Week-end Wrap - June 30, 2018

Week-end Wrap - June 30, 2018
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Democratic Elite Scrambles to Respond to Ocasio-Cortez 

by Norman Solomon, June 29, 2018 [ConsortiumNews , via Naked Capitalism]

But on Wednesday afternoon, the party committee approved a proposal to prevent superdelegates from voting on the presidential nominee during the first ballot at the 2020 Democratic National Convention. (The last time the party’s convention went to a second ballot was 1952.)

From Naked Capitalism, by Lambert Strether, Water Cooler, June 29, 2018:

Pavlina R Tcherneva@ptcherneva

"pie in the sky" is code for:
1) you're a threat: your proposals make economic, political, moral sense to too many people
2) I want the status quo even if it's reactionary or economically irrational
3) I will always fund 2) but cast 1) as out of reachhttps://twitter.com/StephanieKelton/status/1011969893099503616?s=19 …

Stephanie Kelton

✔@StephanieKelton

The weapon of choice against @Ocasio2018's progressive agenda will be crying poor and complaining about debt and deficits. They'll claim it's all pie-in-the-sky because Pete Peterson. They're wrong. http://www.latimes.com/opinion/op-ed/la-oe-kelton-pony-for-all-20170929-story.html …

How Long Can The Federal Reserve Stave Off the Inevitable?, by Paul Craig Roberts, June 26, 2018 [Institute for Political Economy via Mike Norman Economics]

When are America’s global corporations and Wall Street going to sit down with President Trump and explain to him that his trade war is not with China but with them? The biggest chunk of America’s trade deficit with China is the offshored production of America’s global corporations. When the corporations bring the products that they produce in China to the US consumer market, the products are classified as imports from China. 

Six years ago when I was writing The Failure of Laissez Faire Capitalism, I concluded on the evidence that half of US imports from China consist of the offshored production of US corporations. Offshoring is a substantial benefit to US corporations because of much lower labor and compliance costs. Profits, executive bonuses, and shareholders’ capital gains receive a large boost from offshoring. The costs of these benefits for a few fall on the many—the former American employees who formerly had a middle class income and expectations for their children. 

In my book, I cited evidence that during the first decade of the 21st century “the US lost 54,621 factories, and manufacturing employment fell by 5 million employees. Over the decade, the number of larger factories (those employing 1,000 or more employees) declined by 40 percent. US factories employing 500-1,000 workers declined by 44 percent; those employing between 250-500 workers declined by 37 percent, and those employing between 100-250 workers shrunk by 30 percent."

Why Free Trade Isn’t Efficient: "The core assumptions of capitalism are wrong,"
by Ian Welsh, June 26, 2018 [Ian Welsh]

For the past few weeks I’ve been reading a raft of literature by lawyers, economists and bureaucrats involved with the World Trade Organization (WTO) and other free traders. It’s been a fascinating journey into an alternate world....

The reasoning behind this virtually unquestioned acceptance is as follows: if there are no barriers to trade, whether financial or regulatory, goods and services will be created (or done) wherever they cost the least. If they are done in the lowest-cost place, they are being done in the most efficient way, and that means more is created and consumers also pay less....

But you may have caught the error in the thinking. It assumes the lowest cost is equivalent to the most efficient. 

But it isn’t. When manufacturing moved from the US to China, it cost less to do in China, yes, but it produced more carbon (climate change); it took more people to produce the same amount of goods, and it generally used more materials, as well. In other words, in every way except the monetary cost it was less efficient....

The core problem with capitalism is that it assumes that money measures benefit: if someone’s willing and able to buy something (is “demand”) then that something is good.
But the cheapest cost and the highest profit don’t take into account actual efficiency or actual good in the world. Producing less climate change gases to produce the same stuff is more important than saving 5 or 10% cost, or making 5% or 10% profit. Using less resources that are limited is more important than the lowest cost. And good wages are also important, because they measure good lives.... 

The core assumptions of capitalism are wrong. They are simply wrong.

Southeast Missouri nail company gets hammered by Trump’s tariffs,
by Alisa Nelson, June 22, 2018 [MissouriNet, via Naked Capitalism]

President Trump’s tariff on steel imports that took effect June 1 has caused a southeast Missouri nail manufacturer to lose about 50% of its business in two weeks. Mid Continent Nail Corporation in Poplar Bluff – the remaining major nail producer in the country – has had to take drastic measures to make ends meet. The company employing 500 people earlier this month has laid off 60 temporary workers. It could slash 200 more jobs by the end of July and be out of business around Labor Day.

Trump's protectionism will remain mere theatrics and will often result in damage like this if it is not combined with a national industrial policy. But the Republican base loves the show:

“A Cleveland Revival Must Include Manufacturing” [The American Conservative, via Naked Capitalism]. “If we are to again become a rich city, we must make more things…. The old cities were above all places where people worked. Can we bring it back? Of course we can. We industrialized this country under tariff protection and we can re-industrialize under tariff protection. When President Trump slapped tariffs on foreign steel, Cleveland cheered. In nearby Lorain, Ohio, another steel center, a steel company announced it would reopen a shuttered mill, hire hundreds of people, and was prepared to fill all domestic orders. We can make everything America needs in America—and much of it in Cleveland. China has a plan to make everything it needs by 2025. Why can’t America have the same plan? After all, we already did it once.”

There were a few people, including Ian Welsh, Stirling Newberry, Thomas Frank, and Michael Hudson, who warned before the 2016 election that the Democratic Party's embrace of neoliberalism and the post-industrial "information society" would leave it vulnerable to being outflanked on the left by Trump on economic issues. See also “Democrats badly underestimated Trump” [CNN, via Naked Capitalism]. 

Is Trump about to be blind-sided by the Fed?
by Pam Martens and Russ Martens, June 27, 2018 [Wall Street on Parade]

[Trump] is likely to learn a hard truth this year and next – that the Federal Reserve can make or break his presidency by delivering up to three different gut punches to the markets.... During his press conference on June 13, the new Fed Chair Jerome Powell mentioned the normalization schedule, stating: “…our program for reducing our balance sheet, which began in October, is proceeding smoothly. Barring a material and unexpected weakening in the outlook, this program will proceed on schedule, and our balance sheet will continue to shrink.” 

Powell also mentioned during the press conference how close the U.S. had come to a complete financial meltdown in 2008. He stated: 

“…and if I can just take this opportunity to say, you know, the financial system all but failed 10 years ago. We went to work for 10 years to strengthen it—stronger capital, stronger liquidity, stress testing, resolution planning. We want to keep all that stuff. We want to make it, you know, even more effective and certainly more efficient. We want to tailor those regulations for institutions. We want the strongest provisions to apply to the most systemically important institutions. And so we’re committed to preserving and enhancing that structure.” 

Unfortunately for Powell, the most systemically important institutions are the big Wall Street banks like JPMorgan Chase, Citigroup, Goldman Sachs, Bank of America and Morgan Stanley who are collectively sitting on hundreds of trillions of dollars in derivatives – a good chunk of which are the credit default swaps that played a major role in bringing down the financial system in 2008. The Fed will announce tomorrow whether it is going to allow these banks (and others) to continue to bleed cash (or take on more debt) through massive stock buybacks and dividend boosts for shareholders. The annual announcement is known as the Comprehensive Capital Analysis and Review (CCAR) and is the second leg of the Fed’s stress testing process for banks.

How to get away with financial fraud,
by Dan Davies, June 28, 2018 [The Guardian, via Naked Capitalism]
A review of the Barclays Bank LIBOR  rate-fixing scandal.

It is not a pleasant thing to see your industry subjected to criticism that is at once overheated, ill-informed and entirely justified. In 2012, the financial sector finally got the kind of enemies it deserved. The popular version of events might have been oversimplified and wrong in lots of technical detail, but in the broad sweep, it was right. The nuanced and technical version of events which the specialists obsessed over might have been right on the detail, but it missed one utterly crucial point: a massive crime of dishonesty had taken place. There was a word for what had happened, and that word was fraud. For a period of months, it seemed to me as if the more you knew about the Libor scandal, the less you understood it. 

“California sues nation’s largest student loan servicer” 

[Wild About Trial, via Naked Capitalism]. 

“Attorney General Xavier Becerra said the state will sue Navient Corp. this week, contending the Delaware-based company financially harmed thousands of Californians. He said the firm systematically and illegally failed to properly service federal student loans by steering borrowers to more expensive repayment plans, failing to tell them how to switch to income-driven repayment plans or how those with disabilities could end their debts and misrepresenting how it handled payments.” 

Mr. Market: “Most stockmarket returns come from a tiny fraction of shares” 

[The Economist, via Naked Capitalism].

“Since 1926, most stockmarket returns in America have come from a tiny fraction of shares. Just five stocks (Apple, ExxonMobil, Microsoft, GE and IBM) accounted for a tenth of all the wealth created for shareholders between 1926 and 2016. The top 50 stocks account for two-fifths of the total. More than half the 25,000 or so stocks listed in America in the past 90 years proved to be worse investments than Treasury bills.

Inside the White House’s Quiet Campaign to Create a Supreme Court Opening,by Adam Liptak and Maggie Haberman, June 28, 2018 [New York Times, via Naked Capitalism]

Justice Kennedy's son directed over $1 billion in Deutsche Bank loans to President Trump's real estate ventures.
by Charles P. Pierce, June 29, 2018 [Esquire, via Naked Capitalism]

Judges Brett Kavanaugh and Amy Coney Barrett are leading candidates for Supreme Court seat
by David G. Savage,, June 28, 2018 [Los Angeles Times, via Naked Capitalism]

Unlike in decades past, when presidents and their top lawyers scrambled to find a qualified nominee when a vacancy suddenly arose, the Federalist Society list is the result of careful screening. A team of lawyers read and analyzed everything written or said by the candidates.  

Their unofficial motto is “No more Souters,” a reference to now-retired Justice David H. Souter, who was nominated by President George H.W. Bush in 1990. Souter was a little-known judge from New Hampshire, but the White House team assured Republicans he was a conservative. 

They were wrong. Souter was careful and cautious as a judge and devoted to precedent. But his leanings were moderate to liberal. In 1992, Souter along with Justices Anthony M. Kennedy and Sandra Day O’Connor joined to uphold the right to abortion announced two decades earlier in Roe vs. Wade. 

Conservatives are determined never to make the same mistake again.

If the Democrats ever win back control of the legislative and executive branches, how serious they are about moving in a progressive direction can be gauged by how seriously and actively they begin working to find a way to remove Federalist Society judges from the bench. Contrary to the claims of Federalist Society members of their fidelity to "original intent," their ideology is foreign and hostile to the republicanism on which USA was founded. Nowhere is this more clear than in the Framers' rejection of economic laissez faire, and the issue of enumerated versus implied powers. The Federalist Society must be treated as an enemy fifth column and their members and followers removed from all levels of government as expeditiously as possible.

Mexico’s Economic Growth Failure: Decades in the Making,
June 25, 2018 [The Real News Network]

"As Mexicans get ready to vote for a new president on Sunday, they will probably punish the political class that led the country into a 30-year economic slump." In the age of neoliberalism, the economic performance of Mexico has been roughly half what it was before.  The primary causes have been NAFTA, accepting the neoliberal Washington Consensus, and accepting the austerity dictate of the IMF and World Bank.

Well, that didn't take long: The AT&T merger with Time Warner:
AT&T removed HBO from an unlimited data plan after buying Time Warner
AT&T alters unlimited plans and makes the cheapest one $5 more expensive.
By Jon Brodkin, June 28, 2018 [Ars Technica, via Naked Capitalism]

AT&T bumped a fee on most customers' bills by $1.23, adding $800 million to revenue
by Chloe Aiello, June 27, 2018 [CNBC, via Naked Capitalism]
The tremendous power of  pricing when the republic fails to prohibit concentrated economic power.

AWEA's Wanner: Falling costs will drive US wind gains after PTC ends
Portland Press Herald (Maine) June 26, 2018 [American Wind Energy Association]

The US saw a record-breaking number of power purchase agreements in the first quarter and technological advances will likely continue to drive down costs and help the industry grow after the wind energy Production Tax Credit ends, said American Wind Energy Association research analyst Celeste Wanner said Tuesday at AWEA's Northeast regional conference. Maine Renewable Energy Association Executive Director Jeremy Payne said the Northeast is slated for an offshore wind boom, but various policies are barring the industry's progress in Maine.

India commits to 30 GW offshore wind by 2030 goal
CleanTechnica  June 26, 2018 [American Wind Energy Association]

The Indian government has adopted a new 5 gigawatts by 2022 target for offshore wind capacity, followed by a goal of 30 GW by 2030, according to India's Ministry of New and Renewable Energy. It is also working toward a land-based wind target of 60 GW by 2022.

Milwaukee completes streetcar construction June 28. 2018 [Railway Age]

Milwaukee will shortly become the next U.S. city to power up a streetcar system. Construction has concluded on The Hop downtown route with operations scheduled to begin in the fall. Full Article

China and Nepal sign trans-Himalayan railway MoU, June 28, 2018 [International Rail Journal]

A memorandum of understanding on the construction of a rail link between Tibet and Nepal was signed in Beijing on June 21 by China’s president, Mr Xi Jinping, and Nepalese prime minister Mr Khadga Prasad Sharma Oli. Full Article

German Rail signs first contract to import Chinese CRRC hybrid locomotives, June 26, 2018 [Railway Age]

German Rail (DB) has signed a framework agreement with CRRC Zhuzhou for 20 “AZLok” hybrid switching locomotives to be used by infrastructure manager DB Netz, the first time the Chinese company has exported to Germany. Full Article

North Carolina: Amtrak Raleigh station finally opening [Railway Age, June 13, 2018]

The new $111 million downtown Raleigh Union Station is expected to be ready for passengers on June 27. The opening was delayed by some last-minute fixes to the platform slope and drainage. Full Article

Siemens reveals Velaro Novo high-speed train concept [Railway Age, June 14, 2018]

Siemens revealed details of a concept for its next-generation high-speed train, the Velaro Novo, which will offer a 30% reduction in energy consumption at 300km/h, compared with previous Velaro models. Full Article

Boeing Unveils Hypersonic Airliner Concept, by Guy Norris, June 26, 2018 [Aviation Week & Space Technology]

The initial concept vehicle, unveiled at the American Institute of Aeronautics and Astronautics (AIAA) Aviation 2018 conference in Atlanta, is a preliminary step toward a long-range development plan targeted at both commercial and military applications. Although not yet defined, the concept is provisionally aimed at a passenger capacity larger than long-range business jets, but smaller than Boeing’s 737, with potential entry into service from the late 2030s onward. 

Flying at Mach 5, and with a projected cruise altitude of 95,000 ft., the vehicle would travel at more than 2.5 times the speed and 30,000 ft. higher than the supersonic Anglo-French Concorde, which was retired in 2003. According to Boeing, the additional speed would enable same-day return flights even across the Pacific

It was a super busy week for small rocket news. Rocket Report: Small sat market surging, Proton dying, Falcon Heavy certified
by Eric Berger, June 29, 2018 [Ars Technica]

How Big Will The Space Industry Get?,
by Jen DiMascio, June 25, 2018 [Aerospace Daily & Defense Report]

The Space Frontier Foundation (SFF) and Deloitte are kicking off a six-month study of the size of the space market at the New Space 2018 conference in Seattle, with the results due to be released in late December or early 2019. SFF has led the New Space conference for 13 years. 

The study, which was to have its first closed meeting June 25 and will have its first public outbrief June 26, is the one study leaders have been waiting for since the 1994 Commercial Space Transportation Study by NASA and six aerospace companies—Boeing, General Dynamics, Lockheed, Martin Marietta, McDonnell Douglas and Rockwell.

NASA’s Grand Commercial Space Taxi Experiment Heads Into Home Stretch
by Irene Klotz, June 18, 2018 [Aviation Week & Space Technology]

With Russian rides to space station ending, pressure builds on Boeing and SpaceX to finish and fly their vehicles without shortcutting safety.

https://arstechnica.com/science/2018/06/rocket-report-small-sat-market-surging-proton-dying-falcon-heavy-certified/


Review the leading edges of bionics and robotics in Maxon's magazine, driven, June 25, 2018 [Machine Design] 

Nature is often used as inspiration for engineers when developing new technology, especially when creating robots. Compact DC motors are used in prosthetics, nanorobotics and other unique applications.

Oak Ridge National Laboratory Reclaims Title to World’s Most Powerful Supercomputer
by Stephen Mraz, June 25, 2018 [Machine Design]

The U.S. Department of Energy’s Oak Ridge National Laboratory recently unveiled its Summit computer as the world’s most powerful and smartest scientific supercomputer. It has a peak performance of 200,000 trillion calculations per second, or 200 petaflops, making it eight times more powerful than ORNL’s previous top-ranked machine, Titan. For certain scientific applications, Summit will execute more than three billion billion mixed precision calculations per second, or 3.3 exaops. It is hoped that Summit will provide unprecedented computing power for research into energy, advanced materials, and artificial intelligence (AI), among other domains, enabling scientific discoveries that were previously impractical or impossible. It also moves the U.S. closer to the DOE’s goal of having an exascale supercomputing system by 2021. 

Summit is an IBM AC922, which consists of 4,608 compute servers—each containing two 22-core IBM Power9 processors and six NVIDIA Tesla V100 graphics processing unit accelerators, interconnected with dual-rail Mellanox EDR 100Gb/s InfiniBand. It has more than 10 petabytes of memory paired with fast, high-bandwidth paths for efficiently moving data. The combination of cutting-edge hardware and data subsystems marks an evolution of the hybrid CPU–GPU architecture successfully pioneered by ORNL’s 27-petaflops Titan in 2012.