“America the Shrunken”

by Larry Romanoff

Global Research (December 21 2019)

In May of 2014, Frank Bruni wrote an article for The New York Times titled “America the Shrunken’ in which he detailed what he called “the downward arc of a diminished enterprise” that was the USA, quoting friends who claimed their children would live in a more impoverished America, that the reign was over, and the slide was inevitable. The optimism and arrogant swagger are mostly gone. He quoted Democratic strategist Doug Sosnik who wrote, “At the core of Americans” anger and alienation is the belief that the American dream is no longer attainable” {1}

He wrote,

 

 

For the first time in our country’s history, there is more social mobility in Europe than in the United States. More and more I get the sense that we’ve lost it. Everywhere you turn, the evidence mounts. American schoolchildren aren’t anywhere near the head of the international pack, and American adults, according to one recent study, lack the technical skills that peers in many other developed countries have. American bridges crumble. American trains crawl. American flights leave from terminals that pale next to many Asian and European counterparts.

 

“Joe Biden acknowledged as much when he compared La Guardia Airport to a third-world country. I’ve been to La Guardia and I’ve been to Guatemala, and if I were Guatemala, I’d sue for defamation.” {2} And again, “the middle class in America, which had long been the world’s most affluent, wasn’t anymore. Canada had overtaken us. My Times colleague Nicholas Kristof wrote about America’s rank on a new “social progress index” that includes 132 countries. We’re 39th in basic education, 34th in access to water and sanitation – access to water and sanitation! – and … just two spots above Slovenia.”

Also in May of 2014, Peter van Buren wrote an article titled “An Empire in Decline, City by City, Town by Town”, in which he related some of his travels through parts of the US today and compared them to their appearance in their prime – a time not very long ago. He began by writing:

 

As America’s new economy starts to look more like the old economy of the Great Depression, the divide between rich and poor, those who have made it and those who never will, seems to grow ever starker. I know. I’ve seen it firsthand, the cumulative effects of years of deindustrialization, declining salaries, absent benefits, and weakened unions, along with a rise in meth and alcohol abuse, a broad-based loss of good jobs, and soaring inequality seemed similar enough to me. The destruction of a way of life in the service of the goals of the 1%, whether in Iraq or at home, was hard to miss. I grew up in the Midwest at a time when the country still prided itself on having something of a conscience, when it was a place still built on hope and a widespread belief that a better future was anybody’s potential birthright. Inequity was always there, and there were always rich people and poor people, but not in the ratios we see now in America. What I found in my travels was place after place being hollowed out as wealth went elsewhere and people came to realize that, odds on, life was likely to get worse, not better. For most people, what passed for hope for the future meant clinging to the same flat-lined life they now had.

Visit Atlantic City in 2014 and it’s again a hollowed-out place. The once swanky mall built on one of the old amusement piers has more stores shuttered than open. Trump Plaza, a monument to excess and hubris, is now a catalog of decay. The pillows in the rooms smell of sweat, the corners of doors are chipped, many areas need a new coat of paint, and most of the bars and restaurants resemble the former Greyhound bus terminal a few blocks away. People covered with the street gravy that marks the homeless wander the casino, itself tawdry and too dimly lit to inspire fun. There were just too many people who were clearly carrying everything they owned in a backpack. {3}

 

His visits and commentary extended to many locations he had known earlier, perhaps in his childhood, and all, in their own way, fit the description above. There are still some rich cities in America, and even some glitzy ones, but when we pull back the curtains and survey the entire stage, today we see a preponderance of decay. Detroit, Chicago, many California cities, much of Florida, and so many more with not only neighborhoods but entire counties and larger areas rotting from the inside. The great corporations are gone, the jobs are gone, the wealth is gone; only decaying skeletons remain to remind us of what once was. So much of America today is just junkyards, abandoned homes, lifeless slums, empty lots, rusting carcasses of factories, and homes full of despair.

“California has become a failed state. California’s crisis is by no means unique. That dream is dead. Policies enacted in the second half of the 20th century ultimately undermined it. The tax revolt of the late 1970s dismantled the dream in order to enable a select few to continue enjoying it. Large corporations and the elites chose to restructure state government to cut off everyone else from public services while preserving their own subsidies.” Bill Bryson said in an interview with the UK Telegraph: “America has, during my lifetime, engaged in long campaigns to make everything as ugly as possible. I just find that heartbreaking and disappointing.” {4}

A cover story of Time magazine carried the headline “The Broken States of America”, in which it said:

 

Schools, health services, libraries – and the salaries that go with them – are all on the chopping block as states and cities face their worst cash squeeze since the Great Depression.

A nation that is good at destroying things – with wars overseas and mind-bogglingly self-destructive policies here at home – but that has lost sight of how to build and maintain a flourishing society. We’re dismantling our public school system and, incredibly, attacking our useless system of higher education. {5}

 

According to a report by Ken Klippenstein, Detroit today has 60,000 to 70,000 empty buildings, many city blocks with only one or two remaining dilapidated homes that have not been demolished, and city services are almost non-existent. So much of the city is virtually uninhabited that the fire department can no longer afford to bother fighting fires, and bus service or other public services have been discontinued. The city is simply dying, officials begging residents to relocate to a high-density city core in a final bid to survive. It may be too late. It is possible almost anywhere in Detroit today to buy a nice large home for only $1 because the owner of a worthless property wants to escape the high taxes and maintenance or demolishing costs. There are no takers.

American cities are not only crumbling; they are increasingly filing for bankruptcy. Stockton, California was one of the largest bankruptcies in recent history, and today, according to reports, has “piles of garbage in the central streets; barricaded entrances to once-luxurious shopping centers; homeless, drunken beggars; rampant crime; and an unemployment rate of 20 percent”. San Bernardino, also in California, went bankrupt with debts of more than $1 billion, as did Jefferson, Alabama, and of course the latest and largest being Detroit, General Motors’ headquarters. This is the largest municipal bankruptcy ever in the US and, while this city may be the worst example, it is by no means the only similar example. But the bankers won’t lose; they bullied the state and local governments to raid the public and private pension plans of the city’s residents to repay their loans before the bankruptcy.

One American commenting on an article in The Wall Street Journal, wrote the following:

 

I’ve said it again and I’ll say it now, the US is in terminal decline. The fact that they have to run trillion dollar deficits with 0% interest rates and QE infinity and can only get 2% growth proves my point. I give the US another 10 years before their giant debt based Ponzi scheme comes crashing down and the United States economically collapses like the Soviet Union and the US might even break up politically. I live here in the US, and I can tell you that there is absolutely no rule of law here, it’s corrupt to the bone. The politicians are bought by interest groups and the Caucasian population is dumb as a doorknob.

 

Another commenter on the same article:

 

As a Chinese living in America, I’ve seen the US and I can tell you this country has no future; the education system is failing, crime is off the scale, drug use is rampant, adultery is out of control, teen pregnancies are at all time highs. The debt is actually a lot worse than the official numbers say, it’s sometimes double or triple the official figure. The US government fudges its books to appear strong, don’t believe a single number they say, it’s all manipulated. Here in the US, there are two books, one book for the public and one for the officials. Vast majority of the innovation done here is all done by Asians, mostly from China. Nearly all the top universities are filled with Asian students. The white students just aren’t smart enough or hardworking enough to beat the Asians. Anyone thinking this will be the century of America is beyond delusional. It’s a country on the way down and fast. I give it another 10 years before this facade comes to a crashing and painful end. Folks you are witnessing the decline of the United States.

 

_____

Larry Romanoff is a retired management consultant and businessman. He has held senior executive positions in international consulting firms and owned an international import-export business. He has been a visiting professor at Shanghai’s Fudan University, presenting case studies in international affairs to senior EMBA classes. Mr Romanoff lives in Shanghai and is currently writing a series of ten books generally related to China and the West. He can be contacted at 2186604556@qq.com. He is a frequent contributor to Global Research.

Notes:

{1} https://www.nytimes.com/2014/05/04/opinion/sunday/bruni-america-the-shrunken.html

{2} https://time.com/5318/joe-biden-laguardia-airport

{3} https://www.unz.com/tengelhardt/this-land-isnt-your-land-this-land-is-their-land/

{4} https://www.telegraph.co.uk/culture/books/historybookreviews/10372268/One-Summer-by-Bill-Bryson-review.html

{5} http://content.time.com/time/covers/0,16641,20100628,00.html

Disclaimer: The contents of this article are of sole responsibility of the author{s}. The Centre for Research on Globalization will not be responsible for any inaccurate or incorrect statement in this article.

Copyright {c} Larry Romanoff, Global Research, 2019

https://www.globalresearch.ca/america-shrunken/5698017

No Power, No Running Water, No Toilets

Millions Of Americans Are Living In Third-World Conditions

by Daisy Luther

The Organic Prepper (November 25 2019)

Scattered around the nation, there are parts of the country in which millions of Americans are living without the basic amenities that most of us take for granted …

I’m not talking about high-speed internet or frivolous things. I’m talking about electricity, flushing toilets, and clean running water.

But this isn’t a problem that only exists in one state or to one demographic. It’s happening across the nation more and more. Let’s take a look.

 

Millions are living without running water

 

A new report {1} says that more than 2 million Americans in West Virginia, Alabama, Texas, and the Navajo Nation Reservation in the Southwest are living without clean running water or indoor plumbing. They’re drinking from polluted streams. They’re carrying buckets of the same water home for washing. They’re urinating and defecating outside with no wastewater treatment.

 

 

Race and poverty are the strongest predictors of water and sanitation access, according to the study. Native American families are 19 times more likely than white households to lack indoor plumbing, while black and Latino homes are nearly twice as likely. Meanwhile, federal funding for water infrastructure is just a small percentage of what it used to be, the authors wrote.

“Access to clean, reliable running water and safe sanitation are baseline conditions for health, prosperity, and well-being”, DigDeep CEO George McGraw and US Water Alliance CEO Radhika Fox said in a statement. “However, they remain out of reach for some of the most vulnerable people in the United States”.

The 2 million figure includes 1.4 million people with homes who lack access to hot and cold running water, as well as a sink, shower, bath or flushing toilet {2}.

 

As well, more than half a million homeless Americans don’t have access to basic sanitation. Nor do almost a quarter of a million people in Puerto Rico, where many of whom are still struggling after Hurricane Maria {3}.

The lack of access to water is happening across the nation, often hidden within wealthier enclaves.

 

 

Water-access challenges affect entire communities, not just “isolated individuals choosing to live off the grid”, the authors wrote. The researchers found clustered water problems in Alaska, New Mexico, the Dakotas, and Maine, in addition to their focus on six “hotspots”: California’s Central Valley, the Navajo Nation, Texas colonias, the rural South, Appalachia, and Puerto Rico.

Notably, these at-risk communities can hide within wealthier counties, the study showed. Overall, one Arizona county highlighted by researchers revealed that just 4 percent of residents overall lacked complete plumbing – but a more local analysis revealed pockets where 40 percent of people lacked access. {4}

 

Don’t even get me started on all the diseases that can occur when people dispose of their human waste unsafely. I wouldn’t be shocked to see a return of diseases that have all but been eradicated linking back to the lack of plumbing.

 

Then there are places that have running water but it’s toxic

 

It isn’t just a complete lack of running water that is a problem. There is a lack of safe water. Let’s look at Flint, Michigan.

Five years ago, it came out that the city of Flint had been providing tap water to its residents that was tainted with lead, bacteria, and trihalomethanes. At the time this information came to light, there was also an outbreak of Legionnaire’s Disease that traced back to the drinking water.

And to add insult to injury, officials lied about it instead of warning people.

 

When the crisis began, state and federal officials repeatedly denied that there was any issue with the water, despite clear evidence that there was. Later, officials manipulated test results, downplayed the problem, and lied to residents.

As Michigan Radio’s Lindsey Smith reported:

“The tests were bad enough that [in July 2015], they should have informed the public about the broad lead risk, but that’s not what happened. Instead, state and city officials kept telling residents there was no lead problem in Flint’s water; that this EPA report was wrong; that the report was written by a ‘rogue employee’.” {6}

 

The EPA says the water in Flint is safe now, but residents are not convinced. Many still rely on bottled water.

 

 

But Flint’s mayor, Karen Weaver, has dismissed such declarations as “premature”.

“Nobody wants to say that Flint water is safe to drink more than myself and the residents of Flint, but, before we say it, we want to be absolutely sure it is true”, she said in June in response to Wheeler’s comments. A spokesperson for the mayor told FRONTLINE that Weaver stands by her stance.

Though Flint’s water, which once tested dangerously high for lead, is now within federal safety standards, microbiologists, infectious disease experts, and officials including Weaver worry that harmful elements may still remain – and that state and federal regulators aren’t actively testing for them. {7}

 

And some scientists are also not convinced.

 

 

Across the US right now, almost all fatalities from waterborne diseases in the United States are from legionella, and cases have been rising steadily since 2000, according to Mark LeChevallier, a scientist and retired water manager. Legionella testing isn’t common. But LeChevallier, who oversaw more than 300 water systems that served more than 15 million people for private utility American water, believes both state and federal bodies, including the EPA, are responsible for putting new guidelines in place …

… As in other cities, Flint’s Department of Water Services is responsible for tracking the chemical composition of the city’s water. But under both state and federal Safe Drinking Water Acts, government responsibility ends the moment water enters the pipes of a private home – where experts say deadly legionella bacteria are most likely to fester. {8}

 

Other scientists concur with LeChevallier.

 

“We don’t know if it’s safe, because the proper studies haven’t been done”, said Marcus Zervos, an infectious disease doctor who sat on the Flint Area Community Health and Environment Partnership (FACHEP), a group hired by the state in 2016 to investigate the Legionnaires’ outbreak. That fall, the team tested the water of 188 randomly selected Flint-area households and found legionella in 12 percent of them.

The state ultimately rejected the team’s work, saying the scientists had “only added to the public confusion”, and that an outside consulting firm the state hired had been critical of their work. {9}

 

Despite the fact that Michigan has disregarded his warnings, Zervos and other scientists have continued to study the water in Flint.

 

 

In 2018, a team including Zervos tested water filters from 10 Flint residents’ homes that they suspected were infected. The results, published early this year in the International Journal of Infectious Diseases, announced that they had found toxic, often antibiotic-resistant bacteria in some filters.

“By us saying that the filters potentially have a problem with them, we were also getting push back [from the state]”, Zervos told FRONTLINE. “There are people going around that are saying that it’s normal to have bacteria in the water and that the filters are the solution to this. There are still a lot of questions.”

One of his FACHEP colleagues, University of Michigan professor Nancy Love, said that while the filters distributed in Flint are efficient at removing lead, research suggests they can also harbor harmful bacteria. “Whether the level of those bacteria that end up in filtered water, consumed over long periods of time, is a health risk has, to my knowledge, not been evaluated”, Love said. {10}

 

As I’ve written previously, the onus is on us to ascertain whether our water is safe or not. You can easily test your tap water for a wide variety of bacteria, viruses, and other harmful substances. And with Flint in mind, I can think of no reason on earth a person would trust the local government to warn them about unsafe water.

 

Contaminated water isn’t isolated to Flint

 

While it would be easy to say that this situation only happened in Flint to poor families, that would be an incorrect assumption. At least ten other cities have dangerously high levels of contamination {11}.

 

Pittsburgh has been in the news with too-low chlorine levels as well as high levels of lead.

Milwaukee public health officials didn’t disclose the fact to parents that their children had extremely high levels of lead in their systems.

57 out of 86 public schools in Detroit tested positive for elevated levels of copper or lead in their water. Children who have high levels of copper and lead can have learning disabilities and a predisposition toward violent behavior.

Newark has “all-time high” levels of lead as well as high levels of haloacetic acids (HAAs), which can form during the water disinfecting process, cause skin irritation, and potentially increase cancer risk.

Washington DC’s water supply has been known to be contaminated with lead since the early 2000s.

Brady, a small town in Texas, has nine times the EPA’s allowable limit of radium in the water. Radium has been linked to bone cancer.

Baltimore’s water has some lead, but the more prevalent concern is a cloudy reservoir with particles that carry viruses, bacteria, or parasites.

Residents of Dos Palos, a small town in California, have had to switch to bottled water after it was discovered their tap water contained trihalomethanes, a group of chemicals linked to kidney problems and increased cancer risk.

Charleston, West Virginia is dealing with the aftermath of a chemical spill five years later. MCHM, a chemical foam that’s used to wash coal, spilled into their water system and as recently as 2017, the Environmental Working Group found multiple contaminants in the city’s water.

Newburgh, New York declared a state of emergency when the reservoir tested positive for perfluorooctane sulfonate (PFOS), which has been linked to cancer and chronic kidney disease. The city installed a new filtration system but many residents still don’t trust the water.

 

As you can see, dangerous contamination of water can happen anywhere. It’s extremely important to note that filtration devices do not remove all of these contaminants and boiling water can make some contaminants even more dangerous.

 

The California blackouts have a ripple effect

 

Meanwhile in California, having electricity is no longer a given.

By now, you’ve heard about the arbitrary power outages throughout the state which leave millions in the dark. On a regular basis, PG&E is shutting off electricity to its customers in order to “prevent wildfires” {12}. This isn’t just a minor inconvenience – for many who have well water and septic tanks, they’re unable to have running water or even flush the toilets. Schools are closed, businesses can’t run, and people are losing income and food.

And it gets worse. The last time the power was out, communications systems began to fail {13} and Californians found themselves in the dark with regard to information, too. Radio stations, internet service providers, television stations, and even cell phone towers ran out of back-up power, and with it, the ability to warn residents of impending danger.

As far as demographics are concerned, many of the hardest-hit areas are actually conservative. Residents of Northern California have been trying to secede from the madness of more urban areas for years.

 

What area will be hit next?

 

It seems like the standard of living in our country is rapidly declining. It makes you wonder what area will be hit next with rolling blackouts or contaminated water. And as our economy continues to flail, many can’t even afford things like food or rent. It isn’t a stretch of the imagination to think that those who are struggling may have to make a choice to live without utilities.

The United States of America has always seemed like the epitome of a thriving, first-world country. But as these pockets of desperation spread, it’s beginning to look like that status is only true for some of us. I’ve always recommended a low-tech approach to prepping, and as things become more difficult for more people, going low-tech could be the only option.

Selected Links:

{1} https://closethewatergap.org/wp-content/uploads/2019/11/Dig-Deep_Closing-the-Water-Access-Gap-in-the-United-States_DIGITAL_compressed.pdf

{2} https://www.msn.com/en-us/health/health-news/more-than-2-million-americans-living-without-clean-water-new-report-shows/ar-BBWXjWi

{3} https://www.theorganicprepper.com/video-life-in-puerto-rico-now/

{4} https://www.msn.com/en-us/health/health-news/more-than-2-million-americans-living-without-clean-water-new-report-shows/ar-BBWXjWi

{5} https://www.michiganradio.org/post/how-people-flint-were-stripped-basic-human-need-safe-drinking-water

{6} https://www.michiganradio.org/post/does-flint-have-clean-water-yes-it-s-complicated

{7} https://www.pbs.org/wgbh/frontline/article/epa-says-flints-water-is-safe-scientists-arent-so-sure/

{8} https://www.pbs.org/wgbh/frontline/article/epa-says-flints-water-is-safe-scientists-arent-so-sure/

Copyright (c) 2009-2019 ZeroHedge.com/ABC Media, LTD

https://www.zerohedge.com/health/no-power-no-running-water-no-toilets-millions-americans-are-living-third-world-conditions

The Afghanistan Fiasco and the …

… Decline and Fall of the American Military

Philip Giraldi

https://www.strategic-culture.org (December 19 2019)


(c) Photo: Wikimedia

A devastating investigative report was published in The Washington Post on December 9th. Dubbed the “Afghanistan Papers” in a nod to the Vietnam War’s famous “Pentagon Papers”, the report relied on thousands of documents to similarly expose how the US government at the presidential level across three administrations, acting in collaboration with the military brass and civilian bureaucracy, deliberately and systematically lied repeatedly to the public and media about the situation in Afghanistan. Officials from the Bush, Obama, and Trump administrations have all surged additional troops into Afghanistan while also regularly overstating the “success” that the United States was attaining in stabilizing and democratizing the country. While they were lying, the senior officers and government officials understood clearly that the war was, in fact, unwinnable.

The story should have been featured all across the US as Afghanistan continues to kill Americans and much larger numbers of Afghans while also draining billions of dollars from the United States Treasury, but the mainstream media was largely unresponsive, preferring to cover the impeachment saga. Rather more responsive were the families of Army Chief Warrant Officer Second Class David C Knadle, 33, of Tarrant, Texas, and Chief Warrant Officer Second Class Kirk T Fuchigami Jr, 25, of Keaau, Hawaii. Both were killed in a helicopter crash on November 20th in Afghanistan’s Logar province while assisting troops on the ground, according to a Pentagon press release {2}. They were participating in what was characteristically dubbed Operation Freedom’s Sentinel. Both men were assigned to the 1st Battalion, 227th Aviation Regiment, 1st Air Cavalry Brigade, 1st Cavalry Division in Fort Hood, Texas. The Taliban took credit for the downing of the chopper, but the Army is still investigating the cause.

Knadle and Fuchigami are only the most recent of the more than 2,400 American service members who have been killed in Afghanistan since October 2001, together with 20,589 wounded and an estimated 110,000 Afghan dead. In the wake of the Post’s report, Daniel Ellsberg, who leaked the Pentagon Papers in 1974, told a CNN reporter that the Pentagon and Afghanistan Papers exposed the same governmental dysfunction: “The presidents and the generals had a pretty realistic view of what they were up against, which they did not want to admit to the American people”.

The New Republic observes how

 

The documents are an indictment not only of one aspect of American foreign policy, but also of the US’s entire policymaking apparatus. They reveal a bipartisan consensus to lie about what was actually happening in Afghanistan: chronic waste and chronic corruption, one ill-conceived development scheme after another, resulting in a near-unmitigated failure to bring peace and prosperity to the country. Both parties had reason to engage in the cover-up. For the Bush administration, Afghanistan was a key component in the war on terror. For the Obama administration, Afghanistan was the ‘good war’ that stood in contrast to the nightmare in Iraq. {3}

 

The Afghan War’s true costs have never been precisely calculated, though they certainly exceed $1 trillion and counting. The documents relied upon for the Post report include more than 2,000 pages of confidential interviews with people who played a direct role in the war, including soldiers and diplomats, as well as civilian aid workers and Afghan officials. Many of the interviews were initially carried out by the Special Inspector General for Afghanistan Reconstruction (SIGAR). The Post divided the interviews and supporting documentation into subject categories that demonstrate how the situation in Afghanistan began to deteriorate as soon as the United States followed up on its rapid invasion with a plan for nation-building. Resorting to the usual American expedient, the occupiers flooded the country with money, which meant that the only thing blooming on the thin soil was corruption, apart from the poppies that have made Afghanistan the world’s leading supplier of opium.

One contractor who was involved in nation-building described how he was required to spend $3 million daily for projects in an Afghan district roughly the size of a US county. He asked a visiting congressman if he could be authorized to spend that much money in the US [The lawmaker] said hell no.

 

 

Well, sir, that’s what you just obligated us to spend and I’m doing it for communities that live in mud huts with no windows.

 

In another interview the report cites Lieutenant General Douglas Lute, the White House Afghan war czar during the Bush and Obama administrations, who told the interviewers in 2015. “We were devoid of a fundamental understanding of Afghanistan – we didn’t know what we were doing”, later adding “What are we trying to do here? We didn’t have the foggiest notion of what we were undertaking.”

Army Colonel Bob Crowley, who served in Kabul in 2013~2014, described how at headquarters “Every data point was altered to present the best picture possible”, adding also how “Surveys, for instance, were totally unreliable but reinforced that everything we were doing was right and we became a self-licking ice cream cone”.

Part of the problem with Afghanistan was the rotation of American soldiers in and then out after one year or less, just as they were learning about the country and the problems they faced. It has led to the joke that the United States has not fought an eighteen-year war in Afghanistan: it has fought a one-year war eighteen times.

The Post investigative report coincides with an interesting deconstruction of the US military and how it operates. David Swanson of World BEYOND War provides a lengthy review of West Point Professor Tim Bakken’s new book The Cost of Loyalty: Dishonesty, Hubris, and Failure in the US Military. Per Swanson (2020), the book traces

 

a path of corruption, barbarism, violence, and unaccountability that makes its way from the United States’ military academies (West Point, Annapolis, Colorado Springs) to the top ranks of the US military and US governmental policy, and from there into a broader US culture that, in turn, supports the subculture of the military and its leaders. The US Congress and presidents have ceded tremendous power to generals. The State Department and even the US Institute of Peace are subservient to the military. The corporate media and the public help maintain this arrangement with their eagerness to denounce anyone who opposes the generals. Even opposing giving free weapons to Ukraine is now quasi-treasonous.

 

Bakken even disputes the widely held view that the military academies have high academic standards. He describes how the “system” pays to get potential athletes and accepts students nominated by congressmen commensurate with donations made to fund re-election campaigns. Swanson sums it up by observing how the academies offer

 

 

a community college-level education only with more hazing, violence, and tamping down of curiosity. West Point takes soldiers and declares them to be professors, which works roughly as well as declaring them to be relief workers or nation builders or peace keepers. The school parks ambulances nearby in preparation for violent rituals. Boxing is a required subject. Women are five times more likely to be sexually assaulted at the three military academies than at other US universities.

 

Bakken concludes that appreciating the fundamental structural flaws in the US armed forces “leads to a clearer understanding of the deficiencies in the military and how America can lose wars”. In fact, he does not even seek to identify a war that the United States has won since World War Two in spite of the country being nearly constantly engaged in conflict.

Together the Bakken book and the Afghanistan Papers reveal just how much the American people have been brainwashed by their leaders into believing a perpetual warfare national narrative that is more fiction than fact. Donald Trump may have actually appreciated that the voters were tired of the wars and was elected on that basis, but he has completely failed to deliver on his promise to retrench. It suggests that America will remain in Afghanistan for the foreseeable future and the inevitable next war, wherever it might be, will be another failure, no matter who is elected in 2020.

Selected Links:

{1} https://www.washingtonpost.com/graphics/2019/investigations/afghanistan-papers/afghanistan-war-confidential-documents/

{2} https://www.defense.gov/Newsroom/Releases/Release/Article/2022455/dod-identifies-army-casualties/

{3} https://newrepublic.com/article/155977/media-ignoring-afghanistan-papers

_____

Philip Giraldi, PhD, is Executive Director of the Council for the National Interest.

https://www.strategic-culture.org/news/2019/12/19/the-afghanistan-fiasco-and-the-decline-and-fall-of-the-american-military/

Long job hunts, poor pay and hectic hours …

… why is job quality in the US so low?

by Gwynn Guilford

https://www.weforum.org (December 16 2019)


A worker from a public cleaning company collects garbage. Image: REUTERS/Sergio Moraes

* More Americans are in work than any time in the last five decades

* But a new Job Quality Index finds there are 81 high-quality jobs for every 100 low-quality ones

The numbers tell one story. Unemployment in the US is the lowest it’s been in 50 years. More Americans have jobs than ever before. Wage growth keeps climbing.

People tell a different story. Long job hunts. Trouble finding work with decent pay. A lack of predictable hours.

These accounts are hard to square with the record-long economic expansion and robust labor market described in headline statistics. Put another way, when you compare the lived reality with the data and it’s clear something big is getting lost in translation. But a team of researchers thinks they may have uncovered the Rosetta Stone of the US labor market.

They recently unveiled the US Private Sector Job Quality Index ( JQI) {1}, a new monthly indicator that aims to track the quality of jobs instead of just the quantity. The JQI measures the ratio of what the researchers call “high-quality” versus “low-quality” jobs, based on whether the work offers more or less than the average income.

A reading of 100 means that there are equal numbers of the two groups, while anything less implies relatively lower-quality jobs. Here’s what it looks like:

The decline of US job quality in the last 30 years. Image: Cornell University

So, what is this newfangled thing telling us? Right now the JQI is just shy of 81, which implies that there are 81 high-quality jobs for every 100 low-quality ones. While that’s a slight improvement from early 2012 – the JQI’s 30-year nadir – it’s still way down from 2006, the eve of the housing market crash, when the economy regularly supported about 90 good jobs per 100 lousy ones.

Or, in plainer English, the US labor market is nowhere near fully recovered from the Great Recession. In fact, the long-term trend in the balance of jobs paints a more ominous picture.

“The problem is that quality of the stock of jobs on offer has been deteriorating for the last 30 years”, says Dan Alpert, an investment banker and Cornell Law School professor who helped create the index. (Along with Alpert, the index is built and maintained by researchers at Cornell University Law School, the Coalition for a Prosperous America, the University of Missouri-Kansas City, and the Global Institute for Sustainable Prosperity.) The “whole story” told by the index, he adds, is “the devaluation of American labor”.

How low can you go?

To grasp the JQI’s significance, it’s worth understanding how it’s made. The researchers take private-sector non-manager jobs – which make up 82% of all private-sector jobs {2} – and divvy them into two groups: the “high quality” jobs that pay more than the average weekly wage and tend to have more hours per week, and the “low quality” ones that pay less and offer fewer hours. The index is a weighted ratio of the two, averaged over the previous three months to cut out the noise. {3}

The prevalence of low-quality jobs suggests that there’s still a lot of slack in the labor market – meaning, people could be working more or using their skills more fully than they currently are. This is pretty much the opposite conclusion you’d draw from the ultra-low unemployment rate, robust job creation numbers, and other conventional headline data.


Image: BEA

That’s why, starting next month, the JQI will be released on the same day as the closely watched monthly jobs data published by the Bureau of Labor Statistics. The hope is to offer policymakers a more granular picture of America’s economic health, says Alpert.

Take, for instance, the Federal Reserve. “Had they viewed the market through this lens, they might not have [started raising interest rates in 2018]”, says Alpert. “That’s the type of policymaker we’re trying to address. It’s a reality check on the conventional data.”

America’s shift to a crummy-job economy]

Since 1990, America has cumulatively added some 20 million low-quality jobs, versus around 12 million high-quality ones. In short, the US economy has shifted toward creating more bad jobs than good.


Since 1990, the US economy has shifted toward creating more bad jobs than good. Image: Cornell University

This has significant implications for the economy. For instance, inflation-adjusted income for workers with high-quality jobs has grown at a brisker clip than it has for workers in low-quality ones.

That point might seem a little tautological; after all, the researchers’ definition of “high quality” rests on average weekly wage, a big factor in determining income. However, wage growth isn’t what’s really driving that divergence. Rather, it’s a sharp split in hours worked. Those in low-quality jobs now clock a mere 30 hours a week, on average, down from 31 in 1999 {4}. That compares with an average of 38 hours a week for high-quality jobs.

On an individual basis, that seven-hour gap might not sound like a lot. Add it up, however, and it reveals the stunning scale of America’s “underemployment” problem. If the average low-quality job offered the same number of hours as the typical high-quality job, it tallies up to about 480 million hours per year. Those unworked hours – representing labor that could have contributed to the US economy – represents around 12 million forgone jobs every year.

Of course, some of that decline may be due to workers seeking to curb their hours voluntarily. Another key reason is that employers sometimes limit hours to keep from having to pay benefits (a problem that, by the way, European workers are facing too) {5}.

Overall, the hours-worked deficit reflects a much larger problem. The swelling share of jobs that offer lower-than-average incomes means that job growth, as reflected by a super-low unemployment rate, implies less and less spending power than in the past. “As you create these jobs in lower quality areas”, says Alpert, the economy gets “a lot less bang for its buck”.

The dramatic rise and fall of a couple key industries bring this point into sharper focus.

The collapse of US manufacturing

Throughout the second half of the 20th century, US manufacturing supported around 12.8 million production jobs. Then, all of a sudden, America started hemorrhaging factory jobs. By 2010, the number had shrunk to levels last seen in 1939, when the US population was two-fifths of its current size. Although it’s recovered a bit since, manufacturing jobs are still down more than a quarter since 2000.


Manufacturing jobs have declined by more than 25% since 2000. Image: BLS

Nearly all of the manufacturing jobs lost, say the JQI researchers, have been replaced by just four service-sector industries: retail, administration and waste services, healthcare, and leisure and hospitality. In all of these industries, jobs with lower-than-average income predominate.

“If you travel around this country and manufacturing areas, it is not hard in a restaurant to find somebody who was once a manufacturing worker”, says Jeffrey Ferry, an economist at the Coalition for a Prosperous America, a nonpartisan group representing labor and manufacturing interests.

This isn’t just a problem for hard-on-their-luck rust belt residents; it hurts the whole economy.

Factory jobs are good for economies. For one, they tend to pay well and offer steady hours – and not just because of unions or tradition, but because they produce a lot of value. Mechanization boosts the worth of people’s labor by allowing them to produce way more than they otherwise could. In the grand scheme of things, this increased productivity – the ability to produce more, faster – is what drives long-term growth and, ultimately, raises people’s living standards.

Of course, technology can boost human productivity in service-sector jobs, too – for example, how computers let bankers process payments much faster than when checks were cleared by hand. So, it might not matter if the lost factory jobs were replaced by high-tech service-sector jobs – the “knowledge economy” and all that.

But, alas, this hasn’t been the case. Waiting tables, selling shoes, mopping floors – there’s not much technology can do to improve on human labor required for these tasks. So, all else equal, swapping out a factory position for one of these jobs strips the technological value-boost from a person’s exertions – and, in aggregate, leaves the economy producing less than it otherwise could. And, indeed, sluggish labor productivity growth since the end of the Great Recession tracks with the trend in JQI (though there’s not yet enough data to determine anything conclusive).

With a growing share of jobs producing less value from human labor, it’s hardly surprising that more workers are earning offers lower-than-average incomes. The problem is, workers are also consumers. The less they earn, the less they’re able to spend, the poorer they feel, and the more they save. This gets to how the JQI might help explain why the unemployment rate can slip to near-record lows without powering faster growth and whipping up inflation.

What’s worse, this dynamic reinforces itself. Weaker spending discourages companies from investing in new equipment or technology. As incomes stagnate, workers grow increasingly desperate and accept lower wages. The combination of cheap labor and ever-fickler demand pushes firms to replace high-quality jobs with low-quality ones – causing the economy itself to lose vitality. The longer this goes on, the harder it is to switch back because, eventually, the structure of the economy itself prevents demand from reviving growth.

The key to understanding how to escape this perilous feedback loop, says Alpert, is to grasp what caused it to begin with.

A devastating double-whammy

On January 20 1981, in his first-ever remarks as America’s new president, Ronald Reagan uttered one of his most famous phrases: “Government is not the solution to our problem; government is the problem”. More than simply a memorable line, those words became a whole ideology – one that Alpert argues underlies many of today’s economic woes.

The rise of this worldview nixed the US government’s traditional role of supporting demand and investing in boosting productivity (an authority it has yet to reclaim). America’s infrastructure took a big hit. The damage began to appear as early as the 1990s, when the US’s infrastructure deficit started to emerge, says Alpert. Jobs building and maintaining that infrastructure have long provided high-paying, full-time jobs for those who might otherwise struggle to find decent work, which is why he suspects this is a key reason for the JQI’s steady decline.

As unwise at this publish spending-aversion was, the timing of this shift was tragically unlucky, coinciding as it did with something unprecedented in human history.

The initial blow came from the Asian Tigers – South Korea, Taiwan, Hong Kong, and Singapore – that emerged as manufacturing powerhouses in the late 1980s and early 1990s. Then, following a fluky trio of events – the fall of the Berlin Wall, Tiananmen Square, and India’s sweeping economic reforms – the opening up of Eastern Europe, China, and India added more than a billion workers to the world’s labor pool under a single global capitalist system (depending on how you count them; Alpert puts it closer to 3.5 billion). This “Great Doubling” of the global workforce, as Harvard economist Richard Freeman wrote in 2006 {6}, “presented the US economy with its greatest challenge since the Great Depression”. (On top of all that, advanced economies experienced a steady upsurge of women joining their workforces throughout the 1980s and 1990s.)

At the same time, a series of US-led trade and investment agreements – most notably, permanently normalizing trade relations with China in 2001 {8} – lifted the floodgates on foreign investment. As US companies moved factories overseas en masse, American manufacturing employment imploded. (Though plenty of politicians {9}, economists {10}, and media {11} still argue that automation, and not trade, caused most of this collapse, research by economist Susan Houseman shows that trade was indeed the chief driver.)

This would have been bad enough as it was. But without public spending to replace the high-quality jobs lost, the mix in jobs shifted so severely that even near-record-low unemployment rates aren’t enough to revive the US economy’s former might.


Low unemployment rates still aren’t enough to revive the US economy. Image: Alpert, Ferry, Hockett, and Khaleghi

Quality time

Many think the “China shock” is mercifully over. Not Alpert. “I’m still looking at billions of people who aren’t urbanized around the world who will continue to put downward pressure on global labor”, he says. So, what can be done to revive high-quality job creation? There are two possible approaches, he says. The first is protectionism and other more supply-side measures – basically, the tack Donald Trump has taken (this includes his trade wars as well as his tax bill and, to a lesser extent, deregulation).

As you can see in the chart above, the president’s policies – or, perhaps in some cases, confidence in his policies – managed to juice the JQI at three distinct points since Trump won the election. But those effects were fleeting, likely because the problem isn’t that businesses had too little money to spend. Rather, the lack of demand gives them no good reason to spend it.

This brings us to the second option: valorizing the traditional role of the government as a creator of demand. And the ticket here, argues Alpert, is a big, sustained increase in infrastructure spending.

Consider the housing bubble-related bounce in the JQI in the mid-2000s. That was in no small part driven by the surge in construction spending. And, sure, building McMansions in empty suburbs was never going to be terribly productive in the long term. But it’s a different story with new bridges and railways. Those sorts of projects tend to boost overall productivity, by making it easier and cheaper for capital to move around the economy. And, of course, they also require putting America’s vast, neglected pool of desperate workers to far better use.

Links:

{1} https://www.jobqualityindex.com/

{2} https://www.theatlas.com/charts/PydQHthB

{3} https://qz.com/1752676/the-job-quality-index-is-the-economic-indicator-weve-been-missing/#

{4} https://www.theatlas.com/charts/lNjsUBHOL

{5} https://www.wsj.com/articles/europe-is-adding-jobs-at-the-expense-of-job-securityand-workers-are-fuming-11574020704

{6} https://eml.berkeley.edu/~webfac/eichengreen/e183_sp07/great_doub.pdf

{7} https://www.theatlantic.com/ideas/archive/2018/06/normalizing-trade-relations-with-china-was-a-mistake/562403/

{8} https://www.theatlantic.com/ideas/archive/2018/06/normalizing-trade-relations-with-china-was-a-mistake/562403/

{9} https://www.seattletimes.com/business/a-2020-candidate-sounds-the-alarm-about-robots-and-your-job/

{10} https://www.nytimes.com/2016/12/21/upshot/the-long-term-jobs-killer-is-not-china-its-automation.html

{11} https://apnews.com/7cf3f5fabe1147098354d02396bd1817?utm_campaign=SocialFlow&utm_source=Twitter&utm_medium=APFactCheck

{12} https://qz.com/1269172/the-epic-mistake-about-manufacturing-thats-cost-americans-millions-of-jobs/

Have you read?

* https://www.weforum.org/agenda/2019/10/understanding-the-link-between-middle-income-jobs-and-wage-inequality

* https://www.weforum.org/agenda/2018/09/jobs-in-energy-efficiency-now-employ-2-25-million-americans

* https://www.weforum.org/agenda/2012/10/closing-americas-jobs-deficit

https://www.weforum.org/agenda/2019/12/america-labour-jobs-employment

Nearly half US residents to be ‘obese’ in 2030

1 in 4 to have ‘severe obesity,’ study says

The American Academy of Pediatrics says bariatric surgery should be covered for severely obese children and teens.

by Joey Garrison

USA TODAY (December 19 2019)

BOSTON – Waistlines of Americans continue to get wider, and unless habits change on a grand scale, obesity will soon be the norm.

Nearly half of the US population is projected to be obese by 2030, and a quarter will struggle with severe obesity by that time, according to a new study from the Harvard T H Chan School of Public Health.

In 10 years, 29 states are projected to have majority populations that are obese, the study says, and all states will have populations that are at least 35% obese.

“Obesity is going up in terms of the number of people who have it, and the degree or severity of obesity is going up”, said Zachary Ward, a Harvard programmer and analyst who served as lead author of the report published Thursday in The New England Journal of Medicine.

Forty percent of Americans adults are obese, and 18% suffer from severe obesity. The study predicts those numbers will balloon by 2030 to 49% and 24% respectively.

Researchers predict severe obesity to be highest among women, non-Hispanic black adults, and people who earn annual incomes below $50,000 per year. Among men, 21% are expected to be severely obese by 2030, compared with 28% of women.

“It used to be a rare condition”, Ward said of the severe category, “but it’s increasing”.

Obesity versus severe obesity

Obesity is measured by body mass index, BMI, which is calculated by dividing a person’s weight in kilograms by the square of their height in meters. A BMI of above 30 is considered obese; above 35 is considered severely obese, which typically means having 100 pounds or more of excess weight.

“People are at a much higher risk (with severe obesity) for diseases like diabetes, heart disease, some types of cancer and mortality as well”, Ward said. “There are big health implications”.

Obesity is expected to reach the highest levels in the South, which already leads the nation. Ward pointed to the South’s higher populations of African Americans and low-income subgroups, which are both more likely to be obese.

States with the highest projected 2030 obesity rates are Oklahoma, 58.4%; Alabama, Arkansas and Mississippi, 58.2%; West Virginia, 57.5%; and Louisiana, 57.2%.

The highest populations of severe obesity are projected to be in Arkansas, 32.6%; Oklahoma, 31.7%; and Mississippi, 31.7%.

Twenty-nine states are expected to have obesity among more than half of their populations by 2030.

States or districts with the lowest projected obesity rates are the District of Columbia, 35.3%; Colorado, 38.2%; Hawaii, 41.3%; California, 41.5%; Massachusetts, 42.3%; and New York, 42.8%.

Researchers conducted the study by reviewing data from 6.2 million people who took part in phone surveys on behavior risks carried out by the Centers for Disease Control and Prevention from 1993 to 2016.

People typically self-report greater height and lower weight than what’s accurate. Ward said researchers compared self-reported figures with the actually measured statistics in each state. They used trends from that data to project obesity rates for specific states, income levels, and sub-populations.

Although the Harvard study did not identify causes for the rapid spike in obesity, health experts say Americans eat more food high in calories and fat and exercise less as more work has shifted from outside to the desk.

“It’s clear that we’re not going to be able to treat our way out of this epidemic. Losing weight is difficult”, Ward said. “It’s hard for clinicians to treat obesity. I think prevention really has to be the key to combating this epidemic.”

He said “real structural changes, policy changes” at the local, state and national levels are needed to reverse the obesity trends.

“Individual behavior change has not worked so far. We’ve been talking about obesity and telling people to lose weight for years, but it keeps going up year after year.”

https://www.usatoday.com/story/news/nation/2019/12/19/nearly-half-u-s-residents-obese-2030-harvard-study-finds/2699318001/

The Final Act

by Dmitry Orlov

ClubOrlov (December 18 2019)

In processing the flow of information about the goings-on in the US, it is impossible to get rid of a most unsettling sense of unreality – of a population trapped in a dark cave filled with little glowing screens, all displaying different images yet all broadcasting essentially the same message. That message is that everything is fine, same as ever, and can go on and on. But whatever it is that’s going on can’t go on forever, and therefore it won’t. More specifically, a certain coal mine canary has recently died, and I want to tell you about it.

It’s easy to see why that particular message is stuck on replay even as the situation changes irrevocably. As of 2019, 90% of the media in the United States is controlled by four media conglomerates: Comcast (via NBCUniversal), Disney, ViacomCBS (controlled by National Amusements), and AT&T (via WarnerMedia). Together they have formed a corporate media monoculture designed to most effectively maximize shareholder value.

As I wrote in Reinventing Collapse in 2008,

 

… In a consumer society, anything that puts people off their shopping is dangerously disruptive, and all consumers sense this. Any expression of the truth about our lack of prospects for continued existence as a highly developed, prosperous industrial society is disruptive to the consumerist collective unconscious. There is a herd instinct to reject it, and therefore it fails, not through any overt action, but by failing to turn a profit because it is unpopular.

 

Two years earlier, in a slideshow optimistically titled “Closing the Collapse Gap” (between the USSR and the USA), I wrote:

… It seems that there is a fair chance that the US economy will collapse sometime within the foreseeable future. It also would seem that we won’t be particularly well-prepared for it. As things stand, the US economy is poised to perform something like a disappearing act.

And now, 12 years later, I believe I am finally watching what amounts to preparations for that act’s final rehearsal; the ballet troupe is doing stretching exercises and the fat lady is singing arpegios to warm up …

 

Clearly, this final act is yet to be performed. The media replay loop continues to play, keeping the populace convinced that the future will resemble the past (except, perhaps, it will have more wind generators, solar panels, and electric cars). The populace continues to be persuaded to go out and shop for (or, more frequently now, order online) things it doesn’t need, to be paid for by money it doesn’t have.

 

Of course, there have been changes. The populace in the US has been doing progressively worse. Drug addiction and suicide rates have skyrocketed while rates of childbirth have plummeted. The purchase of a home is now out of reach for the vast majority of young couples. Artificially rosy unemployment statistics hide the 100 million or so people who are considered “not in labor force” (because they lost their jobs some time ago and haven’t been able to find another one). Uniquely among developed nations, life expectancy among white males – historically the most economically active and prosperous part of the population – has been dropping. These are all negatives, but neither any one of them nor any combination of them adds up to anything that could cause the US economy to undergo a spontaneous existence failure.

Nevertheless, it is possible to build a convincing case that Rome is, to put it figuratively, burning. To continue with the metaphor, evidence that there is some fiddling going on is particularly compelling. Overall, there is a steady backing away from addressing the substance of any problem and a concerted effort to maintain appearances at all costs.

Take the trade war with China, which has been going on since early 2018. Trump has recently declared a major victory in it but, upon examination, signs of victory are impossible to discern. In 2017 the US ran a $750 billion trade deficit with China on $3.3 trillion of trade (22.7%). In 2018 it has jumped to $930 billion on $3.8 trillion of trade (24.4%). China has found ways to parry each of Trump’s thrusts by imposing counter-tariffs. After two years of this sort of World War I-style trench warfare, in which the US has been slowly losing ground, it became clear that the US doesn’t have any means to put pressure on China.

And so Trump suddenly declares victory; not a full victory (that will have to wait until after Trump is reelected for his second term) but a victory nonetheless, because the Chinese have supposedly agreed to buy an extra $200 billion worth of US exports, $50 billion of them of agricultural exports from states that voted for Trump in 2016. But Trump is lying to his supporters. Over the past two years, the Chinese have imported roughly $24 billion of agricultural commodities from the US, and sources close to the trade talks have said that the Chinese have agreed to increase these imports by just $16 billion, putting the total $10 billion short of the $50 billion mark. Even then, the US agricultural sector would have to rapidly scale up production by a factor of 1.6 – and this is not at all likely.

The farmers will discover this only after they vote to reelect Trump, but that’s not Trump’s problem. Nor was it Trump’s problem when in 2017 the Chinese promised to buy $120 billion of US liquified natural gas exports and then the US wasn’t able to provide anywhere near that volume. And now that Russia’s Power of Siberia pipeline is operational and ramping up volumes, while US fracking companies are going bankrupt left and right, the question has become largely moot. The agriculture promise is just a replay of the LNG promise on a smaller scale. Appearances are all that matter, and appearances are what Trump delivers every time. And if his voters want to believe – who’s to stop them? Even though it is clearly heading toward a defeat for the US as a whole, the trade war with China is definitely a huge positive for Trump: all he has to do to win personally is periodically deliver promises that others won’t keep – but that’s not his problem.

Another net benefit for Trump is the never-ending impeachment saga. It has kept him in the media limelight and has allowed him to pretend that he is prevailing heroically against great odds while making his opposition look ridiculous in the eyes of his supporters. After the “Russian meddling” fable unraveled, an even more preposterous rationale for impeachment has taken its place. An attempt to impeach Trump for refusing to cooperate with a congressional investigation is in the process of failing, since anyone with more intelligence than a bucket of California penis fish should know that it is up to the courts, not up to the legislature, to resolve disputes between the legislature and the executive. All that remains now is an alleged abuse of power by Trump. Apparently, it is a no-no for a US president to ask a foreign leader to investigate a US presidential candidate for a variety of crimes such as corruption, bribery, and money-laundering. This may all seem quite ridiculous, but it serves a purpose: it allows Trump to clean up on free publicity and to continue fiddling (tweeting, in his case) as Rome burns.

But what has set fire under Rome is not the decrepitating state of US society, or the permanent and permanently worsening trade imbalance with China, or the never-ending impeachment farce. It is the incipient failure of the US dollar. For those who have been paying careful attention, the surreal nature of the proceedings, and the fact that results no longer matter – only appearances do – have become perfectly obvious, but they are a tiny minority. What has allowed the politicians and the media to exploit the general public’s innate normalcy bias and to keep the media replay loop going without too many people catching on to what’s really happening was (note the past tense!) the ability of the US government (with the assistance of the Federal Reserve, [Fed], which is a government-linked but essentially private entity) to paper over the gaping chasm in the nation’s finances by issuing debt, in the form of US Treasury paper.

The US Treasury has been able to exploit its “exorbitant privilege” to issue internationally recognized and traded debt instruments denominated in its own currency – the US dollar – which has been the world’s main reserve currency for many decades. The reserve currency status has conveyed a certain aura of security and reliability (paper money is, after all, pretty much just a confidence game) and has supported the world’s largest and most liquid financial market. Anybody anywhere could put up US Treasury paper as collateral for a loan and get a low interest rate because that paper was considered as good as “real money” (whatever that means). And then that scheme suddenly broke.

It is difficult to say what caused the confidence game to fail. It could be just the inexorable and ever-accelerating increase in US government debt. It could be the blatant decoupling between the growth rate of the US economy and the rate of increase of its indebtedness. It could also be the fact that much of the world is making a concerted effort to walk away from the US dollar as a reserve currency and as a means of exchange in international trade (Russia has sold off almost all of its US debt; China’s hoard is much larger but it is also gradually selling it off). It is unclear what was the ultimate cause, but what is clear is that in August of 2019 something finally snapped, and US Treasury bonds (“USTs”) went from “good as real money” to “stuff nobody wants to hold”.

I first wrote about this in September when it became clear that real trouble was brewing in the market for US debt. Now, three months later, the situation has gone from bad to worse, and it would appear that the market for USTs definitively broke. I will try to sketch out what that means for the US economy and society later on (spoiler alert: nothing good) but for now, I just want to lay out some of what has happened. In the meantime please take your normalcy bias and put it some place safe (in case you need it later, although I have no idea what for).

Previously, when it was clear that an overburden of bad debt could trigger financial collapse at any moment, the Federal Reserve (which is in charge of printing money) engaged in something it euphemistically called “quantitative easing” (“QE“). It printed lots of US dollars in exchange for various bits of USTs, along with other financial garbage, with the goal of later selling the USTs while hiding the garbage, thereby preserving the appearance that USTs are sovereign debt supported by the full faith and credit of the US government rather than just some waste paper clogging up its vaults. But when it declared “quantitative easing” to be over and tried selling the USTs, all hell immediately broke loose and it was forced to go right back to buying them up, in a scheme that has been sarcastically referred to as “not QE”. Euphemisms aside, what is happening is properly called “debt monetization”: it’s when a government “borrows” money not by selling its debt in exchange for money that already exists but simply printing the money using paper and ink, or magic digits inside a very secure computer.

Let’s go over some of the relevant details. “Not QE” actually started well before it was announced and proceeded in stealth mode. Over six weeks starting in September 2019, the Fed monetized an average of $20.5 billion per week. This rate is compatible with the extent of its previous efforts at “quantitative easing” at their height. It was forced to do so because the REPO rate on USTs spiked to 10 times the rate set by the Fed. (REPO stands for “repurchase agreement”; it is where one party borrows short-term from another party, using USTs (and other supposedly very safe debt instruments) as collateral, much as a pawn shop will give you money for a watch and then allow you to buy it back.) The huge spike in interest rates signaled that USTs were no longer seen as particularly safe collateral and the Fed had to step in and start throwing freshly minted dollars at the problem. And it never stopped. In fact, the problem grew larger; so large, that now, at the year’s end, the Fed has committed $500 billion of printing press output to making sure that nobody runs out of cash.

It is commonly thought that the Fed’s action has to do with short-term debt, and is, therefore, a short-term problem, but that’s simply not the case. Since early August (the start of stealth-mode “not QE”) the Fed has vacuumed up $179 billion with of USTs, of which USTs with terms longer than a year made up $108 billion, or 60%. Compare these numbers to the total borrowing by the US government over the same period, which amounted to $659 billion, of which $368 billion was short-term debt and $291 billion long-term. Thus, over this period the Fed has monetized 37.1% of new long-term debt and just 19.2% of short-term debt. This should help put your mind at ease if you suspected that this isn’t a short-term problem but weren’t sure. It’s a long-term, structural problem.

Next, let’s consider whether the problem is being solved or is getting worse. Rest assured, it is getting worse. Looking at the numbers for October and November, the Fed monetized over half (50.7%) of new US government debt. A straight-line projection is that if it took the Fed to go from 0% to 50% in four months, then it will go from 50% to 100% in another four – by April Fool’s 2020. But who’s to say that the increase will be linear rather than exponential? Whichever it is, the trend is unmistakable: the market in US government debt – once the deepest and most liquid market in the world – is dead. The only thing propping up the value of USTs is the Fed’s printing press. And the only thing propping up the value of the output of the Fed’s printing press is … what is it, exactly? Exactly!

Let’s add one more salient detail. Over the course of 2020, $4.665 trillion of USTs will mature and will need to be rolled over into new USTs. This is an all-time record, and this is on top of new debt that will have to be issued in order for the US government to be able to stay open. Over the past year, the US budget deficit has amounted to $1.022 trillion, which is a 15.8% increase over the previous year. If this trend continues, the new deficit will be around $1.183 trillion. In order to keep the wheels of finance from grinding to a halt, over 2020 the Fed will have to monetize, or print, close to $6 trillion.

It appears likely that at some point over the coming months Fed chairman Jerome Powell will have to announce “not not QE,” and then “not not not QE,” and then “Milk-milk-lemonade, ’round the corner fudge is made!” and run for the unigender restroom sobbing inconsolably. And then Donald Trump will be forced to channel Boris Yeltsin, who, on August 14 1998, summoned all the presidential gravitas he could muster and spoke the following sage words:

 

Девальвации рубля не будет. Это твердо и четко. Мое утверждение – не просто моя фантазия, и не потому, что я не хотел бы девальвации. Мое утверждение базируется на том, что все просчитано. Работа по отслеживанию положения проводится каждые сутки. Положение полностью контролируется.

 

 

 

There will be no ruble devaluation. This is my firm and clear position. My assertion is not just a product of my fantasy, and not because I don’t want devaluation to happen. My assertion is based on the fact that everything is taken into account. The work on reassessing the situation is being conducted daily. The situation is entirely under control. (My translation.)

 

And then three days later the Russian government declared sovereign default. The ruble dropped by 300% against the US dollar and the Russian economy, which was at that time extremely import-dependent, crashed hard. In a similar scenario, the US economy will crash much harder. Like Russia in 1998, the US is extremely import-dependent. But here the US government is not the only large borrower: most US corporations are zombified corpses bloated with debt. For many years they have been borrowing at artificially-low interest rates in order to buy up their own shares and prop up their value in a ridiculous effort to maximize shareholder value in the face of stalling economic growth. If they become unable to roll over their debt at artificially-low interest rates (which will go away once the Fed definitively loses control of the situation) then they will automatically be forced to declare bankruptcy and liquidate.

If you want to maintain an optimistic outlook in spite of all of this, here is a book you might want to read: https://www.amazon.com/dp/1543168663.

http://www.cluborlov.com/

Washington’s defense of hegemony outdated

Editorials

https://global.chinadaily.com.cn (December 18 2019)

The United States has become accustomed to its hegemony in global affairs, and this shapes its way of thinking and acting. Indeed, it puts its hegemony above anything else. And that end justifies any means no matter how debased it may be.

To this end, international laws, rules for free trade, and human rights principles are all tools it is willing to use to maintain its status.

That is why Huawei is in its crosshairs. Having developed the most advanced technology and equipment for 5G networks, the Chinese telecommunications giant poses a threat not to national security but to the US’ long-established tech supremacy.

But the US government is going too far in its efforts to put Huawei out of business. The State Department has reportedly asked telecom carriers and chipmakers to sign up to a set of principles which would in effect exclude Huawei, and possibly other Chinese companies, from the US market.

It could not be any clearer that the US government has no concern for competition laws and fairness in its attempts to curb the rise of Chinese technology companies, Huawei in particular.

It was reported that a separate proposal by the US Commerce Department would give the commerce secretary the power to block imports of any sensitive technology from a country dubbed a “foreign adversary”. Little wonder some business leaders warn that such rules could slow down large swathes of the global technology trade.

And little wonder that US technology companies are concerned that they would have been the targets of a backlash if they had come together to act against a global competitor by following the US administration’s request to stop sourcing supplies from some Chinese companies.

The way the US is trying to exclude Huawei from its domestic market and even drive it out of the global market will disrupt the global supply chain and slow down the global trade in technologies. And of course, it will hurt the development of its own technology sector as well.

5G is a product of global high-tech cooperation. The global industrial, supply, and value chains are highly intertwined in this area, and it is highly irresponsible of the US administration to deliberately try and cut them, as it is damaging to the rules-based global order and multilateral economic and scientific cooperation.

The attacks on Huawei and other Chinese technology companies by the US administration are nothing but political protectionism. This is a dangerous trend that the international community should oppose, as not to do so would encourage the US to turn a business issue into a political one or even a security one whenever it feels its preeminent position in technology is being challenged.

National security is a common concern of all countries. Fabricating suspicions about another country’s company just because it is the industry leader does a dangerous disservice to cybersecurity which can only be preserved with joint efforts in an open and transparent manner on the basis of trust.

https://global.chinadaily.com.cn/a/201912/18/WS5dfa2645a310cf3e3557f0d2.html