EMPIRE
1.Pride Before the Fall
After World War II, victorious British politicians saw the United Kingdom as a first-class power that would rival the United States. Britain looked like a world power in terms of its navy and army. But it was all based on a mirage of debt.
According to the BBC:
John Maynard Keynes, the chief economic advisor to the new Labour Government, warned ministers in August 1945 that Britain's world role was a burden which '... there is no reasonable expectation of our being able to carry ...'
As he pointed out, the entire British war effort, including all her overseas military commitments, had only been made possible by American subsidies under the Lend-Lease programme. If the Americans stopped Lend-Lease, Britain would face a 'financial Dunkirk' - his words - unless Washington could be touched for a loan of $5 billion.
Keynes wrote that such a 'Dunkirk' would have to be met by: '... a sudden and humiliating withdrawal from our onerous responsibilities with great loss of prestige and the acceptance for the time being of the position of second-class Power, rather like the present position of France.'
History tells us that Briton squandered $4 billion in Marshall Plan money on keeping the dreams of empire alive while Germany rebuilt its factories and infrastructure. The U.K. had sought to revive the sterling and be the banker to the world. Yet, by the end of 1947, the U.S. dollar was ascendant, and the U.K. had wasted its money.
In 1949, the sterling devalued, caused by a balance of payments crisis. By the 1950s, new plants in Germany were about to start putting out millions of Volkswagen Beetles.
On a side note, the Americans offered the VW factory to the British to be dismantled and shipped to Britain in 1945. No British car manufacturer was interested. An official report included the phrases: "The vehicle does not meet the fundamental technical requirement of a motor-car... it is quite unattractive to the average buyer... To build the car commercially would be a completely uneconomic enterprise."
Creative Destruction
The U.K. in the post-war years missed the opportunity to reinvent itself for the new world because it was ingrained in the past. To use a business analogy, it was like Blockbuster and Netflix.
At one point, Netflix's CEO offered to sell out to Blockbuster for $50 million. But Blockbuster just couldn’t cannibalize cash flow of existing stores, though it must have known that the future of rental was online.
The U.S. is a global empire. We have over 800 bases around the world. There are 28,000 U.S. troops in South Korea alone. South Korea is the 11th largest economy in the world — surely it can pay for its own troops...
As a country, we owe more than $21 trillion and are growing that debt rapidly. This is happening at a time when the unemployment is low and GDP is expected to be 4% in the next quarter. We can’t reduce debt during the good times, and we will double it again when the next recession hits.
The longer an empire lasts, the more entrenched the powers become, and the harder it becomes to deviate from course. In business, there is something called “opportunity cost,” which is defined as the loss of potential gain from other alternatives when one alternative is chosen. The VW Beetle and Netflix were just two examples.
The question is not "What will we lose by deviating from the status quo?" but "What have we given up by not?"
What is the price of empire?
All the best,
From <https://mail.google.com/mail/u/0/?shva=1#inbox/164195bafb523462>
SOLUTIONS
1.China Vowed to End Poverty, and It's Working...
By Vic Lederman, analyst, True Wealth
President Xi Jinping said it would be done by 2020. Now, I see it happening firsthand...
A few days ago, I took a ride with Steve on China's bullet train, traveling for our Asia Investment Opportunities Conference. We rode from Beijing to Shanghai.
That's 754 miles. And we covered it in a little less than five hours.
In the U.S., nothing compares. China's in the future. And we're playing catch-up.
Zipping through the countryside, though, you might not realize it. Little villages sped by, subsisting on agriculture. It's the view of China that most Americans expect... Out there, you get a glimpse of the country's working poor.
But next to each village, we saw something odd...
The typical view was interrupted by new construction. Not just once, but nearly every time.
We'd pass a little village. And right next to it would be clusters of cranes – each one working on a massive building.
China is literally lifting its citizens out of the dirt and up into the sky. And the growth has been incredibly rapid…
China's economic reforms started in the 1990s. Since then, it has lifted some 800 million people out of poverty.
About 30 million people still make less than 2,300 renminbi a year... or in U.S. dollars, slightly more than $350 per year. That's China's poverty line.
Now, the push is to get the last 30 million above the threshold. In a speech late last year, President Xi said that ending poverty by 2020 is one of his top goals.
You can see the progress in the economic data. Just look at China's growth in per-capita gross domestic product (GDP)...
That's a general measure of a country's economic activity. And from 1990 to 2016 – the latest data we have – China's economic output has grown more than 2,000%. Next to that, the U.S. looks like it's standing still. Take a look...
China is getting wealthier. And it's happening in a short period of time.
You can see the rise in prosperity through the construction in the countryside... and the upscale commerce of the city centers.
Yet most Americans don't see the opportunity. They still see the old China... the China of 30-plus years ago.
As a result, almost no one is talking about the major change that's taking place in China's stock market...
Regular readers have already heard the first part of the story from Steve. In short, China is finally joining the world's major emerging markets index. That means institutional investors will be forced to pour hundreds of billions of dollars into the local Chinese stock market – likely over the next five years or so.
It's going to happen. As of May 31, one inclusion has already taken place... And it's the first of many.
We believe this transition alone will create the greatest bull market in China investors have ever seen. But it doesn't stop there.
Steve – my mentor and friend – has found another trillion dollars that's ready to flow into China's stock market. And he recently wrote about it in his True Wealth China Opportunities newsletter.
This will be another massive influx of institutional money. And it will reshape China's stock market.
Vic Lederman
INEQUALITY
1. As the rich become even richer – 145 more dollar billionaires were minted last year – orders for new superyachts (longer than 24 metres) have hit a record high. More than 500 are being built in shipyards around the world, and with many requiring at least 100 staff, superyachts now employ more than 37,000 people. Britain’s seafaring history has made it the biggest source of employees; crewing on a superyacht is so popular among young adventurers that Southampton Solent University now offers degree-level training at its Warsash Superyacht Academy. Every spring, dozens of young Brits decamp to Antibes on the Côte d’Azur, the unofficial centre for superyacht crew recruitment, where you can wander along the docks looking for opportunities.
NEOLIBRALISM
1. For bourgeois capitalist economists, "economism" is reduction of all social facts to economic dimensions. The term is often used to criticize economics as an ideology, in which supply and demand are the only important factors in decisions, and outstrip or permit ignoring all other factors. It is believed to be a side effect of neoclassical economics and blind faith in an "invisible hand" or "laissez-faire" means of making decisions, extended far beyond controlled and regulated markets, and used to make political and military decisions. Conventional ethics would play no role in decisions under pure economism, except insofar as supply would be withheld, demand curtailed, by moral choices of individuals. Thus, critics of economism insist on political and other cultural dimensions in society.
Old Right social critic Albert Jay Nock used the term more broadly, denoting a moral and social philosophy "which interprets the whole sum of human life in terms of the production, acquisition, and distribution of wealth". He went on to say "I have sometimes thought that here may be the rock on which Western civilization will finally shatter itself. Economism can build a society which is rich, prosperous, powerful, even one which has a reasonably wide diffusion of material well-being. It can not build one which is lovely, one which has savor and depth, and which exercises the irresistible power of attraction that loveliness wields. Perhaps by the time economism has run its course the society it has built may be tired of itself, bored of its own hideousness, and may despairingly consent to annihilation, aware that it is too ugly to be let live any longer."[2
2. is long past time that we, as a nation, stop worshipping the corporate greed of Disney and businessmen like Bob Iger, their CEO.
While he may be regarded as a brilliant and successful businessman among his peers in the financial, media, and political elite, the truth is that the way Bob Iger and Disney treat their workers represents much of what is wrong with contemporary capitalism.
This is a company, and a CEO, that accepted an obscene tax cut gifted to them by the Trump administration and Republicans in Congress, publicly promised to anyone who would listen a $1,000 bonus for all of their employees, and then withheld that bonus from some union employees unless they agreed to a contract that gave them a tiny raise to a wage that is still a starvation wage.
This is a company, and a CEO, that in addition to paying their workers here at home extremely low wages, employs many thousands of people in China to manufacture their products sold at Disney stores and online.
This type of greed and ruthless capitalism is not an economic model that we should be embracing. It is not to be celebrated. We can do better, and we must do better.
That is why this weekend I am heading to California to stand with Disney’s workers and to demand that Disney pay them wages and benefits which allow them to live with dignity and security.
I want to bring your voice with me. Make them hear the outrage that so many of us feel with regard to this type of economic exploitation.
In addition to my event with Disney workers and union leaders, I will visit Carson, California for a town hall with port truck drivers, who handle 40 percent of consumer goods and merchandise imported into our country – and warehouse workers serving the Port of Los Angeles and Long Beach. These are some of the most abused and exploited workers in America, and I intend to support them and demand that they are paid a living wage with decent benefits.
I am also very excited to join Black Lives Matter co-founder Patrisse Cullors and Real Justice co-founder Shaun King for a rally to discuss the steps we must take to radically reform our broken criminal justice system
I hope you will stay tuned to our social media channels for live video from these stops. And I will be in touch when they are over.
The Political Revolution continues.
In solidarity,
Bernie Sanders
3. Last September, Republican House Speaker Paul Ryan stood in front of a Harley-Davidson plant in Menomonee Falls, Wisconsin and promised that “tax reform can put American manufacturers and American companies like Harley-Davidson on a much better footing to compete in the global economy and keep jobs here in America.”
Trump himself said that under his tax plan U.S.-based companies would be able to “create more jobs and more factories in the United States” and raise the wages of working people by at least $4,000 a year.
Yet, just one month after the Trump-GOP tax scam was signed into law, Harley-Davidson announced the closure of a plant in Kansas City, Missouri, which employs 800 people. At about the same time the company rewarded wealthy shareholders with a $700 million stock buyback plan. Then the company announced it will be opening a brand new manufacturing plant…..in Thailand!
Let’s call the President’s tax plan what it is: a scam.
Unfortunately, Harley-Davidson’s actions are not unique. Across the country, large corporations such as Apple, Pfizer, ExxonMobil and others are enriching shareholders, not workers. One ATF report shows that since the tax scam became law, corporations have spent 66 times as much on stock buybacks as on pay raises for their workers. The Associated Press reported that Trump’s tax scam gave a $1.2 billion monthly tax cut to the country’s six largest banks―enough money to give every single full-time public school teacher a raise of $375 a month.
And Paul Ryan and Congressional Republicans aren’t through yet. They’re crafting a second round of tax cuts that they want to vote on before the August recess―another massive giveaway to the wealthy.
From <https://mail.google.com/mail/u/0/?shva=1#inbox/163b228124da09af> Retail sales data is a treasure trove of such information.
by Lee Adler
While the top line again showed boffo growth in April, when we peel back the layers we are once again confronted with my theme of the Tale of Two Economies. Those of us at the high end of the spectrum are doing so well that we skew the totals nicely positive. But the majority of American consumers are barely treading water. The base of the economic pyramid is being hollowed out, and that should concern those of us fortunate enough to live near the top. The fruits of our labors are at stake. ...
This number is an average. Top income earners skew that average to the upside. Even with that, the average is flat. This highlights the fact that most people can't even maintain recent spending levels, and have only recovered back to where they were in 2004, 2005, and 2006. The majority of consumers in the US haven't been able to increase spending back to where they were 13 years ago. And whatever recovery they had experienced since the recession, stalled in 2016.
This is an example of the hollowing out of the US economy. The top line looks great, thanks to big spending high earners like many of us. But we should be worried, because the bulk of people can't keep up, and US businesses need them as customers if they are to grow at all. At the same time, the US economy is burdened with record and growing debt.
4. “Trump is not a rupture at all, but rather the culmination — the logical end point — of a great many dangerous stories our culture has been telling for a very long time,” Klein writes. “That greed is good. That the market rules. That money is what matters in life. That white men are better than the rest. That the natural world is there for us to pillage. That the vulnerable deserve their fate and the one percent deserve their golden towers. That anything public or commonly held is sinister and not worth protecting. That we are surrounded by danger and should only look after our own.”
5. “Trump is not a rupture at all, but rather the culmination — the logical end point — of a great many dangerous stories our culture has been telling for a very long time,” Klein writes. “That greed is good. That the market rules. That money is what matters in life. That white men are better than the rest. That the natural world is there for us to pillage. That the vulnerable deserve their fate and the one percent deserve their golden towers. That anything public or commonly held is sinister and not worth protecting. That we are surrounded by danger and should only look after our own.”
6. Review: How Corporate America Won Its Civil Rights
“e the CWorporations: How American Businesses Won Their Civil Rights” charts the strategies and philosophical battles that have now earned state-created corporate entities much the same civil rights as individual citizens.The sheer volume of existing scholarship on the history of civil rights in the United States poses a formidable challenge to any academic seeking to say something new or unexpected. Adam Winkler, a professor at the law school at the University of California Los Angeles, has nonetheless managed to produce a work that is both engrossing and surprising. Professor Winkler has identified a secret parallel universe of civil rights whose beneficiaries are not the “discrete and insular minorities” whose protection were once the focus of the Supreme Court’s jurisprudence.From pre-Revolutionary times to now, “We the Corporations: How American Businesses Won Their Civil Rights” charts the strategies and philosophical battles that have now earned state-created corporate entities much the same civil rights as individual citizens. Professor Winkler argues that this has occurred because corporate rights “have largely been won in the courts, not in the streets, and have developed largely without much public scrutiny.”Recent Supreme Court decisions in the Citizens United and Hobby Lobby cases have brought the apparent triumph of corporate rights to the forefront of the national consciousness. But the nature of the role of corporations in United States history is poorly appreciated, often undermining the quality of the resulting debate. We celebrate the persecuted Pilgrims’ landing at Plymouth Rock in 1620 every Thanksgiving, but years earlier “the Virginia Company of London founded England’s first permanent New World colony in Jamestown.” And few realize that key portions of the earliest state constitutions — including the recognition of individual rights — are lifted wholesale from the corporate charters of these early colonies.That said, given the absence of any mention in the Constitution of corporations or, with the exception of the First Amendment’s reference to “the press,” businesses of any kind, the ability of these “artificial persons” to secure many of the same rights as real people is a little shocking. The corporate rights movement achieved this result by following many of the same tactics as the more familiar modern African-American civil rights movement, using test cases and civil disobedience. More broadly, the biggest differences between the corporate and individual civil rights movement is the relentlessness and rate of success of corporate litigants.
Nowhere is this more apparent than in the earliest cases dealing with the amendments to the Constitution ratified in the aftermath of the Civil War. Although the Supreme Court acknowledged that the “one pervading purpose” of these amendments was “the protection of the newly made freeman and citizen from the oppressions of those who had exercised unlimited dominion over him,” its jurisprudence reflected a starkly different perspective.Of the more than 600 cases the Supreme Court heard dealing with 14th amendment’s guarantee of equal rights between 1868 and 1912, less than 5 percent involved African-Americans at all. When they did, as in the infamous Plessy v. Ferguson case upholding the principle of separate but equal, African-Americans almost always came up short. Corporations invoking the protections of the new constitutional provision, by contrast, “succeeded in striking down numerous laws regulating business, including minimum wage laws, zoning laws, and child labor laws.”Even when individuals or public interest nonprofit organizations that have succeeded in establishing new rights at the highest court, for-profit corporations have managed to reap the bulk of the benefits. For instance, Ralph Nader’s big consumer victory in the Virginia Pharmacy case in 1976 would be used decades later as a precedent to justify Citizens United’s broad protection for corporate “political speech.” Mr. Nader’s litigation arm, Public Citizen, would ultimately disavow the entire line of cases it had spawned.Another reason corporations have been so effective is their ability to afford the best lawyers. From Daniel Webster to Ted Olson, the most effective advocates have been enlisted by corporations to press their cases.One of the most remarkable stories in the book relates to the fabled Supreme Court advocate Roscoe Conkling. He was the last surviving member of the Senate Committee that had drafted the civil war amendments and had recently been confirmed but declined to serve on the Supreme Court. No one had more credibility with the court. Arguing for new corporate rights on behalf of the Santa Fe Railroad, Mr. Conkling flashed his notebook from the Senate committee deliberations and claimed that the word “citizens” had been changed to “persons” precisely to protect corporations. Years later, scholars examined the notebooks and concluded that the claim was fabricated for the benefit of Mr. Conkling’s client.Of the many fascinating surprises of “We the Corporations,” none is more consequential than its rejection of the conventional wisdom that treating corporations as legal “persons” has fueled the corporate rights movement. In fact, where courts have recognized corporations as “people,” it has usually been for narrow purposes such as the right to enforce contracts or other property rights. Professor Winkler convincingly demonstrates that the more expansive theories of corporate rights often rest on piercing the so-called corporate veil and allowing the corporation to effectively enforce the rights of its shareholders in its own name.Ironically, the same corporatists who have embraced piercing the corporate veil for the purpose of securing new rights are the most vociferous in enforcing the veil to protect the corporation from any possible liabilities. As we await the Supreme Court’s decision in the critical case of whether a business can decline to serve a customer based on its distaste for same-sex marriages, all citizens would do well to pick up a copy of “We the Corporations” to understand the full implications of what it decides.
Jonathan A. Knee is a professor of professional practice at Columbia Business School and a senior adviser at Evercore. His latest book is “Class Clowns: How the Smartest Investors Lost Billions in Education.”
8. TAX SCAM
Six months after passage
of Tax Scam Round 1, here is what we know:
83% of the tax cuts are still going to the richest 1%.
Just 4% of workers have gotten a pay hike due to the
tax cuts -- a one-time bonus or wage hike.
The cost of the tax cuts has ballooned from $1.5
trillion to $1.9 trillion, emboldening GOP lawmakers to demand even more cuts
to Medicare, Medicaid, Social Security, education and more.
Trump proposed a budget that would cut funding for
these critical services by $1.7 trillion to pay for his tax scam.
Prescription drug companies, health insurers, Wall
Street banks and other major industries are getting huge tax breaks and not
sharing the wealth with consumers or their employees.
9. EFFECTS OF NEOLIBERALISM
the CDC reported
that between 1999 and 2016, suicide rates in all but one state in the U. S.,
across age, gender, and ethnic lines, increased. Suicides, in fact, are the
second leading cause of death for people ages 15-34. Throw in the other “deaths
of despair,” such as drug overdoses and complications from alcoholism, and we
have a public health crisis of the first order.
CRISES
The Genoa Accord, May 1922: 34 nations gathered at the Palazzo di San Giorgio in Italy to “reboot” what was called the gold exchange standard and restore the international monetary system.
The Threadneedle Street Accord, 1931: With gold flowing out of the UK, loans from New York and Paris exhausted and a budget crisis underway, the Bank of England decided to abandon the gold standard and devalue the sterling. This “rebooted” the economy and stopped the crisis.
The White House Accord, 1933: Franklin Roosevelt unilaterally creates a two-step plan to try and “reboot” the U.S. economy out of the great depression. First he confiscated the nation’s private gold holdings. Then, he ordered a 60% devaluation of the dollar — moving the price of gold from $20.67 to $35 per ounce.
The Bretton Woods Accord, July 22, 1944: 44 countries and 730 people gathered in New Hampshire to “reboot” the post-WWII monetary system. The dollar was tied to gold at $35 per ounce. And the rest of the world’s currency was tied to the dollar and convertible into gold.
The Smithsonian Accord of December 1971: The “Group of 11” — U.S., UK, Japan, Canada, France, West Germany, Belgium, Netherlands, Italy, Sweden and Switzerland — agreed to “reboot” the dollar by devaluing it by 8%.
The Jeddah Accord in July, 1974: The U.S. was facing an oil crisis… runaway inflation… a crashing stock market and recession. Nixon sent Henry Kissinger and William Simon to Saudi Arabia and rebooted the dollar by creating the “Petrodollar Deal.” This priced oil solely in U.S. dollars in exchange for defending the Saudi royal family with U.S. military might. Since everyone needs oil, everyone needed dollars so they could buy it. This massive new demand for dollars saved the American financial system.
The Plaza Accord , September 22, 1985: Signed at the Plaza Hotel. There, the top financial officials from the United States agreed with the UK, West Germany, France and Japan to reboot the dollar to a lower value to help the world economy.
The Louvre Accord, February 22, 1987: After the Plaza Accord didn’t work out so well, a new accord was signed at the Louvre Museum in Paris to correct the mistakes. The damage was so bad from the Plaza Accord that the group agreed to reboot the dollar once again and halt the dollar’s devaluation.
The Shanghai Accord on February 27, 2016: I was one of the leading researchers trying to sound the alarm on this accord. This was a failed Obama policy. His idea was to purposely weaken the dollar in order to help China from collapsing, because China’s currency is pegged to the dollar. It hasn’t helped the U.S. economy at all. In fact, it’s put it at risk.
From <https://pro.af-financial.net/p/AWN_dollarreboot_0717/PAWNU224/Full?s1=&s2=&s3=1_10760953822322204&h=true> K
2. THERE HAVE BEEN $1.4 TRILLION IN ATTACKS ON THE DOLLAR
- The United Kingdom ($18.7 Billion Betrayal):Joined China’s Foreign Exchange Trade System to bypass the U.S. dollar and trade directly in sterling and yuan.
- China ($100 Billion Attack): The Chinese official sector sold almost $100 billion of U.S. stocks over the past year. They've been reducing their Treasury holdings. And they've secretly been stockpiling hundreds of tons of high-purity gold bullion bars.
- Iran ($1.2 Billion Attack): Has used gold to avoid U.S. sanctions and the dollar-based payments system called SWIFT.
- South Africa ($2.5 Billion Attack): Has joined with the BRICS nations to create a bank that will extend at least $2.5 billion so far in 2017 in non-dollar credit to the world.
- Hong Kong Monetary Authority and South Korea ($83 Billion Betrayal): Both have joined and expanded their roles in the CMI, or Chiang Mai Initiative, which is a non-dollar currency swap agreement with the 10 countries that comprise the ASEAN nations, including Indonesia, Cambodia, Brunei, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
- India ($8.2 Billion Betrayal): Has made agreements with Japan to receive yen for internal development projects, instead of turning to U.S. development institutions like the World Bank for dollars or going to the U.S. government itself.
- Japan ($69 Billion Betrayal): Has agreed to circumvent the dollar and trade directly with China in billions worth of yuan and yen. One news outlet says the move aims to “hedge the risk of the dollar’s fall in the long run as the world’s key settlement currency.”
- Switzerland ($24.17 Billion Betrayal): Agreed to help China develop its offshore yuan market so more countries can diversify away from dollars into yuan. According to Bloomberg, the Swiss franc makes “the seventh major currency that can bypass a conversion into the U.S. dollar and be directly exchanged for yuan.”
- Sweden, Norway and Denmark ($2.5 Billion Betrayal): Created a euro currency-beeline to Iceland that doesn’t require dollars.
- South Korea ($20 Billion Betrayal): Has created bilateral currency swap agreements with Australia, China, Malaysia and Indonesia that last until 2020. They’ve renewed a multibillion won-yen currency swap with Japan. And they’re also actively trying to forge a direct currency swap deal with the United Arab Emirates.
- Russia ($7.8 Billion Attack): Is actively recruiting nations to trade oil in rubles instead of dollars and having its largest state-owned oil company issue its corporate debt in Asian currencies instead of privileging dollars. Bloomberg says its “aim is to move away from quoting petroleum in U.S. dollars.”
- United Arab Emirates ($55 Billion Attack):Created a bilateral trade deal with China to trade in dirhams and renminbi. One expert said the Chinese are “trying to shoot for an alternative currency to the dollar.”
- Saudi Arabia ($750 Billion Attack): Threatening to take a $750 billion prop out from under the U.S. dollar if America doesn’t meet its demands.
- The International Monetary Fund’s Betrayal:Added the Chinese yuan to its supranational currency, the Special Drawing Right. One millionaire commodity investor remarked upon the news, saying, “The U.S. dollar is a very flawed currency… [the yuan] will probably challenge the U.S. dollar.”
s1=&s2=&s3=1_10760953822322204&h=true k
COMMON GOOD
1. There's the beautiful quote by Dr. King that says the arc of the moral universe is long but it bends toward justice. Now, there have been many, many days of recent when you could certainly have an argument over that. But I've lived long enough to see that in action and to put some faith in it. But I've also lived long enough to know that arc doesn't bend on its own. It needs all of us leaning on it, nudging it in the right direction day after day. You gotta keep, keep leaning.
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