The meritocratic class has mastered the old trick of consolidating wealth and passing privilege along at the expense of other people’s children.
We are not innocent bystanders to the growing concentration of wealth in our time. We are the principal accomplices in a process that is slowly strangling the economy, destabilizing American politics, and eroding democracy.
Our delusions of merit now prevent us from recognizing the nature of the problem that our emergence as a class represents. We tend to think that the victims of our success are just the people excluded from the club.
But history shows quite clearly that, in the kind of game we’re playing, everybody loses badly in the end.
All three articles are informed by a sense of disappointment that China’s WTO accession didn’t do more to transform the rules of the game inside China’s own market.
Expectations that China would have to change, politically and economically, to succeed in the global economy haven’t been born out—as Ely Ratner and Kurt Campbell argued in Foreign Affairs.
China’s Communist Party hasn’t been tamed by commerce. The Party-State still has firm control over the commanding heights of China’s economy—both directly, and indirectly, through its influence on large “private” companies (who can only remain both successful and private with the support of the Party).
At one level, the global financial system is significantly more robust. It would be wrong to underestimate the extent of the recapitalization, particularly of American banking.
The big banks that were the big risk factor are more robust than they were then, there’s no doubt. With regard to Europe, the story is less optimistic. The damage has been more long-lasting. This was emphatically a transatlantic crisis. And to that extent, in Europe the damage is still visible in the enormous non-performing loans and the fragility of the balance sheet of a bank like Deutsche Bank, which was once a key player.
But the bigger point to make is that, though America’s banks were recapitalized, there was no structural change.
We are still in a world in which we have massive, ‘too big to fail’ financial entities that, insofar as we have a government willing to regulate them, we have a minute-by-minute, second-by-second, kind of regulatory situation that we’re in. We have not structurally stabilized the financial system.
We have recapitalized and made more robust essentially a very similar system as the one that failed in ’08. Now, that’s not to be underestimated. An event like 2008 is extremely rare, but if you ask whether we’ve changed anything fundamental, the answer is no.
At this point the actual number doesn’t really matter—what matters is that hyperinflation has undoubtedly arrived. The pace of price increases in Venezuela has reached levels comparable to the Weimer Republic in 1923 or Zimbabwe in the late 2000s, the IMF said yesterday (July 23).
Some are already worried about a flattening Treasuries yield curve and slowing housing market, even as other economic vital signs remain healthy.
U.S. economic growth will probably slow gradually over the next two years and the threat of a trade war has made a recession more likely, a recent Reuters poll predicted.
A majority of bond market experts in a separate poll now predict a yield curve inversion in the next one to two years, a red flag for those who believe short-term yields rising above longer-term yields means an imminent recession.
When advanced digital systems became more common, building owners and operators and energy efficiency vendors found that more savings were achievable through coordinated control of all relevant building systems. Individual system gains can represent 5%-15% in energy savings when operated in a silo. The coordinated operation of all building systems can achieve savings of up to 35% or more.
Siloed systems can often step on the actions taken by other building systems that are trying to operate more efficiently. When systems are integrated and work towards a common efficiency goal, operational actions taken by one system do not degrade the performance of others in the same building or setting.
Everyone at the conference agreed, however, that the new business models permitted by the sharing economy raise a range of potential issues, starting with the risk of monopolies dominating the market.
“The first issue is to have fair rules for everybody. It just isn’t right for two very similar Czech services to come under completely different rules. The next problem is taxes: it is quite difficult to apply tax laws on large multinational companies. Consumer safety can become an issue as well,” Czech MEP Niedermayer said.
But the Czech MEP also referred to the subsidiarity principle, which states that the EU should only regulate if lower levels of government are unable to do it better.
.. under its statutes, the ECB cannot save a country plunged into a deep and lasting crisis.
Indeed, EMU governance has three fundamental flaws:
the rule of no restrictions on the free movement of capital;
the rule of non-monetization of public deficits;
the rule of no bail-out.
They mean every country in the eurozone is potentially subject to speculative attacks on volatile financial markets, and, in the event of a major financial crisis, the ECB cannot intervene to save even the euro. The euro is thereby always prone to crisis and not irreversible as Draghi claims.
To protect the euro, any eurozone member must have the right to issue its own complementary quasi-currency in order to undertake counter-cyclical actions and avert the crisis.
To implement an effective and flexible monetary policy, eurozone states must regain some form of sovereignty in this field. Of course, this new national system should be law-abiding and respectful of the eurozone rules. It must not go against the ECB monopoly on currency issuance as the European legal tender; moreover, the new national quasi-money must comply with the eurozone fiscal constraints on public debt and public deficit.
The complementary money should not be a parallel currency; on the contrary, it should be accepted not only by the ECB but also by the banking system.
The White House last week quietly conceded that its initial budgetary estimates for the next few years are unlikely to materialize as planned. In February, a preliminary presidential budget proposal projected deficits of $7.1 trillion over the course of a 10-year window.
But updated estimates indicate that initial benchmark was off by more than $900 billion, with annual deficits eclipsing $1 trillion as soon as next year.
“This is a striking acknowledgment following almost two years of claims that economic growth unleashed by [tax cut and spending hike] policies will wipe deficits away,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement on Tuesday.
“On our current course, debt will overtake the size of the entire economy in about a decade, and interest will be the largest government program in three decades or less. This will weaken both our economy and our role in the world.”
THE ISSUE: On Monday July 9, in the most extensive trade protections in nearly a century, the White House implemented a 25 percent tax on Chinese imports.
China retaliated in force with a 25 percent tax on U.S. automobiles and agricultural products, such as soy beans.
Exports to China are concentrated in agricultural products like soybeans, plus automobiles and Boeing aircraft sales. The trade war is already having an effect on those sectors.
The U.S. exports cars from Southern states like Tennessee, so the effects of this change will be felt there.
While China is the final assembler from many products, actually more than half of the value of those products are in parts and components from other countries like South Korea and Japan—so there will definitely be collateral damage from U.S. tariffs.
It’s hard to see the off-ramp right now. The U.S. has announced $250 billion of tariffs on products from China, and China has partially retaliated and will probably come out with more retaliation.