Saturday, December 10, 2016

James Holmes — Why the World Should Fear a 'Thucydidean' China

This is an interesting article from the perspective of psychological projection. Professor Holmes projects onto China the behavior of the American Empire asserting its right to global hegemony as "exceptional" and "the indispensable nation" that gets to make the rules.

In comparison China has so far has done very little to project its power, while the US has been encircling China militarily.

Moreover,the Chinese government certainly has not claimed global hegemony as the US did in the Wolfowitz Doctrine. And has the good professor forgotten about the Monroe Doctrine that claimed hemispheric hegemony in 1823 and America's ongoing intrusion in the internal affairs of Latin American countries?

Moreover, the People Liberation Army officers that Holmes quotes are not in a position of authority to speak for the Chinese government on Chinese foreign policy.

Interestingly also, Holmes uses the term "Thucydidean." Certainly he is aware that the Thucydides trap refers to a country in decline going to war with a rising power challenging it to maintain position and that international relations (IR) experts have applied it to the US-China relationship. President Xi was so concerned it was becoming an IR meme that he addressed while in the US, brushing it off as irrelevant in today's world of mutuality.

It appears to be yet another example US pessimism and paranoia.

The National Interest
Why the World Should Fear a 'Thucydidean' China
James Holmes | Professor of Strategy at the U.S. Naval War College

Craig Murray — The CIA’s Absence of Conviction

According to Murray, it was an inside job rather than a Russian hack.

Craig Murray
The CIA’s Absence of Conviction
Craig Murray | former British ambassador to Uzbekistan

SouthFront — Israeli Military Admits Tweeting Fake Lebanon Map with Marked Hezbollah Positions

Israeli military caught disseminating false information news on Twitter.

Israeli Military Admits Tweeting Fake Lebanon Map with Marked Hezbollah Positions

The Saker — The IMF admits that Russia has survived both the drop in oil prices and the sanctions and is on the path of recovery

IMF report provided.

The Vineyard of the Saker
The IMF admits that Russia has survived both the drop in oil prices and the sanctions and is on the path of recovery
The Saker

Glenn Greenwald — Anonymous Leaks to the WashPost About the CIA’s Russia Beliefs Are No Substitute for Evidence

Why Donald Trump is right about skepticism toward the CIA, especially anonymously sourced charges without providing supporting evidence.

The deep state has often used "intelligence" to promote policy it favors and secondly, top officials have lied to cover up CIA activities. Greenwald reminds us of the evidence.

The Intercept
Anonymous Leaks to the WashPost About the CIA’s Russia Beliefs Are No Substitute for Evidence
Glenn Greenwald

Alexander Mercouris — ALEPPO UPDATE: 4 Al-Qaeda chiefs arrested; one thousand Jihadis surrender

I will now offer my own opinion that the Jihadi pocket will be totally gone by early next week and may not survive the weekend.
The Duran
ALEPPO UPDATE: 4 Al-Qaeda chiefs arrested; one thousand Jihadis surrender
Alexander Mercouris

Alexander Mercouris — The attempted Clinton-CIA coup against Donald Trump

Last ditch effort to dump Trump in the electoral college vote.

They had better hope they win, because Trump prides himself on getting even.
Perhaps given that the political situation in Washington is starting to bear the hallmarks of what in other countries would be called a pre-coup environment, it is not so surprising if Donald Trump is choosing to surround himself with generals.
Incidentally, this accords with Ravi Batra's analysis in The New Golden Age: The Coming Revolution Against Political Corruption and Economic Chaos.

The Duran
The attempted Clinton-CIA coup against Donald Trump
Matthew Rosza
Yves: Please tweet and circulate this letter widely.
Naked Capitalism
We Demand That the Developer of “Fake News” Blacklist Software B.S. Detector Cease Distribution and Issue an Apology
Yves Smith

Yves Smith — We Demand That PropOrNot Remove Its Blacklist, Report, and Browser Tool Defaming Naked Capitalism and Issue an Apology

Yves: Please tweet and circulate this letter widely.
Naked Capitalism
We Demand That PropOrNot Remove Its Blacklist, Report, and Browser Tool Defaming Naked Capitalism and Issue an Apology
Yves Smith

Ruptly — Putin laughs at US intel - "I read all of your instructions!" [Video]

39 second clip with subtitles. Pretty funny.

Fort Russ
Putin laughs at US intel - "I read all of your instructions!" [Video]
Ruptly - Translated by Inessa Sinchougova

Paul Robinson — Losing the propaganda war

Bear in mind that this is just one week’s stories. The consumers of Western media are subjected to similar output week after week. The oft-stated claim that ‘Russia is winning the information war’ is rather naïve. It is losing it badly.
The Western liberal establishment is becoming unhinged at the prospect of losing power to the growing populist front whose rise they are responsible for owing to their irresponsible policy. Russia is the political scapegoat as well as their domestic "rabble," and China is the economic scapegoat, along with the "laziness" of domestic workers.

They apparently think they can prevail by doubling down on the narrative. That is called "propaganda." The are actually winning the propaganda war measured by volume, but they are failing to convince in the face of demonstrable failure to deliver and irrational persistence in that failure.

Losing the propaganda war
Paul Robinson | Professor, Graduate School of Public and International Affairs at the University of Ottawa

Noah Smith — Economists Pretend They Don't Pick Winners and Losers

The rediscovery of political economy. Surprise, economics is normative as well as positive owing to it subject matter. Methodological choice including assumptions matter for picking winners and losers.

Economics involves tradeoffs. Tradeoffs are not equally distributed. Some win and some lose. Who chooses and on what basis?

These are social and political issues in addition to economic.

Economists Pretend They Don't Pick Winners and Losers
Noah Smith | Bloomberg View columnist

Tim Wallace — CBI: We need immigrants in the UK because young Britons won’t move to get jobs

I'm guessing the UK will get its Donald Trump soon enough. Nigel Farage?

Remind me, but in a market economy when there are idle resources available isn't price supposed to be the incentive that brings everything into equilibrium. Maybe they need to increase the wage where domestic workers available and needed.

The Telegraph
CBI: We need immigrants in the UK because young Britons won’t move to get jobs
Tim Wallace

Steve Holland — Trump to name Exxon CEO Tillerson secretary of state: NBC NEWS

I've been expecting this. Good choice — if Trump follows through with it. It's unconfirmed as yet.

Leaves no doubt that it's all about the oil, stupid.

If this is true, it's a huge break with the status quo. Tillerson is eminently qualified, too, since he already knows most of the major players and understands business negotiation. With his level of organizational experience, he will be able to reshape the US State Department, too. As a bonus, he is also an engineer.

Tillerson at State would also be bullish economically, since he would be focused on deals, just like Trump.

Of course, the bar was set very low since it was expected that HRC would have chosen Victoria Nuland, so anyone Trump picked would be better, excepting John Bolton, who was on Trump's transition team's list.

Unfortunately, Russia Insider is reporting, "… according to one source, Bolton might be slated as Tillerson's deputy secretary." Bolton is to the right of Victoria Nuland, who is only a neocon, while Bolton is an Iran war hawk.

Trump to name Exxon CEO Tillerson secretary of state: NBC NEWS
Steve Holland


Trump Goes Corporate on Secretary of State Pick
Tory Newmyer

Michael Hudson — Innocuous Proclaimations

This is a transcript from Meet the Renegades with economist Michael Hudson and interviewer Ross Ashcroft.
MH: If you’re teaching economics, you should begin with the relationship between finance and the economy – between the buildup of debt and the ability to pay. That should be the starting point if you realize that the problem of our time is how can society cope with the debt buildup that has occurred.
Since "money" is a credit-debt relationship, money creation results in the creation of either bank credits in deposit accounts and corresponding debts in loan accounts or in tax credits issued by government with no corresponding debt in the private sector.

The law of reflux states that money created flows back to the creator.

Repayment of bank loans extinguishes the bank credits that were created by crediting deposit accounts. These credits are extinguished the loan is reaped and the corresponding deposit accounts are debited.

Use of tax credits to pay tax obligation or other obligations to the currency issuer extinguishes those credits as the tax credits flow back to government.

The total flow of credit issuance and extinguishment constitutes the money supply available to non-government. That flow is held as various stocks in the interim.

Note that the public debt is non-government net financial wealth and the debt is cancelled with tax collection.  When government runs fiscal deficits they increase non-government net financial wealth since there is no corresponding debt in non-government. A currency issuing government can always generate more tax credits than flow back through taxes in order to increase the net financial assets of non-government to meet saving desire.

Therefore, the issue is never public debt in the case of government that is sovereign in its currency and doesn't borrow in currencies it doesn't issue or promise to convert its currency to real assets like gold or silver at a fixed rate.

Governments that either don't issue their own currency, such as US states, or governments that limit their currency sovereignty voluntarily like the nations of the EZ or countries that peg like China, are constrained financially.

Debt deflation pertains to privately issued credit. Debt deflation occurs when borrowers are unable to repay loans and the demand for money rises faster than money creation. Then a financial crisis occurs that spreads to the real economy as demand contracts. Recession sets in. If the situation is not addressed by increasing money flow, then the recession can develop into a debt deflationary depression.

There are also several paragraphs on economic rent.
This was the basic classical economics of Smith, Ricardo and John Stuart Mill. They all looked at what the landlords got – and what banks got – as socially unnecessary overhead. The economy could function technologically without a landlord class, without a banking class.
Economic rent is socially unnecessary costs imposed by those in positions of power whose power enable them to do so. "Socially necessary" costs are the costs of factors of production, chiefly cost of labor in terms of labor time multiplied by labor power based on knowledge in skill in work performance in excess of unskilled "brute" labor. Those in positions of power are able to extract more from the economic process than they actually contribute, owing to unearned reward based ownership of means of production and financial resources rather than productive economic contribution. This is financial and economic "rent" that is "socially unnecessary since the same output of production could be obtained in the absence of it.

Hudson is claiming that neoclassical is anti-classical economics in that it denies the role that economic power and economic rent play in modern monetary production economies because neoclassical economics is based on the assumption of a barter economy, where money is neutral and doesn't affect the economic process. In this view, everyone receives their just deserts based on marginal productivity.

Note that Michale Hudson is assuming quite a bit of knowledge of finance, economics, and history economics in these remarks on money and rent. It is a broad brush cursory treatment of two of the most controversial concepts in economics.

Michael Hudson
Innocuous Proclaimations
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

See also

Orwellian doublespeak.

Michael Hudson
Golden Tongues
Sharmini Peries interviews Michael Hudson

William Cummings — Trump bashes CIA, dismisses Russian hacking report

No worries that the deep state is going to tether Donald Trump. Notice served.

USA Today
Trump bashes CIA, dismisses Russian hacking report
William Cummings

Nobel economics prize winner: ‘The euro was a mistake’

The European Union should embark on a process of decentralisation and return certain areas of decision making to the member states if it wants to survive and thrive, according to Nobel Memorial Prize in Economic Sciences winner Oliver Hart.…
Hart argued that “the euro was an mistake” and said that it’s an opinion that he has maintained ever since the monetary union was first introduced.
The economist added that it “wouldn’t be a sad thing at all” if in the future Europe abandoned the single currency and that the British were “very clever” to stay out of it.
Nobel economics prize winner: ‘The euro was a mistake’
Carmen Rodríguez
Translated By Samuel Morgan

Wolfgang Streeck: the German economist calling time on capitalism

Streeck adds another voice to Stauss & Howe, and Ravi Batra.

It would be a mistake to see the current dissatisfaction of the 99% as only inequality of income and wealth, which the high earners and people high net worth write off to envy, as much as inequality of opportunity and the rise of unearned privilege that recalls the feudal era. 

Streeck believes that this is explosive and the people in charge are clueless not only about what to do about it, other than social repression, but are clueless about what is happening. As the scenario unfolds, they are in deep psychological denial and intellectually paralyzed.

The Guardian
Wolfgang Streeck: the German economist calling time on capitalism
Aditya Chakrabortty, senior economics commentator for the Guardian

Carlson vs. Rep. Shiff

This was a big interview on the "Russia!" issue from earlier this week.

Carlson imo is running the first "TrumpTV" show out there on Fox.

Corporate tax cuts: How big an impact on corporate profits?

From Pisani at CNBC not bad analysis.

Theoretically a 20% increase just from the tax rate reduction if firms can maintain sales/margins... does not take into account any increase in leading flows which may/may not manifest next year which would be or may be even more bullish.

President-elect Trump's proposed nominee for U.S. Treasury secretary, Steve Mnunchin, said on our air yesterday that the administration was still targeting a reduction in the corporate tax rate from 35 percent to 15 percent. 
The current 2017 estimate for the entire S&P 500 is roughly $131 per share. 
Thompson estimates that every 1 percentage point reduction in the corporate tax rate could "hypothetically" add $1.31 to 2017 earnings. 
So do the math: If there is a full 20 percentage point reduction in the tax rate (from 35 percent to 15 percent), that's $1.31 x 20 = $26.20. That implies an increase in earnings of close to 20 percent, or $157. 
What does that mean for stock prices? The S&P is currently trading at a multiple (PE ratio) of 17, high by historical standards. Applying that 17 multiple to earnings of $157, we get a price on the S&P 500 of roughly 2,669 for 2017. 
That is 469 points or roughly 20 percent above where it is today.

Friday, December 9, 2016

Robert Parry — The Need to Hold Saudi Arabia Accountable

Background that is important in light of Donald Trump's stance on Iran, as well as that of Lt. General Flynn, Trump's choice for National Security Advisor and appointment of General Mattis as Secretary of Defense.
One of Official Washington’s favorite “group thinks” is to insist that Iran is the “chief sponsor of terrorism,” but the reality is that Saudi Arabia is much guiltier and U.S. officials know it, says Robert Parry.…
Parry shows that it is impossible for anyone in the deep state or the military not to know that Saudi Arabia is the chief state sponsor of terrorism and not Iran. Iran is opposed by Israel and the Wahhabi-Salafi Sunni states, Saudi Arabia and Qatar.

Is Donald Trump either misinformed, or carrying water for Israel?  But if that is so, why would he be backing off replacing Assad in Syria, which IsraelI officials have stated as the number one goal?

Are the generals are also misinformed (which is highly unlikely), backing Israel also, or just uttering a shibboleth as a secret handshake to be admitted to the game.

Consortium News
The Need to Hold Saudi Arabia Accountable
Robert Parry

See also
Some of President-elect Trump’s national security appointees are part of Official Washington’s “we-hate-Iran” group think, raising concerns about another Mideast war, notes ex-CIA analyst Paul R. Pillar.
Trump and His Iran-Haters
Paul R. Pillar

Glen Greenwald — A Clinton Fan Manufactured Fake News That MSNBC Personalities Spread to Discredit WikiLeaks Docs

Back in October, when WikiLeaks was releasing emails from the John Podesta archive, Clinton campaign officials and their media spokespeople adopted a strategy of outright lying to the public, claiming – with no basis whatsoever – that the emails were doctored or fabricated and thus should be ignored. That lie – and that is what it was: a claim made with knowledge of its falsity or reckless disregard for its truth – was most aggressively amplified by MSNBC personalities such as Joy Ann Reid and Malcolm Nance, The Atlantic’s David Frum, and Newsweek’s Kurt Eichenwald.…
That the emails in the Wikileaks archive were doctored or faked – and thus should be disregarded – was classic Fake News, spread not by Macedonian teenagers or Kremlin operatives but by established news outlets such as MSNBC, the Atlantic and Newsweek. And, by design, this Fake News spread like wildfire all over the internet, hungrily clicked and shared by tens of thousands of people eager to believe it was true. As a result of this deliberate disinformation campaign, anyone reporting on the contents of the emails was instantly met with claims that the documents in the archive had been proven fake....

I will be shocked if any of them now acknowledge this even with [Marco] Chacon’s confession [see link below]. That’s because MSNBC has repeatedly proven that it tolerates Fake News and outright lies from its personalities as long as those lies are in service of the right candidate (when Democrats were smearing Jill Stein as a Kremlin stooge, Reid’s program aired Nance’s lie to MSNBC viewers that Stein had previously hosted her own show on RT: an utter fabrication that MSNBC, to this day, has never corrected or even acknowledged despite multiple requests from FAIR).
Every day, literally, you can turn on MSNBC and hear various people so righteously lamenting the spread of “Fake News.” Yet MSNBC itself not only spreads Fake News but refuses to correct it when it is exposed. How do they have any credibility to denounce Fake News? They do not....
But the problem here goes way beyond mere hypocrisy. Complaints about Fake News are typically accompanied by calls for “solutions” that involve censorship and suppression, either by the government or tech giants such as Facebook. But until there is a clear definition of “Fake News,” and until it’s recognized that Fake News is being aggressively spread by the very people most loudly complaining about it, the dangers posed by these solutions will be at least as great as the problem itself.

The Intercept
A Clinton Fan Manufactured Fake News That MSNBC Personalities Spread to Discredit WikiLeaks Docs
Glen Greenwald

You MUST READ this.

The Daily Beast
I’ve Been Making Viral Fake News for the Last Six Months. It’s Way Too Easy to Dupe the Right on the Internet.
Marco Chacon

Moar links on fake news

All links below are from Naked Capitalism

Black Agenda Report
White Supremacy, U.S. Exceptionalism and Capitalist Dogma are All “Fake News”
Glen Ford | BAR executive editor
Maxwell Tani

Fabius Maximus — Today’s news shows America’s dark future. It’s time to act, not just watch.

I would elaborate on "dark future" as a dialectical clash of incompatible ideologies that is headed toward conflict to determine which will prevail in the liberal world. As social conflict rises, authoritarian "solutions" tend to rise also. The consequence is that in overreacting to the prospect of growing socialism, liberalism tends toward imposition of fascism to protect itself.

Fabius Maximus

Ruslan Ostashko — Yalta 2.0: The Atlanticists' #1 Fear in 2017

Fort Russ
Yalta 2.0: The Atlanticists' #1 Fear in 2017
Ruslan Ostashko, LiveJournal - translated by J. Arnoldski

Noah Smith — A Better Theory to Explain Financial Bubbles

But to gain wide acceptance, extrapolative expectations will have to overcome years of entrenched convention in the economics profession. The near-ban on using anything other than rational expectations is still very strong. In the hunt for truth, sociology is often the greatest barrier.
The problem is equating nominal market price with underlying value, "the fundamentals."

Nominal market price is determined at the margin and can therefore vary both rapidly and widely.

While it is a truism that "in the long run" prices must approximate fundamentals, in the short run a lot of people can be ruined, and there is no model available that is conclusive — because "animal spirits" (Keynes). Traders call it "momo," signifying "momentum," which measured as changes in velocity and acceleration of trends.

The assumptions involved in current models based on rational expectations are too restrictive to account for observed phenomena which include bubbles and busts. The scope of the models are too narrow and miss the "action."

Economics hate to admit that they don't have a model, so they stick with the "best explanation" — which doesn't work at crucial points.

This is a problem affecting regulation and policy since regulators are often economists‚ think Allan Greenspan and Ben Bernanke, and policy is heavily influenced by conventional economic theory and models. Worse, regulators that warn about uncertainty and overextension are sometimes let go as result of being honest.

Bloomberg View
A Better Theory to Explain Financial Bubbles
Noah Smith, Contributor

Bill McBride — Fed's Flow of Funds: Household Net Worth increased in Q3

Household net worth was at $90.2 trillion in Q3 2016, up from $88.0 trillion in Q2 2016.
Calculated Risk
Fed's Flow of Funds: Household Net Worth increased in Q3
Bill McBride

Dirk Ehnts — A comment on the trickle-down economics of Arthur Laffer, 2017 Trump edition

Laffer’s trickle-down economics did not do well empirically. Whether a cut in taxes stimulates the economy is a different question, and also any changes in tax rates might be overcompensated by changes in government spending taking place simultaneously. This, I believe, was part of the bait-and-switch under Ronald Reagan (tax cuts for the rich, but huge increase in government spending on defence) and will be part of the Trump policy, too. Nothing new here.
econoblog 101
A comment on the trickle-down economics of Arthur Laffer, 2017 Trump edition
Dirk Ehnts | Lecturer at Bard College Berlin

Capitalism in the Time of Trump? — Lynn Parramore interviews Mariana Mazzucato

Mariana Mazzucato, Professor of the Economics of Innovation at the Science Policy Research Unit of the University of Sussex and author of The Entrepreneurial State: debunking public vs. private sector myths, has made a passionate case for the government’s active role in the economy —sending the old laissez faire notion that markets can run themselves into the dustbin where it belongs. In a new book co-edited with Michael Jacobs, Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth, she offers a bold new vision for contemporary capitalism that works for the people and the planet. What chance does this vision have in the age of Trump and Brexit? Mazzucato shares her view.
Capitalism in the Time of Trump?
Lynn Parramore interviews Mariana Mazzucato, Professor of Economics, University of Sussex

Erik Bähre — Towards a Heterodox and Reflexive Economics

After the 2008 financial crisis, the call for a more heterogeneous approach to studying and teaching economics intensified. But how can heterodoxy take up a more prominent place in economic science? A cultural anthropologist offers three suggestions.
Category of doh. Conventional neoclassically trained economists don't get any of this. Institutional economists do.

The Human Economy
Towards a Heterodox and Reflexive Economics
Erik Bähre | Associate Professor, Institute of Cultural Anthropology and Development Sociology, Leiden University