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Class Warrior Paul Krugman to Receive $225K for No-Show Job with “Income Inequality Initiative”

If this were published in The Onion, people would think; “Ah, once again, those clever Onionistas have adroitly par0died our zeitgeist.” (Some people would think that. Probably) But IRL… Paul Krugman – the New York Times economitician who rails constantly against “income inequality“… is going to be paid $225,000 by a publicly-funded university for… well, no one can really say exactly… but it has something to do with an “Income Inequality Initiative.” (Perhaps, they think there isn’t enough.)

According to a formal offer letter obtained under New York’s Freedom of Information Law, CUNY intends to pay Krugman $225,000, or $25,000 per month (over two semesters), to “play a modest role in our public events” and “contribute to the build-up” of a new “inequality initiative.” It is not clear, and neither CUNY nor Krugman was able to explain, what “contribute to the build-up” entails

Maybe Krugman’s advice to CUNY will help them as much as it helped Enron back in the 2000′s.

FWIW: At 2014 rates, Krugman’s stipend would pay a year’s tuition for 39 CUNY students.

BTW: The Leftist Sycophants at the New Republic are 100% OK with this.

More Sweet Irony:  SEIU — one of the Democrats many favorite labor unions — wants to unionize workers at Left-wing FoxNews haters and champions of the proletariat “Media Matters for America.”  The good lefties at MMFA have responded by hiring a law firm that specializes in “union-busting.”

Thought for the day

We live in a world where the central bank (Fed) *rigs interest rates low, in order to rig debt levels and asset prices high* as they can possibly go.

I know it’s abstract and I comment on it ad nauseum, but I’m not sure it can be over-stressed. It has lots of bad effects.

  • You think homes are unaffordable, compared to (say) 20-40 years ago? Guess why home prices aren’t a good deal lower. (There are many reasons – but try guessing the biggest.)
  • Feel hopeless about your ever retiring? Take a guess why retirement income is hard to come by.
  • Feel like you struggle to make ends meet every month, while wealthy people (having lots of financial assets) keep doing better and better? One more guess why.
  • Feel like new, good jobs are impossible to come by? The Obama administration (including Obamacare) is a big drag, there. But the Fed doesn’t exactly help.
  • Feel like the stock market is a crazy bubble again? Feel like we learned nothing from the 2008 crisis, and our economy is still much too ‘financialized’ and debt-ridden? Again, many causes – but one guess as to the top cause…

Interest rates are the most important price in the economy. They should be set by the People in free markets. I see no reason to have a Politburo which plans them – and plans them badly, in ways that injure society.

More Bizarro-World Economics

Remember this promise: “We’re going to solve the health care crisis by adding millions and millions of poor people to the health care system. We’re going to force insurers and providers to provide more services to them. But this will result in massive savings, affordability, and lower costs for everyone!”

Yeah, that.

Well, those same Bizarro-World Economists are making a new promise: “We’re going to solve global warming by putting severe limits on the use of carbon-based fuels. We’re going to put severe limits on industry to force them to emit less carbon. But this will result in “co-benefits” that result in economic growth and prosperity for all!

How well do you reckon that will work out?

bizarro

[Is "Co-Benefit" even a word?]

Importing the FSA

A study recently found that the reason immigrants favor Democrats 2 to 1 over Republicans is because immigrants want what the Democrats promise: Free [Stuff] from the Government. The more immigrants that get imported, the larger the Free [Stuff] Army (FSA) grows, even in Texas.

So, the Republican Party is doomed… and pro-Amnesty, pro-Mass Immigration types like Jeb Bush, Eric Cantor, Paul Ryan and John McCain… are eager to facilitate the demographic Kervorkianing of the GOP.

One problem though; the economy is way, way past its freeloader carrying capacity. Our actual private economy is in decline; a decline hidden only by massive borrowing and spending by Government at all levels. (Government spending is actually a component of the Gross Domestic Product; which is kind of like if I counted the money I spent every year as part of my annual income). A declining economy and an expanding Government are mutually unsustainable. The USA today is in very much the position of the USSR in the 1980s; except instead of a bloated military complex, we have a bloated entitlement complex.

The appetite for Free [Stuff] from the Government is infinite; but economic resources are limited. The new Democrat majority can vote for everything their greedy little hearts desire; but at some point, there’s no money to pay for it. We are already beyond that point.

The Ukraine crisis – and the dollar’s decline

Posted by Jeff (ILoveCapitalism) at 11:18 am - April 14, 2014.
Filed under: Debt Crisis,Economy,National Security,Obama Incompetence

We know the Ukraine crisis is hot, with Ukraine and Russia accusing each other of terrorism and east Ukraine basically expecting a Russian invasion. But what interests me is the larger backdrop: the erosion of the U.S. dollar as the world “reserve currency” (or centerpiece of global finance and trade).

You see, the more President Obama tries to isolate Putin, the more he pushes Russia and its trading partners – such as China, India, Germany, Iran – to speed their efforts to integrate their economies and financial systems, to the exclusion of the U.S.

Consider the following news items. None are earth-shattering, but each reveals a bit of the picture.

So, Russia annexing territory (the Crimea) is not really a big deal to Washington; it triggers token U.S. sanctions. But Russia trading with its own neighbor (Iran), in a way that bypasses the dollar-based financial system and thus the U.S. ability to eject little countries from world trade – that gets Washington’s attention. That tells you where the sore spot is.

To continue:

Do you see where this is going? Not toward Russia being isolated. Maybe, in time, toward the U.S. being isolated.

UPDATE: Ordinary Russians are only annoyed, not frightened, by U.S. sanctions.

Recovery for the One Percent

To continue my series on this, I’ve been accumulating chart links. There are so many, especially on Zero Hedge which has great coverage. I’ll make some introductory remarks, then show the charts.

As a capitalist, I have no objection to the good inequality that investors, employers and consumers award by their actions in the marketplace. The problem is inequality awarded by force or fraud. That includes crime of course; but the systemic problems in our economy today arise, sooner or later, from *government force* and fraud. Under President Obama – and our nut-job economic planners at the Federal Reserve – we have more government intervention than ever. We also have more inequality. It can’t be a coincidence.

I believe that Obama likes it on some level, because the more inequality there is, the more he can offer (still more) government intervention as the alleged “solution”. While our problems did not start with Obama, he has exploited and worsened them because inequality of power – taking ever-greater amounts of power away from the People, giving ever-more power to the Party/bureaucrats/government – is the deep tendency of the State, and as well, the deep goal of the Left.

I could talk about the explosion of welfare dependency under Obama, which rapes the “working poor” (among others) for the sake of the “lazy poor”. But my focus today is on the rape of the middle class for the so-called “One Percent”, the wealthier people who gain from our government-planned economy and government-rigged markets.

The charts show that under Obama, U.S. income inequality has increased and may be the biggest it’s ever been.

Under Obama, U.S. income inequality is the greatest it's ever been

More charts: (more…)

A 1,000 Word Argument (Equivalent) Against Increasing the Minimum Wage

Posted by V the K at 7:42 am - April 8, 2014.
Filed under: Economy

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(i.e. Why would any employer pay someone $15.00 an hour for a job that can be performed by a touchscreen?)

(more…)

Dumb People Talking About Gold

Posted by V the K at 7:05 pm - April 5, 2014.
Filed under: Depression 2.0,Economy,Random Thoughts

I am mainly posting this as palate cleanser between outbreaks of gay fascism (yeah, they’re only going to get worse after the Mozilla thing). Also, I want to see if it makes Jeff’s head explode.

YouTube Preview Image

The dollar’s removal proceeds apace

Like aging, the overthrow of the U.S. dollar (as the key world currency) is a gradual process. In the last month, I’ve blogged on Russia as a U.S. financial opponent, growing ties among the BRICS nations, and growing Germany-China ties, all tending toward the decline (or eventual elimination) of the dollar from those countries’ relationships with each other.

Today it’s growing Russia-Iran ties (that remove the U.S. dollar from their partnership):

(Reuters) – Iran and Russia have made progress towards an oil-for-goods deal sources said would be worth up to $20 billion, which would enable Tehran to boost vital energy exports in defiance of Western sanctions, people familiar with the negotiations told Reuters.

In January Reuters reported Moscow and Tehran were discussing a barter deal that would see Moscow buy up to 500,000 barrels a day of Iranian oil in exchange for Russian equipment and goods…

[A] source said the two sides were looking at a barter arrangement that would see Iranian oil being exchanged for industrial goods including metals and food…

The Iranian official said missiles would also be part of the deal, together with Russia providing assistance with building two nuclear plants in Iran…

Missiles? Yikes! But this is what you can expect, with Jimmy Carter President Obama at the helm. He should have assisted Iran’s (aborted) Green Revolution back in 2009-10, when he had the chance.

Hat tip, ZH.

And suddenly, HFT

I never knew that Casey Kasem was the voice of Shaggy. But I digress.

CBS recently did a good piece on High Frequency Trading (HFT), a means by which well-connected computers churn the stock markets and skim the cream. 15 minutes, here it is:

But a few things are odd about HFT as a story, or at least noteworthy.

First: the curious absence of government involvement. HFT has been going on for years (Zero Hedge started blogging it in 2009). Where have the vaunted government regulators been, all this time? Answer: Nowhere (until right now, as we’ll discuss in a minute).

The CBS piece praises Brad Katsuyama, a trader who figured out years ago how HFT works and founded a new exchange, IEX, to try to defeat HFT. That’s a great example of private enterprise being ahead of the regulators.

In fact, private enterprise has run circles around the regulators; first by creating HFT, then by being years ahead of government in working to defeat HFT. Could it be that government regulation isn’t effective? (cough)

The mainstream media’s absence from the HFT story until now (2014) is also striking. And that brings us to the second oddity: the timing of the CBS story. As if by magic, within days of its airing, we have also had announcements that the FBI will finally probe HFT. And that Goldman-Sachs will back IEX, the new HFT-free exchange. (Update: And the pr0n-watching SEC finally, also, investigating.)

I’m old enough to recognize a co-ordinated campaign. Granting that HFT is a real story, I still must speculate that the reason why HFT is suddenly on our collective lips, under investigation, etc., is because somebody powerful finds it convenient, at this time. (Where in the previous five years, they didn’t find it convenient.)

Who is that somebody? I don’t know. I did just note that Goldman-Sachs is rolling with the punches, at least. Over at Zero Hedge, they speculate that HFT is now being set up as the scapegoat for a coming stock market bubble-crash. The Federal Reserve is (by its QE, ZIRP and many other policies) the biggest market-rigger of all. The Fed has engineered the stock market bubble of the last five years. And, when that bubble bursts eventually, the Fed will want us all to blame something or someone else.

UPDATE: On CNBC, Katsuyama and a (truly obnoxious) pro-HFT guy get down-n-dirty. Good times.

This is who leads us

Posted by Jeff (ILoveCapitalism) at 11:21 am - April 1, 2014.
Filed under: Debt Crisis,Depression 2.0,Economy

Janet Yellen, who is President Obama’s new chair of the Federal Reserve Bank (Politburo that plans our economy), and who is thus the most powerful woman in the world, gave a speech yesterday where she bemoaned the fact that inflation isn’t high enough (in her view).

To humanize her speech, she told about three people who are long-term unemployed. If only there were enough inflation for these poor people to find jobs. It’s Yellen’s noble job to manipulate the economy until they can. But guess what? Two of the three have criminal records. Might that have anything to do with their unemployment?

One was Dorine Poole, who lost her job processing medical insurance claims when the recession hit.

“When employers started hiring again, two years of unemployment became a disqualification,” Yellen said in her speech yesterday to a community development conference in Chicago. “Even those needing her skills and employment preferred less-qualified workers without a long spell of unemployment.”

Poole was convicted of felony theft 20 years ago after she fell in with a “bad circle,” she said in a telephone interview…

Jermaine Brownlee, a skilled construction worker and apprentice plumber, “saw his wages drop sharply as he scrambled for odd jobs and temporary work,” Yellen said.

Brownlee said in a telephone interview that he was convicted of possession of heroin last year and currently is on parole.

OK, so was Yellen just caught by surprise? Did her speechwriter goof? Nope:

Yellen met personally with both people and knew about their records before the speech.

So basically, the most important person in our economy is determined to create inflation until she sees even the least employable people of all – namely, convicted criminals – in demand as employees. “Fasten your seatbelts; it’s going to be a bumpy night.”

CAVEAT: Lest the excitable accuse me of being a doomsday theorist (gasp!), I shall duly warn that in no way am I predicting instant hyperinflation as of tomorrow morning. In fact, for now, Yellen has officially adopted a less-inflationary stance as she “tapers” the Fed’s recent inflation-creating efforts. I have said “for now” and “officially”, because I think it’s Kabuki theater. As the Taper progresses over the next several months, it will cause markets to drop – whereupon Yellen will revert to full inflation-creating mode (gladly, under political cover). The point here, about her speech, is that it tips her hand.

A conversation I keep having with people

Posted by Jeff (ILoveCapitalism) at 3:58 pm - March 29, 2014.
Filed under: Debt Crisis,Depression 2.0,Economy

Other: How ’bout that economy?
Jeff: The U.S. dollar’s days are numbered. I don’t know when, but sometime in the next five years (and maybe even beginning as soon as this year), the dollar will be kicked out as the key world currency.
Other: That’s crazy. We’re Number One. Other countries need us to trade with.
Jeff: Not necessarily. In fact, it would be good for other countries to keep more goods for their own people, rather than sending them to us just for our crappy paper dollars.
Other: But dollars are how you, like, buy stuff. Countries will always need dollars.
Jeff: Why? They can set up payment and trade systems in their own currencies, without us. And stupid Obama is helping to push Russia, China and India together as we speak. That’s half the world.
Other: But Germany and Japan will stick with the U.S.
Jeff: Really? Why? Japan is a sinking ship. Germany isn’t, but Germany traditionally does business with Russia and China. They could wake up and re-align at any time.
Other: That’s crazy. Germany has been pro-U.S. for 70 years. They’ll never change.
Jeff: Hmm, why are you so sure?
Other: How ’bout them Niners? It’s been raining cats and dogs.

Now consider this news item: Bundesbank, PBOC in Pact to Turn Frankfurt Into Renminbi Hub.

Germany’s Bundesbank and the People’€™s Bank of China agreed to cooperate in the clearing and settling of payments in [China's] renminbi…

The central banks signed a memorandum of understanding in Berlin today…

“Frankfurt is one of Europe’s foremost financial centers and home to two central banks, making it a particularly suitable location,” said Joachim Nagel, a member of the Bundesbank’s executive board. “Renminbi clearing will strengthen the close economic and financial ties between Germany and the People’s Republic of China.”…

In a sign of closer economic ties between the two countries, China plans to open a fourth consulate in Germany…About 800 Chinese companies have bases in North Rhine-Westphalia, Germany’s industrial heartland…

German companies including Siemens AG, the country’s biggest engineering company, and Volkswagen AG are embracing the renminbi internally as a third currency for cross-border trade settlements…

This isn’t new; it’s a trend. China has been inking pacts with country after country in the last five years, so they can stop needing the U.S. dollar. That’s how and why the dollar is getting set for a fall.

I don’t think this trend has been reported much, in U.S. media. I try to spread the word, as I can. The U.S. has worsened its own problems in the last six years, and is moving toward some tough times. Get ready. Have your life in order: health & relationships fixed, debts paid, career solid. Also, don’t hide under a rock, but just in case things get really bad, consider maybe having some emergency supplies, gold and/or guns.

Don’t say you weren’t warned. Russia, China and India have problems too, but some (not all) of those problems stem from U.S. dominance and will be solved as they slowly re-organize the world in their favor.

Left-wing economists: They’re that stupid

Zero Hedge remembers how the Great Housing Bubble of 2003-7 was something Paul Krugman had called for:

Before you say “But that was in 2002!”, consider more recent examples of Krugman stupidity, like his calling in 2012 for the government to boost (supposedly) the economy by faking an invasion of space aliens. The Krugtron quote from Time’s account:

“If we discovered that space aliens were planning to attack, and we needed a massive build-up to counter the space alien threat, and inflation and budget deficits took secondary place to that, this slump would be over in 18 months,” Krugman says…

A second instance, from PuffHo’s account:

“So if we could get something that could cause the government to say, ‘Oh, never mind those budget things; let’s just spend and do a bunch of stuff.’ So my fake threat from space aliens is the other route,” Krugman said before a laughing crowd. “I’ve been proposing that.”

So he said it more than once; only half-joking at best. The man loves his malinvestment.*

(*Borrow-and-spend that creates market bubbles, overbuilding, leaf-raking, wars or other activity that is economically inefficient, or useless, or even destructive.)

Related: It struck me that one way you can tell a left-liberal is: government spending always sounds like a good idea, to them. Should government spend, to stimulate the economy? Check. Spend more on education, so people will (supposedly) be more educated? You betcha. It never occurs to the left-liberal that government just might be incompetent at most things. So that the proposed spending would do nothing at all – or would even make things worse, as it only subsidizes incompetence. For example: Subsidizing an incompetent system of educators. The possibility just doesn’t cross a liberal’s mind.

The Taxman cometh to Bitcoin

Posted by Jeff (ILoveCapitalism) at 5:10 pm - March 25, 2014.
Filed under: Economy,Technology

Since Bitcoin came up recently in a GP thread, I thought I’d note that the IRS has just ruled it is property (not currency).

This means that, in the eyes of the IRS, every Bitcoin transaction is a property-for-property barter. If you’re paying Bitcoin, for example, then you must figure out its worth in dollars on the day you paid it, and pay the appropriate capital gains tax (if your Bitcoin had a gain, measured in dollars).

Bitcoin is NOT crashing on this news, but I believe that it will kill Bitcoin over time – to the extent that the IRS enforces it. The record-keeping alone will be an onerous burden for anyone who uses Bitcoin often. The main reason any alternative-currency scheme works is because it lets people escape painful tax burdens. When there’s no escape, then…

Inflating the cost of retirement

Posted by Jeff (ILoveCapitalism) at 3:07 pm - March 24, 2014.
Filed under: Depression 2.0,Economy,Obama Incompetence

To retire, you need a regular income stream. For a lot of Americans, that’s Social Security. But many will tell you it’s not enough; plus you only get it in your 60s. What would it take for a person to retire on their own, today?

For that, you need investment income. Hopefully, you invest capital safely and live off the proceeds. Let’s take a lottery-ticket approach. Say you’re young (no Social Security for decades, and your principal needs to last, so no dipping into that). How much do you need to win in the lottery, to get $50,000/year of investment income?

This will be verrrry quick-and-dirty. Let’s simply assume that you keep your lottery winnings half in 5-year bank CDs, and half in a U.S. stock market index fund. I won’t bore you with the math. In brief, currently you’d get 1.55% from the 5-year CDs (per bankrate.com), and 1.88% from the S&P 500. It comes out to your needing roughly $2.9 million.

$2.9 million, just to yield $50,000/year. But what’s interesting is how this compares to times past.

  • 5 years ago (2009): the 5-year bank CD rate was around 3.5% (again per bankrate.com), and the S&P dividend yield was around 2.5%. You would have needed roughly $1.7 million.
  • 10 years ago (2004): the bank CD rate was around 3.5%, and the S&P dividend yield around 1.8%. You would have needed roughly $1.9 million.

Again, these numbers are just for a long-lived person to get themselves a $50,000 annual yield. A person in their 60s, collecting Social Security and/or dipping into their principal, would need rather less money. Especially if the stock market goes well (we know that always happens, right?) so they get some capital appreciation.

But here’s the point that applies to everyone: the kind of change we can see in the numbers.

  • Between 2004 and 2009, the cost of a $50,000 yield stayed roughly the same (going down 10% or so).
  • Between 2009 and today, the cost of a $50,000 yield has skyrocketed (up over 60%).

And that’s why tens of millions of Americans now feel like they can never retire. They can’t retire because the cost of getting X amount of retirement income (from bank CDs or stocks) has skyrocketed, in the last five years. Whatever their own “retirement number” was, big or small, suddenly they need much more. So they can’t retire, and keep working.

This is one dark side of market bubbles. The Federal Reserve’s ZIRP and “QE” policies are designed to make the financial markets go higher. A stock market bubble means, among other things, everyone paying more money for small (or nonexistent) yields. Higher bond markets mean lower bank CD yields. High real estate markets mean higher housing costs. The financial markets are roughly like your price tag for retirement. In the last few years, Obama/Bernanke/Yellen have pumped some giant inflation into them. It’s not a good thing.

And all of that is aside from the question of inflation in general: the fact that $50,000 today won’t buy you what it did 5 years ago. (Gasoline and medical costs, for example, are way up.) “Thanks, Obama!”

The Banker Suicides

Posted by Jeff (ILoveCapitalism) at 12:12 pm - March 18, 2014.
Filed under: Debt Crisis,Economy

I don’t know what this means; I’m just noting the oddity. Eleven investment bankers have committed suicide, so far in 2014. ZH gives the list.

Why would they, with the markets near all-time highs? The conspiracy-minded note the connections to Big Banking (JP Morgan, Deutsche Bank, etc.) and suggest that some of these men did not commit suicide, but rather, ‘were suicided’ as either cover-up or revenge in one of the recent Big Banking scandals (LIBOR rigging, “London Whale” trading losses, alleged forex (foreign exchange) and gold market rigging now under investigation from the German regulator Bafin, etc.). The New York Post notes that the brother of the most recent suicide had some connection to London Whale, as the Senate Finance Committee had cited the brother’s emails in their investigation of it.

But I have no idea what the answer is here. For now, it’s just weird.

UPDATE: Maybe another detail to file here would be the recent suicide of Jeffrey Corzine, the son of disgraced Democrat (and Obama bundler) Jon Corzine. The straightforward explanation is in the media reports that son had a history of severe depression. The conspiracy-minded might also recall that the father was (is?) a top Big Banking insider, who had seriously burned some people in the MF Global scandal (for which he was never charged or otherwise brought to justice).

New lingo for you: BRICS Development Bank

Posted by Jeff (ILoveCapitalism) at 2:56 am - March 16, 2014.
Filed under: Anti-Americanism Abroad,Economy,National Security

Did you know that since 2009, the BRICS countries (Brazil, Russia, India, China, South Africa) have had a summit each year where, basically, they plot a new world financial system with a greatly reduced role for the West, and the U.S. dollar?

This will be a long explanation. I’ll keep it as neutral as I can (not expressing outrage in any direction).

The dollar is (or has been) the chief currency of international trade and finance. The international oil trade, for example, is settled almost entirely in dollars. This is part of why America has gotten away with decades of trade deficits.

A trade deficit means, among other things, that other countries want to give us real goods (produced by their workers) in exchange for our paper money. That’s intuitively unfair; it gives us extra goods from other countries’ production. Why would other countries do it? Because, up to now, they’ve liked getting the dollars. They have wanted to have dollars in their back pocket (say for buying oil, etc.).

And that’s part of the reason (just one part!) why U.S. inflation statistics have stayed moderate, in the face of the Federal Reserve’s policy of massive “QE” or money-printing. Other countries have absorbed some of our excess dollars. To the extent that such a country wants to keep its currency’s value in line with the (declining) dollar, it must create more of its own money, sort of matching its dollar inflows. That inflicts inflation on its people. In effect, the U.S. has been able to export inflation to other countries.

It’s a cushy arrangement for the parts of the U.S. that live off the Fed’s money-creating machine (or get effectively bailed out by it). In other words: cushy for the U.S. Big Government – Big Banking complex.

Those Americans who know about it, often take it for granted. They’ll say things like “Oh, of course we can get away with it. The dollar is too entrenched for other countries to get rid of it. Of course other countries want our dollar, and they will keep wanting it, no matter if we keep over-printing it.”

But history shows that no country stays at the center of world trade and finance (enjoying exorbitant privileges) for more than 50-80 years. This post is about the fact that America is, in historical terms, nearing the end of its run.

The first BRIC summit was in 2009. As The Guardian puts it:

…Brazil, Russia, India and China expressed mounting dissatisfaction with the inertia in [current world financial] institutions (the International Monetary Fund and the World Bank) and agreed to “advance the reform of international financial institutions, so as to reflect changes in the global economy.” Russia’s president, Dmitri Medvedev, said the main point of the meeting was to show that “the Bric should create conditions for a more just world order.”

“A more just world order.” Get it?

It’s code for knocking down Western influence, including the U.S. dollar. Thus ending the privileges just described; the privilege of the U.S. endlessly bailing itself out by creating new money and then exporting the inflation (or some of it) to other countries via trade deficits, which give Americans cheap foreign goods. Or the privilege (for Europe) of an IMF that bails out profligate European countries, such as Greece, and helps buy Ukrainian revolutions on Russia’s doorstep.

The BRICS countries know they can’t change things overnight. But each year, they move the ball forward a little. Last year’s summit (2013) saw an announcement that they would create a BRICS Development Bank, designed to duplicate the functions of the IMF and World Bank on the BRICS’ terms. The 2014 summit should see the announcement of some progress. For example, in September, they agreed on how the bank should be capitalized at $100 billion.

Some Westerners think the duplication-of-effort is stupid (for example, see Laurson and Pieler, at Forbes). Or they scratch their head over why it’s happening and whether the 5 BRICS countries will keep it together. Such criticisms miss the point.

The point is that the IMF and World Bank serve Western interests; and the BRICS countries, who are the up-and-coming powers, are tired of it. They will create duplicate institutions in some form, so as to be able to leave the Western-oriented ones or at least bypass them. Not surprisingly, non-Western observers get it.

We are moving to a world which increasingly rejects Western influence, especially American financial and political influence. For example, last October, Chinese media openly called for a “de-Americanized world”.

I blame 20 years of bad U.S. policies which have debauched the dollar, abandoned freedom, and given America a phony economy of endless deficits and debts, welfare, bubbles and bailouts. Policies which President Obama has obstinately made much worse. But however that might be, the “de-Americanized world” is coming. It is no surprise to see India and China tilting Russian in the Ukraine crisis.

In the bigger picture, it will mean foreigners needing a lot fewer U.S. dollars. When that happens, America’s inflationary chickens will come home to roost. As foreigners return their dollars to America in contempt, we won’t be able to run trade deficits anymore, and the dollar’s international buying power will go down. The cost of imported goods will skyrocket, and U.S. inflation with them. America will face some tough times.

Obama’s daily lawlessness

On Wednesday, V noted how President Obama set aside his own Obamacare law and decreed a delay to the “individual mandate”. (The mandate that he previously told the Supreme Court was an absolutely essential part of Obamacare.)

Thursday’s example was Obama’s plan to decree overtime pay for some 10 million who had willingly been working without it, because they are salaried employees.

It’s not a good thing. First of all, anytime the government mandates pay increases, it costs real people their jobs. While some people might get more pay, others’ pay goes to part-time, or to zero. When Obama proposed his minimum wage hike last month, even the Congressional Budget Office (CBO) agreed that it would cost 500,000 jobs.

But the deeper problem is that, in Barack H. Obama, we have a President who increasingly abandons constitutional, legislative and democratic processes. Throughout his administration, in issue after issue, he has declared that the rules are now different because he says so. Whether it’s ripping off honest GM bondholders, Fast and Furious, hiding information about corrupt federal prosecutors, Obamacare or countless other issues, you never can tell when this President will suddenly decide on different rules.

With this overtime change, there is serious debate about whether the President has the legal authority to do it. Some say he doesn’t; some say he does. But that means his move is dubious. And however that might be – and I say, even worse – Obama’s move makes the government interfere, once again, in arrangements that freely consenting adults had agreed on. (Liberals may want government out of the bedroom, but boy, do they want government in everything, everyone and everywhere else.)

This is one more, little thread in the tapestry of America’s decline: we have become a nation ruled by “men, not laws.” And if you think that arbitrary government doesn’t make for an atmosphere of fear and uncertainty that stifles the economy, think again.

UPDATE: Allahpundit has video, as he puts it, of Obama “in 2008 promising to roll back Bush’s executive overreach because he was a law professor and knew the Constitution ‘n stuff.”.

Rep. Trey Gowdy gives an appropriate response.

Obama, not fixing his Debt Bomb

Last week, President Obama released his new budget proposal, which in February he said would be the end of austerity. First let’s ask, what is meant by “austerity”? As a policy, was it ever tried?

As discussed by myself and others, “austerity” means tax hikes (not spending cuts) in practice. Lefties hurl the word “austerity” to demonize the idea of spending cuts. But few of the countries which left-liberals accused of cruel austerity in the last few years cut their overall government spending levels; the majority continued to increase spending. So spending cuts can’t explain those countries’ poor economic results. What can? Well, most of them raised taxes.

Clearly, we should end (or reverse) the tax hikes. That would be a great “end of austerity”. But Obama’s meaning is that we should undertake spending increases; which, for reasons touched on below, probably mean deficit increases.

Before going into Obama’s proposal, let’s review the current state of the U.S. budget. (more…)

Russia threatens financial retaliation if Obama proceeds with sanctions

Posted by Jeff (ILoveCapitalism) at 3:25 pm - March 4, 2014.
Filed under: Economy,National Security,Obama Incompetence

I’m amazed to see financial threats being made this openly. Like real military threats, real financial threats are usually made via backchannels. But, then again, President Obama has threatened Russia openly with sanctions.

MOSCOW, March 4 (RIA Novosti) – An adviser to Russian President Vladimir Putin said Tuesday that authorities would issue general advice to dump US government bonds in the event of Russian companies and individuals being targeted by sanctions over events in Ukraine.

Sergei Glazyev said the United States would be the first to suffer in the event of any sanctions regime…

Glazyev noted that Russia is a creditor to the United States.

“We hold a decent amount of treasury bonds – more than $200 billion – and if the United States dares to freeze accounts of Russian businesses and citizens, we can no longer view America as a reliable partner,” he said. “We will encourage everybody to dump US Treasury bonds, get rid of dollars as an unreliable currency and leave the US market.”

Is it just bluster? As recently as last year, the answer would be yes. But China holds approximately $1 trillion in U.S. Treasury bonds; and if Russia ‘goes there’, China will not want to be left behind.

And for several years now, China has been working with its partners (including Russia, Japan, Brazil, the UK, France and Germany) to set up facilities for trade & finance that would enable them, collectively and at long last, to be independent of the U.S. dollar. Even before this crisis, some experts were predicting that 2014-15 would see those efforts bear fruit.

Leave it to John F.-n Kerry and Barack Obama to be just stupid enough to push Russia and China further along a road that they are already well-and-gladly on.

Russia’s threat also comes via its Foreign Ministry: (more…)