Randy Wray: What If China Dumps US Treasury Bonds? Paul Krugman Inches Toward MMT

Yves here. While I agree with Wray’s post, there’s a small caveat I wish he had included: China will continue to take US dollars as long as it exports to the US. There does not appear to be any near or intermediate term risk of that changing. Ironically, the US and other advanced economies have been urging China to rebalance, as in generate more of its demand for its manufacturing capacity internally and export less. China has not made much progress in that direction. Japan was also encouraged in the 1980s to become more consumer driven. Instead they managed to engineer an bubble and bust, and only Abenomics (not necessarily by design) has led to a reversal of the island nation’s long-standing trade surpluses.

By Randy Wray, a professor of economics at the University of Missouri, Kansas City. Cross posted from New Economic Perspectives

Our deficit hysterians love to raise the specter of China. Supposedly Uncle Sam is at the mercy of the Chinese, who have a stranglehold on the supply of dollars necessary to keep the US government above water. If the Chinese suddenly decided to stop lending those scare dollars, Uncle Sam would be forced to default.

Can anyone, please, explain to me how the sovereign issuer of the US dollar—Uncle Sam—could ever run out of his supply of dollars? Please, give me one coherent explanation of how that could happen.

Pivotal Trans-Pacific Partnership Section Revealed

Wednesday, 13 November 2013 09:39  
By Staff, PopularResistance.org | Press Release 

The TPP has been shrouded in secrecy from the beginning because the Obama administration knows that the more people know about it, the more they will oppose the agreement. The release of the full Intellectual Property chapter today by Wiikileaks confims what had been suspected, the Obama administration has been an advocate for transnational corporate interests in the negotiations even though they run counter to the needs and desires of the public. 

JPMorgan’s Fruitful Ties to a Member of China’s Elite

By DAVID BARBOZA, JESSICA SILVER-GREENBERG and BEN PROTESS

To promote its standing in China, JPMorgan Chase turned to a seemingly obscure consulting firm run by a 32-year-old executive named Lily Chang.

Ms. Chang’s firm, which received a $75,000-a-month contract from JPMorgan, appeared to have only two employees. And on the surface, Ms. Chang lacked the influence and public name recognition needed to unlock business for the bank.

Frank Rich: CBS’s Benghazi Report Was a Hoax, Not a Mistake

Every week, New York Magazine writer-at-large Frank Rich talks with contributor Eric Benson about the biggest stories in politics and culture. This week: Lara Logan apologies for her Benghazi report, Bill Clinton calls for Obamacare changes, and The New Republic forwards Elizabeth Warren as the anti-Hillary.

On Sunday, CBS News correspondent Lara Logan issued a short and, many commentators felt, insufficient apology for her now-discredited 60 Minutes report on the Benghazi consulate attack. A year ago, Logan had publicly mocked the notion that the Benghazi attack was a protest gone awry and advocated for a stronger U.S. military response. Should CBS have given her this story? How can Logan or her network satisfactorily explain the botched report? And do you see a double standard at work between Logan's fate (issuing a halfhearted apology, so far) and Dan Rather's much harsher penalty for his questionable 60 Minutes report in 2004?

Lara Logan’s story was not a mere journalistic mistake, but a hoax comparable to such legendary frauds as Life magazine’s purchase of the billionaire Howard Hughes’s nonexistent “autobiography” in the seventies and Rupert Murdoch’s similarly extravagant embrace of the bogus Hitler “diaries” in the eighties. In Logan’s case, she perpetrated an out-and-out fictional character: a pseudonymous security contractor who peddled a made-up “eyewitness” account of the murder of four Americans in Benghazi. The point seemed to be to further Benghazi as a conservative political cause (instead, Logan’s hoax boomeranged and extinguished it) and to melodramatically exploit the tragic slaughter of Ambassador Chris Stevens and his colleagues as titillating prime-time network entertainment. Logan’s phony source, who in fact was at a beachside villa and not on site to witness anything, cooked up violent new “details” for the Benghazi narrative that seemed to have been lifted from a Jean Claude Van Damme movie.

How Franklin D. Roosevelt Botched Social Security

by ALAN NASSER

 

The seeds of neoliberal economic policy were planted during the founding years of twentieth century liberalism. The Democrats’ current embrace of  fiscal conservatism is claimed by contemporary self-proclaimed New Dealers to be a repudiation of the founding bequest, a capitulation to reactionary Republican dogma. Budget deficits, we are told, were legitimated by Franklin D. Roosevelt during the New Deal as a legacy to future Democratic regimes. The political obligation to enhance social welfare is supposed to have trumped the old-time Hooverian taboo against government expenditures beyond government receipts.

Objections to this policy are thought to have been refuted not merely by Keynesian economic theory but mainly by successful practice: once Roosevelt put into place large scale deficit-funded projects like the Works Progress Administration, the economy was launched into its steepest cyclical expansion to this day, from 1933 to 1937.  Reagan’s tirades against budget deficits are said to be a throwback to pre-Rooseveltian times and outdated orthodoxy. Imagine the chagrin of  “the Democratic wing of the Democratic Party” when Clinton and Obama betrayed the heritage of the New Deal by seconding the Republican commitment to fiscal orthodoxy. The rustling sound you are supposed to hear is FDR tossing in his grave.

House Pushing Back on Trade Deal; More Detail on How Secret Arbitration Panels Undermine Laws and Regulations

Wow, this is amazing. Word has apparently gotten out even to Congressmen who can normally be lulled to sleep with the invocation of the magic phrase “free trade” that the pending Trans Pacific Partnership is toxic. This proposed deal among 13 Pacific Rim countries (essentially, an “everybody but China” pact), is only peripherally about trade, since trade is already substantially liberalized. Its main aim is to strengthen the rights of intellectual property holders and investors, undermining US sovereignity, allowing drug companies to raise drug prices, interfering with basic operation of the Internet, and gutting labor, banking, and environmental regulations.

The update from the New York Times:

The Obama administration is rushing to reach a new deal intended to lower barriers to trade with a dozen Pacific Rim nations, including Japan and Canada, before the end of the year.

But the White House is now facing new hurdles closer to home, with nearly half of the members of the House signing letters or otherwise signaling their opposition to granting so-called fast-track authority that would make any agreement immune to a Senate filibuster and not subject to amendment. No major trade pact has been approved by Congress in recent decades without such authority.

Dean Baker: The Obama Pledge on Keeping Your Insurance

President Obama has been getting a lot of grief in the last few weeks over his pledge that with the Affordable Care Act (ACA) in place, people would be able to keep their insurance if they like it. The media have been filled with stories about people across the country who are having their insurance policies terminated, ostensibly because they did not meet the requirements of the ACA.  While this has led many to say that Obama was lying, there is much less here than meets the eye.

First, it is important to note that the ACA grand-fathered all the individual policies that were in place at the time the law was enacted. This means that the plans in effect at the time that President Obama was pushing the bill could still be offered even if they did not meet all the standards laid out in the ACA.

The plans being terminated because they don't meet the minimal standards were all plans that insurers introduced after the passage of the ACA.

Corporate America’s New Scam: Industry P.R. Firm Poses as Think Tank!

How the media fell hook, line and sinker for the propagandist, respectable-sounding "Employment Policies Institute"

 

by Lisa Graves

 

When scholars at University of California, Berkeley, recently released a study finding that low wages in the fast food industry cost taxpayers $7 billion every year in social supports to subsidize salaries of low-income workers, they ran into a respectable-sounding opponent. The professors had argued that the minimum wage should be increased to relieve the burden on taxpayers who underwrite supersize restaurant industry profits.

But as the bona fide academic study rolled out, multiple media outlets ran comments criticizing the report’s numbers and methodology from the scholarly sounding “Employment Policies Institute.”  The Austin Business Journal characterized EPI as a think tank “which studies employment growth,” while the Miami Herald ran a quote from Michael Saltsman, whom the paper named as EPI’s “research director.”

Paul Krugman: Who's Afraid of China?

The Slate commentator Matthew Yglesias recently noted an uptick in warnings from Very Serious People that China might lose confidence in America and start dumping our bonds. In an article published earlier this month, he focuses on China's motives, which is useful.

But the crucial point, which Mr. Yglesias touches on only briefly at the end, is that whatever China's motives, the Chinese wouldn't hurt us if they dumped our bonds - in fact, it would probably be good for the United States.

Saving the Ozone May Slow Earth's Warming Rate

By Tim Radford

November 11, 2013  |  Scientists who looked at the whole history of climate in the 20th century have come up with a new possible explanation for the apparent slowdown in global warming. It is because, they say, of the Montreal Protocol that banned chlorofluorocarbons, also known as CFCs, and saved the ozone layer.

 

The ozone layer was the second great atmospheric crisis of the late 20th century (the first involved the urban smog and acid rain that triggered clean air legislation in Europe and the US). CFCs were the safe, enduring gases used as refrigerants: their only problem was that - once they reached the stratosphere - they unexpectedly began to destroy the ozone layer that screens out harmful ultraviolet light.

Scalia’s chance to smash unions: The huge under-the-radar case

A Supreme Court case being argued Wednesday could take away a tactic that's kept unions alive

Josh Eidelson

On Wednesday, the Supreme Court will hear arguments on an under-the-radar case that could deal a major blow to already embattled U.S. unions. As Harvard labor law professor Benjamin Sachs told the New York Times, the case now facing Antonin Scalia and company could be “the most significant labor case in a generation.”

The case, Unite Here Local 355 v. Mulhall, involves the constitutionality of “card check neutrality agreements” between unions and companies they’re trying to organize. That’s the technical-sounding term for agreements that pave the way for unionization by restricting companies from running union-busting campaigns, and by committing companies to recognize a union and start negotiating if a majority of workers sign union cards, rather than holding out for a government-supervised election. In exchange, unions can agree not to publicly shame and slam the company – which means calling off the kind of public pressure campaign often necessary to compel companies to sign away their union-busting rights.

Poverty Is America's #1 Education Problem

By David Sirota

November 11, 2013  |  Google the phrase "education crisis" and you'll be hit with a glut of articles, blog posts and think tank reports claiming the entire American school system is facing an emergency. Much of this agitprop additionally asserts that teachers unions are the primary cause of the alleged problem. Not surprisingly, the fabulists pushing these narratives are often backed by anti-public school conservatives and anti-union plutocrats. But a little-noticed study released last week provides yet more confirmation that neither the "education crisis" meme or the "evil teachers union" narrative is accurate.

Before looking at that study, consider some of the ways we already know that the dominant storyline about education is, indeed, baseless propaganda.

Mistaking Omniscience for Omnipotence: A World Without Privacy

Tuesday, 12 November 2013 09:55
By Tom Engelhardt, TomDispatch | News Analysis

Given how similar they sound and how easy it is to imagine one leading to the other, confusing omniscience (having total knowledge) with omnipotence (having total power) is easy enough. It’s a reasonable supposition that, before the Snowden revelations hit, America’s spymasters had made just that mistake.  If the drip-drip-drip of Snowden’s mother of all leaks -- which began in May and clearly won’t stop for months to come -- has taught us anything, however, it should be this: omniscience is not omnipotence.  At least on the global political scene today, they may bear remarkably little relation to each other. In fact, at the moment Washington seems to be operating in a world in which the more you know about the secret lives of others, the less powerful you turn out to be.

Thom Hartmann: The Plot to Destroy America -- and What We Can Do to Stop It

November 11, 2013  |  The following is an excerpt from Thom Hartmann's new book, THE CRASH OF 2016: The Plot to Destroy America--and What We Can Do to Stop It [3] (Twelve Books, 2013). 

There are very few Americans still alive who heard President Franklin D. Roosevelt, in March 1933, address the nation as he was being sworn into office. Which is why many Americans today believe that when FDR famously said, “The only thing we have to fear is fear itself,” he was talking about World War II. But Roosevelt said that long before Hitler had even fully consolidated his own power in Germany.

Instead, the fear—and the war—was here in America. He was speaking of the Great Depression.

The week of his inauguration, every state in the country closed their banks. The federal government couldn’t make its own payroll. A quarter of working-​age Americans were unemployed— some measurements put it at a third— and unemployment in minority communities was off the scale.

Penn and Drexel Team Demonstrates New Paradigm for Solar Cell Construction

For solar panels, wringing every drop of energy from as many photons as possible is imperative.  This goal has sent chemistry, materials science and electronic engineering researchers on a quest to boost the energy-absorption efficiency of photovoltaic devices, but existing techniques are now running up against limits set by the laws of physics.

Now, researchers from the University of Pennsylvania and Drexel University have experimentally demonstrated a new paradigm for solar cell construction which may ultimately make them less expensive, easier to manufacture and more efficient at harvesting energy from the sun.

Why the Hate-Filled, Retrograde Politics of the Tea Party Are Here to Stay

By CJ Werleman

November 11, 2013  |  After last Tuesday’s creaming in the Virginia governor’s race, and with Tea Party negatives creeping toward 75 percent, the political punditry class has divided itself into one of two camps: those celebrating the demise of the Tea Party versus those forecasting its inevitable end. Who’s right? They're both wrong, because it’s not a movement. It’s a geographical region, and if history has taught us anything, southern folk are a pugnacious bunch.

Despite political feel-good rhetoric, there are two Americas. Not just ideologically, but geographically. That’s what still makes this country unique among other Western democracies. America is two distinct nations with a distinguishable border that runs the breadth of the country from the Mason-Dixon line across the southern border of Pennsylvania, finishing in some Baptist church somewhere in rural Texas.

Separating myth from reality on Obamacare

News media scare stories, website glitches hide savings for those who look at insurance alternatives

By Wendell Potter, 6:00 am, November 12, 2013 Updated: 9:59 am, November 12, 2013

My heart sank when I got an email late last month from my friend Robert, who has been battling multiple sclerosis for the past decade. He wrote to tell me that he was among the many Americans who in recent weeks received letters from their insurance companies saying that their policies won’t be available next year.

Insurance companies are sending those letters primarily because the policies they will no longer offer don’t provide enough coverage — or have deductibles that are too high — to comply with the Affordable Care Act. In many cases, however, the policyholders getting those letters are simply victims of a business practice insurers have engaged in for years: discontinuing policies because they’re no longer sufficiently profitable.

Mom as the New Face of Anarchy? Police Terrorize Americans Who Object to Right-Wing Lunacy by Using "Anarchist" Label

By Lynn Stuart Parramore

November 11, 2013  |  Dissent is once again a criminal act in America. People who object to right-wing lunacy used to be called “communists” and treated as enemies of the state. Now “anarchist” is the label of choice used to harass those who disagree.

 

Just ask my 81-year-old mom. In the state of North Carolina, she is a suspected anarchist for wanting children to go to decent schools.

Matt Taibbi: Chase Isn't the Only Bank in Trouble

I've been away for weeks now on a non-financial assignment (we have something unusual coming out in Rolling Stone in a few weeks) so I've fallen behind on some crazy developments on Wall Street. There are multiple scandals blowing up right now, including a whole set of ominous legal cases that could result in punishments so extreme that they might significantly alter the long-term future of the financial services sector.

As one friend of mine put it, "Whatever those morons put aside for settlements, they'd better double it."

Firstly, there's a huge mess involving possible manipulation of the world currency markets. This scandal is already drawing comparisons to the last biggest-financial-scandal-in-history (the Financial Times wondered about a "repeat Libor scandal"), the manipulation of interest rates via the gaming of the London Interbank Offered Rate, or Libor. The foreign exchange or FX market is the largest financial market in the world, with a daily trading volume of nearly $5 trillion.

Paul Krugman: The Plot Against France

On Friday Standard & Poor’s, the bond-rating agency, downgraded France. The move made headlines, with many reports suggesting that France is in crisis. But markets yawned: French borrowing costs, which are near historic lows, barely budged.

So what’s going on here? The answer is that S.& P.’s action needs to be seen in the context of the broader politics of fiscal austerity. And I do mean politics, not economics. For the plot against France — I’m being a bit tongue in cheek here, but there really are a lot of people trying to bad-mouth the place — is one clear demonstration that in Europe, as in America, fiscal scolds don’t really care about deficits. Instead, they’re using debt fears to advance an ideological agenda. And France, which refuses to play along, has become the target of incessant negative propaganda.