Naked Capitalism has the article Wolf Richter: The Big Hoax Of The Wall Street Hype Machine.

The S&P 500 index keeps bumbling from one all-time high to the next as corporations are issuing record amounts of debt to spend record amounts on buying back their own shares: $160 billion in the first quarter alone, according to CapitalIQ. Borrowing money to buy back shares and hyping it ceaselessly as “returning value to the shareholders” is the most effective way to manipulate up the stock, even if revenues are declining quarter after quarter.

In this climate of ZIRP, any major corporation can do it. The heavy buying during these low-volume times pushes up shares, the hype surrounding the buybacks pushes up shares, expectation of more buyback announcements pushes up shares, the mere idea that shares are being pushed up pushes up shares…. And in the end, the buybacks lower the share count for the all-important EPS ratio.

There may be some good points of hoax mentioned in the article, but I commented on my appraisal of one point in the article.

“And in the end, the buybacks lower the share count for the all-important EPS ratio.”

Thinking as a dividend oriented investor, the buybacks also allow for higher dividends per share. What is wrong with that?

If it is true that non-financial corporate growth is going to be lower in the foreseeable future compared to post-WWII history, then the way for companies to prosper like they did before is to lower their output capacities to match falling demand. Companies can adjust to this new environment while we stock owners can have value inflation in the stock price per share and increasing dividends per share. If this buyback is done with idle cash rather than by borrowing, then it isn’t even mortgaging the future of the company.

What are the flaws in this line of reasoning?

I anxiously await any comment on whether or not there are flaws in my point of view.

Naked Capitalism has the post Randy Wray: Taxes and the Public Purpose.

If Congress ever got hold of its senses (no, I’m not holding my breath), it would increase spending (or reduce taxes) to employ idle resources. At some point (probably later rather than sooner) we could come up against resource constraints. At that point we might need to curtail spending and/or raise taxes.

We can examine how to deal with the happy problem of chock-full employment later—we haven’t seen it in the US since WWII and it isn’t on any horizon at present.

Taxes can serve other purposes, too, as I’ve argued earlier in this series. We can use taxes to discourage “sins”—in which case the purpose of the tax is to eliminate “sin” so the optimal sizing of the tax would eliminate sin and hence raise no revenue at all.

Previously, I argued that we can view excessive riches as a sort of “sin” that we want to tax away. Some commentators have argued that high tax rates on high incomes in the early postwar period “worked” by discouraging corporations from paying high incomes to top executives. Exactly! That is how sin taxes are supposed to work. The goal is not to raise revenue but to reduce sin.

This is the clearest description of the attitude MMT proponents have about taxes.  It doesn’t cover all taxes, though.  The topic will garner more attention in later articles.  Above, I have excerpted some statements on issues on which I am particularly focused.  There is more good stuff in the article.

The Real News Network has the interview Piketty: The Market and Private Property Should Be The Slaves of Democracy.

So the human capital illusion is saying that now with the modern economy all that matters is human capital. And education, personal skills, personal talent, as opposed to traditional forms of non-human capital – financial, real estate, etc. Now this is an illusion because in fact in the long run you have a rise of both human and non-human capital in comparable proportions. So of course you have a rise of human capital. You have more education and higher level of human skills today. But you also have a higher level of real estate, equipment, patents, robots and other non-human assets. So that in the long run, you know I’m not saying that robots will dominate humans but I’m just saying that the balance between human capital and non-human capital has no reason to move in the direction of human labor. And indeed, if we look at the recent trends, you know the capital share in GDP has actually been going up and the labor share, for the share of income going to labor earners in the form of wages or other forms of compensations for labor, has actually been reduced. And I’m not saying it’s going to reduce forever but it can very well stabilize at a level that is not so different from the 19th century. So in other words, the capital labor split today is not that different from the 19th century. And it would be wrong to assume, and this has been an illusion to assume, that technological change alone and modernity alone in the form of technical change would make the triumph of labor over capital, and the triumph of human capital. So this is the first illusion.

I am so glad to finally hear Piketty in his own words. Up till now I have just been reading and hearing what reviewers have to say about his book.

It is good to hear his own take on the applicability and limitations of what is in the book. He also puts his projections for the future into a proper perspective.

The excerpt that I chose to highlight above goes to the concern that I have expressed by my suggested thought experiment. Imagine a world where only a very few people are needed to run the automated systems that can produce all the goods that the world population needs to sustain a decent standard of living. How will the potential output of such a system be allocated in such a way that everybody shares in the benefits to some degree or other?

My thought, like Piketty’s above is that this allocation can not be depended on to happen automatically because of capitalism. We actually need to think about how humans and democracies can make decisions to shape that allocation.

The Real News Network has part 7 Financialization and the Collapse of European Social Democracy – Costas Lapavitsas on Reality Asserts Itself (7/8).

LAPAVITSAS: Yes, in Germany and so on, different traditions and so on. But nonetheless we find social democracy in many parts of the world. Social democracy has suffered terribly as a result of financialization, particularly the [incompr.] financialization now, because it basically accepted all that stuff about neoliberalism and so on, and it really believed that this was the future and free-market capitalism was a stable, wonderful system that was going to produce good results, and really went for it. And, obviously, now that it has become clear that financialization is a highly unstable, highly unequal, and deeply problematic system, social democracy hasn’t got a message to come up with.
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Now the strongest party is the left. Greece has always had a left presence, political presence, away from social democracy. And as the social democratic core has collapsed, then the voters of that party or government have migrated to parties of the left, which is why we have SYRIZA, the main party of the left now, you know, bidding for power. So we’ve had a complex movement whereby a large part of the electorate has gone to the left. But also a significant part of the electorate, mostly from the right, now has gone to the extreme right, because obviously the voters of the right have been disillusioned in governments of the right applying the neoliberal programs so viciously too. So we’ve had a polarization. We observe a polarization in Greece pretty naturally as part of this financialization

In the comments on YouTube, you can see that there is debate in Greece over some of what was said in this interview.

There was a promise that in part 8 there will be some talk about what are the solutions. My experience is that this is usually the weakest part of such a discussion. It takes a lot more imagination and creativity to talk about a new social system that does not exist that will solve the problems than it does to talk about the current system and what is wrong with it. So, we should not expect that there will be as many people who can say profound things in this domain as there are people who can be profound about what already exists.

The Real News Network has published 40% of Profits Buys A Lot of Politicians – Costas Lapavitsas on Reality Asserts Itself (6/8).

LAPAVITSAS: That’s it. And this ideology is very, very powerful, and in the United States it’s exceptionally powerful compared to other countries. A very powerful ideology. And that is–you find it in the policy-making field. You find it in the academic departments. You find it in think tanks. There’s a vast array of institutions and mechanisms across the United States and elsewhere that produce and reproduce this kind of thinking and this kind of approach to the economy and society.

Now, I don’t want to go into a deep debate of it. I think it’s a great lot of nonsense, if you really want to go into the substance of it. What I want to stress is something else. This image they present of we are for the market and the free interaction of agents because that produces the best results, and the state is problematic, and we are against the state and we want to limit the state because that’s the way to get progress and welfare and so on, this is actually not true in terms of what they want, in terms of committed, sophisticated neoliberals truly want. And that became very clear over the last two years. These people understand very well what the role of the state is, and they know that the state isn’t really an enemy of financialization or an enemy of free-market capitalism or anything like that. Actually, it’s the tool you need in order to put all these policies in place. And neoliberals have a clear aim and a clear strategy to capture the state. There’s no doubt at all about it.

So there’s been a neoliberal capture of the state and a sort of–it’s almost like self-censorship or self-limitation of thought and options within the ruling elite, within the ruling class about what might be feasible. And anything that goes outside the neoliberal box is not even considered.

Now we are really getting down to the nitty gritty of what this is all about. I haven’t heard it expressed this clearly before.

Part 7 of the series has been published, and I am off to look at it. I can hardly wait to see what other insights Lapavitsas has in store.

The Real News Network has another segment of the ongoing series. This one is Is Financialization Necessary for a Modern Economy? – Costas Lapavitsas on Reality Asserts Itself (5/8).

LAPAVITSAS: I know. But let me just get this stuff on households a little bit clearer.

So what have we got here? We’ve got a system in which households have got to depend on private finance, basically, and they’re sucked into the system, and their wages and salaries and savings become a social profit for banks. We’ve got a direct transfer. I would call that financial expropriation. It’s a kind of secondary exploitation of households. Our incomes, our savings become a social profit-making for banks. And predatory lending is just the extreme case of this. Right?

JAY: So you’re not only making–you’re not only getting taken, if you want, on you buy something, and usually there’s a profit made when you buy the thing; but they’re skinning you twice, ’cause they’re getting you on the credit card interest.

LAPAVITSAS: Well, that’s it. That’s it. And you’re getting–and there’s interest that comes out of your income, which goes to the private financial system, or other fees, commissions, and so on. For what?

The interview also covers international capital flows and whether or not the big banks are actually helping the world economy.

Both aspects of this segment are fascinating.

CBS News has the story Intel hopes to bring 3D printed robot kits to market this year.

The hardware designs will be available through an open-source platform, allowing anyone with access to a 3D printer to make and create basic parts. Essential parts that can’t be printed, such as motors, wires, battery and processors, will be available to consumers in a kit that can be purchased on the project’s website, according to Re/code.

Take that Apple and Google. At $1600 per kit, I don’t think this market will use enough Intel chips to replace declining sales of PC’s. However, this project could lead to some amazing changes to our world.

I think I may keep my Intel stock for a little while longer. Even if I doubt I am going to spend the money on the robot kit at the initial prices, I may be able to buy one eventually. The prices will come down, but not as fast as smart phone prices have come down. Too much of the cost is in hardware that is not produced like a semiconductor chip.

On the CBS Facebook page, there is the following post:

Veterans, CBS News wants to hear from you — do you think the resignation of VA secretary Shinseki is fair or politically motivated?

My initial response was

What does CBS think about its reporting on this issue? Has it reported enough depth of facts so that we can answer the question posed? Was Shinseki working on fixing the problem before it blew up? Was anybody fighting for more resources for the VA? (What did Bernie Sanders do? What was the House’s response to Bernie Sanders? Is it true that we cannot afford more resources for the VA? When a country is sovereign in its own currency, has huge unemployment, has idle factories, has corporations not investing their cash, and has plenty of natural resources, is it true that the deficit is a constraint on what we can afford?)

What was in CBS’s coverage of the Memorial Day celebrations to give us a hint as to whether people were just speaking platitudes or they were actually backing up their words of thanks with actions of thanks?

Will the news media ever take responsibility for their role in what the public does and doesn’t know?

To another comment,

The top man at any large institution such as the VA will not be aware of day-to-day operations at specific locations. He’s the sacrificial lamb.

I replied as follows:

If Shinseki had come out and said, “Well this behavior was a complete surprise to me.”, that might have been honest, but it would not have been an indication that he was a good manager.

When people’s jobs are on the line to meet a goal that cannot be met with the resources at their disposal, how do you expect them to react?  Can you expect a certain amount of cheating the measurement system?

There is a management style called “managing by walking around.”  This means that no matter what formal methods you have of keeping track of the organization, a manager learns a lot by walking around, observing the organization at work, and speaking directly to random employees that you meet while walking around.

At the last company I worked for of thousands of employees, the top guys had a habit of eating in the cafeteria and setting their tray down in a random empty spot at a table of random employees and talking to the people around them.  It made us feel better about the company to know that they did that.

You can put your two cents worth in, too.

CBS News has the story VA Secretary Eric Shinseki resigns.

Facing a growing outcry over the scandal at Veterans Affairs medical facilities, VA Secretary Eric Shinseki offered his resignation to President Obama on Friday, and the president accepted the offer.

“A few minutes ago, Secretary Shinseki offered me his own resignation,” the president said in a statement in the White House briefing room. “With considerable regret, I accepted.”

If Obama had wanted to avoid this resignation, he would have made the case that Shinseki was key to the solution and was not the problem. If facts stood in the way of making this case, then resignation was inevitable. It shouldn’t have taken this long to figure out what was what.

If the facts were on Shinseki’s side, then Obama really botched this situation.  I have no idea what the facts are regarding whether or not Shinseki was actively working to solve this problem before it blew up in his face.  If he had not been working on fixing the problem, then by my definition he was part of the problem whether or not the problem began before he took office.

This is a replay of what Governor Deval Patrick went through with the problems in the Massachusetts state DCF (Department of Children and Families) and its leader.  If the leader was not part of the problem, in other words she was aggressively trying to fix the problem, then Deval Patrick should have made the case as his very first statement addressing the issue.  Since he did not, one is left to assume that the head of DCF  was not actively working on the problem when it blew up in their faces.  If that assumption is incorrect, then Deval Patrick had the responsibility to tell us why.  If the assumption is correct, then there is a deficiency in Deval Patrick’s management style.

I have a suspicion that the problems in both institutions have to do with chronic underfunding by the legislature.  Who is holding the legislature’s accountable, as they point fingers at everyone else?  What has the press got to say about their responsibility to dig deeper into the causes?  What do the voters have to say about their responsibility to choose the elected representatives better?

How does an effective leader of an agency that is woefully underfunded handle that problem?  Of course, the head tries to do the best possible job with the resources available.  There is more that such a leader must do.  Should the leader constantly harp on the fact that the agency is underfunded for the responsibilities thrust upon it?  How should that leader carry out that part of the responsibility?  Should the leader refuse to accept responsibilities that the agency does not have the resources to handle? Should the leader make clear how the agencies priorities are arranged to do the most good with the resources at hand?  Should the leader make clear the risks involved with the priorities that are set as best as is possible?  Or should the leader cover up the fact that there are problems so that the higher ups can feel good thinking that there are no problems?

How did the leaders of these two agencies perform with regard to what a good leader should do?

I was checking out the implications of high blood sugar levels and came across the article Diabetes and cognitive decline. Below is an example of one of the things mentioned in the article.

A study related to cognitive function in women was published in the February 2007 edition of the Journal of the American Geriatrics Society. The researchers examined older women (average age, 72 years) with different levels of cognitive function and found that the strongest factor associated with good cognitive function was lack of diabetes. Women without diabetes were almost twice as likely to have good cognitive function than women with diabetes. Lack of high blood pressure and lack of smoking were also associated with better cognitive function.

Also on the Alzheimer’s Association web page in the article Blood Sugar, I found the following table:

Current guidelines on blood sugar

• Based on a “fasting” blood test taken at least 8 hours after eating
• Regular testing should begin at age 45 or earlier in individuals with risk factors in addition to age

Fasting blood sugar	Status	Health impact
Less than 100 milligrams per deciliter (mg/dL)	Normal	Healthy level
Between 100 and 125 mg/dL	Prediabetes or borderline diabetes	Increased risk of cardiovascular disease and future diabetes
126 mg/dL or higher, measured on two different days	Diabetes	Risk of damage to the eyes, kidneys, blood vessels, heart and nerves as well as cognitive decline and dementia

If your blood sugar is higher than normal, you should talk to your doctor about the best treatment strategy.

As if I needed one more thing to worry about in my diet – no salt, no fat, no sugar, no simple carbohydrates. I wonder what impact starvation has on the brain.

One should also remember the statistical dictum that “correlation is not the same thing as causation.” Meaning that high blood sugar and mental decline may be correlated but that does not mean that high blood sugar causes mental decline. There is always the possibility that aggressive measures to lower blood sugar may be counterproductive in decreasing mental decline. It is possible that high blood sugar levels are the body’s way of fighting off mental decline. Working to decrease blood sugar level could be fighting the body’s natural defense mechanism. I am not suggesting that the possibility that I am mentioning here is at all likely to be true, but it a cautionary tale on mixing up correlation and causation.