Romney's Staples closing 60 stores around the world

Romney is a jobs creator, you know. As a vulture capitalist, surely you can't expect him to be more concerned about jobs for working families over his own wallet. This brings us back to what I wrote about the other week. The skills that made Romney a successful CEO would make him a terrible president. Romney's core focus is not about, nor has it ever been, about creating jobs. Romney's focus has been on making money and lots of it.

Again, he is an awful candidate for president but it wasn't a fluke that he built a fortune of up to $378 million. If chopping jobs could make him a few more dollars, Romney would and has consistently taken the money. As the CEO of Bain Capital, his exclusive focus was money. Period. For a person like Romney that lacks empathy, it was the perfect job.

Anyone who thinks Romney can suddenly change and show compassion or care about jobs is kidding themselves. Running a country where you have to care about everyone and not just the select few is radically different from running a venture capital firm. Ten times out of ten, Romney would chop jobs the way Staples is doing now.

The chain expects the U.S. store closings will result in a charge of about $35 million in the fourth quarter. For fiscal 2012, it anticipates about 30 U.S. store closings. Staples also expects 30 stores will be scaled down and stores being relocated.

In Europe, the store closures are expected to occur before the end of fiscal 2012. The company has also tapped John Wilson to serve as president of Staples Europe. Wilson succeeds Rob Vale, who is retiring.

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New 65 year study shows tax cuts do not lead to economic growth

This will be shocking news for the Republicans, though it shouldn't be. The US has had higher growth rates during times of much higher taxes but somehow that is always glossed over by the tax cut proponents.

Even Mitt Romney himself proves how little tax rates are connected to employment creation investments. The man hasn't worked in years and has paid no more than 14% in taxes yet we don't see him setting up new businesses with the extra income. He fails his own test on tax breaks.

Let the GOP tax spin begin.

Analysis of six decades of data found that top tax rates "have had little association with saving, investment, or productivity growth." However, the study found that reductions of capital gains taxes and top marginal rate taxes have led to greater income inequality. Past studies cited in the report have suggested that a broad-based tax rate reduction can have "a small to modest, positive effect on economic growth" or "no effect on economic growth."

Well into the 1950s, the top marginal tax rate was above 90%. Today it's 35%. But both real GDP and real per capita GDP were growing more than twice as fast in the 1950s as in the 2000s. At the same time, the average tax rate paid by the top tenth of a percent fell from about 50% to 25% in the last 60 years, while their share of income increased from 4.2% in 1945 to 12.3% before the recession.

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Goldman average pay to fall to only $314,000 this year

Oh the humanity! Don't we all shed a tear for the leading team that ran the global economy into the ground? While we will hear plenty of cries and complaints of evil socialism, the pampered class of Wall Street still doesn't get that they are the ones who caused the crash through their greed.

The deregulation that they had to have in the 1990s happened and it only took them a few years to see the results. New Wall Street regulations are having an impact, though we still need more disclosure and more control over the Wild West gamblers. They have proven over and over that they can't be trusted, nor should they be trusted with controlling the economy.

Sniffle, sniffle. How will they explain being bumped out of the 1% to the guys at the club?

The average compensation at Goldman (GS) is likely to fall by nearly $100,000 by the end of next year as new regulations, fewer deals and legal payouts hurt the firm's profitability. That's the conclusion of a recent report from a European division of rival JPMorgan Chase (JPM).

As recently as two years ago, Goldman's annual pay, which includes everyone from the people who work in the firm's IT department to CEO Lloyd Blankfein, had averaged $412,000. That salary put employees of the elite investment bank solidly in the top 1% of all earners in the United States. Last year, the cut off for the 1% was $368,000.

But by the end of next year, though, analysts at JPMorgan Cazenove expect compensation at Goldman to average just $314,000. That will bump the average Goldmanite all the way down to near the bottom of the top 2% of all U.S. earners. The cut off for the 98% tops out at around $290,000.

Even after dropping into the 2%, they're still doing much better than others who lost their jobs and houses. The pampered class should consider themselves lucky. Read the rest of this post...

China continues to deliver poor economic numbers

This year continues to be a rough year for China. The ghost towns are still there, demand for raw materials is sagging, the critical 8% growth rate is slipping and now exports are also slowing along with internal consumer demand.

Again, for almost any other economy many of the numbers would be impressive but in the case of China, the numbers are both disappointing as well as reason for concern. For years the economic growth has been the key to social stability so when the growth disappears, the future is much more in question. To date, China has refused to implement a second stimulus though as the numbers get worse, that may be necessary. It also may be too late.

What next?

Exports grew 2.7 percent year-on-year last month, below the 3 percent forecast in a Reuters poll, confirming President Hu Jintao's warning of the "grave challenges" posed by the world economy.

Data for imports was even worse, showing a fall of 2.6 percent on the year in August, compared with expectations for a 3.5 percent rise. The number will solidify market expectations for further stimulus and monetary easing to support growth as China heads towards a once-a-decade leadership change later this year.

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Bernanke hints at QE3, aka, handouts for Wall Street

This madness of shoveling cash over to Wall Street has to stop. The first two rounds did little for the 99% who have been clobbered thanks to Wall Street gambling but somehow, Bernanke wants to continue. What is good for Wall Street is clearly not good for the rest of the US.

Let the bankers go and gamble with their own money and leave everyone else out of it. We don't need more socialism for the 1%.

US central bank chief Ben Bernanke sparked a surge in share values on Friday after he signalled his willingness to embark on a third phase of money creation to boost the US economy.

The Dow Jones industrial average closed the day with a gain of 90 points after the chairman of the Federal Reserve gave a robust defence of past central bank interventions, which, traders said, prepared the ground for a third round of quantitative easing should the economic picture worsen. France's CAC and the German DAX closed up 1%.

In his much anticipated a speech in Jackson Hole, Wyoming, Bernanke described the current economic situation as "far from satisfactory". He said that high rates of unemployment were a "grave concern, not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for years".

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Consumer sentiment up again

Three months in a row is a good sign. We're a long way from recovery but a bit of optimism doesn't hurt.

Consumer sentiment climbed to a three-month high in August as households made progress paying down debt, but future expectations remained grim, a survey on Friday showed.

The Thomson Reuters/University of Michigan's final reading on overall consumer sentiment this month rose to 74.3, its highest since May and above economists' expectations of 73.6. In July, the number stood at 72.3.

Buying was bolstered by price discounts and low interest rates, the survey found. But the biggest source of optimism was tied to success in trimming debt.

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"Niallism" — This is what defrocking an academic looks like (climate scientists, take note)

This is a follow-up to this post about kicking intellectually dishonest academics out of their (former) profession.

The post had two parts:

• The first half, in which Krugman takes "Niall Ferguson the political operative" (my phrase) to task for being, well, more or less a dishonest political actor.
  
  
• The second half, in which I recommend doing same to Koch-fueled climate "scientists" who have traded integrity for a career as an operative, but kept their lab coats anyway.

For those who've been spared the pleasure, Niall Ferguson is the "economic historian" who has turned up seemingly everywhere these days defending austerity and ridiculing anyone who proposes solutions not endorsed by the world's elites.

PBS has created shows around his views; respected magazines often host his opinions; and most recently Newsweek has used his byline to trash Obama with obvious lies in a blatantly political cover story. (Yes, lies. And Ferguson, trading on his academic brand, was the delivery boy.)

Now via Krugman, we're led to this by Matthew O'Brien in The Atlantic. Here's what defrocking and de-labcoating an academic looks like. Climate guys, take note (my emphasis and paragraphing):

The Age of Niallism:
Ferguson and the Post-Fact World
Bluster cannot make untruths true

People who believe facts are nothing think you'll fall for anything. Call it Niallism.

This is my last word (well, last words) on Niall Ferguson, whose Newsweek cover story arguing that Obama doesn't deserve a second-term has drawn deserved criticism for its mendacity from Paul Krugman, Andrew Sullivan, Ezra Klein, Noah Smith, my colleagues James Fallows and Ta-Nehisi Coates and myself.

The problem isn't Ferguson's conclusion, but how Ferguson reaches his conclusion. He either presents inaccurate facts or presents facts inaccurately. The result is a tendentious mess that just maintains a patina of factuality -- all, of course, so Ferguson can create plausible deniability about his own dishonesty.

Then he gets specific:

Exhibit A is Ferguson's big lie that Obamacare would increase the deficit. This is not true. Just look at the CBO report Ferguson himself cites. ...

And then gets even more specific than that. After much dissection of the indefensible and dishonest, O'Brien concludes:

Of course, it's not just Ferguson. There is an epidemic of Niallism -- which Seamus McKiernan of the Huffington Post defined as not believing in anything factual. It's the idea that bluster can make untruths true through mere repetition. We expect this from our politicians, not our professors.

In the end, O'Brien contrasts the academic Ferguson was with what he has become, a blustering liar unworthy of his frock and his credentials. A sad, ironic side-by-side.

I'd have gone one step further. I'd have not only taken his frock; I'd have burned it in the public square. But that's me.

O'Brien does the next best thing — he names the essence of dishonesty after the man:

Niallist: One who believe facts are nothing.

"Niallism" has a great ring to it, and if god is just, it will follow the man to the grave. A fitting monument, given the human suffering Ferguson helps cause. After all, he's an eager and well-worked lackey for the Billionaire Bankers Club, and those folks are doing real damage.

Climate scientists, take note. Taking away the lab coat is an option.

You could spend your lives engaging with your bought denier "colleagues" — who would frankly like nothing better. Or you could dispatch them more quickly, as O'Brien has done, with strong "uncollegial" strokes, and move on to the next big job.

I personally like the latter choice; there should be a price for academic dishonesty in matters this important. But that's me.

GP

To follow or send links: @Gaius_Publius
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In 2010, 75% of Americans near retirement had less than $30,000 in their retirement accounts

As we approach the 2012 elections, the "fiscal cliff" (clever branding, that) and Obama's post-electoral march to the Grand Bargain sea, I want to present to you three virtual images. And an injunction.

■ Image one, from the New York Times in a recent article on retirement (my emphases and some reparagraphing throughout):

Seventy-five percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts. The specter of downward mobility in retirement is a looming reality for both middle- and higher-income workers.

Almost half of middle-class workers, 49 percent, will be poor or near poor in retirement, living on a food budget of about $5 a day.

The article is really good; do read the rest. But I want to stop here a moment.

Gather that fact — 75% of about-to-retire Americans are headed off their own "fiscal cliff." Once that $30,000 is gone, boom.

■ Image two, from the William Pitt Rivers article that led me to the quote above:

I heard the sound of clinking and clanking coming from the front of my house. I knew what it was immediately: one of the Can People was making her daily pass through my recycling bins. ...

The Can People are old men and women, stooped, wearing worn-out clothes and fraying shoes as they rattle through my refuse with gnarled, arthritic hands. ...

I wave to them when I see them, but they seldom respond, either because their eyesight is too poor to make me out as I stand on my porch like a lord, or because they are too ashamed to acknowledge the fact that I see them, and thus see what it is they must do to survive. ...

I remembered a brace of ginger ale cans I'd neglected to bring outside. Hurriedly, I tossed them into a bag and brought them to my porch. She was bent into the blue bin to the waist, and when she reared up at the sound of me, there was fear in her eyes. ...

I came to the railing, extended the bag of cans to her, and she took them without a word. Her face was a delta, a map of time itself, and she could not bring herself to meet my eye. She placed the bag of cans in her shopping cart, and I watched as she clattered her way down the sidewalk[.]

In the article, Mr. Rivers takes apart "something called Charles Lane" — a Wash Post writer and water-carrier for something called Paul Ryan. A worthy read.

■ Image three, this man, a politician whose face I've seen lately telling Clinton's money man Robert Rubin ("Bob" he says) and a roomful of Rubin's best friends (including "Roger" and "Peter") that Social Security needs reforming.

He forgot to say that he was just the man to do it, but I can't blame him for that. This was 2006 and he was not yet president of the United States.



"Too many of us have been interested in defending programs as written in 1938," he codedly says. Social Security was enacted in 1935 and significantly amended in 1939, partly in response to the government's kicking the economy back into recession by reduced New Deal (stimulus) spending.

Other telling quotes:

"The coming baby boomer retirement will only add to the challenges."

And:

"Most of us are strong free-traders."

Good to be among friends.

■ The injunction — It's legitimate to consider the man above to be 2012's Lesser Evil. As near as I can tell, the current Koch-couped Republican Party is a wrecking ball.

But Lesser Evil is still evil. If you do decide to hand him four unfettered years to do as he chooses, remember — you put him there. You have to help save us from this evil as well.

I'm serious. If you vote for Romney, what he does will be your fault.

If you vote for Obama — and you don't try to stop his Keystone Dreams and the looting of the safety net to please the future funders of the Barack H. Obama World Legacy, Library, and Retirement Tour — that will be your fault too.

Stopping those who want to install "Ayn Ryan" is only half the job.

If you conspire to install Obama, you have to stop him too. It's part of the job you gave yourself by voting for him.

GP

To follow or send links: @Gaius_Publius
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China's hard landing?

Somehow there are still a number of economists who can't (or don't want to) see that China is starting its hard landing. Believing in the next quarter, or the one after the next, is not facing the reality that all is not well in China. The economic growth is still well ahead of any Western country but that is completely irrelevant. China needs to maintain even higher growth in order to keep up with internal jobs demand or else things start to turn ugly.

The other problem that won't go away is that China needs buyers in the West and that market is not returning any time soon. China has the problem of 70% of its wealth concentrated in the hands of 1% so they do not have enough middle class buyers to fill in the gaps.

Each month another new sign shows problems and now it's more bad factory activity.

A key private sector indicator on Thursday - which showed Chinese factory activity slumped to a nine-month low in August against expectations of a modest seasonal pickup - throws up the question when the world’s second largest economy will finally hit a bottom.

The second quarter, during which growth slowed to 7.6 percent, was regarded by many economists as the bottom for Chinese economic growth. However, experts say this view may have been overly optimistic.

“(While) we still believe the Chinese economy will pick up steam in the fourth quarter, this idea that the bottom has already passed in May-June is optimistic,” Frederic Neumann, Co-Head of Asian Economics Research at HSBC told CNBC after the release of the data.

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Crops unharvested in California due to labor shortage

The problem of crops going unharvested raises a few questions that have been ignored during the anti-immigration debates. If the anti-immigration people are able to shut down the border, are they also willing to pay a lot more money for the produce due to higher wages being paid by the farms? If farmers are struggling to find workers during this economy, clearly they're not offering enough money for the hard work involved.

Are the farmers themselves ready to pay more money or are their margins already too low? Some are but even then, few want to do this back breaking work. Either way, it's a pity so see good food go to waste while crops are dying elsewhere in the US.

"This year is the worst it's been, ever," said Craig Underwood, who farms everything from strawberries to lemons to peppers, carrots, and turnips in Ventura County.

Some crops aren't get picked this season due to a lack of workers.

"We just left them in the field," he said.

The Western Growers Association told CNBC its members are reporting a 20 percent drop in laborers this year. Stronger border controls are keeping workers from crossing into the U.S. illegally, and the current guest worker program is not providing enough bodies.

Read the rest of this post...

Chris Christie's NJ hits 35 year high for unemployment

Tell us more about the New Jersey economic miracle, Governor Christie.

New Jersey’s unemployment rate jumped to a 35-year high of 9.8 percent in July, the state Labor Department said.

The rate climbed from 9.6 percent in June and is above the national level of 8.3 percent, which also increased last month. New Jersey lost 12,000 jobs in July, with the largest drops in manufacturing, construction, and professional and business services, the department said in a statement today.

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US consumer sentiment up

Is the worst over? While it's hard to see much great news out there, enough people are starting to think that at least it can't get worse.

The Thomson Reuters/University of Michigan preliminary August index of consumer sentiment increased to 73.6, the highest level since May, from 72.3 the prior month. The gauge was projected to be little changed at 72.2, according to the median forecast of 72 economists surveyed by Bloomberg.

After two months of sliding sentiment, August’s advance indicates consumers may be feeling the benefits of growing payrolls. Rising confidence raises the odds households can sustain July’s pickup in retail sales, which set the pace for stronger growth in the third quarter.

“People have said the worst scenario is not going to happen,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. Confidence “seems to be stabilizing at a fairly low level, suggesting to me that consumer spending is going to continue. I don’t see a huge pick- up in growth.”

Though there's very little great news ahead, the economy could certainly get much worse if the GOP implements its plan of austerity. If one looks at what is happening in the UK or Spain, it's clear that the economy can get much, much worse with Republican tampering. Read the rest of this post...

US businesses paying more to CEO's than to US government

While the businesses profit enormously from the overall business environment in the US, shareholders and employees usually don't enjoy quality CEOs. There's nothing that suggests higher pay is linked to better corporate performance though you'd never know it by looking at the annual pay of the pampered class. CNBC:

Citigroup, Abbott Laboratories, and AT&T are among the 26 companies that paid more to their CEOs in 2011 than they did in U.S. federal taxes, according to a study released on Thursday.

Tax breaks on research and development, past losses, and foreign-held earnings were among those lightening the tax load for many companies on the list, said the Institute for Policy Studies, a left-leaning think tank in Washington, D.C.

Citi, Abbott and AT&T all took issue with the institute's methodology. All three said they paid all taxes owed in 2011.

Uh huh. The issue is not whether they paid taxes or even owed taxes, which suggests they're all concerned about the study. Read the rest of this post...

Wealth reduces compassion (via Scientific American and another guy)

I'm going to make two points with this posts — one point about Romney, the rubes and wealth. And one point about something the actual, historical Jesus said — not the mythical guy from Paul's dreamy letters; the real one. (To jump to that point, click here.)

■ First, according to a report in Scientific American, the more you focus your mind on wealth, the less you care about the poor (great find by David Neiwert at Crooks and Liars; my emphasis and paragraphing):

Who is more likely to lie, cheat, and steal—the poor person or the rich one? It’s temping to think that the wealthier you are, the more likely you are to act fairly. After all, if you already have enough for yourself, it’s easier to think about what others may need.

But research suggests the opposite is true: as people climb the social ladder, their compassionate feelings towards other people decline.

Berkeley psychologists Paul Piff and Dacher Keltner ran several studies looking at whether social class (as measured by wealth, occupational prestige, and education) influences how much we care about the feelings of others. In one study, Piff and his colleagues discreetly observed the behavior of drivers at a busy four-way intersection.

They found that luxury car drivers were more likely to cut off other motorists instead of waiting for their turn at the intersection. This was true for both men and women upper-class drivers, regardless of the time of day or the amount of traffic at the intersection.

In a different study they found that luxury car drivers were also more likely to speed past a pedestrian trying to use a crosswalk, even after making eye contact with the pedestrian.

Synchronicity, simultaneity, but not causation. So then they tried to actually create the results, as opposed to just linking them with car ownership (fascinating experiment design, by the way):

In order to figure out whether selfishness leads to wealth (rather than vice versa), Piff and his colleagues ran a study where they manipulated people’s class feelings.

The researchers asked participants to spend a few minutes comparing themselves either to people better off or worse off than themselves financially. Afterwards, participants were shown a jar of candy and told that they could take home as much as they wanted. They were also told that the leftover candy would be given to children in a nearby laboratory.

So, I get the candy, or I give it to ... little children. Guess who were less inclined to give to the children?

Right the first time:

Those participants who had spent time thinking about how much better off they were compared to others ended up taking significantly more candy for themselves--leaving less behind for the children.

If you think of yourself as better than others, you're more likely to end up a net taker from the world.

There are two other studies mentioned in the article, followed by some musings about why these results turn out to be true. The studies, briefly:

In one study, they found that less affluent individuals are more likely to report feeling compassion towards others on a regular basis....

In a second study, participants were asked to watch two videos while having their heart rate monitored. One video showed somebody explaining how to build a patio. The other showed children who were suffering from cancer. After watching the videos, participants indicated how much compassion they felt while watching either video. ...

[P]articipants on the lower end of the spectrum, with less income and education, were more likely to report feeling compassion while watching the video of the cancer patients.

The heart rate data tended to confirm those results — slower heart rates imply greater focus and attention. The heart rates of the less wealthy slowed during the cancer video.

Obviously this matters. The report doesn't say if the results were scalable — if greater wealth tended toward greater lack of compassion.

But I'd be shocked if that weren't true, however — especially given reports like this (the context is the wealth-display of super-rich Romney donors):

“It’s incredible, right?” shouts Jeff Greene over the roar of the two-seater dune buggy’s motor. “It’s 55 acres!”

Still in his whites from this morning’s tennis match, he’s giving a personal tour of his Sag Harbor estate, barreling at 30 miles per hour through the vast forest of scrubby pines and soft moss of its gated grounds.

“Beautiful nature here!” A blur of deer goes by, and the trees break to reveal the summer sun glinting off a grassy lagoon. Greene slows by its shore.

“This is our swan pond, and this is our private beach,” he says, gesturing toward a slip of white sand encircling the edge of the North Haven Peninsula. “It goes all the way to the ferry. Three thousand feet of beach,” he adds, a smile spreading across his tanned face. ...

“I wish we could spend more time here,” he says. “Honestly, we have so many great homes.”

This is Sag Harbor. Fifty-five acres of "beautiful nature" in Sag Harbor, Long Island, and he can't spend enough time there because he has "so many great homes."

No wonder he wants to kick you Lessers all the way to the poor house. If wealth and lack of compassion are scalable, I'd be surprised if this instance of Our Betters had enough soul left to fill a sweathouse worker's thimble, much less his own "swan pond."

■ Now Jesus on the same subject. One of the most famous quotes in the Bible is this one:

"It is hard for a rich man to enter the kingdom of heaven. ... [I]t is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God."

Closely followed by:

"[G]o and sell what you have, and give to the poor, and you shall have treasure in heaven: [then] come and follow me."

What do these quotes actually mean? The key phrase is "kingdom of heaven" and similar formulations.

I'm not personally religious — I adhere to no religion for what I hope is the obvious reason. But I do believe in doing good work(s), for the other obvious reason. As a result, I pay attention to teachers.

Strip away the Pauline layer of "Jesus was god" from the actual historical Jesus. Throw away the edited-in quotes where "Jesus said" what the writer or polemicist — some them well into the Middle Ages — wanted him to say. (See ex-evangelical Bart Ehrman's deliciously readable Misquoting Jesus for this; you can almost watch quotes change when a new monastery takes up the mass-copying task.)

Do all that and you get close to the core of what a fascinating teacher actually taught. Stuff like (paraphrased):

"If you want god to be infinitely forgiving, you must be infinitely forgiving yourself."

If you care about personal ethics, as I do, this is a powerful point of view, even revolutionary.

There's real research in this field. What quotes were most likely to be historical? And what did they mean in the context of who he was (a Mediterranean peasant — a serf) and where he lived (a first-century Roman colony)? These things can be (and are) studied.

The key work, in my opinion, is John Dominic Crossan's The Historical Jesus: The Life of a Mediterranean Jewish Peasant. And the key research is going on under the auspices of the Jesus Seminar. Again — they don't buy "Jesus as god." That's not their job. What they do is scholarly research into an historical figure whose real thinking can be reconstructed through textual, literary, historical and anthropological analysis. It's fascinating stuff.

So back to the quote about "eye of a needle." Most people think of "the kingdom of heaven" as a place. Crossan argues that for Jesus the kingdom of heaven is a state of mind.

In other words, the "kingdom of heaven" and the "kingdom of god" are inside you. You enter the kingdom of god by thinking and acting like god. That is, the core message of the real Jesus was, "Be the change you wish to see."

If you want to live in a world ruled by a kind, just and forgiving god — be that way in all of your dealings. Tough stuff, right? Now you see where all that "if a man steals your cloak, offer him your shoes" comes from. Be the god you want to see.

In that context, the "eye of a needle" quote makes exactly the same sense as the study results quoted at the top of this article.

Why is it so hard for a rich man to "enter the kingdom of heaven" — i.e., to think like a loving and compassionate god? Precisely because of his wealth — that's the barrier.

How do you fix the problem? Remove the barrier. Thus the second quote about giving your possessions to the poor. Your best shot at re-igniting your compassion — to "have treasure" in the heaven inside you — is to get rid of your wealth.

Wealth is a barrier. There aren't many FDR-types who can get past it. The study and the guy we've just been talking about are in complete agreement on that.

■ An "easter egg" for those of you who've lasted to this point. Think of the quote —

"Blessed are the poor, for theirs is the kingdom of heaven"

in this new light. The meaning? If the "kingdom of heaven" is inside you, only the poor (the destitute, the cast-off, the lepers and homeless) are truly able to "act like god."

Why's that? Because every one in the economic middle adds to the misery of those below them. Crossan's translation is this, memorable in itself:

Only the destitute are blameless.

Everyone but the bottom is complicit — they're the only ones not hurting someone lower.

In modern terms — got iPad?

GP

To follow or send links: @Gaius_Publius
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China's economy "slows" to only 7.6% growth

As much as everyone in the West would like to see such growth numbers, for China, dropping below 8% is dangerous territory. The 8% mark for China is similar to the 150,000 jobs per month mark for the US. Dropping below 8% growth likely means not enough jobs to keep up with the population growth. Unlike in the (modern) US where people are mostly docile and peaceful even during times of economic problems, in China, it's not the same. Workers and those seeking work are much more likely to take to the streets.

Some economists (including some very clever economists) still see a soft landing for China though I'm reluctant to buy into that theory. It's possible things will go well, but as an interested observer of China's long and amazing history, I don't see it.

China's best export markets are not buying the way they used to buy and that business is gone for a while. Infrastructure development could have helped in many ways but building ghost towns at home and abroad is wasteful and indicates ongoing problems with corruption. (Not that the US doesn't have serious corruption problems.)

This year and into 2013 is going to be very challenging for China's leadership.

China's economic growth has slowed to a new three-year low, dampening hopes it can make up for US and European weakness, but analysts have said a rebound might be in sight.

The world's second-largest economy grew by 7.6% in the three months ending in June compared with a year earlier, down from the previous quarter's 8.1%. It is the lowest since the first quarter of 2009 during the depths of the global financial crisis.

China's slowdown could have global repercussions, especially at a time when the United States and Europe are struggling. Lower Chinese demand could affect Asian economies that supply industrial components to its manufacturing industry and exporters of oil, iron ore and other commodities such as Australia, Brazil and African nations.

Don't forget that Australia linked its economy to China a while back and has enjoyed an impressive export economy feeding raw materials to China. The Australian economy is now softening and exports are dropping.

If China doesn't have an export market, it doesn't need the same supply of raw materials. Shipping is also another sign of trouble and those numbers also show a sharp decline as does a dramatically reduced need for electricity.

There's still time though for the whining bankers to relocate to Asia so they can fully enjoy the freedom of playing in that market. Don't wait guys and don't bother to send a post card or come back when you need another round of handouts. Read the rest of this post...

Australia the next Spain?

The Australian Treasurer Wayne Swan is saying no and it may be an overstatement, but there are definitely some similarities. Spain also had a budget surplus (despite what austerity people believe) as well as strong jobs growth. What Spain did not have is a large export market heavily reliant on a booming China. During the good times, the economic ties were worth a lot to the Australian economy. But those good times are fading.

“It’s absurd - the Australian economy and its economic fundamentals are very strong. On a yearly basis we are growing at 4 percent – we are going to grow faster than any other developed economy this year and next,” Swan told CNBC's "Capital Connection" on Wednesday.

“Let’s go through the fundamentals – bringing our budget back to surplus in 2012-2013, low unemployment, strong job creation over time, a record investment pipeline in resources – half a trillion (dollars). What planet does he live on?” he added.

Xie, an independent economist with sometimes controversial views, argues that Australia is at danger of becoming the next Spain due to its reliance on foreign demand, especially from its biggest trading partner China, which he believes is decelerating faster than headline growth numbers suggest.

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Job openings up in May

Clearly the Republicans are not going to like this positive news. Since they're more concerned about scuppering the economy, they're going to have to think of a new plan to extend the misery for Americans.

The number of positions waiting to be filled climbed by 195,000 to 3.64 million, partially countering the 294,000 drop seen in April, the Labor Department said today in Washington. Another report showed confidence among small companies slumped in June.

Increasing demand for workers indicates some companies see an opportunity to expand as sales improve. At the same time, the report showed firings also picked up, indicating the European debt crisis and slowing growth in emerging markets like China may be prompting some employers to cut back.

“The labor market still looks pretty tenuous,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. The April report “sent some worrying signals that maybe things were in free fall. You have the May report and you can see businesses were turning a bit more cautious, but they weren’t completely pulling back.”

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Fracking all the way to the bank

Governor Andrew Cuomo, you have some company.

It turns out that New York is not the only state selling its soul to the natural gas industry this summer. Good ol’ North Carolina is joining the fracking bandwagon, too, and opening up its landscape to the unlovely risks of mini-earthquakes, water pollution and disease dissemination.

This past week, just in time to mark our nation’s birthday, Republicans in the North Carolina state legislature overrode a veto by Governor Beverly Purdue to give a green light to hydraulic fracturing. Drill, baby, drill!

Still, the vote was a close-run thing. The Republicans only prevailed because a veteran Democratic lawmaker, Becky Carney, mistakenly cast the deciding vote after a marathon legislative session late Monday night. She opposes fracking but inadvertently gave the GOP the votes it needed to override the governor’s veto.

She cried when she realized her mistake – and with good reason. The industry has too much political juice to give its opponents room for error. The wider the fracking debate spreads, in fact, the more it becomes clear that conflicts of interest abound at every turn.

According to The Institute for Southern Studies, North Carolina state lawmakers took two fact-finding trips to Pennsylvania to investigate the issue. Their guide was a gas company facing multiple federal and state investigations into possible fracking-related violations, Oklahoma-based Chesapeake Energy. No prizes for guessing which “facts” they found.

One of Chesapeake’s business practices, according to a Reuters investigation, is to conspire with its top competitor, Encana Corp of Canada, to avoid bidding against each other in land-purchasing deals, all the better to keep prices artificially low. According to the piece:

In one email, dated June 16, 2010, [CEO Aubrey] McClendon told a Chesapeake deputy that it was time "to smoke a peace pipe" with Encana "if we are bidding each other up." The Chesapeake vice president responded that he had contacted Encana "to discuss how they want to handle the entities we are both working to avoid us bidding each other up in the interim." McClendon replied: "Thanks."

Shocker, that is not the only price-fixing natural gas scandal out there. Citizens for Responsibility and Ethics in Washington (CREW, where I worked for years as the Deputy Director) has asked the Justice Department’s Antitrust Division to initiate an investigation into whether large natural gas producers, including Chesapeake and ConocoPhillips, are illegally conspiring to limit their production in a bid to raise demand and increase prices.

Turns out, over the past few months, natural gas prices have dropped to a ten-year low while inventories have increased dramatically. Clearly, it’s in the companies’ business interests to reverse that. The question is whether they are violating antitrust laws in the process – and whether the state legislatures they are so effectively targeting for new business even care.

What is so galling about all these anti-competitive practices by the natural gas industry is that on the one hand they conspire to push gas prices higher by reducing production and on the other they attack President Obama and the Democrats for not agreeing to give them more wells to drill.

The companies want government both ways – active on their behalf and inactive on everyone else’s. Our legislators should be smart enough not to fall for it. Read the rest of this post...

Stiglitz: Much of the financial sector involves "rent-seeking" not production—An essay on rentiers

I put "rent-seeking" in quotes in the headline because it's a special term. The fancy term is "being a rentier" — a renter.

I've written about rent-seeking before, in several places in fact. But this is a place to collect those thoughts in essay form.

What is rent-seeking?

Rent-seeking is one way to make money.

■ If you own land, mine copper (say) from that land, and sell it, you're what is technically called ... "productive." (I know, strange word; take your time learning it.)

■ If you own land that contains the only source of water in the county and you sell "your" water to the drought-stricken everyone-else, you are what is called ... a "leech."

My joke — you're living off of "economic rents" — the special position granted by your ownership of something you didn't create, but stumbled across. (See here for my views of "ownership".)

■ If you stole that land by buying lunch for the state legislature, in return for which they gave you the land by decree, you're a "thief and a leech."

My joke again — you're still a "rentier capitalist," though a corrupt one. Some would call that a Bain Capitalist, or a Wall Street Capitalist. You've done nothing illegal; you win by buying the law.

Keep that term "rent-seeking" in mind, and also that use of the law. This perfectly describes what the bulk of current economic activity is about.

Joseph Stiglitz, who is on a book tour, has some thoughts along these lines. This appeared in a Fox Business interview (h/t economist Mark Thoma; my emphasis):

Why does growing inequality matter? ...

We care about inequality partly because we pay a high price in terms of our economic performance. We care about it also because of the impact that it has in every other aspect of our society -- our democracy, our rule of law, our sense of identity or a land of opportunity -- because we aren't anymore.

The people at the top are not the people who made the most contributions to our society. Some of them are. But a very large proportion (is) simply people I describe as rent-seekers -- people who have been successful in getting a larger share of the pie rather than increasing the size of the pie. ...

[W]e don't understand the extent to which our economy has really become a rent-seeking economy.

How has the financial sector contributed to the growing inequality?

Much of what goes on in the financial sector is this kind of rent-seeking.

The most dramatic example was the predatory lending and the abusive credit card practices, which took money from people on the bottom and the middle often in a very deceptive way, sometimes in a fraudulent way, and moved it to the top....

There is another example where the financial sector has been particularly bad. They pushed for laws like our bankruptcy laws that gave priority to derivatives. In bankruptcy, derivatives got protected and workers and everybody else has to swallow their losses. That encourages more risk-taking.

At the same time, they pushed for laws that made it more difficult for ordinary Americans to discharge their debt and (were) particularly bad for students who can't discharge their debt no matter what happens, no matter how they have been deceived by the schools, even in the event of bankruptcy. ...

There's more of Stiglitz and his thoughts at Thoma's site, and in the original interview.

What characterizes a rent-seeking economy?

I want to tie together a couple of concepts:

1. Being a rentier is much easier than being productive. Being productive involves work, actually making things.

To be a rentier, you just send out Big Louie (sorry, your collection agents) to gather the goods. Sometimes Big Louie is your friend the local sheriff.

2. A rent-seeking economy is not productive. We have been converting to a rent-seeking economy since Reagan started sending U.S. manufacturing overseas and rewarding (with money) people who made money by moving money around (rentiers).

As Kevin Phillips points out, one of the three signs of the end of an empire is the financialization of its economy — its conversion from productivity to "financial services" — extracting fees for moving money around. (See here for Spanish, Dutch and British examples; search on "Phillips".)

3. Rent-seekers, like most Big Money types, use their Money to buy the Law. Which means ...

4. Money and Law are fungible — exchangeable for each other. Who knew?

Actually most of us did; we just haven't said it that way. Shakespeare's version from Hamlet: "Oft 'tis seen, the wicked prize itself buys out the law."

Translation: You can often exchange stolen money for laws and rulings you want.

5. Rented money is called "debt" and debt collection is rent-seeking.

Look at the water example above. You have it; everyone else needs it. You thus have a special position, which you can use to collect income (economic rents) by owning the only source of what people need.

Once rent-seekers have, say, almost all the money in the world, they don't have to make anything else. They just rent out their money.

6. The interest of rent-seekers is to make everyone else pay their debts. Since rent-seekers typically use their money to buy the law, they use their money to make debt and bankruptcy laws most favorable to them.

What's wrong with that? This ...

7. When an economic system is clogged with too much personal debt, the whole system stagnates, producing a stagnant economy and often, a demand-driven depression.

Why? Think; what happens when everyone is paying off debt and no one is buying stuff? Answer: At best, nothing happens; the economy stagnates. At worst, a downward spiral of job loss and depressionary price collapse (deflation).

Or don't think: just look out the window. You're watching the milder form of what happens — a debt-clogged system in which little economically is happening. (This is why public debt has to take over for personal debt, by the way, but that's another discussion.)

8. In a system clogged by personal debt, the political Bigs — the Obamas, the Bidens and the Clintons — have to choose between the interests of the rentiers and the interests of, say, everyone else in the country.

Mostly, political Bigs choose the interests of their paymasters.

9. Thus my term — Rentier Rebellion — a political conflict in which rentiers use the political Bigs to put the squeeze on everyone else.

It kills the system, but hey ... fortunes of war, as they say.

How do rentiers win?

Let's summarize. Anyone can win at the rentier game. All it takes is:

• All the money in the world;
• A captured political system;
• A "democracy" filled with the easily (and eagerly) fooled;
• A rentier class with no conscience.

Put that together and what you you get? You're living in it. The current State.

Don't lose sight of that last requirement — no conscience. The condition of "no conscience" can be defined as "treating other people as things to be used." (That actually is a good working definition.)

Once you breed a ruling class dominated by Trumpism (my term) — people whose only goal is to bend the world to their will, as exemplified in Trump's first book — you really are ruled by the conscienceless.

What can you do? What one always does before the last battle is lost — resist.

It's the only way to stay here and stay sane.

My rented thoughts,

GP

To follow or send links: @Gaius_Publius
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CNN poll: Americans increasingly optimistic about economy

Are they right?

"Americans are usually optimists, but in 2011, polls for the first time found that more than half the country thought that economic conditions would worsen in the next 12 months," says CNN Polling Director Keating Holland. "Now that trend has reversed itself, with only four in ten saying that the economy will be in poor shape a year from now."

Sixty percent of those questioned say the economy will be in good shape next year, a surge from 39% who felt that way last October. Despite that jump, three-quarters say that current economic conditions are poor, a slight worsening of opinion since May, but better than where things stood in January.

"Not surprisingly, the poll indicates that the economy's the public's top issue, the only topic that more than half say will be extremely important to their presidential vote in November," adds Holland.

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