An Anecdote Involving Air Conditioning

Update: Thanks again to Batocchio for sharing this blog at Crooks & Liars' Mike's Blog Round-Up! Just remember to save up your pennies, kiddos, 'cause trump's tariff rollercoaster ain't done yet.

Last week, I needed to replace my air conditioner.

The unit was as old as the duplex, built in the mid-1990s. I bought the place - with my parents help, as I was still recovering from long unemployment - in 2014 with the understanding that things were 20-plus years old and at some point will age out and die on me.

The AC compressor had been a problem for years, barely generating enough air to cover the two-bedroom place. The far ends of the house - which happened to be the master bed and bath - wasn't getting much air at all the last five-six years. The AC repair guy told me the last two annual checkups that the compressor was doomed sooner rather than later. This winter, it finally doomed.

The repair guy came out and checked, and showed me the points of failure in the compressor that meant getting a replacement. Problem is, the whole unit was thirty years old, and replacement parts - even compressors - were no longer available. The whole thing needed switching out.

And the cost was going to be around $7500.

Any homeowner will tell you things can get expensive - have been even before the housing booms of the 1980s and 1990s, and the housing market crash of 2007-08. It was still something above my annual income, and it was something I had to get further help from the parents, who were understanding because they knew I lived alone and had no other options other than an equity loan that would cost me a lot more later down the road. They had already helped to clear my mortgage, so replacing the AC was something they could help.

Also, this is the middle of Florida, heading into April and the goddamn heat wave that is April through November anymore (fuck you deniers, climate change is REAL). Air conditioning should not be a privilege, it should be a constitutional right in this state.

So I put in the repair order, the AC guys came out with a three-person crew, they worked on it early Thursday morning well into noon, finishing an hour early, and got the system turned on and pumping clear air. I checked: the new compressor is strong enough to get air to the back rooms of my duplex. At last.

While showing me that new compressor, pointing out what I need to look at in case there are any issues during the limited warranty period for it, the three AC guys all complimented me on spending $7500 on the whole thing.

"Why?" I asked.

"Because," the lead guy responded. "Next week, our company has to raise the price on these units by 20 percent."

Basic math told me 20 percent (.2) of $7500 (and change) was $1500 (and change) meaning a cost spike to $9000 (and change). THAT would have even made my parents give pause and suggest I just live with the ceiling fans on full blast for the rest of my life. 

I had to ask this. "Is this because of the trump tariffs?"

All three of the repair guys - where at least one of them had to have voted for that shitgibbon trump in 2024 - said "Yup!" while shaking their heads in discomfort if not alarm.

And this was just as trump unleashed his "liberation" Retribution tariffs on every country and territory on the maps - save for his buddies in Russia - to where we've started trade wars with the entire planet - again, save for Russia - even the islands populated solely by penguins (no, I am not making that up).

I could go into the illogic of trump - and his handlers' - math regarding how his tariffs are "fixing" any trade deficits we have with penguins and most of humanity, and I would argue that trade deficits we've had since the 1970s aren't damaging our economy the way trump claims. Hell, it's not trade deficits that have caused recessions, it had been reckless deregulation of financial markets; the upending of our housing markets; and a global pandemic that our political leaders - especially trump himself - barely took serious.

But I'm sticking to this anecdote as an example - that I'm certain is repeating across many households  this weekend - that right now, the American economy as we know it - our industrial capacity, our supply chains, our ability to provide goods and services, our ability to get reliable air conditioning - is doomed by trump's irrational and aggressive push for high tariffs.

The U.S. economy is not ready for any of this. And all the other damage trump and his lackeys are inflicting on us - the dismantling of our federal agencies, the theft of revenues, the growing job losses - is turning this all into the early stages of an economic depression. It won't even be a recession long enough to ease the coming fall off the cliffs.

Gods help us.

The Problems with trump's Tariffs

This week's trumpian chaos focused a lot on his threat to impose broad and heavy tariffs on three of our major trade partners of Canada, Mexico, and China, something that the economic experts warn would trigger more inflation than U.S. voters realize and escalate retaliation and trade wars across the globe.

In the days following, there had been a good amount of punditry and pushback on the matter, during which trump's people walked back the comments or tried to reframe the topic. There are think pieces about how trump might be "bluffing," that he's trying to force the likes of Mexico and Canada to the negotiation table - much like how trump shredded the existing NAFTA deal to force a new USMCA agreement that barely changed anything - to gain more concessions he didn't get then.

My view on all this is to consider taking trump at face value when it comes to tariffs. he's had a long history of loving the concept of them, and he had spoken - early and often - that trade wars are "good and easy to win". And it's not even a trade war trump seems focused on: he talked during the 2024 campaign about the McKinley Tariffs of 1890 and how such tariffs could replace income tax as the government's main source of revenue.

There's no chess game here: trump genuinely wants to increase tariffs because he views them as win-win.

trump - and his pro-tariff allies in his transition team - refuse to see the larger historical trends surrounding tariffs, trade wars, and their impacts on economic stability. The non-profit Tax Foundation published Erica York's report looking into how other factors in the 1890s countered the negative economic impacts of the McKinley Tariffs... factors that were NOT in play during the later tariffs of the 1930s:

As a review, tariffs are a type of excise tax (a narrowly targeted consumption tax) applied to domestic consumption of foreign-produced goods. Since the depths of the Great Depression and the collapse in global trade after the 1930 Hawley-Smoot tariffs, US policy shifted away from restrictive tariffs in favor of multilateral cooperation to reduce tariffs (as economist Douglas Irwin explains in his book Clashing Over Commerce).

That shift in policy sent the average tariff rate on a downward path, from highs of 59.1 percent on tariffed goods and 19.8 percent on all imported goods during the Great Depression to an average of 4.7 percent on tariffed goods and 1.4 percent on all imported goods in 2017...

As Chairman of the House Ways and Means Committee, McKinley shepherded the Tariff Act of 1890 into law. At the time, the federal government was running a budget surplus of nearly 50 percent, and tariff revenues substantially outpaced government spending. The McKinley tariff was designed to fix that problem, moving sugar (which accounted for a large share of revenues) to the “duty free” list, providing direct subsidies to sugar producers (to replace the benefit of tariffs and increase spending), and raising tariffs on a variety of other imports.

The McKinley tariff and higher government spending brought a swift backlash, earning the Republican-controlled Congress the nickname of “Billion Dollar Congress,” and leading to Republican defeats in the 1890 midterm elections (McKinley himself lost his reelection). In 1892, while monetary and banking policies were larger issues, Democrats ran heavily against the protectionist tariffs and the “Billion Dollar Congress,” and won unified control of government.

Democrats did not get to make good on their promises to address protectionist tariffs immediately, because the nation fell into a deep recession (caused by monetary policies). In late 1893 and early 1894, Democrats took up the tariff issue, but as the bill worked its way through Congress, it strayed from its original goals: a House amendment added an income tax, Senate amendments added back many protectionist tariffs, and ultimately, President Cleveland allowed the law to take effect without his signature.

Dissatisfaction with the broader state of the economy, still in a monetary-policy-related downturn, led to a Republican sweep in the 1894 midterm elections and the election of Republican President McKinley in 1896. Just four months after convening, Republicans sent a new tariff bill, the Dingley Act of 1897, to McKinley, raising protective tariffs even higher than the Tariff Act of 1890.

Many at the time credited tariffs for the economic recovery that soon took shape. Likewise, Trump often credits these high tariffs with the industrial growth of the US during the period.

But as economist Doug Irwin explains, around the same time as the new tariffs were enacted, the global supply of gold began to increase, easing the monetary conditions responsible for the economic downturn and bringing about a recovery.

Further, many economic historians have cautioned that impressive growth in the late 1800s and early 1900s cannot be explained by high tariffs. Instead, labor force growth and capital accumulation—neither of which have strong links to tariffs—are responsible for America’s fast growth during this period. If anything, it is possible that the high protective tariffs of the late 19th century somewhat hindered America’s economic growth.

Ironically that period saw a massive increase in immigration, which fueled that labor force growth. Something that trump and his anti-immigrant allies are going to undermine the same time they'll push their tariffs plans. York and Irwin both point out how our gold reserves expanded - that Klondike Gold Rush by the by - back in a time when the gold standard established our currency's value. We won't have those resources today to balance out the economic chaos that trump's tariffs will unleash.

trump's agenda to replace our current income tax system - which would be a massive boon to the uber-rich - with tariffs would be a disaster all its own. Kimberly Clausing and Maurice Obstfeld at the Peterson Institute for International Economics - a nonprofit think tank - looks at the numbers on that:

To be sure, when Trump vents before friendly audiences, one has to take it with a large grain of salt. But a partial substitution of tariffs for income tax revenues is nearly inevitable under a Trump presidency. He has repeatedly proposed increased tariffs, including a 10 percent across-the-board tariff on all trading partners as well as 60 percent or higher tariffs on goods from China. He has also called for extending the tax cuts enacted in 2017, which are due to expire next year, a step that could easily cost as much $5 trillion over ten years. And Trump has suggested further cuts, particularly on the corporate side...

Can tariffs replace the income tax?

Simply put, NO. Tariffs are levied on imported goods, which totaled $3.1 trillion in 2023. The income tax is levied on incomes, which exceed $20 trillion; the US government raises about $2 trillion in individual and corporate income taxes at present. It is literally impossible for tariffs to fully replace income taxes. Tariff rates would have to be implausibly high on such a small base of imports to replace the income tax, and as tax rates rose, the base itself would shrink as imports fall, making Trump’s $2 trillion goal unattainable.

A recent Peterson Institute policy brief calculated that revenues from Trump’s 10 percent/60 percent tariff proposals would total about $225 billion per year in current dollars. This figure is certainly an overestimate because it does not account for lower economic growth due to the inevitable economic shocks caused by retaliation against US exporters and the losses suffered by the import-dependent manufacturing sector. Exporters would also be hit by an appreciating dollar...

Another consideration that comes into play is that the United States already raises about $50 billion from tariffs on imports. That amount reduces the revenue potential of new tariffs relative to figure 1. In addition, a tariff as large as 50 percent would create very large distortions in Americans’ economic activity (moving resources away from sectors where the United States has a comparative advantage and toward sectors where it is less efficient), while increasing tax avoidance and evasion (including shopping abroad, smuggling, lobbying government officials for exemptions, etc.)...

trump is looking to replace an established - and deep - means of revenues for our federal government and installing a revenue source that's neither deep nor reliable. If we want to talk about "running government like a business," this is akin to price-hiking your goods or services to where you lose your customers who refuse to pay even if you're the only business in town.

Now you can see how trump kept driving his own casinos into bankruptcy.

If there's any good news about all this tariffs speculation is that for anything tariff increase on a large scale, trump could be stymied by the existing USMCA agreement as well as a Congress - even one that's Republican-controlled - that's not about to commit political suicide like this.

However, we exist in a new reality where the Supreme Court expanded presidential powers to where trump could get away with ANYthing without Congressional approval under the umbrella of "official acts." And given how he'd unilaterally forced tariffs during his first term, he's going to want to do that again, this time with more devastating results.

Thanks again, 75 million voters. You unleashed this economic chaos on us. I only hope the Tariff Leopards eat you first.

Liz Truss Is In Trouble

Update: Ooof, what? I was at work today, what's all this about Batocchio adding this article to Crooks & Liars' Mike's Blog Round-Up this morning? Dammit, I didn't vacuum the rug or anything! (hurries to clean up the place) Um, glance around, I got other stuff to read. Also, in a couple of weeks I will find out if any of my blog articles up for the FWA's Royal Palm Awards will win anything, so keep an eye out for more news! Thank ye, Batocchio.

When last we checked in with the United Kingdom, the Brits were coping with the loss of their beloved Queen Elizabeth II while their Parliamentary government had chosen a replacement Prime Minister to take over from scandal-plagued Boris Badhair.

Liz Truss had just recently replaced Boris Johnson in early September, going up to Scotland to Elizabeth's pastoral retreat at Balmoral to present her credentials and perform the ritual - bowing, holding the hand, answering three questions to cross the Gorge of Eternal Peril, that sort of thing - each new PM does with the Crown. Only that within 24 hours of doing so, Elizabeth II fell ill and never recovered, which didn't exactly bode well for Truss.

It was as though Liz II met Liz T, and Liz II decided "Fuck all, this ditz isn't worth it, I'll let Charles handle this nightmare" and got out while the getting was good.

Because Liz Truss is turning out to be even WORSE as Prime Minister than Johnson was. Within a month of being in office, Truss has blundered from one bad mistake to the next, exposing her Conservative leadership to humiliation, creating economic catastrophes that can't be easily undone, and forcing her Tory allies to plot her early removal.

Christ. Even William Henry Harrison lasted longer than this (okay, I exaggerate, but Truss is honestly facing the shortest tenure as Prime Minister in British history).

Let's go to the dirty details with Tom McTague at the Atlantic (paywall):

Today, we had the absurd spectacle of a prime minister, barely a month into the job, abandoning the central tax-cutting purpose of her premiership and sacking her closest political ally, who had implemented this vision. This all in aid of a vain and surely doomed attempt to cling to power, after the markets concluded that her policies were insane. Never before has Britain found itself in such a humiliatingly risible position. It is the stuff of nightmares: the national equivalent of getting caught short onstage in front of your entire school because you chose not to go to the bathroom when you had the chance...

The political ally McTague speaks of was Kwasi Kwarteng, chosen to be her Finance Minister in her Cabinet, who was obsessive about the supply-side/trickle-down fantasies of massive tax cuts as stimulus in a British economy facing inflation and several other woes. When Kwarteng presented his tax-cut plan with Truss' approval, everything went to hell (back to McTague):

What Britain needed, Truss argued, was a tax-cutting bonanza to set it free. Her rival for the leadership was Johnson’s chancellor, Rishi Sunak, who argued for fiscal responsibility and warned that such a reckless policy would lead to a run on the pound and a calamitous series of mortgage-rate rises. Given this choice, the electorate for the Tory leadership—the roughly 170,000 members of the Conservative Party—preferred the magical money tree.

So, on September 23—two and a half weeks after taking over as prime minister—Truss and her new chancellor, Kwasi Kwarteng, announced an extraordinary array of tax cuts without any indication of how they would be paid for. They called this their “plan for growth.”

And then there was a run on the pound and a calamitous series of mortgage-rate rises...

If you've followed my blog, every so often I will come across the Republican Party's obsessions with tax cuts being a cure-all for all ills, and I will scream into the void that TAX CUTS DON'T WORK. Watching the British counterparts of the Tories trying to pull the same trickle-down fantasy and getting smacked by the real world is satisfying in a schadenfreude kind of way. Back to McTague:

The reaction to Truss’s plan was immediate and savage. The markets responded with horror at the sudden gaping hole in Britain’s budget. The pound collapsed against the dollar, almost reaching an unprecedented parity, and the cost of government borrowing rocketed. Huge interest-rate increases by the Bank of England began to be priced in as the only way to protect the currency, which, of course, meant stepping on the brakes after Truss had put her foot on the accelerator.

This, in turn, led ordinary banks to start hiking their mortgage rates in expectation of what was coming, just as Sunak had warned, which then sent the property-owning middle classes into a tailspin as they rushed to lock in new rates before the numbers spiked even further. Suddenly, the tax-cutting budget to get Britain growing again had turned into a massive hit on Middle England. Even the International Monetary Fund departed from protocol to issue a sharp rebuke to Truss’s government...

Her intraparty rival warned her, the UK banks warned her, and Truss STILL pushed ahead on an unjustified tax cut plan all because - Gods help the Conservative Party - they have no other plans that fit their world-view. Tax cuts are all they believe in much like the American Republicans, because they dare not think about raising taxes on their billionaire corporate allies to fix their government's budget woes. Again to to McTague:

In a single act of stupidity, Truss managed to blow up Johnson’s markedly redistributive election-winning platform—and therefore his coalition, which included disaffected Labour voters from the poorer north of England. Instead of spending more on public services, Truss detonated an economic bomb under the middle classes—first, by lifting the cap on bankers’ bonuses and cutting taxes for the rich, and then, faced with market turmoil, by scrambling around for new spending cuts. It would be hard to design a more catastrophic act of political self-immolation...

Britain has been broke before. It was in this position after the war when it needed U.S. assistance, and then again in the late ’70s when it was bailed out by the IMF. It was battered by the markets in 1992 when John Major’s economic strategy collapsed.

What’s happening now is entirely new: the very real prospect that the markets will force a change of prime minister before an election. They have already forced a change in policy. Truss’s problems are so acute that Tory MPs are discussing removing her as a serious option, perhaps their only one. If Truss is removed any time soon, hers would be the shortest premiership in British history, beating George Canning’s 119-day tenure in 1827. And he died in office...

(That's where I got the comparison to Harrison. My bad)

While McTague is raking Truss over the coals for her blunders, the thing he avoids discussing is how Truss and her Tory allies were hampered by their blinkered devotion to the primary source of all of Britain's current economic woes: Brexit. That disaster - haunting that nation since 2016 - is a very big reason why Truss - and her predecessor Johnson, and his predecessor Teresa May - can't make any other major economic reform needed to rebuild the UK economy.

For that, I go to Chris Grey at his invaluable Brexit & Beyond blog where he points out the flaws in Truss' agenda and how Brexit is going to doom her and any other replacement Prime Minister until the next general election. From his September 30th article:

The political ambitions of the libertarian wing of the Brexit Ultras have always been ambivalent. On the one hand, they have largely preferred to complain of betrayal from the sidelines rather than take any responsibility or, if accepting ministerial office, to quickly resign rather than engage with the pragmatic realities of Brexit. On the other hand, they have hankered to be in charge not just so as to create ‘true Brexit’, but the ‘real Conservatism’ of which Brexit was a part and to which it was a gateway.

With the advent of Truss’s premiership, they have eschewed the sidelines in favour of governing and, with a rapidity that even their sternest critics would have thought it cruel to predict, have been exposed as utterly incompetent, both politically and economically, and in the most basic of ways. It is deeply ironic that this has happened at the hand of ‘the markets’ which they so slavishly fetishize...

The occasion, of course, was last Friday’s tax-cutting ‘mini-budget’. “At last! A true Tory Budget”, the Daily Mail drooled, whilst Nigel Farage simpered about “the best Conservative Budget since 1986”. Yet, whether despite or because of this fidelity to Conservatism, and as anticipated in my previous post, there was an immediate crisis in the currency and bond markets, with the value of the pound falling to its lowest ever level on Monday, and the cost of government borrowing in the form of gilts or bonds rising very sharply. Amongst numerous knock-on effects, pension funds, which invest heavily in such bonds, came within hours of mass insolvency on Wednesday afternoon, threatening a major breakdown of the financial system and requiring major emergency temporary action from the Bank of England. This, in combination, with a clear signal from the Bank that interest rates will rise in due course, which eased pressure on the pound, has effected a degree of stabilization, but markets remain jittery and it’s by no means clear that this crisis has run its course, especially as regards gilts.

These weren’t routine or trivial market movements, but an overwhelming and brutal vote of no confidence in the government’s plans. Specifically, they were a vote of no confidence in the decision to cut taxes, or not implement previously planned tax rises, and to fund this through borrowing. Again as anticipated in my last post, the government’s refusal to allow its plans to be scrutinised independently by the Office for Budget Responsibility added to market alarm. So, too, did Chancellor Kwasi Kwarteng’s casual reaction over the weekend, even suggesting further tax cuts to come. The rout continued on Monday when, as Paul Donovan, Chief Economist at UBS Global Wealth Management, put it, “investors seem to regard the UK Conservative Party as a doomsday cult”...

Re-read the part about Kwarteng's suggestion of doubling down on an economic plan that already caused a meltdown. The wingnut Conservatives can't stop themselves. If tax cuts create a massive economic crisis, well then by God we'll insist on even more tax cuts, because sooner or later the Trickle Down Fairy will grant us our boons. /headdesk Truss firing Kwarteng from his job was the only way to curtail that particular madness. And yet, the cause of every other act of insanity happening in England remains because Truss and her party are still wrapped up in Brexit dogma, as Grey continues to note:

So, given that the Brexiters themselves regard the mini-budget as integral to Brexit, it’s reasonable to say, as Robert Shrimsley of the Financial Times did (£), that “Brexit ideology lies behind the UK’s market rout”. It’s abundantly clear to even the feeblest intelligence that those Brexiters now include Truss, for all the fury  of Dominic Cummings’s denials (directed at me!) on the inane grounds that she supported Remain in 2016. As I pointed out during the campaign, she is now a ‘born again Ultra’, perhaps the more fanatical for being so, and was extravagantly endorsed by the leading Ultras, making the fact that she was once a Remainer the most tedious and least relevant thing to say about her.

As so often before, Brexiter responses to the crisis they created have been confused and contradictory. Some in the government prissily said they could not comment on market events, as if some new Trappist ordinance of political propriety has been invented. Others downplayed what has happened, suggesting that the market reaction is either trivial or transient, or even that it has little or nothing to do with the budget but is simply a result of a strengthening dollar (which doesn’t explain why the pound fell against all major currencies, or what happened in the bond market). Outrageously, some, like Crispin Odey, hedge fund manager, Tory and Vote Leave donor, and sometime employer of Kwarteng, blamed “Remainers”. Peak insanity was reached by Daniel Hannan, who blamed the crash not on the mini-budget, but market fears of a Labour government!

Of course much like Conservatism itself, Brexit cannot fail it can only be betrayed. Even with the Bank of England and IMF and various other economic entities telling the Tories that it's their Brexit policies creating these economic meltdowns, the Tories cannot accept that fault and must blame others - the Remainers, Labour, hell even the Teletubbies will get accused next - rather than admit where the Leave movement went wrong. Grey calls them out on that:

That refusal has as its counterpart the distinctively Brexity idea, now taken over wholesale by this Brexit government, that they are beleaguered revolutionaries of true Conservativism fighting the (presumably false) conservatism of ‘the Establishment’. The notion of Brexit as an anti-Establishment insurgency has been a ludicrous one ever since the 2016 referendum was won, and Brexit became adopted as the central policy and national strategy. It is even more so now that the Brexit Ultras are unequivocally in charge of government, though of course it is a standard populist trope, familiar from the Trump presidency.

What we have seen this week is that the Brexiters have added ‘the markets’ to the increasingly long and diverse list – encompassing the ‘Woke’ Blob, the civil service in general and the Treasury in particular, the BoE, Remainers, Rejoiners, the National Trust, the BBC – of enemy forces they must confront in the name of revolutionary purity...

So my own view is that, in their arrogance and delusion, this Brexit government, and its cheerleaders, really do believe it has found a new ‘unconventional’ economic model and did not expect the market reaction, and that although a full November budget was certainly planned, including the announcement of the deregulatory ‘supply side reforms’ that will supposedly deliver the growth to pay for tax cuts, it was not going to include significant spending cuts which, instead, were anticipated for after Truss had won the election on the back of what they expected to be a growing economy. Then, with the legitimacy of a fresh mandate and a compliant parliamentary majority, she would declare it was time to shrink public spending but without coupling that with the tax cuts that would already be in place.

If my interpretation is right, the government’s plan is now in tatters, and the expectation is that the November budget will feature huge spending cuts (£) (and perhaps reversing the tax cuts, as some Tory MPs want, which can’t be ruled out though it seems unlikely at the moment)...

For this government was already politically weak, and as a result of this crisis is now much weaker. Although the libertarian cabal has taken control of the government, both it and Truss have many opponents amongst MPs and, as I remarked in a post during the leadership campaign, the current Tory Party is so riven by factions as to be unleadable, with rebellions an ever-present possibility. This week’s crisis has laid that bare, with, almost astonishingly given how new her premiership is, reports of letters of no confidence in Truss being submitted by some MPs and threats of backbench revolts...

There is already talk of a No Confidence vote happening by Monday. They're already pressing the 1922 Committee that oversees such matters to force her out as soon as possible. But this maneuver exposes the Conservatives with the painful reality that they have ousted two Prime Ministers within within 6 months of each other, and creating a leadership crisis among factions who are fighting amongst themselves for high office. A situation that will consume the next unlucky soul who signs up as PM because their party's Brexit platform will condemn that fool to more failure.

Seriously, who will be next to replace Truss? It's looking like it will be Sunak, who warned of the collapse of the pound and housing costs skyrocketing, but he didn't win over the party earlier this year, and he's viewed as being weak on Brexit meaning the extremist factions will rebel against him anyway.

The entire Conservative Party in the UK is stuck in a downward spiral of self-inflicted defeats, all because they can't change course on their Brexit policies and dare not open themselves to the possibility that the Remainers were right all along. But in the meantime, they'll fight against any calls for a emergency election in order to stay in power until 2024 when the general election happens anyway: Two more years of nightmarish intraparty fighting while the British Isles falls apart. 

The only way that election happens is if the Tories finally break apart into their own party factions: If the Tories go to a Minority government, they may not have enough votes to stop Labour forcing new elections.

It then becomes an issue of how angry the British voters will be, and if they abandon Conservatives to switch to Labour - or even Liberal Dems - in a final rebuke to Brexit madness that has broken their nation the last six years.

That's the only hope the British have left.

Strange Days Inside the Job Lines (w/Update)

(Update: Many thanks to M. Bouffant at Crooks&Liars to include this blog article in Mike's Blog Round-Up! Please visit the site and check out the vacation pics from Virginia!)

What with the ongoing COVID pandemic happening, and the power struggles between Blue America and Red America over masking and vaccines and everything else, the American economy seems to be chugging along at a normal pace... except that it's doing things that are freaking out the economists and setting off red flags that make no sense to them. This article from Derek Thompson in The Atlantic is one of the latest OMFG essays from the punditry trying to make sense out of nonsense:

Americans are buying more stuff than ever before. That’s good. But because of supply constraints, it can feel like there’s a painful shortage of just about everything. That’s bad. Economic growth is booming, but the president’s approval rating on the economy is falling, which is a historically odd juxtaposition. Businesses everywhere are struggling to fill jobs, which sounds bad, but employer pain is workers’ gain, and wages are rising, which is wonderful. But because prices are rising too, inflation-adjusted hourly-wage growth actually declined in September, which is not wonderful...

The great mystery of this moment is the labor shortage. America’s GDP is larger than it was in February 2020. But the total economy is down about 7 million workers. That’s akin to the entire labor force of Pennsylvania sitting on the sidelines. In September, the number of people working or actively looking for work mysteriously declined, which is not what you would expect to see in a rapidly growing economy with simmering inflation. Wages are rising. Job openings are everywhere. But we’re running out of people who seem to want a job right now...

This seems to be the thing at the crux.

Thompson tries to go through the usual list of suspects: The reality we're still in a pandemic where a majority of Americans don't WANT to go into a workforce that would expose them to COVID, and the ghoulish realization that the 700,000 (and going) deaths in the United States put a dent in that workforce is another likelihood. That's not even counting the hundreds of thousands of Americans suffering from the long-term effects of COVID that could well keep them out of employment. 

But Thompson thinks that's not enough of a reason: The numbers of vacancies (7 million) don't match up to the COVID numbers (a tenth of that). So he goes pointing to a potential solution with the financial aid packages passed in 2020 and early 2021 that eased money woes for much of the working class:

The most complete explanation is that the massive fiscal-policy response to the pandemic reduced the urgency of looking for work. The United States has spent trillions of dollars to help families get through the economic deep freeze, via stimulus checks, expanded unemployment benefits, and the moratorium on student-loan interest payments. National eviction bans have taken pressure off renters. Then there’s the record-high surge in savings among families who haven’t gone on vacation or splurged on experiences in more than a year. Add to that the fact that job openings have hit record highs—which means people know that if they wait a month or three, there will still be jobs aplenty to apply to. Seeing this whole picture, more Americans clearly feel like they can take a more leisurely approach to going back to work...

Except that might not be it. The stimulus checks were nice but they barely took care of two-three months' worth of rent, and the most recent checks were back in March/April of this year. The moratorium of student-loan payments doesn't cover the entire population that's still avoiding the open job market. The eviction bans ended during this summer, and the rental aid meant for those families are backlogged by state bureaucracies. Those expanded unemployment benefits might still be helping out in Blue states, but many Red states had cut back on those benefits in a mad attempt to force people back into the workplaces (guess what, didn't work).

What might really be at work (for lack of workers) here is the shift in workplace realities. The ability to work from home for half our households seemed to have convinced two-income families they didn't have to sacrifice to the demands of businesses to commute, waste nine hours in a cubicle, and then struggle to race home to deal with latch-key children stressing over schoolwork (from Thompson's earlier article about the fall of office space):

If the past year and a half has taught us anything, it’s that white-collar workers can do hard work from home just about as well as they can do it in the office—and maybe even better, precisely because their colleagues aren’t interrupting them...

For a decade or more, productivity experts have been telling us that cross-group collaboration and weak ties are the skeleton key to unlocking radical creativity... This sounds like a loud endorsement of the office. But the internet does all of this at a much larger scale than any office floor... What’s more, if today’s corporate conventional wisdom were true, the pandemic would have created a hellscape for productivity. Instead, corporate earnings are rising, wages are rising, and official measures of productivity are rising too, in practically every state...

This points to the possibility that a lot of workers - many of them part-timers who held two jobs at the same time - want to stick with the at-home jobs that may have well paid better with fewer expenses that would have necessitated those second jobs. I'd love to see if anyone's done surveys on how many part-time employees before 2020 - those who juggled multiple jobs - decided to just stick to one job during/after the pandemic and found they did well enough financially to not seek a second.

There is also the possibility that the pandemic forced a number of workers to find alternatives to the established job markets by going into self-employment. Monetization of performing arts, creative arts, crafts - all things you can do from home and upload to the Internet, hello TikTok! - seemed to increase during the pandemic, and a lot of that from the younger populations that would otherwise fill those job vacancies.

There is one other thing that would explain the jobs gap, and Thompson points it out a little later in his article: The United States is seeing a gap in the workforce numbers due to the decrease in immigration that would have filled those jobs under normal circumstances. As he notes:

Whether or not today’s worker revolt becomes tomorrow’s worker revolution, what’s abundantly clear is that America needs more workers. America’s prime-age population stopped growing more than a decade ago, and because of declining fertility rates, it’s unlikely to recover through natural growth alone. If the U.S. needs more workers, the arithmetic is straightforward: We need more immigrants.

Welcoming immigrants is more complicated than putting up a help wanted sign at the border. Democrats are looking for ways to expand legal immigration—a matter of moral and long-term economic urgency—while avoiding a xenophobic backlash from the right. One great way to do this would be to “recapture” surplus permanent-residency visas, or green cards, that went unclaimed in previous years. Since 1992, hundreds of thousands of green cards authorized by Congress have not been issued because of administrative hiccups; last year, unused green cards reached a record high...

I wouldn't call it a hiccup: The pile-up of unused green cards was due to an overall lack of travel due to COVID restrictions, but before that the unused green cards was a policy decision by trump's anti-immigrant agenda. That's been 4 years already of the Trumpian Far Right putting the screws to a jobs market seeing dwindling population numbers before the pandemic hit. We're just now seeing the results of that.

Whether or not this screwy jobs market gets straightened out, there ought to be honest benefits out of this long-term: desperate corporations and businesses realizing that their decades-long refusal to pay workers better is going to have to end, and they're going to have to start paying Americans - and any immigrants still wishing to move here - better if they want those jobs to get done.

Time to Conduct Some Semiconductor Business At Home

If anybody's waiting on an order for a new Atari VCS microconsole, you might have to wait awhile. There seems to be a massive shortage of semiconductors required for... practically every electronic device we have. Per David Atkins at Washington Monthly:

But there’s increasingly an argument to be made that a just-in-time lowest-cost supply system may not just be bad for the climate or for domestic employment. It may also in many cases be bad for business. The semiconductor crisis tells an exemplary tale. As information technology becomes essential to daily life in developed countries, semiconductors are essential for making the world go round. Phones, computers, gaming consoles and automobiles all require increasingly sophisticated semiconductors. And most of them are made by a single company: Taiwan Semiconductor. Indeed, Taiwan Semiconductor is so dominant in the field that few competitors can match them, and they’re falling farther behind...

We've got a hundred different manufacturers putting together a 1001 different electronic devices, and NOBODY seemed to notice they ALL relied on ONE supplier for a required component to their devices???

The semiconductor shortage is harming vehicle production lines. It’s why the next generation gaming consoles that were supposed to be available last Christmas are still in vanishingly short supply. It is starting to impact smartphones and personal computers as well.

There are many correlated aspects to this problem. It’s partly a matter of national security: what does the global economy do when it relies so heavily on a single actor in a location of geopolitical instability? It’s partly a problem of monopoly: is the market truly free or stable if so many essential products depend on the fate of a single company? How can there be genuine competition if the cost of entry makes establishing new competition prohibitive? It’s partly a matter of the pandemic: Taiwan Semiconductor and other manufacturers have been struggling to meet production targets due to reduced capacity from COVID restrictions.

An over-reliance on global trade and shipping, combined by corporate eagerness to find the cheapest labor instead of reliability and location, have led us to this bloody mess. The Pandemic merely highlighted our vulnerabilities.

At no time in the past 20 years it seems - as the Internet revolution exploded the computer tech industry into the behemoth it is today - anyone planned far enough ahead to plan for possible shortages or cuts to supply lines. It never occurred to anybody relying on tech parts like semiconductors that it would help to establish their own manufacturing to compete for that key part in more than one country/continent so that they didn't rely on Taiwan Semiconductor Inc itself. That company could have branched itself out, using its expertise in its manufacturing techniques to build more factories in other places to maintain a stranglehold on its monopoly of semiconductors while improving its supply chain to ensure availability. Apparently nobody - even the company aware of its own situation - wanted to spend the money to do that.

I'm not a businessman, don't have a degree in economics, but even *I* know it's foolish to rely on one provider of one product from one location that just happens to be so needed for almost everything out there.

But monopolizing practices don't seem to breed expansion or competition, only complacency. Nobody wants to spend profits on improving service or supply. Until it's too late.

If the United States wants to respond properly to this crisis, our own government ought to push for business start-up funds to get semiconductor manufacturers up and running here (and to hell with the local CEO mindset against hiring workers in the U.S. because they might ask for living wages). We've got manufacturing towns dying out because they've been abandoned: This could be a good time to reinvest in those places that can handle the semiconductor industry.

Sort of what Atkins says at the end of his article:

The world has a mutually invested interest in distributing production of goods like semiconductors–and it’s not clear that the private sector should be wholly responsible for taking on the burden. (To say nothing of the leftist critique that the benefits of successfully adding semiconductor production should not redound merely to the shareholders.)

The governments of the world have both a competitive and cooperative interest in ensuring that resources like semiconductors are not at the mercy of geopolitical conflict, and that production can be ramped up as needed even if problems should arise in one company, country or corner of the globe.

What say ye, President Biden? Care to invest America in much-needed semiconductors to generate much-needed jobs?

Biden Going Big

As we go past the official "First 100 Days" of a Biden Presidency, the common refrain in the Beltway media is how "Biden is going big" in terms of pushing an aggressive economic agenda rivalling the New Deal for ambition and scope.

To Elia Nilsen at Vox.com: 

The Biden administration’s theory of policy so far is to go big. The same goes for its politics.

Taken together, President Joe Biden’s $2.25 trillion American Jobs Plan and newly introduced $1.8 trillion American Families Plan come out to slightly over $4 trillion in proposed new spending. It’s an enormous investment in American job creation; the last bipartisan infrastructure bill Congress passed in 2015 clocked in at about $305 billion — about one-thirteenth the size of Biden’s proposed plan. And Obama’s $800 billion stimulus plan of 2009 was about one-fifth of Biden’s plan, not even taking into account the $1.9 trillion in Covid-19 relief that has already been signed into law.

That sheer amount of proposed federal funding is meant to do a lot of things, but the main goal is to get as many jobs to as many people in as many voter constituencies as possible. Under Biden’s plan, infrastructure no longer calls to mind images of white men in hard hats; it includes working mothers, home health aides who care for the nation’s elderly, and workers of color across the nation. Women and people of color were crucial to Biden’s presidential win, and they are also crucial elements in his jobs plan...

To EJ Dionne at the Washington Post (watch out for paywall) Biden is harking back to the Democratic glory days of FDR and LBJ:

President Biden on Wednesday night went big, populist, folksy, hopeful, urgent — and bipartisan and partisan at the same time.

Addressing a pandemic-reduced gathering of lawmakers at the Capitol, Biden proposed a sweeping program of change that would create four more years of free schooling, expand child care and family leave, and attempt to beat back climate change through large infrastructure investments...

Biden welcomed the help of Republicans again and again, but he took clear aim at their favored economic doctrines. “My fellow Americans, trickle-down economics has never worked,” he declared. “It’s time to grow the economy from the bottom up and middle-out.”

And he took a victory lap on progress against covid-19, proclaiming that widespread vaccinations were offering “a dose of hope.”

This address wasn’t exactly the New Deal or the Great Society, but it was equally ambitious. Biden, reassuringly unradical with his plain, avuncular demeanor, is bidding to create a new common sense rooted in political lessons that Democrats have learned the hard way...

Going big - pushing for ambitious national programs on scale the United States hasn't seen since the 1960s - is more than just pushing back against the economic malaise we find ourselves in thanks to the COVID-19 pandemic: This is basically pushback against the last 40 years of the Far Right's "glorious" Pax Reaganica, where Big Government was "evil", deficits from massive tax cuts starved our public sector into a broken mess, and the rich got richer while the rest of us suffered.

This is Biden playing not only to the national audience - offering them a way out of low wages and little hope - but playing to a liberal and Progressive base eager to change the direction of the nation away from massive inequality the Far Right has been creating.  

The good news for Biden and the Democrats is how well the public is responding to these proposals. Back to Nilsen at Vox:

A range of polling shows that Biden’s expansive view of what counts as infrastructure has fairly broad support among the American public.

A recent NBC News poll found that 59 percent of respondents supported Biden’s American Jobs Plan. A recent Vox and Data for Progress poll found that 68 percent of likely voters support the plan. And a Monmouth University poll released Monday found 68 percent of respondents supported Biden’s infrastructure bill, with another 64 percent supportive of the ideas in Biden’s American Families Plan, which aims to make child care, higher education, and health care more affordable.

As Republicans and Democrats argue over the semantics of what constitutes “infrastructure,” Monmouth polling director Patrick Murray told Vox that Biden’s broad brush does not appear to be turning off voters so far.

For instance, Vox and Data for Progress polling found that a majority of likely voters of all parties supported Biden’s proposal of putting $400 billion into bringing down the costs of long-term care: 88 percent of Democrats, 72 percent of independents, and 55 percent of Republicans support the idea. And recent polling from Politico and Morning Consult shows that a large majority of Black voters support Biden’s pledge to increase housing options for low-income Americans; 80 percent of Black voters support that measure, and 58 percent “strongly” support it.

In other words, voters seem to care more about things that directly impact their lives than they do about whether these things meet a strict definition of “infrastructure...”

In short: People are back into believing that government can be a positive force in their lives, generating better jobs and better wages and better lives. The "Government is the Problem" meme is dying off, much to the horror of the Far Right clinging to the strands of political power.

But why exactly is this happening?

Isn't Biden supposed to be a Centrist, a post-LBJ pro-business Democrat who wasn't so great on issues of race and women's rights or on liberal issues in general, who tacked to the middle in order to push bipartisan deals through a Congress that is no longer the bipartisan haven he knew?

Well, kind of. This is all due to Biden's Presidential Character of being a Congenial Passive-Positive at the head of a Big Tent political party.

This isn't from my 2019 review of Biden's Character - where I worried Biden's easy-going nature made him vulnerable to Republican treachery - but from my 2020 followup that found Biden was doing a good job of building "the Big Tent" coalition of Democratic Moderates and Progressives. In fact, let's go to the direct quote from Aubrey Immelman about Biden's skills in forging that Big Tent:

Leaders with Biden’s personality profile are likely to exhibit an interpersonal leadership style, characterized by flexibility, compromise, and an emphasis on teamwork. The general tenor of a Biden presidency likely will be conciliatory, which could render a prospective President Biden vulnerable to manipulation by pressure groups and handicap him in negotiations or conflicts with foreign adversaries...

In short: Biden is someone willing to dance with those that brung him (got this from Molly Ivins). But where Immelman - and myself - might view that openness as a vulnerability to manipulation, there IS another way to view it as Biden building his teamwork between the various factions of his own party. To make that Big Tent work and push a broad, Big-Fucking-Deal agenda in a successful fashion.

Biden is pushing a big Progressive/Liberal agenda in the mold of FDR's New Deal because it's what his own Democratic ranks want. He will be more congenial and flexible with them, even as he tries to reach out to obstructionist Republicans, because he is a Democrat and they are Democrats and this is their Big Tent and that's how he'll roll, son. As long as Republicans refuse to barter or deal with Biden in any sane fashion, Biden's agenda won't reflect their interests, doubling down on their obstruction but also their obsolescence as Biden happily bulldozes forward.

Edit: I just found this article on MSNBC by Medhi Hasan and need to include it here as emphasis:

This was definitely how Biden behaved, at times, during the Democratic primaries. He never pretended to be at the head of a transformational movement, a la his former boss, Barack Obama. He didn’t enter office backed by a loyal cult, as his predecessor, Donald Trump, did.

Yet he and his administration have spent these first 100 days embracing the progressive wing of his party, along with labor unions, youth groups, climate campaigners and sundry activists. “Progressives say they’re being included, heard and respected by the Biden White House,” Politico reported in February.

Compare and contrast this outreach with the Obama era, in which White House press secretary Robert Gibbs dismissed people on the “professional left” who “ought to be drug-tested,” and White House chief of staff Rahm Emanuel denounced liberal activists as "f---ing retarded.”

Biden, on the other hand, proudly invoked Vermont Sen. Bernie Sanders’ support for the American Rescue Plan in the immediate aftermath of its passage through the Senate. His chief of staff, Ronald Klain, has been dubbed the “left whisperer,” having become “a point of rapid response for many on the left who are angling to get within earshot of the president,” The Daily Beast wrote.

Real access has been matched by real impact. Does anyone really believe the Biden who launched his presidential campaign in 2019 looking for a “middle ground” on climate issues would have committed to cutting U.S. carbon emissions in half by 2030 without pressure from groups like the Sunrise Movement...?

Here's the thing: Biden is listening. It's what Congenial characters do. And it's how he builds his world around him.

This IS what I wrote before about Biden: He's the Democratic Party answer to Ronald Reagan. Not Reagan the hard-core Conservative, but Reagan the Uniter, Reagan the Big Tent builder. Reagan was able to pull together divided Republican factions into a cohesive whole, dominating the electoral cycle of the 1980s in a way that only a Passive-Positive Congenial figure could. For all the damage Reagan did as President to the liberal foundations of 20th Century America, you have to admit his administration oversaw a massive, active period of policy changes and formation you wouldn't expect from a "passive" leader.

Biden can be the same way as President overseeing a massive wave of policy changes, only in favor of that liberal foundation that can be re-forged for the 21st Century America.

All Biden has to do is break loose the remaining obstructionist logjams - sadly enough, from Democratic Senator Centrists unwilling to see this moment in history for what it can be - and get his American Families Plan working.

This can be a big moment. Biden knows it. He knows it'll be good for his Democrats and it'll be good for his fellow Americans.

Any day now. All he has to do is get a few more Democrats to join this Big Tent moment and let it roll forth.

Some Thoughts This Monday Night March 2020

Images, by Tyrone Green Witty Librarian:

Look, I have a lot of schadenfreude watching the Dow Jones drop like a stone over the last month, but we're at the point - probably way past it - where a lot of middle-class 401k and mutual fund portfolios are getting nuked. Isn't there a way to close down the markets for two weeks, let things cool off, like the banking holiday FDR ordered back when he took office at the height of the Great Depression? Those trading floors will be one less place for people to pick up the COVID19.

My library closed to the public back on March 17, we spent the remainder of the week getting our holds into Books-by-Mail for those we could contact, the rest are stuck here until late April when we *hope* to re-open. We're still coming to work until further notice, depending on what the state does, and in the meantime we're using the closed time to re-arrange office space and catch up on paperwork. We DO have ebooks available through Overdrive...

Most libraries - public and college - have closed, almost all the schools have closed here in Florida... and yet our governor DeSantis, obsessing over the economic hit that would happen, isn't doing anything to get the state to block off the beaches and reduce public gatherings there. He's resisting calls for stronger "Shelter In Place" emergency orders to get more residents to stay at home and not spread contact by infectees. Even as we're getting a shitton of New Yorkers fleeing a locked-down New York City and bringing more infectees with them.

For all my science fiction/fantasy and horror readings, for growing up on Stephen King's The Stand, for all the zombie apocalypse movies I've seen, I still can't believe that when a global pandemic finally hit the first thing to go was all the toilet paper. (I kid. Hand sanitizer and eggs disappeared just as quick)

I just found out today that the TV show Supernatural predicted it back in 2009!

We're looking at a possibility of the number of people filing for unemployment - due to layoffs at a lot of tourism, travel, retail, education, restaurant/bar, luxury service jobs because we HAVE to avoid these places of business now - jumping into the 30 percent range during this month. We need to remember a few things: 1) unemployment figures relied a lot on people claiming that, which was lower than actual numbers that can no longer live off-the-books as it were 2) we're looking at a collapse of several industries that will take YEARS to recover meaning those numbers are going to stay up well into 2021 (and 2022 for that matter).
We are looking at both funding unemployment and other social aid services way more than we already are (which wasn't all that great to begin with), AND we are looking at the reality of a Universal Basic Income - a monthly payout by the federal government to help cover the basics like rent/mortgage and food - getting implemented for a long period of time (if not set up permanently). THIS means one thing: The Federal government has to pay for this, and our nation is going to HAVE to raise taxes on upper incomes to balance this out.

None of this would be happening if trump took his job seriously, recognized the warning signs from JANUARY, and prompted both Congress and the Executive branch into funding and manufacturing the medical supplies - not just masks and gloves but also ventilators and respirators - so that when we got to here in March we'd have the bare minimum of those supplies to keep our hospitals functioning. Instead for reasons of his own - either sheer laziness, ignorance of the severity, some twisted idea this crisis would work to his advantage this year of election - trump fiddled while Rome got burned.

Gods help us, this is where we're at tonight.

The Thing About Wall Street

It is in the nature of the stock markets to go up.

I'm not a full-on economic expert, I barely got out of college Econ 1101 with a C plus, but ny dad worked awhile as a broker and still invests to this day, so I have a small inkling of how it all works.

For starters, "Buy low and sell high."

/rimshot

Seriously, my observation about stock markets comes from even a cursory glance of any market chart. The Dow Jones, the one on Wall Street, the one most news services keeps an eye on, shows a near constant, relatively slow uphill climb going from left (past years) to right (current year).

From the Business Insider Markets site, tracking from 2010 to 2020

For what I know, it's a combination of factors.

The constant addition of startup companies and IPOs (Initial Public Offerings) as companies add themselves to the list, that a certain amount of investment gets pumping into the markets right there. The market goes up because the market is adding more publicly traded companies, that simple.

The ever-changing and growing industries, such as the entire Information Technology industry that overwhelmed the markets in the 1990s, expands the number of companies out there, creating a diverse investment field to build a portfolio that won't fall apart if just one industry has a bad year or overall downturn. A smart investor can use the minuses to balance out the pluses and keep boosting the values of the pluses.

Upon all that, a major shift of upper incomes directly using the capital gains on investments as their own income, increasingly separate from the original purpose - well, one of them - of the markets as a means to invest in capital and business growth. All a rich person has to do is put enough money into stocks, let the corporations boost their values through buybacks, and let those markets keep generating more money that quite honestly never existed before and isn't based on anything other than the hopes and predictions of the markets themselves.

It's all a wonderful illusion, when you look at it that way.

And it's an illusion that despite all the wealth and power that's tied into it, the stock markets are vulnerable to outside forces that can turn a steady uphill chart into a cliff of eternal peril.

That chart above is from the past ten years of the market from 2010 to 2020. Here's a chart from the past month:

Also from Business Insider Markets site, tracking from February to March

We've been witness to one of the greatest collapses in stock market history, not so much from trump's meddling with tariffs since 2018 that began the wobbly status the Dow is in now. Despite all of trump's worst efforts, the markets kept rebounding once they figured how to adjust to the Orange One's conniptions against China, Europe, and other trading markets.

No, this collapse is from the now-unavoidable Coronavirus pandemic, something that's been out there since December 2019 and something that trump's administration has been mishandling - through avoidance, lying, blame-shifting, and nonexistent planning - the government's response to a flu outbreak that is already disrupting every aspect of human life. Above all, trump's failure to prepare for trade to break down, medical supplies to dry up or run out, businesses to close due to declining patronage, people losing jobs as workplaces close, all of that.

The markets have been in shock since February, when it was clear the federal government wasn't prepared to handle the long-term implications of the pandemic. We've borne witness to some of the worst drops in the Dow Jones since 1987 (Black Monday) and 1929 (the first Big One)... almost all of them in the past ten days.

When trump took an Oath of Office he wasn't prepared to run back in January 2017, the Dow Jones was around 19,488 points, give or take an 8. As of tonight, it's at 20,188, to where we're one more bad trading away of watching every stock market gain made between 2017 to 2019 - where it reached the highs of 29,000 points - completely wiped out. For a man who brags about how the stock markets were doing thanks to the Republicans Tax Cut of 2017 - which turned into a sugar/cocaine/meth/steroid boost of greedy proportions - finding himself back to Obama levels (or falling even further) has to be a blow to that narcissistic Id of his.

And while the Futures are pointing to an up day tomorrow - because investors will try to buy stocks in companies while their values are lower, and they are desperate to make the markets go back up again - there's every sign the markets will keep dropping another day later because nearly every action trump's White House has done up to now hasn't helped. Every spike on that last month's chart was followed by more drops.

And things are poised to get worse.

What's happening to Wall Street right now hurts a bit, especially for people who ARE investing towards things like retirement and a modicum of personal fiscal stability. But this is just a sideshow to the rest of the world coping with a global pandemic.

The worst things are going to be happening to our families and those most vulnerable to the COVID19 virus (our kids and our grandparents), the worst things are going to be happening to our hospitals and medical workers and our emergency responders. The worst things are going to be happening to those forced to keep working in public, exposed to vectors, trying to keep the power on and the water running and the toilet paper shelves at the stores restocked.

This stuff with Wall Street is just one sign of how bad it's been and how bad it's going.

I don't want to show the charts of the infected and the dying. THAT'S too horrible to review...

Just Say "Inverted Yield Curve" To a Financier And Watch Them Scream

There's been growing reports over the past three months of red flags regarding the U.S. economy. 

The ongoing damage of trump's tariff wars starting to rattle the major banks.

The Gross Domestic Product has been underperforming, mostly due to trump's tariff demands.

And then, just yesterday we get the news that the short-term (two year) bonds are getting higher interest rates than the long-term (ten year) bonds. It's something called an "Inverted Yield Curve," meaning bond investors believe in getting their money now instead of later, suggesting a recession is unavoidable. 

The last time there was an Inverted Yield Curve? 2007, and all the fun THAT led to.

The stock markets pretty much tanked today in one of their worst performances in modern memory. Funny enough, today only ranked 4th worst. The other top five? All happened under trump as well.

The investors get it. They have to, it's how they keep their wallets full. There's a recession coming and it's no longer a question When it's a question of How Soon and How Painful.

A replay of the 2007 global economic collapse - only this time thanks to tariffs and Brexit - is quite likely.

Penny For My Thoughts Because I'm Out of Pocket Change

Like I've written earlier, I can't understand why people think our economy's gotten better since the Great Recession. Far too many of us are living paycheck to paycheck and weighed under by too much debt.

Even FORBES Magazine is taking notice (via Peter Georgesceu):

Ostensibly, for the past ten years, our economy has been recovering from the 2008 collapse. During the past few years, our comeback seems to have gained momentum. All the official indicators say we’re back in boom times, with a bull market, low unemployment and steady job growth. But there is an alternative set of data that depicts a different America, where the overlooked majority struggles from month to month.

The Nation recently published a stunning overview of the working poor and underpaid. One of the most powerful data points in the piece described how empty the decline in unemployment actually is: having a job doesn’t exempt anyone from poverty anymore. About 12% of Americans (43 million) are considered poor, and yet they are employed. They earn an individual income below $12,140 per year, and slightly more than that for a family of two. If you include housing and medical expenses in the calculation, it raises the percentage of Americans living in poverty to 14%. That’s 45 million people...

If we link to that Nation article by Rejan Menon, we get more details:

For a fuller picture of American (in)security, however, it’s necessary to delve deeper into the relevant data, starting with hourly wages, which are the way more than 58 percent of adult workers are paid. The good news: Only 1.8 million, or 2.3 percent of them, subsist at or below minimum wage. The not-so-good news: One-third of all workers earn less than $12 an hour and 42 percent earn less than $15. That’s $24,960 and $31,200 a year. Imagine raising a family on such incomes, figuring in the cost of food, rent, childcare, car payments (since a car is often a necessity simply to get to a job in a country with inadequate public transportation), and medical costs.

The problem facing the working poor isn’t just low wages, but the widening gap between wages and rising prices. The government has increased the hourly federal minimum wage more than 20 times since it was set at 25 cents under the 1938 Fair Labor Standards Act. Between 2007 and 2009 it rose to $7.25, but over the past decade that sum lost nearly 10 percent of its purchasing power to inflation, which means that, in 2018, someone would have to work 41 additional days to make the equivalent of the 2009 minimum wage...

Take the poverty gap, which the OECD defines as the difference between a country’s official poverty line and the average income of those who fall below it. The United States has the second-largest poverty gap among wealthy countries; only Italy does worse...

No nation can honestly maintain itself under this kind of income inequality. At some point, the financial scams at the top can't find any more suckers, and the debt consumes itself (this is what happened with the housing speculation in 2007-08 causing the Great Recession). At some point, the public frustration at being constantly in debt will erupt.

The United States has been separate from the rest of the world when it comes to this kind of oppressive economic decay. Most other countries would have broken out the pitchforks and Molotov Cocktails by now. But in the U.S., we've been able to hide from the economic despair by leaving most of the class warfare to revolve around Race instead of Poverty (despite all the Progressives thinking our class struggle is economic, all of the violent moments in American history have been over racism SEE Tulsa, Rosewood, Japanese internment, Jim Crow and Slavery eras, etc).

But sooner or later, the corrupt minority rule of Republican oligarchs - who are suppressing voters by ethnicity, gender, and youth - worried more about their goddamned tax cuts than good wages for mos workers cannot contain the anger that's brewing. trump can siphon off that rage to confuse his voting base into blaming Illegals for all their ills, but what happens when the boogeymen are gone and the oligarchs are still raking in our wages? How many Latinos and Blacks and feminists are you gonna blame for your $7.65 an hour paycheck (without health benefits) before you realize it's your $21 million a year CEO ripping you off with wage theft?

If voters were genuinely rising up over "economic anxiety" they'd be in the streets demanding $15 an hour minimum wage, caps on CEO pay, ending the GOP 2017 Tax Cut Disaster that made income inequality worse, and relief for majority of Americans regarding college/health care/homeowner debts.

They sure as hell wouldn't be voting for the Tax-Cheat-in-Chief and his Republican buddies.

Hope You Invested In Manure Futures...

This may not be the kickoff of the recession that Pinku-Sensei warned was coming, but am willing to bet this is the tsunami alarm going off: The Stock Market has dropped sharply both on Friday and today (via CNN):

Stocks went into free fall on Monday, and the Dow plunged almost 1,600 points -- easily the biggest point decline in history during a trading day.

Buyers charged back in and limited the damage, but at the closing bell the Dow was still down 1,175 points, by far its worst closing point decline on record.

Percentage-wise, it was about a 4 percent loss - not as bad as the 1987 crash or the 2008 crash - but the optics of seeing a huge wave of red (losses) dominate the screens has to hurt.

I'm seeing other people online say this is merely a "course correction," that the markets can't ALWAYS go up like they've been doing the last 18 months. But you rarely see a course correction this steep.

I'm also seeing the argument about the crash happening because of inflationary fears and/or concerns about interest rates going up, in responses to the "strength" of the American economy when it comes to employment numbers (which isn't as sound as it looks either).

When you consider a lot of pension plans - city, county, state, private - tie their revenues to stock portfolios and mutual funds, there's a lot of money getting lost for people right now. So this is not good news.

The long-term implications for this are beyond my meager understanding (I got a C in economics: the best I can tell you is "buy low, sell high."), but when I consider Pinku's early warning about the recession, and the fact we've got a federal government led by morons who create economic chaos wherever they go, I am not looking forward to the coming fiscal year.

The Next Recession: Not A Matter of When But A Matter of How Soon

It's been awhile since I've linked to Crazy Eddie's Motie News - if Pinku-Sensei can pass along a good hard cider recommendation for me to get drunk to, that would be nice - but he recently posted an article about the impact of the tax cuts would have on the economy and it looks like he's got a better handle than I do on how the coming recession is gonna look.

If I might quote from the parts of his analysis that stand out to me:

Three things could trigger the next recession.  The most likely would be an inversion of the yield curve, which means that short-term interest rates would rise higher than long-term interest rates.  The Federal Reserve has been raising short-term rates for the past two years while long-term rates have been rising much more slowly.  If present trends continue, short-term rates will rise above long-term ones within a year or two, which always signals a recession within a year...

The second is a rapid rise in oil prices, which has occurred either slightly in advance or concurrently with every recession since 1973...

The last, which the U.S. saw along with both of the above during the last recession, would be a crash in housing prices.  However, that is not as reliable an indicator of contraction, as it took nearly two years between the bursting of the housing bubble and the onset of the Great Recession of 2008-2009, barely happened before the recession of 1990-1991, and it didn't happen at all before the 2001 recession...

...I want my readers to notice the timing of recessions.  They range from seven (2001 to 2008) to eleven years (1990 to 2001) apart.  That range is exactly consistent with the Juglar Cycle, an economic cycle that lasts seven to eleven years, the downturns of which correlate to U.S. recessions since 1980.  The Great Recession technically began in December 2007 and adding eleven years to that means the next one should start no later than December 2018.  We're due...

...In fact, I expect the next recession to be somewhere between the 2001 recession or the 1990-1991 recession in its effects, probably closer to 2001.  Before then, the extra disposable income runs the risk of overheating an already booming economy, never mind that the fruits of that economy are very inequitably distributed.  That will increase demand for oil and other energy sources, making their prices go up.  That will cause inflation to rise again as energy costs become distributed throughout the economy.  Higher inflation will prompt the Federal Reserve to raise short term rates, eventually inverting the yield curve.  Viola, recession!

Now, I won't blame the tax cuts for this.  All of this is going to happen anyway; the tax cuts might marginally speed up the process and make it more acute.  It might make the difference between the recession starting in November or December of 2018...

In short: I think he's telling us we're gonna be screwed by November 2018.

Good timing, Republicans, if you can make that recession happen by November 1st before the midterms. It should give us voters additional incentive to vote you fuckers out.

One of the things I note about these recessions is how they seem to coincide with Republican control of the Presidency (and usually control of Congress). If Pinku-Sensei is correct about how the Juglar Cycle ties into the recession cycles, wouldn't Republicans with any economic backgrounds recognize the pattern and do something to change it by committing to programs that wouldn't exacerbate the recessions the way their current policies seem to do?

Then again, I fear most Republicans with economic backgrounds focus too much on their Randian fixations of greed and self-interest. /sigh

Anyway, Pinku-Sensei does a good job putting his arguments together on this. Go read his work, and then GET THE DAMN VOTE OUT FOR DEMOCRATS TO GET THE DAMN REPUBLICANS OUT OF OFFICE. Thank ye.

While I Was Away

So, to the seven readers who keep track of this blog, you may have noted I was off on vacation with limited access to updating the site.  For what I've kept up with during my trip to the DC/Baltimore area (hello, Gettysburg National Park!  Remember me?  Yeah, the fat guy in the UF sports cap), this is what I'm noting on my return here:

• Donald Trump doubled down on being a douche.
• Jim Webb announced his candidacy for the Democratic nomination and pretty much nobody noticed.
• Chris Christie announced his candidacy for the Republican nomination and pretty much everyone mocked him.
• Greece voted in a referendum to turn down the EU's offer to fix their debt crisis, mostly because the EU's offer was an austerity program that would have made the 2001 Argentinian deal look like the Marshall Plan (if you know your history, you will understand how bad a deal the EU offer was).  This link to Interfluidity's article goes into a long and complex explanation of what led to the vote and why Greece was fighting the bad deal, but it's worth the read:

• It is difficult to overstate how deeply Europe’s leaders betrayed the ideals of European integration in their handing of the Greek crisis... Regulatory mistakes and agency issues within banks encouraged poor credit decisions. Spanish banks lent into overpriced real estate, and German banks lent to a state they knew to be weak. Current account imbalances within the Eurozone — persistent and unlikely to reverse without policy attention — implied as a matter of arithmetic that there would be loan flows on a scale that might encourage a certain indifference to credit quality. These were European problems, not national problems. But they were European problems that festered while the continent’s leaders gloated and took credit for a phantom prosperity. When the levee broke, instead of acknowledging errors and working to address them as a community, Europe’s elites — its politicians and civil servants, its bankers and financiers — deflected the blame in the worst possible way. They turned a systemic problem of financial architecture into a dispute between European nations. They brought back the very ghosts their predecessors spent half a century trying to dispel. Shame...

• Ta-Nehisi Coates is releasing a new book Between the World and Me.  He's already got a rave review from Toni Morrison.  Toni NOBEL LAUREATE Morrison.  Try to imagine the amount of squee-ing Coates must have went through.  Lemme just say if I ever got a review from Neil Gaiman saying "eh, his Hero Cleanup Protocol estory doesn't have that many grammar errors in it, so..." I'd be stuck in a fanboy coma for weeks.
• Oh, and the Women's Soccer Team won the World Cup in Canada. USA USA USA USA USA!

UK Elections 2015: What the Hell Happened?

Had to admit, I was hoping for a divided result to where another coalition would have been necessary, along the lines of Labour having enough seats to tempt potential allies in the Liberal Dems or the rising Scottish National (SNP) to turn over Tory Prime Minister Cameron's Austerity regime.  Most of the pre-polling pointed to a muddled result.

Instead, the results ended with the Conservatives winning enough seats to secure their own majority under Cameron.  Labour lost seats, the Liberal Dems were near annihilated, and the other third parties barely scratching out single seats making them more than meaningless.  The only other winner on Thursday were the Scottish National Party, which pretty much dominated all of Scotland as a voting bloc: a major paradoxical turn of events regarding Scottish independence movement (which had been shut down not too long ago).

So, what the hell happened?

Simplest explanation is usually the best one.  The simplest explanation is that the United Kingdom's economy is struggling but stable.  In spite of an austerity regime of spending cuts and uneven tax hikes/cuts, the UK's economy was stable compared to the rest of Europe's.  Parties in power tend to stay in power when conditions - economy, wars, social trends, lack of political scandals - are stable and manageable.  If the economy was truly tanking, or there were troops caught in quagmires in overseas occupations, or the Conservatives were caught in massive bribery/sex/bizarre Masonic ritual scandals, we would have seen voter unrest and a desire for change at the top.

Cameron was able to sell economic stability as the Conservatives' platform.

Stability - especially economic stability - is the big reason a lot of parties/elected officials can stay in office even during trying times or questionable leadership.  Here in the U.S., that kind of stability is why Obama won in 2012 despite the Republicans' efforts to claim otherwise, and Bush the Lesser winning in 2004 (as the occupations in Iraq and Afghanistan hadn't soured yet and the economy was still - barely - ticking), and Clinton winning in 1996 during the Internet Boom, and Reagan winning in a (misleading) blowout in 1984...

Nearly every electoral turnover here in the U.S. happens because of a major, troubling economic malaise.  At the Presidential level, major recessions (and a Great Depression) ended a lot of one-term guys like Bush the Elder, Carter, and Hoover (going back into the 19th Century we can point to Van Buren).  Obama won in 2008, and the Democrats won Congress in 2006, due to the economic downturns starting to collapse during Bush II's second term as well as growing disillusion over Iraq/Afghanistan.  Republicans took over Congress in 1994 due to a slow recovery as well as the overall ennui of Democratic control for 25-plus years.  Republicans had brief control of the Senate in 1980, but lost that as the 1981-83 recession turned voters against Reagan's tax-cut agenda.

Most other congressional turnovers are tied to economic woes (other times it's shifting demographics affecting gerrymanders, which affected the 1994 and 2010 results).  The only exceptions to this would be honest-to-God scandals like Watergate (which hurt Republicans who had nothing to do with it) or bad wars like Iraq II.  Even major scandals like Iran-Contra and the S&L debacle, or petty ones like the Lewinsky Affair, might not impact results as long as people are content with their lot.

When Clinton campaigned in 1992, the inter-office message "It's The Economy, Stupid" was pretty much the right message.

(To explain the Republicans regaining Congress in 2010 and retaining it in 2014, I'd have to point to the perception of economic disaster painted by the GOP, especially over the "threat" of Obamacare and tax increases.  During periods of lesser voter turnout like the midterms, that perception can be enough)

How this applies to the UK would be the same thing: while unemployment remains an issue, and cuts to social aid are a serious problem, most Britons seem content overall (or at least unburdened) with the direction their kingdom's economy is rolling, and so they're not about to rock the boat.

A more thorough examination into the election would point to what was happening with Scotland.  This gets a little harder to explain.

Even though Scottish voters rejected full independence, those same voters remain upset at how their nation is mired in deeper economic woes than the rest of the UK.  As a result, voters switched from the Labour Party - which used to dominate that region - to the Scottish National as a form of protest.  Even though at the united level, the incoming SNP ministers won't have any real power (they're third behind Labour, which means they're not even the official Opposition party) to make changes.

On the one hand, this cut into Labour's overall strength of numbers as a major party.  On the other hand, this gave Conservatives a means of fear-mongering - this was arguably one of the nastier campaigns in modern history, which is saying something considering how vicious British tabloids get - to their base voters and undecideds: by warning of a threat by the SNP - certain to win enough Scottish seats to be a threat - to divide Great Britain if they were to form a coalition with Labour, the Tories ensured voter turnout to their side.  As another part of the paradox, that fear-mongering worked to SNP's advantage as Scottish voters bought into that and supported the SNP well above the staid Labour.

Another factor was the utter collapse of the Dems (no relation).  What had been a small-yet-thriving third party alternative between Far Right Conservatives and Far Left Labour fell apart in the wake of this election.  The explanation for that goes all the way back to the deal with the devil that party leader Clegg made with Cameron in 2010: rather than team with Labour to form a minority government, Clegg teamed with the Conservatives to form a coalition government.

That deal was supposed to moderate the Tory agenda and preserve key issues for the Lib Dems.  Instead it gave the Conservatives a license to pursue their own policies, forced the Dems to vote on matters they normally wouldn't have, and drove away supporters after failing to prove any influence on government policies at all.

At the time - 2010 - Labour was a weakened party riven by scandal and barely functioning: Blair's scandals (sucking up to Bush/Cheney had to hurt) and Gordon's poor leadership made them a party on the downturn.  Clegg probably viewed them as a sinking ship (literal and metaphor) and likely felt he could get a better deal out of Cameron. He didn't.  He got the worst of both worlds: the coalition neutered the Liberal Democrats on policy matters, and the party got all the blame for Conservative actions that violated the liberal leanings of both the Dems and Labour.

Lib Dems went from 57 seats to just eight.  Voter disillusionment is the only explanation.  How many switched to Conservative and how many went for Labour needs deeper examination (given how Labour lost seats not just in Scotland is a factor here as well).  But if any tangible change went for the Conservatives this election cycle, this was it: the vacuum caused by the Dems' self-implosion was not filled by other third parties, and those votes had to go somewhere...

Past all that, I got nothing else to say about this except "Good luck, Brits.  You get what you pay for."

The UK should now expect increased privatization efforts in education and health care - despite evidence that in both cases nothing good is happening.  More tax cuts to corporations and wealthy are likely, even against evidence that income inequality is a growing problem in the UK (as much as it is here in the US).  And now that one party is in charge, expect the radicalization of that one party to turn into obsessive dogma at the expense of pragmatic reform.

My apostasy against the American Conservative wingnuttery may blind me against the more constrained-seeming British Conservatism, but Right Wing is too far a wing for me no matter the country.

I dread the coming austerity collapse Great Britain is about to get.