2:00PM Water Cooler 5/4/2016

By Lambert Strether of Corrente.


“PM John Key launches TPP charm offensive ahead of trade deal law changes” [New Zealand Herald].

“French President François Hollande threatened on Sunday (1 May) to reject the ambitious TTIP trade pact if it endangers the future of French agriculture, triggering similar warnings from the US regarding exports of farm produce to Europe” [Euractiv].

“Every single publicly voiced suspicion concerning the lack of transparency in these TTIP negotiations has been justified by the revelations stemming from the leak. If the Commission had the intention to really stand up for the interests of European consumers, European manufacturing industries and in particular small and medium-sized enterprises, they should welcome critical contributions from many NGOs and the broader public in general. But instead, by keeping the public ignorant about the truth of the negotiations they only manage to weaken the European negotiating position. Obviously, the Commission cannot be trusted to be a good steward for European interests in the political battle over TTIP. Not on ISDS, not on regulatory cooperation, not on good protection standards” [European Greens].

“Report of the 17th TiSA negotiation round 10–15 April 2016” (PDF) [European Commission]. Seems to be rolling along, although this is the official report.

“TTIP leaks update: Greenpeace response to Commission statements” [Greenpeace]. A good wrap-up.

“TTIP trade talks ‘likely to stop’, warns French minister” [BBC].

National Pork Producers Council on TTiP: “We publicly support these talks. There’s great potential here, but … we’re not going to accept anything other than removal of all the barriers on our products” [Politico].



“In America, this Soviet-style foreign-policy nomenklatura system has helped the post–Cold War foreign-policy elites in the Republican and Democratic parties to develop a sense of entitlement wholly disproportionate to their accomplishments. How difficult was it to run America’s foreign policy during an era of virtually unquestioned dominance? Why—with so many advantages—have our elites produced so many failed policies? And why do they feel no shame?” [The National Interest]. The National Interest hosted Trump’s speech. Their reaction: “His remarks outlined a fundamental break with post-Cold War U.S. foreign policy and offered an alternative vision with considerable appeal to a frustrated public, if less to the elites who have defined, articulated and implemented policy through three administrations run by both major political parties.”

The sentence sorta popped out at me in a think piece otherwise about productivity: “As best I can, I cover the path back to functional democracy…” [Jared Bernstein, WaPo]. Yikes!

Seymour Hersh: “I’ve been told there are many more forces in Iraq than we’re publicly announcing, including even some elements of one of our airborne divisions. What the hell? As usual, we don’t really know what the game plan is” (interview) [Democracy Now!]. (Here’s another one from the This is Hell podcast. Hersh is a hoot!)


Or not?

The Voters

“I Know Why Poor Whites Chant Trump, Trump, Trump” [STIR]. I’m not sure, but the anecdote that begins at “Luckily, life often has a way of turning stereotypes on their heads, if we pay attention” (search on it) is riveting.

“President Obama insists—rightly—that the U.S. has done much better than most other advanced economies. Unemployment has come down further than in Europe, and GDP has risen faster” [William Galston, Wall Street Journal, “How Obama’s Economy Spawned Trump”]. “But most Americans are not comparing the U.S. performance with that of other countries. They are comparing it with previous recoveries in this country, and they are evaluating it in light of their own circumstances. They are painfully aware that their household income is still lower than it was at the end of the Clinton administration and that the jobs many of them have gotten during the recovery pay much less than the jobs they lost during the recession.”

“Both of these transformations owe much to the same root cause: the failure of elites to appreciate the damage wrought by globalization and technology, and their inability to understand that a great many people do not share their value systems” [Real Clear Politics]. “You can see the problem with the solutions offered in Hillary Clinton’s promise to retrain coal miners as she shifts us from a fossil economy; this may sound great to a think tank analyst, but a coal miner sees his life fundamentally altered in ways that may not be for the best. This tendency becomes more marked as elites retreat into gated communities or carefully policed enclaves in cities, stop interacting with people who disagree with them on cultural issues, lose their ability to empathize, and see disagreement transform to disdain.” And disdain to hate.

“I believe Republican primary voters are protecting their party. Just as voters knew they could avoid impeachment by approving of Clinton’s job performance, GOP voters have decided that the only way to prevent a disastrous convention is to line up behind Trump and give him the path to the magical number of 1,237 delegates” [Real Clear Politics]. Well, it’s an interesting idea…

The Trail

I have to say I underestimated how rapidly Republican opposition to Trump would disintegrate; I suppose it’s theoretically possible for some skullduggery to occur in Cleveland, but…

“Senior Adviser: John Kasich to Suspend Presidential Campaign” [NBC]. Although he’s still waiting to see how Trump’s FBI investigation turns out. Oh, wait…

“If we were talking about ANY OTHER LIVING BEING, you would have sympathy for what Cruz just endured. Trump called his wife ugly. Trump accused his father of helping to assassinate JFK…. Even his children run away from him on the podium.” [GQ]. But, schadenfreude: “It was Cruz who led the Tea Party charge to infiltrate the American government and then destroy it by cutting the power lines. It was Cruz who shut down Congress and left us on the brink of default for two weeks back in 2013. This is a faction of the Republican Party that demands zero government, and zero compromise in the pursuit of that goal. And Cruz, as much as anybody, has whipped them into the kind of irrational froth that Trump now manufactures on an hourly basis. No one plays the “no surrender” card better or more often than Trump. And the concocted Tea Party faction, Cruz included, lives for that kind of shit. That’s why, when the dust has settled, Cruz will slither back into the fray and be right there at Trump’s side come July. They are of a kind.”

“[Trump said] he had seen a picture of [the elder Cruz] with the man who killed President John F. Kennedy. The picture in question ran in the National Enquirer, and the tabloid’s identification of Rafael Cruz is utterly uncorroborated, a point that Fox’s Brian Kilmeade feebly tried to make as Trump continued speaking. ‘What was he doing with Lee Harvey Oswald shortly before the death, before the shooting?’ Trump said. ‘It’s horrible!'” [The New Yorker]. All I want to know: How did Roger Stone plant this story? Are there no limits to the powers of this wonder man?

“Here’s a sentence I never thought I’d write: Ted Cruz is exactly right. Donald Trump is a serial fabulist of a scope virtually unseen in modern U.S. politics” [US News]. From Robert Schlesinger, “managing editor for opinion at U.S. News & World Report.”

“Around Washington, chatter about the possibility of an independent run by a traditional conservative is becoming louder. It is fueled in part by the business end of the political cycle: Campaign consultants eagerly await — and financially plan for — the quadrennial, billion-dollar payday that is a presidential election” [HuffPo]. “But there are also political reasons to run an independent candidate. A traditional conservative on the ballot who could peel a few points away from Trump would virtually assure Hillary Clinton of victory — giving business-minded conservatives who prefer Clinton a way to support her without having to support her directly. As importantly, a third-party conservative candidate could potentially draw in Republican voters disaffected by having Trump on top of the ticket, thereby giving a much-needed boost to down-ballot candidates.” So, if three, why not four?

Elizabeth Warren: “I know which side I’m on, and I’m going to fight my heart out to make sure Donald Trump’s toxic stew of hatred and insecurity never reaches the White House” [Facebook].

“Republicans can afford to lose only a net of three Senate seats to hold their majority, and the party is already defending seven states — Illinois, Wisconsin, Ohio, Pennsylvania, New Hampshire, Florida, and Iowa — that President Barack Obama won twice” [Roll Call]. “[M]any of the men and women running Republican Senate races are still uncertain about what to expect from the unpredictable Trump. They don’t know, for example, if he plans to build a ground-game in battleground states or share voter data.”

“When you have two well-known and poorly regarded candidates running against each other, it means only one thing: It’s not about winning, it’s about making the other guy (or gal) lose. Neither Trump nor Clinton has much of a chance — given their unfavorable numbers — of convincing voters to make an affirmative choice for them” [WaPo]. “Both Clinton and Trump offer a target-rich environment for that sort of race-to-the-bottom campaign.”

“In an average of the individual polls listed, Clinton beats Trump by 6.2 points versus a Sanders’ margin of victory of 13.6 points” [Wall Street on Parade]. “But one thing is for sure now. Corporate media’s efforts to shame Sanders into withdrawing from the race and allowing the Clinton coronation to proceed unchallenged, has simply strengthened Sanders’ resolve.”

Stats Watch

Not “(wonky)” at all: I was talking with Yves about the odd discrepancy between elite skittishness — see Bernstein up under 2016 Policy — and a crappy economy that seems destined to stay crappy forever but not get a whole lot crappier (in the sense of a 1929-style collapse, not ecological collapse). They’re really Nervous Nellies! But what about? It’s not like 2007 at all, where the colder-eyed observers — Yves very much among them — could, Michael Burry-style, call the coming SHTF episode. Where are the out-of-band, misallocated capital flows that would make the owners of capital nervous? Nobody seems to know, exactly. (Gillian Tett, Financial Times, “The tiny shifts that can signal huge changes”). Then it hit me: “Political risk is the mother of all capital flows.” An explanation, then, too obvious to see? (This idea applies, perhaps even especially applies, to China.) Readers?

ADP Employment Report, April 2016: “Consumer spending and economic growth are slowing and now the labor market, at least based on ADP’s estimate, is softening. ADP sees private payrolls rising only 156,000 in April for what would be one of the weakest prints of the economic cycle and the lowest since 142,000 in February 2014” [Econoday]. This index, “whose reputation as a leading indicator isn’t perfect, has nevertheless been on a 4-month hot streak and today’s report is certain to raise talk of trouble for Friday’s employment report.” It would be hilarious if, after 8 years, the Democrats were given a second response to butcher their response to a recession, and hand 93% of subsequent gains in the recovery to the 1% again. And: “[T]here is no question that this was a weaker jobs report than expected” [Econintersect].

Productivity and Costs, Q1, 2016: “The nation’s output is slowing despite an increase in hours worked in what is the latest signal of structural weakness for the economy. Productivity fell at an annualized 1.0 percent rate in the first quarter for the 4th decline of the last six quarter” [Econoday]. (My speculation: “Workers to managers: ‘Screw you, Jack.'” Or Jacqueline, as the case may be.) Econintersect doesn’t like the methodology, but nevertheless: “Even though a decrease in productivity to the BLS could be considered an increase in productivity to an industrial engineer, this methodology does track recessions. The current levels are well above recession territory” [Econintersect]. In terms of economic modeling: “If productivity growth is a full percentage point slower than pre-crisis, then the ‘normal’ wage growth figures should similarly be a full percentage point lower” [Amherst Pierpont Securities, Across the Curve]. Actually, no. Workers need a make-good.

Factory Orders, March 2016: “Factory orders rose a solid 1.1 percent in March but follow a downward revised 1.9 percent decline in February” [Econoday]. “March’s report got a major lift from a 49 percent jump in defense goods.” And: “US Census says manufacturing new orders improved. Our analysis says sales declined. However, the rolling averages improved, but remain in contraction” [Econintersect]. However: ”

ISM Non-Mfg Index, April 2016: “ISM non-manufacturing has been among the strongest indicators on the calendar and once again showed strength in April” [Econoday]. “And the strength is centered where it must be, in new orders.” With a gain in employment. And: “Important internals were mixed but remain in expansion” [Econointersect]. And: “This performance showed a marked divergence from the manufacturing survey released earlier this week and helps to reinforce the narrative of continued domestic momentum in the US economy” [TD Securities, Across the Curve].

PMI Services Index, April 2016: “The services PMI for April came in at a soft but still expansionary plus-50 reading” [Econoday].

International Trade, March 2016: “The nation’s trade gap narrowed in March but, unfortunately, is not a positive for the economic outlook” [Econoday]. “Contraction in imports, though a positive for the gap, is however a negative indication for domestic demand, especially in this report as consumer goods show unusual weakness. And indications on foreign demand are also negative.” And: “The unadjusted three month rolling average value of exports decelerated and imports accelerated (but all rolling averages are in contraction). Many care about the trade balance which improved because exports collapsed less than imports” [Econintersect].

MBA Mortgage Applications, April 29, 2016: “Purchase applications for home mortgages managed to rise 1.0 percent in the April 29 week, but refinancing continued to decline” [Econoday].

Gallup U.S. Job Creation Index, April 2016: “Employed Americans’ reports of hiring activity where they work were essentially unchanged in April, keeping Gallup’s Job Creation Index near its highest level ever recorded” [Econoday]. “New orders bounced up from a survey low in March while business activity also improved. Not improving, however, and echoing this morning’s ADP report is employment,” reflecting contraction in backlogs.

Shipping: “It could get a whole lot worse” [Splash247]. “Up to now, we have been able to count on a secular trend of rising demand – our version of Moore’s Law is that ton mileage doubles every 15 years. This rise in demand has tended to bail us out by mopping up excesses in newbuilding…. The state of the global economy suggests that we may be coming to the end of that regular doubling of ton mileage, which has been driven by globalisation – specifically the homogenisation of demand and the globalisation of sourcing – as there is a move to deliberately manufacture as close to where the demand is as possible.”

The Fed: “[T]he domestic economy is no longer the Fed’s sole consideration in policymaking. On the contrary, America’s monetary authority has all but explicitly recognized a new mandate: promoting global financial stability” [Project Syndicate].

“Janus’ Bill Gross: ‘Helicopter money’ is coming in a year or so” [Futures].

“[T]he product front, it seems that the only people on this planet who remain surprised and awed by Apple’s “clandestine” device updates are tech journalists and bloggers, and I’m beginning to think they’re faking it” [Recode]. All I want from Apple is that they’d stop making OS X a smidge crappier with every “upgrade.” And bring back the MagSafe connector, so — follow me closely here, Tim — I don’t trash a two-thousand laptop when I trip over the power cord. Oh, and stop equating better with thinner.

“The Internal Revenue Service (IRS) is going to hire between 600 and 700 new employees focused on tax enforcement, the agency’s head announced” [The Hill].

Today’s Fear & Greed Index: 57, Greed (previous close: 65, Greed) [CNN]. One week ago: 72 (Greed). (0 is Extreme Fear; 100 is Extreme Greed). Last updated May 4 at 11:45am. A stronger retreat.


“Las Vegas Is Betting It Can Become the Silicon Valley of Water” [Los Angeles Times]. “A hub of water innovation.” Silly. We’re not going to invade Canada and take their water from Las Vegas; it’s too far south.


“One way to look at that when I talk to people is to say, “What is the signaling molecule?” All cells in the body communicate by releasing various kinds of signaling molecules, like a hormone is a signaling molecule that travels through the blood and the pancreas can communicate with cells in the body by releasing insulin and telling them to get ready for the cells to be ready for sugar.” [Ganjapreneur]. “We came to find in the ’90s that nearly every brain cell, the neurons of the brain release these molecules that we call endocannabinoids that act in many ways like THC does to turn down excitability, excessive activity that can be toxic in the brain, and to mediate processes like perception and learning and memory. They’re kind of like the body’s own cannabis molecules in a sense. They’ve been called the body’s internal marijuana. There’s a good reason to say it that way.”

“Lakota Lead the Fight Against the Dakota Access Pipeline” [Truthout]. The tribes have done great work protecting the Penobscot, in particular from landfills.

“BP on Tuesday yielded in its almost two-year-long resistance to paying damages to US Gulf Coast seafood industry stakeholders” [Splash247].

The Jackpot

“Missing: The Curious Anomaly of Tiffany Whitton’s Disappearance” [Esquire]. Excellent long-form reporting that reads like The Peripheral with the fairytale romance party left out, and very much like Dylan Roof’s milieu. The future is here. It’s just not evenly distributed…

“Fukushima No. 1 plant’s ice wall won’t be watertight, says chief architect” [Japan Today].

Guillotine Watch

“Silicon Valley CEO Says He’d Make Low-Income Vendors Lives ‘Miserable,’ Brags About Driving Out Family of Recyclers” [Alternet]. Classy!

Class Warfare

“[O]ver 90 percent of the money raised by the two major candidates [for Chicago mayor] came from donors giving more than $1,000, and more than half (52%) came from donors outside of the city” [Demos].

“Another Nonprofit Craters Overnight in Wake of Failed Gates Experiments” [Non-Profit Quarterly]. School “innovation.” “They were careless people, Tom and Daisy – they smashed up things and creatures and then retreated back into their money or their vast carelessness….”

News of the Wired

“Canadian scientists are now allowed to speak out about their work — and the government policy that had restricted communications” [Nature]. Stephen Harper was a horrible human being.

“How Irritable Are You? Take This Test to Find Out” [New York Magazine].

“Hedgehogs, the Keepers of Order and Knowledge in Slavic Fairy Tales” [Tiny Donkey]. With cute hedgehog picture.

“The future of apps is chatbots, and it’s going to be terrible” [Guardian]. “[T]he mid-term success for many chatbots will be as a shield, protecting us from the reality that much of the benefits of automation are actually just low-paid grunt work from call centres in developing nations. Be nice to your bots; you never know when they’re actually people.” More gigs! Thank you, Mark! Thank you!

“[T]eenagers’ experience in the mobile world largely parallels rather than supplants their experience in the physical world. Teenagers mostly use mobile devices to communicate with friends they already know offline. They can have bad online experiences, but they are the same sort of bad experiences they have offline” [Wall Street Journal, “No, Your Children Aren’t Becoming Digital Zombies”].

“Neoliberal Tools (and Archives): A Political History of Digital Humanities” [Los Angeles Review of Books]. Important:

despite the aggressive promotion of Digital Humanities as a radical insurgency, its institutional success has for the most part involved the displacement of politically progressive humanities scholarship and activism in favor of the manufacture of digital tools and archives. Advocates characterize the development of such tools as revolutionary and claim that other literary scholars fail to see their political import due to fear or ignorance of technology. But the unparalleled level of material support that Digital Humanities has received suggests that its most significant contribution to academic politics may lie in its (perhaps unintentional) facilitation of the neoliberal takeover of the university.

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I think I fixed my fershuggeneh contact form below. Just to keep the NC comment section clean, will only those who already have my email address tell me if they have issues, using email? Thank you!

Readers, feel free to contact me with (a) links, and even better (b) sources I should curate regularly, and (c) to find out how to send me images of plants. Vegetables are fine! Fungi are deemed to be honorary plants! See the previous Water Cooler (with plant) here. And here’s today’s plant (Phil H):


Phil writes:

Old, weathered, mossy, semi-disintegrating tree remains of unknown age, but that has to have been stumpified at least 40 years ago because that is when we purchased our property. The smallish plants in front of the stump are some emerging self-seeded Lungworts (Pulmonaria) that spread from a nearby flower bed.


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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. John

    Here’s a question for you NC readers:

    If the rate of profit continues to decline and eventually nears zero, can any amount of fiscal stimulus prop up the economy and keep it growing at a normal rate?

    Just some food for thought.

    1. Yves Smith

      Corporate profit are at a record level of GDP, 11-12%, depending on how you compute them. By contrast, Warren Buffet in the early 2000s declared that a corporate profit share of 6% of GDP was unsustainably high.

      Corporate profits can drop like a stone and we’d be collectively better off. But the capital-owning classes will threaten to kill the Confidence Fairy (probably successfully) to try to preserve the unnatural and ultimately destructive level of rent extraction they’ve managed to create. They are in apres moi, le deluge mode.

      1. neo-realist

        I’m just wondering if the response to a Corporate profit drop to about 6-7% of the GDP would be demands from the elites for further layoffs, and austerity on steroids? While 6-7% levels may be objectively sufficient, haven’t the elites gotten so used to the bigger skim, er rather margins that any dip is unthinkable to them without the commoners taking the hit?

      2. John

        I was referring to the rate of profit, not the mass of profit. And the rate of profit in the global manufacturing sector has steadily declined since the 1970’s.

        While I am enraged by income inequality as well (CEO vs. worker pay needs revert to the levels it was at during the Bretton Woods era, for example), this is a different issue. A decline in profits means a decline in investment, which leads to a decline in consumption, which causes a recession.

        1. cwaltz

          I follow a decline in profits might lead to a decline in investment. However, I don’t get the decline in investment leads to a decline in consumption line. It’s generally the other way around….consumption or demands for a good or service are what fuels investment with the expectation that investing will lead to profits.

          1. John


            Here’s one good explanation. Investment is what drives economic growth, not consumption.

            I also read a great blog post that I can’t find at the moment that compared consumption and investment in the year before each slump since World War II. In every one of those years, consumption was more or less the same from the previous year, while investment dropped drastically.

            I will look around but I know there is a lot of data showing that a decline in investment almost always leads to a decline in economic activity.

            1. cwaltz

              Are you suggesting that investors are investing in something that a consumer doesn’t want or need?

              Heck, if you want a loan or someone to invest in your business, you actually have to have a business plan. That plan better include how you intend to get consumers to buy or use your product or service.

              You’ve got it backwards. No one hands out money and says “Here you go, here’s money, now come up with an idea of something that consumers might want or need.” It just doesn’t happen that way….EVER.

              1. John

                First of all, I never said consumption isn’t a part of the picture. I’m just saying that you have it backwards when it comes to recessions. Moreover, your analogy is irrelevant. I’m not talking about the business plans firms make when they invest. I’m referring to recessions. But to stick with your analogy, if firms won’t make profit on their investment, they won’t invest. Of course they do some market research to see if there are willing consumers…but their decision to invest ultimately comes down to profits.

                And recessions aren’t caused by a magical reduction in consumption. Consumption drops after the recession hits…it’s the last thing to drop. If we look at any recession, first profits growth slows, then investment slows, and then consumption slows. This is what I was talking about.

                1. cwaltz

                  Why does profit slow?

                  I don’t think I have it backwards at all. I think you’ve oversimplified.

                  According to wiki-
                  A recession has many attributes that can occur simultaneously and includes declines in component measures of economic activity (GDP) such as consumption, investment, government spending, and net export activity. These summary measures reflect underlying drivers such as employment levels and skills, household savings rates, corporate investment decisions, interest rates, demographics, and government policies.

                  In other words, investment is a component of recession. It isn’t necessarily the driver.

                  1. John

                    “Why does profit slow?”

                    The rate of profit has been steadily falling since the 1970’s. Why is up for debate. It may be the tendency of the rate of profit to fall. It may be a global crisis of overproduction/under-utilization of productive capacity.

                    “Investment is a component of recession. It isn’t necessarily the driver.”

                    The fall in profits is the driver, which leads to a fall in investment, which triggers a fall in consumption and, thus, a recession. This is why that in the year before every slump since World War II, investment saw a big decline, while consumption didn’t.

                    1. cwaltz

                      Probably because businesses are supposed to anticipate what consumers will do. If I see a build up in my warehouses I’m not going to run out and invest in more workers or materials to make more product. I’m going to sit tight.

                      Also from wiki- Recessions generally occur when there is a widespread stop in SPENDING. Who spends? Consumers.

                      You’ll note it says spending, not investing.

                    2. John

                      Recessions occur WHEN consumption declines; reduced consumption is what exactly what happens when there is a recession. If consumption doesn’t drop, there’s no recession. But there is a cause to this drop in consumption. It results from a decline in investment, which is preceded by a sustained decline in profits (even if profits were high to begin with). A decline in consumption describes a recession, but it is not the initial cause of recession. It’s the effect of the preceding factors (profits and then investment).

        2. John

          I forgot to add that corporate profit growth has, indeed, slowed, and appears to be heading towards negative territory. If this trend continues, investment will decline, followed by consumption, and we will have another recession.

          But in my first post I was mostly referring to the bigger picture. With the rate of profit steadily declining, how can fiscal policy save us? What happens as it approaches zero? How can an economy grow with a low and declining rate of profit?

          I am all for fiscal policy to alleviate the pain of those on main street and for the redistributive effects it has, but I think it’s clear that stagnation is our future. If we have a robust social democracy, like those of the Scandinavian countries, low growth isn’t so bad. I’m all for it. But we must remember that low growth will be the reality, and I’m afraid that neither the public nor capital will put up with it. They’ll be willing to try any sort of extreme measures to get the economy growing again, measures that will have long-term consequences (after two lost decades, Japan has turned to Abeism, for example). And I also fear that ‘social democracy’ will be blamed for low growth in the future–politicians will blame the “welfare queens” for our economic malaise and we’ll get another Reagan/Trump type figure, only much scarier, who dismantles the welfare state and promises to get the economy growing again by pursuing extreme laissez-faire economic policies. When he fails, he will simply blame the Democrats, economic policies from prior administrations, or immigrants. Many developing countries get stuck in a similar sort of trap.

          1. cwaltz

            It’s slowed because almost has a point where growth levels are not maintainable.

            At some point businesses can’t give the investment class more and simultaneously run the business which requires that you to pay for utilities, labor, taxes, etc, etc.

            Additionally the investment class is essentially chewing it’s own hand off because as wages have stagnated or declined in real dollar value it means that there is less money for consumption. If my housing, medical, and other bills go up and my income doesn’t I’m not exactly going to be running out to by a big screen TV, I’m going to be cutting cable.

            1. John

              Fair enough, but simply increasing consumption won’t do the trick. Wages have been stagnating since the 80’s, and to counteract for the lack of demand, massive amounts of credit was extended to the popular classes. Consumption was at all-time highs and we ran a huge current account deficit as time progressed. Yet growth was still weak compared to the 50’s and 60’s, and it was entirely unsustainable (bubbles).

              But more importantly, we can use fiscal policy to boost demand, and keep the economy going while houshoulds and firms pay down their debts. But then what? If the problem is wage stagnation/lack of demand, as you describe, how can fiscal policy change that? Wages have been stagnating for a long while because of the rise of foreign competition and the increasingly connected global economy. Firms can outsource labor very, very easily. Nothing will change thus. And passing legislation to keep factories at home may make things better for the general populace in the short term, but in the long term, we’ll pay for it with inflation and reduced competitiveness. Fiscal policy will ease the burden, but it won’t change these fundamental structural conditions. You can’t simply prop up an economy ad infinitum with government spending. There is no free lunch. Either you pay for it in taxes, in inflation, or poorer countries pay for it because their firms lose competitiveness because they don’t get that kind of demand boost (their currencies are too weak for such large fiscal deficits). And then eventually, you run out of new bridges to build, and fiscal policy starts losing its effectiveness. Law of diminishing returns and all that.

              Either way, if you’re right or I’m right about the structural causes of our current malaise, fiscal policy is only a stabilizer and won’t fix things in the long term. It can’t change the fundamental structural conditions of an economy (aside from producing infrastructure that didn’t exist previously, which is beneficial to capital accumulation, but again, there is a limited amount of useful infrastructure to be built).

              1. cwaltz

                Credit extended based on future earnings are a large part of the problem. It isn’t the only problem though. The number of savings and investment vehicles we have is bordering on absurd. Americans are expected to save for their retirement, for their kids college, for the health care they will need annually and do it all on a median of $50,000 while simultaneously consuming enough to save our economy. It’s insane.

                We disagree on the solution. You think the government is the problem. I think it is a solution.

                If the government starting addressing the economic uncertainties involved in sending their kids to college, paying for health care, or strengthening our retirement system then we might be able to free up that money in savings where it sits stagnating instead of actively participating in our economy. Addressing college would free up billions of dollars. Addressing health care would start to address one of the largest reasons for bankruptcy in this country. In 2014, 64 million people faced medical debt. 59% of them had insurance. That’s likely billions of dollars on the table.
                I also support fixing retirement by adding a second tier to FICA and removing the cap. Social Security was modeled on railroad retirement. Since that time railroad retirement actually addressed the fact that the amount placed in is not enough. They created a second tier to address that. Social Security should do the same. Additionally the rich should come to terms with the idea that they and their investment income are not special snowflakes. They get to contribute at least as much as the guy who makes the widgets.

                I think that government has the means to fix societal problems. It just lacks the political will thanks to the lobbying of the well off but not very bright.

                1. John

                  “We disagree on the solution. You think the government is the problem. I think it is a solution.”

                  Whoa there buddy, I never said that government is the problem. The problem is the falling rate of profit, and it’s something that the government is powerless to do anything about.

                  I agree with the measures that you stated, and I agree that government has the means to help fix many societal problems. However, government will be unable to get the economy growing at a normal rate. While an effective welfare state can make a zero growth economy not so bad for the masses, I don’t think people will put up with it. We’re just used to these high growth rates, 2-3%. The public is and the business sector is. They will revolt against the low growth rates, just as the Japanese are doing now after two lost decades (and that’s a country with very traditionally strong hierarchies)…they’re trying every policy possible to get the economy growing again. There will be long-term consequences, and it certainly appears that they’ll fail in restoring the growth rates they were used to before the 90’s. We’re headed for the same fate, and I’m afraid that the Republicans (and Democrats) will unfairly (and illogically) blame the “welfare state” for our malaise and we’ll see a bunch of right-wing economic policies in the name of restoring growth.

                  While I’m fine with a low-growth economy if it’s sustainable and does a good job of maintaining income equality, if the choice is between chaos and a whole new economic system, I’m inclined to want to try the latter.

                2. John

                  I wrote a long comment that is still awaiting moderation…

                  In sum, I never said the government was the problem. The problem is a falling rate of profit, and government is powerless to stop this. While redistributive policies can ease the burden on the masses, and I support the policies you listed above, they will not restore growth rates. They will help the plight of most Americans, but growth rates will remain low. I am fine with this, but unfortunately, the public (and the business class) is addicted to 2-3% growth rates. We think of it as a divine right. So when we don’t get those numbers, we will be willing to try any economic policy to get the economy growing again. Japan put up with two lost decades and now they’re willing to try out anything (Abeism). The same will happen in America, and my fear is that the “welfare state” is unfairly (and illogically) blamed for our economic malaise and dismantled.

                  1. cwaltz

                    The funny thing is these same investors seem to be under the misimpression that their investment income be given special snowflake status because- “risk”

                    The idea that investment should always result in absurd levels of profitability defies why investment was given a lower tax rate to begin with.

                    It’s also a house of cards considering our rocket scientists in charge of the economy have decided that the fate of our elderly is reliant on the rise and rise(because must not ever fall) of the stock market.

              2. reslez

                Firms can outsource labor very, very easily. Nothing will change thus. And passing legislation to keep factories at home may make things better for the general populace in the short term, but in the long term, we’ll pay for it with inflation and reduced competitiveness. Fiscal policy will ease the burden, but it won’t change these fundamental structural conditions. You can’t simply prop up an economy ad infinitum with government spending. There is no free lunch.

                You are making blanket statements you have not shown to be true. Like a fish so immersed in neoliberal muck it doesn’t see what it’s floating in. The ease of offshoring and outsourcing is a designed, conscious policy that can be changed. We have underutilized labor and manufacturing capacity due to overliberalized, self-destructive trade policies. “Free” trade only benefits a nation at full employment. Otherwise you are sacrificing your workers to benefit elites.

                Government spending is highly necessary to guide economic growth to productive areas. When demand is deficient government spending is sometimes the only way to jumpstart growth. Not to mention the minor side benefit of keeping citizens from starving in the streets.

                It can’t change the fundamental structural conditions of an economy (aside from producing infrastructure that didn’t exist previously, which is beneficial to capital accumulation, but again, there is a limited amount of useful infrastructure to be built).

                The US has trillions in unfunded and deteriorating infrastructure. Let’s start there. When every major city in the US has first world public transportation, when regional centers are linked by modern rail, when every public building is energy neutral, then we can quibble about the “limited” number of things it would be useful to build next.

                1. dots

                  Infrastructure is always good, but what’s really needed will be an economy not based upon a bacchanalia of mindless consumption & waste. Perhaps an economy that can transform tons of plastic waste, toxins/drugs/poisons, and non-biodegrable crap back into non-threatening substances that won’t swallow us all alive?

                  Balance this off with a fair chunk of economic activity that recycles, repairs, and just generally does no more harm for however long it takes to unwind the industrial revolution and we just might stand a chance….

                  There’s no guarantee, of course, but where we’re headed now is probably well beyond worrying about corporate profitability.

                2. John

                  If you think I’m “neoliberal,” you’re not reading me closely enough. How many neoliberals are discussing the tendency of the rate of profit to fall? Adam Smith and David Riccardo did, but no neoclassical economists in the past century have. Neoliberals believe in infinite growth…although even some of them are losing the faith (Larry Summers now thinks we’re in for a long period of “secular stagnation,” for example).

                  Anyway, of course I’d like to see more nationalist trade policies you speak of. It’s much better than the neoliberal alternative. But they can only do so much. The won’t solve the structural conditions that ultimately caused this crisis–they won’t stop the steady fall of the rate of profit in manufacturing because this trend has been occurring all over the globe for over four decades.

                  Sure America’s infrastructure needs replacement–this will improve conditions for capital accumulation and boost demand. And then what? There is a finite amount of infrastructure that can be improved. What do you then? You get to a point where replacing old subways only temporarily boosts demand (through the spending itself) but doesn’t actually augment the process of the accumulation of capital.

                  Of course I want to see our infrastructure upgrade; this will make our lives better and provide a boost to the economy. And then what? The rate of profit will continue its steadily decline, and we will return to our malaise.

                  You argue that we should fix our infrastructure first and worry about the rest later. That’s fine. But it doesn’t hurt to think about what will happen farther down the line. It won’t take more than a decade to finish most of the infrastructure improvements we need if we really committed to it. It’d be a great decade, but most of us will be alive when it finishes, and then we’ll be stuck in low growth mode indefinitely. If we have a socially just and ecologically sustainable economy, I’ll be fine with no growth. But I think most of the public and business class will get fed up and will be willing to do what it takes to get our GDP growing at 2-3%. Japan, despite being very stable and hierarchical, after two decades got sick of it and now they’re trying everything possible to get the economy growing again. They should be more worried about the long-term consequences of their wacky policies.

                  In short, I agree with the policies you’d like to see, but I firmly believe we’re in for little to no growth for the foreseeable future, and it’s something worth talking about.

                  1. Yves Smith

                    If what you said was correct, we’d never had had any growth in the 20th century. We’ve had growth since the 1980s despite declining investment, most important, a big decline in infrastructure spending and government-funded fundamental research.

                    All you are doing is broken record. That plus you making a comment at the top of the comments section that is totally off topic (no relationship to any of Lambert’s links) and your insistence on having the last word makes you look like a troll. I suggest you read our Policies before commenting again.

                    1. John

                      The rate of profit increased from the 40’s to the 60’s, which is why that was a boom period. But as I stated previously, since the 70’s, we’ve been mired in stagnation. The only substantial growth since then has come from asset bubbles (stock market in the 90’s, real estate in the 00’s).

                      Not trying to be a troll, just trying to have a little discussion, that’s all.

                    2. Yves Smith

                      That is also a myth. If you look at the Fed’s Flow of Funds data, corporate profits rose strongly in the 1970s after the horrible 1973-1974 recession. What killed stocks was inflation, which got to be so high that analysts couldn’t trust financial statements (inflation is not “perfect inflation” with all items inflating at an equal rate). And inflation makes anything with a long term payoff look unattractive (high discount rates) which was also punitive to stocks.

                    3. John

                      We did see a rise in the rate of profit during the 50’s and 60’s, which is why that was a boom period. But since the 70’s, our growth has been entirely based on asset bubbles (stock market in the 90’s, real estate in the 00’s). Now that those have popped, we don’t have prospects for robust growth (and eventually, we’re going to pay the price when these reflated asset bubbles pop again).

          2. portia

            In my world, consumption declined a long time ago, and “investment”, at least in the 80-some % of people who consume, declined before that, and this particular recession started almost a decade ago. Debt rose astronomically as a result. It’s just something that is not part of the narrative of economists, who don’t live in my world. But who cares. “Growth” as a term does not apply to the proles

            1. John

              “In my world, consumption declined a long time ago, and “investment”, at least in the 80-some % of people who consume, declined before that, and this particular recession started almost a decade ago.”

              I agree, although I would add that the root structural causes of this particular recession have been around since the 1970’s.

          3. craazyboy

            Post 2008, it’s been widely and consistently reported that “corporate investment” has been largely buying back their own stock.

            So any econ textbook stuff you may be thinking no longer applies.

          4. jsn

            Fiscal stimulus, when done properly i.e. getting money to people who will spend it, causes demand. Again, done properly fiscal stimulus creates sustained demand. Sustained demand sends the signal to investors that investment in the sectors where this demand manifests will yield profits.

            Kalicki/Levy’s profits equations spell it out pretty well. Very little investment, so defined, has happened in the West for a while.

            The vast majority of what is now called investment is asset stripping or cost shifting and the vast majority of what is now called profit is looting.

            1. John

              Investment comes from profits, not consumption. Consumption helps fuel profits, which in turn lead to investment…but ultimately it’s the profits that drive investment. Furthermore, a decline in profits leads to a decline in investment, and we’re seeing corporate profit growth approach zero again. If it falls into negative territory and stays there, investment will decline. And every time investment declines, we get a recession.

              But this was a relatively minor point. The bigger point is that the rate of profit has been steadily declining since the 1970’s. As it continues to do so, and eventually approaches zero, how can we expect the economy to grow? Fiscal policy can temporarily boost demand (consumption) and the mass of profit, but not the rate of profit. And since profits are the lifeblood of the capitalist economy, I can’t believe that an economy can sustainably grow at 2-3% with a low and ever decreasing rate of profit.

              1. craazyboy

                You seem quite confused by arithmetic.

                If a company has 10% “profit” on $10 of sales, it has a dollar of profit. If it has 10% “profit” on $20 of sales, it has $2 of profit.

                1. John

                  What? When did I use arithmetic? When did I demonstrate that I don’t know what the word profit means?

                  Perhaps you’re confused by the difference between the rate of profit and the mass of profit? Look it up.

                    1. John

                      Your post makes no sense.

                      You’ve claimed that I don’t know what the word “profit” means, yet show no evidence for this claim. Please state where I don’t understand what the word “profit” means or what a percentage is.

              2. jsn

                Investors can only project future profits where they see sustained demand and only speculate with their money where they see this possibility. Potential for profits creates the opportunity for investment. When a real investment is successfully made, not the mal-investments, scams and QE transfers, asset strippings and out right looting that passes for investment today, the invested money charged into the economy by the investment process becomes profit.

                Read the Levy link it goes through this step by step, a narrative description of the Kalecki equation. Profits equal investments, but the investment comes first and must succeed to become profit.

                Consumption creates demand for production and production creates the physical space, the opportunity for investment: properly designed fiscal stimulus can drive this and thus create, after investments are succesfully made to service demand, profit.

                1. John

                  “Consumption creates demand for production.”

                  So we agree. Consumption leads to profits, which drive investment.

                  What we have here is a circle between profits, investment, and consumption. Profit leads to investment, which leads to consumption, which leads to profits again.

                  It’s probably not the most fruitful exercise to try and determine where exactly this ‘begins;’ it’s a loop. However, when it comes to recessions, there is an order in which this occurs. Profits fall first, then investment, then consumption.

                  Here’s a graph comparing investment and consumption the year before every slump since WWII.


                  But this was actually a rather minor point of mine. The more important issue is that the rate of profit has been steadily declining since the 1970’s. As this trend continues and it approaches zero, how can we expect the economy to grow? Fiscal policy can boost demand and, thus, the mass of profit, but it can do nothing to change the rate of profit. And over the long term, a low and declining rate of profit results in an unhealthy economy (and less and less investment, among other things). I can’t imagine an economy with a rate of profit near zero that is growing, can you? And fiscal policy can do nothing to change that.

                  1. jsn

                    We almost agree. Causality is important, consumption does not necessarily lead to profits: predictable, sustained consumptions presents the opportunity for fruitful investment. Fruitful investment, mathematically causes money profits. The sequence and causality is important because it allows one to differentiate real investment from all the other things that like to parade themselves as that.

                    1. John

                      Here’s a mainstream economist who has realized that investment flows from profits: http://uk.businessinsider.com/edwards-tidal-wave-us-recession-is-coming-2016-4?r=US&IR=T and that a recession will come.

                      On the topic of sequences, what do you think the causality is in a recession? It seems to me that you’d argue a drop in consumption happens first, but if you look at the graph in the link in the post above, you’ll see that investment actually declines before consumption does in the year preceding a slump.

              3. jsn

                The only thing that boosts the rate of real profit, as distinct from asset stripping, looting etc. is real investment as defined by the two links. These investments will produce profits so long as they are successful. I suspect what your describing, but can’t tell for sure, is the end of the cycle of neoliberal looting where the extraction that has passed for profits since deregulation/decriminalization of FIRE sector frauds has run its course and stripped and monetized most of the assets in the West.

                1. John

                  Actually, investment does not boost the rate of profit. In fact, it does the opposite. Over time, as a firm invests more and more, the value of fixed capital increases, and thus the return on that investment decreases. This is the tendency of the rate of profit to fall:


                  What is a fact is that the rate of profit has been falling steadily since the 1970’s. Some believe this is the result of a downturn in the profit cycle (Michael Roberts included, who I’ve posted a link to somewhere here) and simply the tendency of the rate of profit to fall in action. However, I tend to side with Robert Brenner, who believes that since the 1970’s, we have seen a decline in the rate of profit of the global manufacturing sector because of a crisis of industrial overproduction/under-utilization of capacity. This resulted from the rise of Germany and Japan by the same time (70’s). Firms, facing increased competitiveness, invest in productive capacity to try and undercut the competition (greater efficiency), only exacerbating the problem. This results in the rate of profit continuing to decline.

                  Either way, we have a declining rate of profit, and as it approaches zero, the economy will be unable to deliver the growth rates that it did previously. It’s a structural problem that fiscal policy is powerless to solve.

              4. cwaltz

                Profits do drive investment. However, not all investment comes from profit.

                The government regularly funds things that do not initially produce profit. Companies like Google were able to get loans because the government INVESTED in their idea. The government INVESTS in communities when it spends money on roads and infrastructure that in turn they hope will result in businesses deciding to reside in their communities.

                Again, you’ve got it kind of backwards. Investment precedes profit. That’s why it’s considered risky. It doesn’t always pan out.

                1. John

                  “Again, you’ve got it kind of backwards. Investment precedes profit. That’s why it’s considered risky. It doesn’t always pan out.”

                  But companies won’t invest if profits are declining. And that leads to reduced consumption (a recession).

              5. Yves Smith

                That is utter bullshit.

                Companies can borrow or sell stock to fund investment. And even for those companies that choose not to borrow or sell equity to fund investment, they do it out of free cash flow, which is often different than accounting profit. Amazon is an extreme example of this. If you assertion was true, Amazon would still be in Jeff Bezos’ garage.

                And companies have been net savers in the US since 2003. I wrote about it in 2005:


                1. John

                  Of course businesses have all sorts of avenues through which to tap into capital; credit has been incredibly easy since the early 90’s. But whether or not they decide to invest depends entirely on profits. If they’re making less and less profit as time passes and fore this trend continuing, they will decide against investing. And a big drop in investment leads to a recession (lower demand, ie reduced consumption.

          5. OpenThePodBayDoorsHAL

            I think you’re looking at just a part of a system and trying to predict how the whole system works.
            Since we have a debt-based money system there must be people taking on additional debt in order for marginal additional economic activity to take place. That activity in turn might result in a profit for a corporation.
            Many argue however that since debt burdens are not just high at the moment, they’re higher than they’ve ever been in mankind’s history, it’s very difficult to see how much more debt can be issued. And recall that servicing just current debt is only possible with rates that are at (or below) zero.
            China added > $1T in new debt in Q1 2016, but they have a very different system to ours. In our system “loan demand” helps drive credit creation. In China the central bank decides how much borrowing will take place, then assigns the state and other entities below it to emit that amount of new credit.
            Since there is no longer a mechanism for entities that have issued too much debt to go bankrupt (China just sweeps it under the rug and the central bank declares more credit, in the West the central banks just buy the bad debt from banks, or the banks reach into depositor accounts through “bail-ins” in order to stay solvent), it’s difficult to predict how the situation resolves itself. A student of monetary history would point out that every other time in man’s history when this same situation has arisen it was not resolved, but rather solved by war and monetary “reset” where a brand new money system was put in place.
            Corporations can continue to grow profits, but whereas 40 years ago $1 in new debt might generate $1.25 in economic activity, today $1 in new credit only generates $0.50 in activity, leaving the debt service in place as a limit on new borrowing. Ask a fifth grade math student how that kind of trajectory eventually plays out.

            1. John

              Debt is just one way corporations are trying to counteract the falling rate of profit. But it can’t arrest it for long, and it’s not sustainable.

        3. jgordon

          A decline of profits, investments, consumption are already guaranteed regardless. These all rely on cheap fossil fuel energy, which is getting less cheap by the day. Soon enough there won’t even be the energy surplus needed to maintain an industrial economy at all. That’s the ultimate answer to your question.

          On that topic, I saw this post from Gail Tverberg a couple of days ago that rather nicely elucidates the connection between energy, the economy, and debt: https://ourfiniteworld.com/2016/05/02/debt-the-key-factor-connecting-energy-and-the-economy/

        4. paulmeli

          “A decline in profits means a decline in investment”

          Seriously? A decline in profits could also mean a decline in government spending, as in we’ve averaged 7% since WWII but 1% since 2011. If the government doesn’t spend, profits have to come from savings. Who is spending their savings? 2/3rd’s of the population has zero or less than zero.

          And the idea that lower profits have reduced investment, Profits, as Yves noted, have increased from 6% to 12% pdf GDP, while we’ve cut the top marginal tax rate from 70% to 35%, reduced capital gains taxes, not to mention all of the de-regulation, while investment has declined to 42% of GDP from 55% of GDP.

          Investment in production is just too HARD (cue whining) when the easy money is in rent-seeking and arbitrage.

          1. John

            When I said “means,” I meant ‘leads to,’ not ‘results from.’

            And corporate profit growth is rapidly slowing and approaching zero. If it goes into negative territory and stays there, investment will decline, and that will lead to a recession. Every recession since WWII has followed the same pattern.

            But more importantly, the rate of profit has been steadily declining since the 1970’s, despite government spending as a percentage of GDP staying roughly the same. As it continues to decline and approaches zero, how can the economy grow at a normal rate? Fiscal policy can boost demand in the short-term, but it does nothing to the rate of profit, which is ultimately the cause of our current economic malaise. Short-term stabilizers (fiscal and monetary policy) can’t change an economy’s underlying structural conditions.

            1. bob

              “Short-term stabilizers (fiscal and monetary policy) can’t change an economy’s underlying structural conditions.”

              monetary policy = underlying structural conditions

              You can only square the circle so many times before you come to the realization that where you start, is not where you end up, with the standard neo-lib model.

      3. RP

        And we should be in “hand me that hammer and those planks of wood, the blade goes in the middle with the rope attached here” mode

    2. financial matters

      Perhaps related, Tony Smith has an interesting article in “The Future We Want: Radical Ideas for the New Century” called ‘Red Innovation’

      He discusses the theme that basic public research has supplied much of the technological advances for private companies, such as 12 key innovations in Apple products.

      He suggests that “The social consequences of technological change could be far different than they are today. We do not need private ownership of productive assets, or markets devoted to financial assets, to have a technologically dynamic society”

    3. DJG

      John: You asked a version of that question yesterday in another thread here at NC. Would you, perhaps, have an agenda? Care to tell us?

      Just some food for thought.

      1. John

        I didn’t ask any questions yesterday. I was discussing a similar topic…are we not allowed to discuss related topics twice? Is your agenda to police any possible redundancies?

        I think the rate of profit should be a big part of the discussion, that is all. NC is the best economics site on the internet, but this one extremely important topic does not get enough attention.

        1. hunkerdown

          Personally, my agenda is to not help people taking notes for future PR responses. Those who keep asking the same question over and over again are typically doing just that, as I found out well at Salon a few months ago.

          A zero rate of profit is just fine, as long as all the bankers have been lined up against the wall and disposed of. Their usury is the only reason the rest of us “need” profit.

          1. John

            Is that honestly what you think I’m doing?

            A zero rate of profit means the economy doesn’t grow. I’m all in favor of a no-growth economy if it’s sustainable and equitable, but unfortunately, I think the vast majority of the public and capital is addicted to the magic 2-3% growth number, and will try anything to get the economy growing at that rate. The long-term consequences of such future wacky policies could be disastrous, and when capitalism fails to produce prosperity, particularly for the popular classes, people will start to wonder if there is an alternative.

            1. TomDority

              One thing you should understand is investment in capital goods is not occuring. The falling rate of profit you talk about is not due to a diminishing return to real capital..real capital is equipment, a place for production, a means of production. What is occuring by investment is the loading down via debt of real existing capital to extract a revenue stream from compound interest upon the that debt. Stock buybacks do nothing to increase production. You produce Twinkies for 50 years profitably using the same equipment…then some financial engineer (one who learned the neo-economics fantasy from the best institutions who themselves were endowed by the land Barron’s and rentiers of the past to teach this economic trash. How else do ya have overhead counted as positive GDP.) Comes along and buys the company, saddles it with debt, forces it to borrow to pay themselves a dividend and finally force it into bankruptcy, raid the retirement fund and walk away with a bonus for such good work….not to mention the folks thrown out of work…Twinkies. So, until you tax away this method of profit (pilfering) and, in fact tax favor it, you will get a falling rate of profit due to increased interest payment upon an increased debt load that, in no way, has anything to do with producing anything.

              1. John

                I’m not sure I see much in here I disagree with.

                When ‘investment in capital goods does not occur,’ the result is a recession.

                Over time, companies continually invest in capital goods, and the trend over time is that each upgrade costs more money. Capitalists have to spend more money in relation to the profit they’ll receive. Thus, over time, the rate of profit has a tendency to fall. Wikipedia explains it better than I do:


                One way to counteract this tendency is through the taking on of more debt, as you note, but that only slows down this tendency. It can’t delay it forever.

                On a shorter time scale, when profits steadily decline, companies decide against investing (they’re getting less return on their investment), and consumption drops: a recession. During the slump, the dead weight is cleared, businesses go bankrupt, capital values are destroyed–and then the rate of profit can increase once again, ushering in a boom period. But over time, the rate of profit slowly declines, and it heads towards zero. What do we do then? Ultimately, no amount of Keynesian stimulus can save us from this end; it can only prolong its onset. The only thing that could is a war and huge amounts of destruction (like World War II did).

            2. Darthbobber

              A LITERAL zero rate of profit would mean that nobody could derive income from owning capital. Which renders it hard to see why anybody would BE a capitalist under those conditions. But it is fairly obvious at a casual glance that the present situation is nothing like that.

              1. John

                I agree wholeheartedly. Once the rate of profit reaches zero, no one wants to be a capitalist and the whole system ends.

                And with only a casual glance at this rate of profit, we observe that it has been steadily falling for more than four decades. And we noticed that since then, all growth (which has been less robust than in the 50’s and 60’s) has come from asset bubbles: Japanese real estate in the 80’s, the American stock market in the 90’s (tech), American real estate in the 00’s, and various Euro bubbles in the 00’s.

                So I don’t see how anyone can think we’re in for anything other than secular stagnation for the foreseeable future. Fiscal stimulus can boost the economy in the short term, but then what? We’ll still be stuck with the declining rate of profit and no more avenues for sustainable growth. And over time, the bubbles will eat away at our economies, and the increasingly crazier policies we enact to get out of the malaise (Japan under Abe, for example) will eventually catch up with us.

                If an economy is socially just and ecologically sustainable, I’m fine with a low growth environment. But unfortunately, I don’t think most of the public (and more importantly, the business class) feels the same.

  2. Jim Haygood

    “[Trump said] he had seen a picture of [the elder Cruz] with the man who killed President John F. Kennedy.”

    This is political entertainment of the highest order. And — however preposterous it may have been — it served to dispatch the Can00ban.

    Let’s hope Trump can find a picture of Hillary sitting with Osama, as bin Laden points to a photo of the World Trade towers.

    1. Katniss Everdeen

      Pretty funny.

      But it won’t be too hard to tie the clintons to saudi arabia through the clinton foundation and the secretary of state’s office. And most already know that osama and most of the hijackers were saudis.

      And isn’t it the transitive property that says, “If a = b and b = c, then a = c?”

      I’d guess that whether there’s a photo or not, the Donald can make people think they’ve seen it. With one hand tied behind his back.

    2. NotTimothyGeithner

      “You see this Hillary candidate uh women America, got to keep it pic, but she keeps some pretty creepy company. Believe me I know, she was a guest at my wedding.” -Trump, later this week.

    3. MyLessThanPrimeBeef

      You mean like the elder Cruz was at the basement of the Dallas police station?

      A lot of people were there that day.

  3. Jim Haygood


    FRANKFURT: The European Central Bank on Wednesday (May 4) said it would stop producing and issuing €500 banknotes, amid fears that the violet-coloured bills were favoured by criminals for money laundering and even terrorist financing.

    The bank is to stop issuing the €500 bills (US$580) around the end of 2018 although those currently in circulation will remain legal tender.

    Existing bills can also be exchanged at national central banks of eurozone nations for an unlimited period of time, added the ECB, announcing its decision to scrap the denomination after “taking into account concerns that this banknote could facilitate illicit activities”.

    Because of its size and portability, the €500 note has become so prized in underground finance that it can trade at more than its face value, and has become known in some circles as a “Bin Laden”, a Harvard study said.


    Lies … all lies. This is a war on cash to facilitate negative interest rates and gain market share for fee-extracting banksters.

    If it weren’t an anachronism, the ECB could release a photo of Ted Cruz’s dad handing Lee Harvey Oswald a 500-euro note.

    Hell, maybe they will anyway. Who’s gonna notice?

    Say pal … can you spare me a Tubman for a cup of coffee?

    1. Clive

      Ha. They think they’ve got problems. Try getting a £50 note here. In the Precambrian era when I was a bank cashier just out of school I remember my till had a dozen or less of these (the highest denomination available). If a customer paid them in, in any quantity, they got sent back to the Bank of England that night. We only got them in if a customer specifically requested them and then both the BoE and the bank’s regional office asked questions if it was done too often. A customer merely paying in a wedge of £50s had us umm-ing and ahh-ing about whether this was something we had to report on under the Proceeds of Crime regulations.

      Back then, I thought it all perfectly reasonable as it was to deter the black economy. Now, I think the same as you: security services spying and an enabler of the Coming Attraction of major systematic financial repression.

      But please Jim, don’t start going on about gold again. If you do, I’ll ask about the craazyman drek portfolio. I know a called the top a week or so prematurely, but I think it is, erm… not quite as good as it was?

      1. polecat

        if ever the Treasury prints and circulates $14.00 obamas, I’ll use them to lite my stove…or maybe even a choom-wagon blunt!

      2. Jim Haygood

        Since reaching an equity high on April 29th, Craazyman Fund has pulled back 2 percent so far this week.

        All three of its components (junk bonds, emerging market stocks and gold bullion) still show gains since purchase.

        Craazyman Fund is up 4.18% from March 2nd, versus a 2.17% gain in its SPY/AGG benchmark.

        You can view this week’s pullback as the crack of doom, or (as I do) an opportunity to add more during a dip.

    2. fresno dan

      where in the hell can you get a decent cup of coffee for a Tubman in Europe????
      Mark my words, Obama is gonna regret that line about Tubmans….

    3. OpenThePodBayDoorsHAL

      I have it on extremely good authority that an ECB helicopter money scheme is well in the works. Manna. (I wonder how the purchasing power of each unit of manna scrip held up in 500 B.C.?)

  4. Matt Alfalfafield

    The wildfires in Fort McMurray, Alberta, continue to burn out of control, and the fire chief is openly warning people that most of the town may be destroyed (here’s the CBC’s latest update).

    For those who don’t know, Fort Mac is the heart of Canada’s tar sands extraction. It’s a community that’s boomed majorly over the past few decades as tar sands production took off. Lots of folks from economically hard-hit parts of Canada moved to northern Alberta (or commuted back and forth a few times a month) to cash in on the super-high salaries that industry was paying for a while. The city’s been doing poorly since oil prices crashed, of course, and this massive fire is going to have a majorly disruptive effect on that already struggling industry.

    A wildfire this big this early in the year is unprecedented. The whole region has been going through an extremely dry winter, and apparently it was 30 degrees Celsius (around 86 F) yesterday, which in the past would have been unusual even in the summer. I’ve seen a few folks on social media (delicately) pointing out the profound irony of the epicentre of Canadian fossil fuel emissions being destroyed by a climate-change-driven disaster, but that discussion may have to wait for another day.

  5. fresno dan

    “In America, this Soviet-style foreign-policy nomenklatura system has helped the post–Cold War foreign-policy elites in the Republican and Democratic parties to develop a sense of entitlement wholly disproportionate to their accomplishments. How difficult was it to run America’s foreign policy during an era of virtually unquestioned dominance? Why—with so many advantages—have our elites produced so many failed policies? And why do they feel no shame?” [The National Interest]. The National Interest hosted Trump’s speech. Their reaction: “His remarks outlined a fundamental break with post-Cold War U.S. foreign policy and offered an alternative vision with considerable appeal to a frustrated public, if less to the elites who have defined, articulated and implemented policy through three administrations run by both major political parties.”

    I will say it again – it is sad, but amazing that it took Donald Trump to crack MSM/foreign policy/MIC and say that our foreign policy is ALL F*CKED UP. How is it that those who fail so indisputably manage to advance so reliably???????

    JUST like how most people are seeing through through the crap about “free trade” and how it is all a big scam to keep the rich the richest, and make everybody else poorer, and all the fancy graphs and high falutin “economic models” is nothing more than the high priests speaking in latin that the rich are blessed by God, and conveniently, provides the priests with all expense paid trips to Davos, which by SHEER coincidence has great skiing….

    To me, there is only one way to understand what has happened in this country – is total and complete capture by the 0.1% with a MSM narrative of free trade and the indispensable nation, that is incessantly repeated, that makes saying that “the sun rises in the east” seem fraught with uncertainty and ambiguity….

    1. NotTimothyGeithner

      Everyone else is silenced. The msm in their vanity assumed they would be seen as adults while Trump exploded. The flurry of how awful the poor are articles in recent days Is the msm striking back.

      1. fresno dan

        I swear I have seen more articles on how poor whites are getting exactly what they deserve in the last 3 months than in the last 30 years….
        Funny how today’s “liberals” sound just like small town chamber of commerce republicans of 20 years ago. Just stop taking them drugs, get educated, and get a job dagnabbit!!! (and it only takes 3 or 4 to not starve to death….)

        1. NotTimothyGeithner

          The system is rotten and the bourgeois can’t blame blacks, Catholics, and Jews anymore. Now they will blame miscellaneous whites who don’t live in cities or have money despite the worst Republicans living in wealthy suburbs.

          1. OpenThePodBayDoorsHAL

            I really wish the time lag between the lies and the mainstream recognition of all of those lies would shorten.
            Of course you can lay that delay at the feet of the MSM. Rand Corporation saw during the Vietnam War that they’d lost control of the narrative so they engineered very long-term investments in the media organs. It worked.
            In the end it just takes one little boy to say “but I don’t see the Emperor wearing any clothes, in fact he looks completely naked to me”. At the moment Trump is that little boy.

    2. steelhead23

      I find it amusing when intellectuals try to explain the popularity of demagogues. Simes’ and Saunders’ piece start with this massive understatement,

      “while his approach to foreign and security policy is not yet fully developed and remains a work in progress,”

      and then go on to link his incoherent blathering to the thoughtful policies of Washington, Adams, and Jackson. Wow. Just wow. I’d bet that Mr. Trump has never read a single article in Foreign Affairs, or any papers from the CFR – not that these elitist pubs are gospel, but they are, for the most part, thoughtful. Nor do I imagine he knows anything about the foreign policies of Washington, Adams, or Jackson. I’d ROFL, but this man may be our next president. My advice to political/foreign affairs writers – brush up on emotional appeal – remember Khrushchev’s shoe-pounding and the chill it caused. That’s the direction we are heading if Trump wins. Seriously folks, the man shows less self-control than a drunken sailor – and no one seeks coherence from a drunk.

      1. Lambert Strether Post author

        I think the key sentence is this:

        How difficult was it to run America’s foreign policy during an era of virtually unquestioned dominance? Why—with so many advantages—have our elites produced so many failed policies? And why do they feel no shame?”

        Why and why? When I listen to them, they’re crazier than sh*thouse rats. So, them, or a drunken sailor? An actual decision, no matter how much the Democrats would like to make it not one.

    1. fresno dan

      same here. And they could use drones – maybe contract it out to Amazon.
      I just need a few hundred Benjamin Franklins…..although several thousand Benjamin Franklins would be better for the economy. If I get Tubmans, I will need a few tens of thousands. I don’t care for shopping, but we must all be willing to do our parts to strength…
      I’ve read that things don’t buy happiness, but experiences….so, many, many massages….

      1. MyLessThanPrimeBeef

        Today, we speak of laser-guided precision money-dropping drones.

        The Little People elbowing past each other for that money dropped from a helicopter is so, er, 60s Vietnam war zone like.

        1. fresno dan

          Its not about you! You need thousands to get this economy going!! We all need to make sacrifices….

    2. jgordon

      Make sure you put that helicopter money into rabbit hutches, solar panels and ammo immediately. You won’t have much time to spend it.

  6. fresno dan

    Trump: “…..because I think we’re going to have a great success against, probably Hillary becasue the system is TOTALLY RIGGED against BERNIE. I mean, totally rigged against him.”

    Maybe its just me, but in the Heilemann interview, I don’t find the self funding thing nearly as entertaining or important as Trump trying to get Sanders supporters riled up….

    1. Katniss Everdeen

      If I were Trump, I’d take every opportunity to harden the lines between hillary and Bernie supporters.

      If they don’t vote for Trump, at least they may be pissed off enough not to vote for her.

      1. Massinissa

        At least here, there are NCers in both categories, with myself in the latter. Only a very small number of readers like Paul Tioxin say they are still voting Hildawg.

      2. MyLessThanPrimeBeef

        Trump might even urge Republican voters in California to vote in the Democratic primary, to make sure Hillary will be on the Nov. ballot.

        Maybe the open primary is not such a good idea.

        1. cwaltz

          California isn’t an open primary.

          It is open to no party preference. As I understand it the GOP member that wants to vote in the primary would have to switch allegiance to the Democratic Party or NPP(no party preference.)

          1. MyLessThanPrimeBeef

            Hopefully, it’s too late for them to pull that switching dirty trick.

            And thankfully, it’s not an open primary. (The risk is apparent here.)

            Maybe we call it the San Andrea’s Wall – you queen-worshipping Republicans can’t come over.

          2. Waldenpond

            It’s not too bad…. people have until May 23 (nearly 3 more weeks) to register or change status. There are 3 ways to vote for the D, first- easiest register as a D, second-in the ‘other’ option mark NPP or request a D ballot when at a polling place, third is to select the separate box for unaffiliated. You can select mail ballot (these come out around the 9th) and if registered D, you will get a D ballot, if registered NPP or unaffiliated, you must request a D ballot.

            300-500k accidently registered as American Independent Party which is a white power group. Oops, but the Sanders campaign has the aip list and they are calling them. I know that I caught 3 people who had done this.

            Two weeks deadline isn’t bad but a good chunk of people make up their minds the week before.

        2. Jim Haygood

          Wait, there’s more:

          Of the total number of registered [California] voters, 7,438,655 are registered Democrats, and 4,767,259 are Republicans. Voters not registered with any political party (NPP) totaled 4,141,860.

          Looking ahead at the June 7 presidential primary, these 4.1 million NPP voters will face limited choices as they are forced to choose between 3 party ballots: Democratic Party, American Independent, or Libertarian Party. The Republican Party continues to deny independents access to its presidential ballot.


          These NPP voters are going to be a big factor in the Democratic primary, since they can’t vote in the Republican primary.

          Probably they lean more toward Sanders than Clinton.

    2. Massinissa

      The funniest part is, TRUMP IS TELLING THE TRUTH. To be fair, Trump tells the truth an unusual amount for a modern politician, which is even more amusing considering the man is also a prolific liar.

      They say you gotta put in some truth to make a good lie. Apparently Trump has figured out you gotta add in a whole lot for the bigger lies.

    3. cnchal

      It will be a fine talking point for Trump to hammer Hillary on how she rigged the Democratic Party nomination for her own benefit. The corollary is that she rigs everything for her own benefit, so a vote for Hillary is a vote against yourself.

        1. MyLessThanPrimeBeef

          The other thing is the way he tells the truth.

          Some find it quite effective; for others, worrisome.

          1. jsn

            His kayfabe is majestic: he knows how to tell lies any potential supporter will agree with, laugh at or discount while telling the most cutting truths that lacerate his opponents to the bone without even bloodying himself with their splatter.

        2. cnchal

          Truth to power?

          The other day, while watching the national news on NBC, to see what the people are being spoon fed, they had Hillary voters saying Bernie should just give up, and Bernie supporters should just knuckle under and vote for Hillary. It was so comically lopsided, and demonstrated that the MSM lacks the self awareness that many people look at them as untrustworthy shills of their plutocrat owners.

          The gruel on the MSM spoon is gagging people, and it’s getting spit back.

  7. the blame/e

    About this here 2:00 PM water cooler, because inquiring minds want to know — is that cooler filled with real water, or Flint water?

    1. fresno dan

      out of an abundance of caution, I only drink beer or wine…
      I also find it makes reading about our gubermint so much more tolerable…

      1. Steve H.

        Just occurred to me, if the water kills microorganisms, then it can’t be safe to drink. If it’s been turned to alcohol, the microorganisms survived. Thusly, alcohol content indicates it’s safe to drink.

        I shall now test my logical skills utilizing a test case of Pinot Noir.

  8. DJG

    “French President François Hollande threatened on Sunday (1 May) to reject the ambitious TTIP trade pact if it endangers the future of French agriculture, triggering similar warnings from the US regarding exports of farm produce to Europe”

    Traduction: Of course, the TTIP is designed to undermine French agriculture, which is based on a model of small producers, reliance on quick distribution, artisan cheesemakers, and regional specialties–and designations of origins.

    1. OpenThePodBayDoorsHAL

      I find the “free trade” thing to be an entire lie from whole cloth. We have a higher standard of living than most other countries, but we’re told we desperately need to “level the playing field” with those other countries. Um….so that their standard of living is higher? Or so ours is lower? Or both?
      And countries are desperate to lower the value of their currencies so they get more exports. So the strategy is “let’s make our nation richer by making its citizens poorer”.
      So The Crazy Man With Orange Hair starts to make more sense, especially on the subject of trade deals. Jeff Grundlach nailed it: “I know exactly what this candidate will do. On the other side there is a crazy kook and I have no idea what he will actually do. But it’s got to be an improvement”.

  9. hemeantwell

    “I Know Why Poor Whites Chant Trump, Trump, Trump” [STIR]. I’m not sure, but the anecdote that begins at “Luckily, life often has a way of turning stereotypes on their heads, if we pay attention” (search on it) is riveting.

    EXCELLENT, thanks for that. I’m very tired of getting spam from every “progressive” organization telling me to send them $3 so we can defeat the racist/sexist Trump. Morally impeccable, strategically comatose, and playing right into the HRC campaign’s suppression of class issues which is, of course, what some of them want to do.

    1. hemeantwell

      3 minutes further thought reveals that a basic argument necessary to split away supporters from a candidate is to show that your side might share some points of agreement with that candidate. The Sanders campaign has been doing that around trade and class issues, but the beautiful progressive souls, like PFAW, will not acknowledge any shared positions, however generally they are framed. They only want to be outraged and pull in resources thereby. In preaching to the choir they don’t dent the allegiance of Trump supporters.

      Perhaps this is a bit contorted, but the attempts to paint Trump as a fascist forget the point that Hitler’s electoral success lay significantly in portraying himself as, in part, asserting working class interests, but in a nationalist way, as opposed to internationalist, as the SPD and the CP did. Trump is Hitlerian in that sense.

  10. Synoia

    I think I fixed my fershuggeneh contact form below.

    Good. Has it be subjected to a set of little tests? (aka: Testicles?)

  11. Carolinian

    Trump and language

    It is puzzling that Trump’s “low-level” grammar was declared “mind-blowing.” It was only slightly lower than the grammar of other candidates, and the news media know full well the importance of using simple language. The majority of American publications, including NPR and the New York Times, keep their writing at an intermediate reading level. That publications would declare the language in Trump’s speeches to be newsworthy shows a deep cynicism and eagerness to play to their audiences’ desire to feel superior to Trump and his supporters.

    As it happens, the Flesch-Kincaid index measures Ernest Hemingway’s “The Old Man and the Sea” at a fourth-grade reading level. Again: Complex grammar and complicated words are not necessary to make an impact. William Faulkner famously insulted Hemingway by saying, “He has never been known to use a word that might send a reader to the dictionary.” Hemingway countered, “Poor Faulkner. Does he really think big emotions come from big words?”


    1. James Levy

      My problem is not how Trump says things, its the crap I’ve been hearing him say for decades. As a person born and raised in NY, Trump and his mean, asinine and/or contradictory statements have been a backdrop for 30+ years. One minute he’s all for “making a deal” in the Middle East, the next he’s supporting the expansion of Israeli settlements in the occupied territories. Ditto we’re not going to be the policeman of the world, but we are going to have the “greatest military ever.” Workers are being screwed, but wages are too high. And climate change is a hoax perpetrated by the Chinese to destroy our industry.

      And the fact that Hillary sucks doesn’t change a word I said.

      1. MyLessThanPrimeBeef

        I wonder if it’s his non-verbal communication that stands out and leads the listener to overlook the content.

        Hand gestures, posture, eyes rolling etc.

        And for Hillary doing well in small settings, does anyone suspect body chemicals? Short-range beguiling magic projectiles?

      2. jgordon

        You are absolutely right. Trump is an odious windbag and Hillary being even worse doesn’t change that fact. However that does not change the fact that Trump does still look sort of acceptable when he’s compared to Hillary. Trump may be a narcissist, but at least he’s apparently sane. I’m not too worried that a Trump presidency would lead to humanity’s immediate extinction. I can’t say the same about Hillary.

        1. jgordon

          Oops. Somehow I double posted when I was trying to edit. Oh well, it happens.

      3. jgordon

        You are absolutely right. Trump is an odious windbag and Hillary being even worse doesn’t change that fact. However it can’t be denied that Trump does look sort of acceptable when compared to Hillary. He may be a narcissist, but at least he’s sane; I’m not too worried that a Trump presidency would lead to humanity’s immediate extinction, but I can’t say the same about Hillary.

        1. cnchal

          . . . He may be a narcissist, but at least he’s sane. I’m not too worried that a Trump presidency would lead to humanity’s immediate extinction. . .

          I admire you tenacity at blowing smoke up everyone’s ass.

          1. jgordon

            Yeah–I thought it was a bit odd while I was writing it myself. But look, Hillary is batshit crazy. Plus she has bad judgement. You can rage on Trump’s narcissism all you want–and I’d agree with you that it’s bad, but unlike his competition in the Democratic Party he’s not an out and out committed neocon/neoliberal.

    2. jrs

      Well it shows someone who actually read the debates for themselves. The language and the points Trump made were off .. really obviously and strikingly so (although it may be hard going entirely from memory to say it was the language rather than just how childish, nay infantile, his arguments and behavior was. It was just woah “one of these things is not like the others”). But maybe it only came across from reading them rather than watching them.

      1. Carolinian

        Also from the article I linked

        Research suggests that for public speakers, the precise words they use are less important than their body language, tone and brevity. Most of the words spoken in a speech don’t register in the listener’s brain. They are more likely to remember the general tone of a speech and how it made them feel.

        The author also compares some of Trump’s hyperbolic language to Hillary’s technospeak and it doesn’t reflect well on her. Personally I suspect people take much of what Trump says way too seriously as he is obviously just riffing for effect. He is after all a salesman. Of course being president is serious business but it’s hard to claim that HRC’s line of baloney is much more profound (example: her boast about “smart power”). But it is interesting that when the Donald says something liberals might like they dismiss it as insincere but when he says something hateful they insist it shows his inner being.

        How about this theory?: all politicians are phoneys to some extent. Even a great president like FDR was often sneaky and dishonest (according to Gore Vidal).

        1. jrs

          Does Trump saying something hateful have to show his inner being for it to be harmful. No of course not, it is harmful to spread that stuff in itself. The fact that he even says such things reveals enough about him as a person thank you very much, regardless of how he would govern, which is hard to say. Hate speech is one of those things that can be harmful in itself in a way campaign promises (even Bernie’s plan to change the Dem platform) can’t be beneficial in themselves.

          1. jgordon

            Offensive speech is not harmful. I’ll give an example:

            Telling a Christian fundamentalist that the earth is not 6,000 years old might be incredibly offensive to him. But it’s not harmful.

            I could offer an infinite number of such examples, but they’d all be in that vein. The idea of being offended is purely subjective. It’s an internal choice for each person about whether a certain statement causes offense or not, and the feelings of each individual should not be, and aren’t thanks to the First Amendment, be the determining factor of whether speech is acceptable or not.

            1. fresno dan

              May 4, 2016 at 5:33 pm
              Just to support your point
              Who is more racist with regard to black people in Chicago?
              A Rahm Emanuel
              B Donald Trump
              Maybe Trump if he ever got elected mayor of Chicago would be even worst than Emanuel, but there is no doubt that now Emanuel talks better, but ACTS worse.

              It is a mugs game taking what politicians say seriously….why, I recall a certain recent president who was all for single payer…

            2. reslez

              “Some” offensive speech is not harmful.

              Telling a child she will burn in hell can be incredibly harmful.

              Threatening and issuing violent, macabre threats to online writers and commentators can be harmful.

              Individuals certainly can be damaged by speech. Telling people they should get over it is your prerogative, but to hurl incendiary words and disclaim all responsibility for the result is the height of immaturity and a**holery.

              1. MyLessThanPrimeBeef

                Trump really shouldn’t do that.

                More civility and less incendiary words would be a good start. And he can achieve his goals without the negative stuff.

                Many disclaim any effects of violence in the media. I am very doubtful But unfortunately, that’s the world we live – infinite ways of reflecting countless realities back and forth, like ‘Indra’s Net, ‘but in many, many bad ways…all reinforced 24/7 with violence, vulgarity and crudeness.

                We are simply getting what we have created.

              2. jgordon

                Having a tough and resilient ego is part of being an adult. People who suffer severe emotional trauma because they encounter some words they don’t like are not yet fully developed people. Emotionally they’re still infants, and they are not yet equipped to deal with reality–due to poor upbringing I suppose. It’s to the credit of anyone they encounter who’s willing to put in the work required to offend them so that they’ll have the opportunity to grow and mature as actual human beings. They should appreciate being offended.

                But here is a shortcut for said person of fragile ego: go to China and learn a bit of Mandarin. You will notice immediately that people there, everyone, will be calling you fat, skinny, dumb, weird, white, black, big nose, queer, etc in a near non-stop litany. And I do mean everyone will, everywhere. Any perceived eccentricity you happen to have will be commented on endlessly and in great detail–either to you, directly in conversation, or among the people around you, very loudly. Don’t take it to heart though; they do it to each other just as much or more.

                It’s really just a peculiar cultural affectation of Americans to go around choosing to be offended all the time, and not one that should be encouraged or enabled. Those willing to fight against this infantile trend in America are heroes to be commended.

          2. Carolinian

            I’m not a big supporter of the “hate speech” claim which is used just as often to suppress speech. We see this for example in the false charges of antisemitism being used to weaken Corbyn in Britain. In America we are supposed to have a tradition of free speech. If you don’t like Trump’s boorish insults then don’t vote for him. But we should be a lot more worried about hate deeds.

            1. MyLessThanPrimeBeef

              If Trump is elected, he would have to put his businesses in a blind trust.

              Maybe the trustee can make them more profitable.

              Also that Trump Airlines can be a good idea.

    3. MyLessThanPrimeBeef

      Communication is about inclusiveness.

      Fact: a Ph.D. can read anything 4th grade level (hopefully he/she has not lost that skill).

      Fact: Not too many 4th grader can’t read Ph.D.s. level drivel.

      So, do you want to be inclusive or exclusive?

      1. OpenThePodBayDoorsHAL

        “A demagogue tries to sound as stupid as his audience, so his audience can think they’re as smart as he is”.
        Here’s my past (and upcoming) voting history:
        McGovern, Carter, Carter, Mondale, Dukakis, Clinton, Clinton, Gore, Kerry, Obama, Bertrand Russell (write-in), Trump (or of course Bernie if I am offered that choice)

        1. jgordon

          Hey, I’m with you. I voted straight Democratic tickets until 2008. Then Obama go in, and by late 2009 I’d realized that everything he said was a lie and that everything he did was designed to maximize the screwing of everyone to the benefit of his corporate pay masters. Voting for Trump is like giving a satisfying big FU to the lying Democrat and Republican establishments. I only pray that Trump is ballsy enough to bring the system down on them.

          1. nycTerrierist

            Understood. Obama’s betrayals and brazen lies fouled the waters to such an extent,
            the Dems deserve such a gesture — on a mass scale. (Unless Bernie’s the candidate!)

    4. ekstase

      ” Sanders was the only candidate whose speeches were above a 10th-grade level, making him a notable outlier.”

      If Trump is accurately reflecting the level of the average American, how do we account for Sanders’ popularity? And does anybody wonder at a school system that is routinely graduating people from high school who haven’t really mastered 6th grade?

      I do agree that people get an instinctive feel for a speaker, beyond words. That’s why we want to see them talk. Unfortunately, what they are responding to in Trump’s speaking may be not on the highest plane either.

  12. diptherio

    “TTIP trade talks ‘likely to stop’, warns French minister” [BBC].

    Shouldn’t that read “promises” instead of “warns”?

    1. flora

      Lambert asked: ” Not “(wonky)” at all: I was talking with Yves about the odd discrepancy between elite skittishness — see Bernstein up under 2016 Policy — and a crappy economy that seems destined to stay crappy forever but not get a whole lot crappier….They’re really Nervous Nellies! But what about? ”

      A blue-sky guess: the elites have large plans afoot they fear may be unmasked too soon, or thwarted, or undone by some means. Are those plans the TPP and TPIP? Or absolute vote rigging? Or further suborning govt agencies? Or something else? No idea. But I’ve seen that sort of edgy nervous watching when plans are in the works for great gain but must must be kept ultra private until the deal is done.

      1. Skip Intro

        Where are the out-of-band, misallocated capital flows that would make the owners of capital nervous?

        What about the securitized fracking junk bond bubble? I thought the toxic exposure had been spread sufficiently to ensure that the frackers and consolidating fossil fuel concerns had reached TBTF status. TPP and TTIP were going to be the oil industry’s protection against having their assets stranded by climate crisis regulations. Any stranded assets would have to be paid for by nations seeking to regulate them, at whatever market rate they could convince their pet arbitrators to sign off on.

  13. optimader

    I can’t think of a single candidate that tries /is trying to communicate complex or nuanced ideas. So why should Trump be singled out got not using “high level” grammar-language?

    I think the last one that tried was AGore and he was shot down with general derision for being and effete snob..

    Well then there was JKerry… all the clarity of James Joyce on acid.

    1. steelhead

      Classic comment concerning J Kerry. I almost took out my computer screen with coffee.

    2. MyLessThanPrimeBeef

      For people who have ‘internet grammar anxiety,’ keeping it simple is the best way to convey accurately the message.

      You worry so much about grammar, you forget or end up saying the exact opposite.

      Keep it simple.

      Nothing wrong with ‘Trade deals are literally killing many Americans.”

    3. MikeNY


      Elections are about numbers, i.e., numbers of voters. Nobody wins by reading paragraphs of John Rawls.

    4. Jim Haygood

      ‘all the clarity of James Joyce on acid’

      Finnegans Electric Kool Aid Acid Test … can’t recall getting past the first chapter.

      1. pretzelattack

        there were colors i find it difficult to describe, and the walls were very moving.

    5. yulong

      I think these criticisms are a snide way for certain people to feel superior — it is a particularly common comment among the technocratic class to complain about Trump’s plain language. It allows one to ignore the content and feel superior to those they feel deserve scorn.

  14. rich

    The Supreme Court Gets Ready to Legalize Corruption

    The Supreme Court’s decision in Citizens United marches like a zombie precedent, destroying all in its path. First the case turned the law of campaign finance into a useless corpse. Now it appears the law of political bribery is the next victim. Citizens United let rich people buy candidates; now they may be able to purchase office-holders, too.

    That’s the message from the Court’s argument last week in the appeal of Bob McDonnell, the former governor of Virginia. He was convicted, along with his wife, in a scheme that netted the onetime First Family of the Commonwealth about a hundred and seventy-seven thousand dollars in loans, vacations, and luxury goods from a Richmond businessman. And yet, while the statements of Justices during oral arguments are not always perfect predictors of how they will vote, there was clearly a great deal of bipartisan sympathy on display for this appalling former public servant.

    At the core of Justice Anthony Kennedy’s 2010 opinion for the five-to-four majority in Citizens United was a simple idea: money is speech. In Citizens United, the Court, on First Amendment grounds, struck down a rule that banned corporations from sponsoring political advertisements in the period before elections. Such a “prohibition on corporate independent expenditures” was “a ban on speech,” Kennedy wrote.

    In the McDonnell case, his lawyers argued that what federal prosecutors called bribery was also really just speech by Jonnie R. Williams, the McDonnells’ benefactor.
    The same concept is at the heart of both the Citizens United and McDonnell cases. In the campaign case, Kennedy said Congress could only prohibit quid-pro-quo corruption in regulating campaign contributions. Outside of a direct exchange of a contribution in return for a government action, the First Amendment protected the right to contribute money to campaigns. Likewise, McDonnell’s argument is that Congress can only prohibit bribery when there is an explicit quid pro quo—a payment or gift in return for a specific official act. In both cases, though, the Court seems determined to define quid pro quo so narrowly that it’s practically impossible to find.

    ever feel like we’re all in that tidy bowl boat?

    1. polecat

      …more like being on the really short bus before the accident…….with no way to open the emergency escape door ……..

    2. Propertius

      At the core of Justice Anthony Kennedy’s 2010 opinion for the five-to-four majority in Citizens United was a simple idea: money is speech.

      The Supreme Court decision that equated campaign donations to speech was Buckley v. Valeo(1976), not Citizens United.

      Kennedy’s opinion just restated that precedent.

      1. Flyswatterbanjo

        People who are not able to speak with money should be considered disabled then. In which case Citizen’s United probably violates the ADA.

        The whole thing is so stupid.

  15. Steven

    If Obama had focused on jobs like a Democrat is supposed to instead of his own centrist fabulousness, we wouldn’t be looking down the barrel of a Trump presidency.

    1. TK421

      Also, if Obama had tamped down xenophobia instead of deporting more immigrants than any other president and attacking more mid eastern countries.

  16. ekstase

    Re the Fukushima article. Beyond Nuclear just hosted a conference on Fukushima and Chernobyl yesterday, highlighting the ongoing concerns we also have here in the U.S. (or should have) on this subject.

    Among other concerns: it is not possible to filter some reactor by-products; it does not take an accident – radioactive material is released every day from reactors.

    This topic is really scary, but we really need to think about it. Kevin Kamps has been providing information on this, on Thom Hartmann’s show that has been difficult to find elsewhere.

    1. dots

      I think you’re correct. We need to do some long hard looking and be totally honest about how we will (really) manage power plants during disasters, (all classes of) waste disposal, and crises management. It’s better not to go there at all than to create more “abandoned spaces” on the planet. However, our current energy pathway appears to be scorched earth and brimstone.

      Act soon!

      Radioactive Waste Management

  17. Jim Haygood

    Guccifer speaks:

    The infamous Romanian hacker known as “Guccifer,” speaking exclusively with Fox News, claimed he easily – and repeatedly – breached former Secretary of State Hillary Clinton’s personal email server in early 2013.

    “For me, it was easy … easy for me, for everybody,” Marcel Lehel Lazar, who goes by the moniker “Guccifer,” told Fox News from a Virginia jail where he is being held.

    The hacker subsequently claimed he was able to access the server – and provided extensive details about how he did it and what he found – over the course of a half-hour jailhouse interview and a series of recorded phone calls with Fox News.

    In response to Lazar’s claims, the Clinton campaign issued a statement Wednesday night saying,

    “There is absolutely no basis to believe the claims made by this criminal from his prison cell. In addition to the fact he offers no proof to support his claims, his descriptions of Secretary Clinton’s server are inaccurate. It is unfathomable that he would have gained access to her emails and not leaked them the way he did to his other victims.”


    Poor Hillary — having to publicly mud wrestle with an extradited Romanian hacker.

    Hillary’s ‘criminal from his prison cell’ barb could end up being prophetic — for herself.

  18. marym

    Re: Elizabeth Warren on FB

    As the Indiana results were announced she sent out 9 tweets about scary Trump and the need to fight him. And just in case any “progressives” missed it, here’s David Axelrod tonight:

    David Axelrod ‏@davidaxelrod · 2h2 hours ago

    Biggest political development of last 24 hours was @elizabethforma Twitter blitzkrieg on @realDonaldTrump. Big signal to progressives.

    1. MojaveWolf

      It’s… it’s… AMAZING!

      By all the powers!!!! A Democrat attacking Trump!

      Bravo Sen Warren for this inspiring display of sheer political courage!!!

      And many thanks to Mr. Axelrod for putting everything in proper context. I’m sure everyone is making sure to remember this come donation/support time.

  19. Paper Mac

    ‘Then it hit me: “Political risk is the mother of all capital flows.” An explanation, then, too obvious to see? (This idea applies, perhaps even especially applies, to China.) Readers?’

    China is tapped out, the spatial fix to capitalism’s labour problems is no longer repeatable. Read Minqi Li’s “China and the 21st Century Crisis”. (http://press.uchicago.edu/ucp/books/book/distributed/C/bo22356875.html). Li’s a doctrinaire Marxist but his calculations aren’t particularly bound by ideology. There is no plausible replacement for the function China served in the world-system from mid-1990s to ~2010 and everyone is at some level aware of this.

    1. cnchal

      China sure is a strange inscrutable country, and some of the stuff they do makes my head spin.

      From http://davidstockmanscontracorner.com/commodities-become-chinas-hottest-new-casino/

      At the peak of last month’s China commodities fever, the number of steel rebar contracts traded in Shanghai exceeded volumes for the world’s two most important crude oil benchmarks, Brent and West Texas Intermediate.

      I have no idea what drives this except desperation mixed with greed resulting in insanity.

      1. Paper Mac

        It’s a run-of-the-mill speculative bubble driven by the declining rate of profit on typical Chinese capital investments and lax lending policy. It’s not any more “inscrutable” than the real estate bubbles in the West.

        1. cnchal


          The other day I read somewhere that enough cotton was traded to make 9 billion pairs of pants. Perhaps that was a lie, and only enough cotton to make 5 billion pairs of pants was traded, but the point is it’s bizzarro land over there.

          It begs the question, is there any Chinese capital investment that makes any profit at all, never mind a declining rate?

          In your original comment I wonder what you mean by “the function China served”. What was their function? A repository for gross mal investment or a manufacturer’s toxic waste dump, which continues unabated today, or a method for plutocrats to exploit cheap labor for their own gain?

          1. Paper Mac

            I’m sure the quantity of cotton-related paper (futures etc) traded was something like that, I guarantee that amount of physical cotton did not change hands. It’s obviously not tied to the fundamentals, but that’s what happens in speculative bubbles. If there’s anything particularly notable about the Chinese case it’s just the size of the speculative bolus sloshing around the economy (real estate ->stocks ->real estate again->commodities etc). It’s good to avoid writing off East Asian political economy as “inscrutable”- too close to racist tropes of “inscrutable orientals” and shuts off examination of phenomena that are explicable in the same frameworks used to examine those in the West.

            Chinese capital is still profitable as a whole (rate of profit is ~15%) but this has declined from ~25% 5-6 years ago. If the rate of profit continues to fall at this pace by the 2020s it will be down below US great depression levels (~8%).

            About the spatial fix function (see Harvey for more), mostly labour and resource costs. China was on the periphery of the world-system until the 1990s when the ongoing overaccumulation crisis capital was having with declining/stagnant profit rates (starting in the 70s as noted by comments above) were alleviated by integrating China w/ MFN status etc. Cheap labour, cheap resources, new markets, temporarily increased profit rates. As China has become more integrated capital is once again suffering from an overaccumulation crisis. There are no remaining geographical regions which could be exploited in the same way as China was, and China is hitting biophysical limits anyway (pollution etc as you mention)

  20. Attila the Hun

    When this campaign is concluded, the Clintons will wish they had never been born. Trump will trumpet every negative, derisive and embarrassing item from their long sordid history. He will broadcast it far and wide, with great gusto, as only he can. It will be reminiscent of “The Picture of Dorian Grey”.

  21. VietnamVet

    Being old fashioned and centrally controlled, China spent trillions to stimulate itself out of the 2008 great recession. Except in the meantime, the rest of the world imposed austerity and is suffering from devaluation and can’t afford to buy all of China’s goods. The stimulus has ended and China is going through contortions.

    The world’s accumulated debt is so great it cannot be paid off; not to mention, climate change or the proxy world war in Syria. Since the rise of civilization, only has war wiped out the old debt system and given birth to new money to start all over once more. Today’s problems are that mankind has enough hydrogen bombs to exterminate itself and the oligarchs who refuse to write down their bad debt.

  22. McKillop

    You wrote: “Stephen Harper was a horrible human being”

    He’s still alive, still an elected member of Canada’s Parliament. There are still many like him and who’like’him. We’ve all got ;em.

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