek. Oh joy, someone who actually believes that old Hapsburg toady had anything interesting to say about economics. von Hayek was the guy who taught that socialized medicine was the Road to Tyranny. If you want to blame one person for the disaster that is USA medicine, von Hayek is a damn good candidate. I tried not to let this bother me because under any objective standards, von Hayek was not intellectually qualified to wash Veblen's shorts. Which of course, is the main reason von Hayek is treated as a god at the University of Chicago.

It got worse. At the end of my talk, I was subjected to questioning. The event planner asked the final question. He wanted me to comment on the rumors of Veblen's sex life. Veblen wrote 10 books and 100 papers. And this clown wanted to talk about the fact that Veblen lost his job at the Rockefeller-Baptist University of Chicago because he got a divorce. That's Puritanism for you—don't grapple with a man's ideas when you can talk about his sex life. Talk about getting stuck in puberty. It's no damn wonder this nation has become a cesspool of ignorance.

As I prepared to leave, the von Hayek fan made the claim that without government subsidies, Elon Musk (who I had used as an upper-level member of the Producing Class in my talk) would be nowhere. Of course, as Tony could have informed him for days without resorting to notes, virtually ALL scientific and technological advancement in USA was initially funded by the government. In my mind, people with the vision, imagination, and organizational ability of an Elon Musk should be told by the Federal government that we would be providing $20 billion per year to spend on any project he found interesting—especially projects that would help us transition us out of the Age of Fire.

Anyway, I thought I gave a good talk and friend Fabre captured fine video. So while I was busy casting pearls before swine, I think the effort was ultimately useful. Fortunately for me, this blog has readers who are anything BUT swine so I hope you enjoy the effort. I added a 2 minute 40 second graphic animation on my view of Veblen's distinction between business and industry which starts at about the 19 minute mark. This was a LOT of work.

15,000 scientists warn of scientifically predictable global destruction

This is one of those bad-news—worse-news stories. The bad news is that the science on climate change in 1992 was damn near flawless already. And we have gotten a LOT better at it in 25 years. And the science says that without a radical alteration in business-as-usual, we are doomed on this planet. No ifs, ands, or buts.

The worse news is that the brightest minds of the species seem to believe that warnings lead to action. Not without a plan they don't. Preachers have been warning about hell-fire and brimstone for thousands of years and I have yet to see how all that fear-mongering has ever led to a better society. Why is it any better when our best scientists believe that if only their warnings are dire enough, someone in the greater audience will somehow come up with a solution?

We get the point. Climate change is dangerous. Now, oh bright ones, lay out some reasonable possibilities for remediation. I don't want to get all worked up about a problem unless there is something  I can do to help. Otherwise, screaming headlines about the world coming to an end is just meaningless motivation.

Also, I am not at all certain it actually requires 15,000 scientists to tell us we are in deep shit. It seems like 500 could monitor our ride in the handbasket so that 14,500 could work on what to do next. Just a thought.

Five Hundred Million Dollar Negative Yield Bond Issued

I have permission from Mr. Welsh to repost anything he writes after waiting at least a day or two from his original posting. TW.
by Ian Welsh, Nov. 17, 2017

No, central banks aren’t screwing the economy up with their purchases:

Veolia (Paris:VIE) has issued a 500 million 3-year EUR bond (maturity November 2020) with a negative yield of -0.026 %, which is a first for a BBB issuer.

To be clear, central banks didn’t buy those bonds, investors did. But central bank purchases of government debt are a large part of what is causing this issue.

The ECB (European Central Bank) has been buying SEVEN times the issuance of government bonds. Seven times. Seven times.

They are straight up financing governments (which, done right, could be a good thing, but isn’t in this context).

The problem in the world today is the same as it was 15 years ago, before the financial collapse: There is too much money chasing not enough returns. Because there isn’t enough real growth, that money moves into bubbles and fraud, and destroys companies through leveraged buyouts and so on, but it also means that, if there isn’t enough fraud or predation going on, it sits and stagnates and does nothing worthwhile.

What the developed world actually needs is stuff to invest in, high marginal tax rates (higher on capital gains than on earned income), distributive policies to the bulk of the population to create wide-spread demand, and moderate inflation of about five percent a year to get people to actually invest in new businesses, not in financial speculation.

The problem with this solution set is that if it doesn’t also include effective regulation, it can have to environmentally devastating effects; for instance, because solar is not fully online, the above solution set could lead to oil price spikes.

Those problems, however, are not why this isn’t being done. This isn’t being done because current leadership does not believe in high taxes, wide distribution, or regulation. They are neoliberals, and 40 years of neoliberal disasters cannot convince them to engage anything other than neoliberalism, because neoliberalism has made them and their friends very very rich.

But the game is coming to an end. They want to tax the middle class and poor people, sparing the rich but they are now starting to tax the rich through the back door of negative interest rates. Meanwhile, the poor and middle class, especially the young ones, are losing patience and are willing to go either straight-up socialist or straight-up fascist (the Polish 50K rally).

This is going to get a lot uglier before it gets better.

There will be three choices for countries: Fascism, left-wing populism, or dystopic surveillance/police states.

Choose.

Trump's New Fed Chairman--Meet the New Boss; Same as the Old Boss

Trumpster's choice as next chairman of the Federal Reserve is Jerome Powell, who is not an economist, but a lawyer. Powell, a Republican, has been on the Fed Board of Governors since 2012 when he was appointed by that paragon of unrequited bipartisanship, Barack Obama.

Actually, I myself missed the news: Powell's appointment was on November 2, 2017. I just learned of it via one of today's postings at Naked Capitalism: Powell’s Federal Reserve, a melange of reactions from various economists, including Kenneth "dangerous debt cliff" Rogoff, and Joseph Stiglitz, one of the precious few high-profile but decent economists in the world, who "wonders whether Trump has captured the Fed." The best line in the piece linked to by NC is "Tho Bishop at Mises Wire argues that with the nomination of Powell the “swamp wins again”." This is one time the libertarians get it right: a quick perusal of Powell's profile on Wikipedia shows that Powell is a swamp creature, a Wall Street financial predator, and nothing else.

Powell started his career clerking for a federal judge, followed by joining the big Wall Street law firm of Davis Polk & Wardwell in 1981. This firm was a central legal player in the leveraged buy outs (LBOs) of the 1980s, which laundered hundreds of billions of dollars of dirty money by taking over and asset-stripping thousands of U.S. industrial and other companies.

In 1984, Powell moved to Dillon, Read & Co., one of the most established of the Wall Street establishment investment banks. A few years ago, a former managing director of Dillon Read, Catherine Austin Fitts, made her public mea culpa by posting details of the firm's involvement in dirty money laundering that will make your eyeballs pop. Dillon Read was involved in what was by far the largest LBO of the time, the $25 billion buyout of RJR Nabisco by Kohlberg Kravis & Roberts in 1988. (KKR has been a top funder of the Republican Party and conservative political infrastructure for decades now). Fitts writes that the RJR Nabisco LBO made no business sense at all, since it was impossible for RJR Nabisco to service the buyout debt piled on it within the limits of its stated cash flow. The LBO only made sense after she read a European Union lawsuit against RJR Nabisco, which alleged that RJR Nabisco was engaged in multiple long-lived criminal conspiracies, including business with Latin American drug cartels, Italian and Russian mafia, and Saddam Hussein’s family. There were literally billions of dollars in additional cash flow, but it was all dirty money.

Porsche admits electric car investment to take on Tesla will be very expensive

Anyone who doesn't understand the role of institutional inertia in the foot-dragging that shows up whenever an industrial company must upgrade its offerings to cope with changing environmental circumstances should pay attention to the tears being shed these days at Porsche. This a company that feels it must get into the business of building electric cars but clearly does NOT want to do it.

Porsche's most fundamental problems stem from the fact that no one has a good reason for owning their cars. They are expensive and downright dangerous to drive at their design speeds. Here in Minnesota it is now a FELONY to drive over 100 mph (160 kph). A Porsche is barely warmed up at that speed. So in USA, all the performance action is acceleration. Unfortunately for Porsche, their fastest accelerating cars are not as quick as a 5-passenger Tesla because electric motors produce maximum torque at zero rpm. Absent this fact, it would be highly likely that Porsche would just keep building what they know how to make.

The other obvious reality is that Porsche is just a minor branch of the very large corporate tree that is Volkswagen. The corporate pooh-bahs have decided that little Prosche should meet fixed profit targets as part of the plans to make VW the kind of conservative investment beloved of pension funds. Unfortunately, a decision to make a completely different type of car involves spending big money. In such a situation, Tesla just eats up their capital because it is a company run by someone who understands that an enterprise is never profitable when it is seriously innovating.

Corporate mandates tell Prosche that they cannot go into a temporary loss situation to finance the tooling for a new line of cars. Sounds like an impossible situation. Either Porsche takes the financial hit, or they don't build electric cars. And if they do not build electric, they won't be the fastest cars on the street. And if they aren't the top dog, they pretty much lose their reason to exist.

Oh goody—another dirty climate conference

Someday soon, humanity must make organizing and attending climate conferences a capital crime. These things are worse than useless but they grind on because the folks who like these sorts of things are convention planners. It's what they do. This year's climate extravaganza is being held in Bonn Germany. No one knows why or what they hope to accomplish. An estimated 23,000 people are descending on a tiny little backwater that is obvious ill-equipped to handle them—belching thousands of tons of CO2 on their sacred journeys of self-importance.

If anyone suggests that anything important could be accomplished with video-conferencing, the face-to-face crowd reacts in horror. According to them, those who would eliminate these conferences are the worms of humanity—the introverts. Since the only legitimate way to call these conferences a success would be the ability to point at falling CO2 levels, and that clearly has not happened after 23 years of conferencing, a sane person would try something else. But these folks cannot even progress to video conferencing. And since few or none of them seem willing to grapple with the problems of progressing from legislating outcomes to funding outcomes, we can assure ourselves that no meaningful progress will happen anytime soon.

Climate change is a Producer Class problem that will only respond to Producer Class solutions. Climate conferences are extreme manifestations of Leisure Class behavior. Pretty much explains why they are useless. After all, useless is the primary goal, the heaven, of the Leisure Class.

Ein feste burg ist unser Gott—Luther's Reformation at 500

To perform a good deed once or twice is easy. But to avoid becoming bitter from the ingratitude and wickedness of those for whom you have done good deeds, that is difficult.

If I knew the world would perish tomorrow, I would still plant my apple tree today.

One should not dispute with quarrelers. They won't be bettered thereby, but become all the more furious. They are not seeking truth, but glory and triumph.

Martin Luther

My junior year of high school was just incredibly painful. My nominally Lutheran preacher father had relocated the family to an ugly little oil town in northwestern North Dakota. Now there ARE people who are in love with vast and very bleak vistas of the "Peace Garden" state, but there aren't many of them, and I was certainly not one of their club. The wind howled all the time. Temps of -30°F (-35°C) in the winter were routine and while the brief summers were a lot warmer, the season brought clouds of hungry biting bugs.