Monthly Archives: July 2018

‘Eye-popping’ payouts for CEOs follow Trump’s tax cuts

Politico has the article ‘Eye-popping’ payouts for CEOs follow Trump’s tax cuts.

In a speech last month, the SEC’s Jackson said, “There is clear evidence that a substantial number of corporate executives today use buybacks as a chance to cash out the shares of the company they received as executive pay.

“In fact, twice as many companies have insiders selling in the eight days after a buyback announcement as sell on an ordinary day,” he said.

This is information I have been looking for. I have been wondering what the insiders are doing with their stocks when their companies have been buying it back. I couldn’t figure how it would benefit them in the long run if they stripped away the company’s future prospects.

Why do the insiders wait a day to trade if they know the buyback is coming? If they bought before the buyback was public knowledge, that would be illegal trading based on insider knowledge. This is the crime for which went Martha Stewart to prison.

Stephanie Kelton Has The Biggest Idea In Washington

Huffington Post has the article Stephanie Kelton Has The Biggest Idea In Washington.

Once an outsider, her radical economic thinking won over Wall Street. Now she’s changing the Democratic Party.

I don’t usually expect much from HuffPo, but this article is pretty good once you get past the fluff.

I am pretty familiar with Kelton’s economic views, so I didn’t need the Huffington Post’s explanation of it. What interested me was an explanation of some of the political events that had frustrated me.

But it’s hard for many to believe that achieving such ambitious goals wouldn’t come with some other searing social price. While she got Sanders’ attention talking about economic rights and social justice, he balked at the implications of her broader theory. He had been pounding Republicans on the deficit for years and didn’t want to give it up. He had voted against the expensive Iraq War, the George W. Bush administration’s Big Pharma–friendly Medicare prescription drug benefit and the Bush tax cuts, arguing they were too expensive and diverted resources from programs that would genuinely help the middle class. While Kelton the radical theorist wanted Sanders to shrug off deficits, Sanders the politician wanted to pay for his plan by taxing the rich.
For all its ambition, Sanders’ agenda wasn’t very creative. It just expanded the scope of existing programs that liberals already liked. The minimum wage would be higher. Tuition at public universities would be not just reduced, but free. Medicare would be available to everyone, with better coverage. Kelton didn’t have a problem with any of it, but almost nothing distinctive about her economic thinking ended up in the platform.

She thought her boss was walking into a trap by insisting that higher taxes on the rich and economic growth could pay for everything he wanted to do. She was right. When the campaign enlisted University of Massachusetts at Amherst economist Gerald Friedman to calculate the cost of Sanders’ platform, Friedman relied on overly optimistic assumptions in his modeling. Economists aligned with rival Democratic candidate Hillary Clinton pounced, accusing the Sanders operation of fiscal irresponsibility and economic illiteracy. Sanders staffers still wince at the memory. The numbers shouldn’t have mattered, but they didn’t add up.

I had also been warning Democrats not to get trapped into the deficit issues and not to get trapped by their own rhetoric about paying for ambitious programs. Knowing of Kelton’s position with Bernie Sanders and knowing her economics, I was wondering why he wasn’t listening more to what she had to say. Now, at least, I know she fought for her ideas, but failed in this case. I also now see what the Sanders’ excuse was for failing to heed wise advice when he received it.

Explaining Social Democracy

The Week has an article titled Bernie Sanders and the rise of American social democracy.

Let me start with a bit of history. Social democracy developed out of a turn-of-the-century split from traditional Marxists, who had long thought a political revolution would be necessary to replace capitalism. Social democrats, by contrast, thought the same egalitarian objectives could be evolved over time through parliamentary democracy and without suddenly overturning bourgeois institutions of private property. (These definitions tend to fray at the edges, but that’s a fair gloss.)

This is a good explanation of how things work in the Nordic countries that have highly productive economies and great social programs.

Let’s not get too hung up on labels or examples, though. Whatever Bernie may label himself as, look at the programs and policies he supports. Decide for yourself if these are things you want for the USA. If they are, support Bernie Sanders because he supports what you want.

Don’t get hung up on some program in some other country that you assume Bernie supports because the labels in the two countries seem similar. Bernie is quite happy to tell you what he supports and what he doesn’t. That is what is important. If you are not sure about Bernie’s attitude on some policy, try to find out what he says and does about it. Don’t think you can read his mind because of a label.

Education or espionage? A Chinese student takes his homework home to China

NBC News has the typical story about this incident, Education or espionage? A Chinese student takes his homework home to China.

Ruopeng Liu believes his work at a Duke lab was simply “fundamental research” that he brought back to China. His former professor thinks otherwise.

In the latest news is a story about how a Chinese graduate student came to the U.S. to steal intellectual property and take it back to China. This is just the latest example of a bill of goods our oligarchs want us to swallow. Most of the push to protect “intellectual property’ in our trade agreements is to protect the rentier class’s rents they extract from patents, copyrights, and “intellectual property”. We need to be less gullible about the idea that “intellectual property” is something the whole world should agree to protect in the way that the USA says it should.

I wonder if we are supposed to think that graduate students come here to have fun, and not to learn anything they can use as the basis for a career. Of course students come here to learn “intellectual property”. Isn’t the whole purpose of a university to impart “intellectual property”?

Days of Revolt: How We Got to Junk Economics

YouTube has the video Days of Revolt: How We Got to Junk Economics,

In this episode of teleSUR’s Days of Revolt, Chris Hedges interviews economist Michael Hudson on the history of classical economics and explores Marx’s interpretation of capitalism as exploitation.

This is a discussion of Michael Hudson’s book “Killing The Host: How Financial Parasites and Debt Bondage Destroy the Global Economy”. I am finally getting a more complete picture of what I have been slowly piecing together from my study of Modern Money Theory. It is not Karl Marx that had crazy economic theories. It is the capitalist economic theories that I have been learning since the 1960s that is the crazy theory. (To be more accurate, the mixed economy is sensible, but the unregulated capitalism is what is crazy.)

Here is the second part of the interview Days of Revolt w/Hedges & Michael Hudson Junk Economics and the Future | Part 2

The Russia “National Security Crisis” is a U.S. Creation

The Real News Network has a two part interview that I hope can put a stop to some of the Trump Derangement Syndrome that is driving us to war with Russia.

The first part is The Russia “National Security Crisis” is a U.S. Creation.

President Trump’s warm words for Vladimir Putin and his failure to endorse U.S. intelligence community claims about alleged Russian meddling have been called “treasonous” and the cause of a “national security crisis.” There is a crisis, says Prof. Stephen F. Cohen, but one of our own making.

The second part of the interview is Debunking the Putin Panic with Stephen F. Cohen

There is much to criticize the Russian president for, says Professor Stephen F. Cohen of Princeton and NYU, but many US political and media claims about Putin are false – and reckless.

Growing Up in the USSR – RAI with A. Buzgalin (1/12)

The Real News Network has a very interesting 12 partseries Growing Up in the USSR – RAI with A. Buzgalin (1/12).

Prof. Alexander Buzgalin joins Paul Jay on Reality Asserts Itself; born two years after the death of Stalin, he talks about growing up in the Soviet Union.

This series gives me a much netter understanding of Russia and the Soviet Union from the point of view of a Russian scholar. I find this discussion to be very revealing.

I came to this series at a later segment, and found it so interesting, I went back to the beginning. I have listened to the first 3 segments so far, and intend to watch the rest of the series as time permits.

The initial link in this post leads to a collection of links to all 12 parts.

July 23, 2018

At this point, only 9 of the 12 segments have been published, and I have seen them all. I am getting a somewhat different picture of Russia than I had before. Some of what I thought before has been confirmed, but there are more than nuances and subtleties that are different.

July 25, 2018

The 10th segment is now available Why Does the West Hate Putin? – RAI with A. Buzgalin (10/12).

July 27, 2018

The next segment has been published – Many Russians Think Climate Change is Propaganda to Weaken Their Economy – RAI with A. Buzgalin (11/12)

Senator Discusses Ways Congress Can Improve U.S. Business Bankruptcy System

Senator Elizabeth Warren has posted some prepared remarks Senator Discusses Ways Congress Can Improve U.S. Business Bankruptcy System.

It is an interesting discussion about structuring bankruptcy laws. There is one slightly sour note in those remarks.

The business world is littered with companies that were thought to be invincible — right up until the killer moment: Worldcom and accounting fraud, Blockbuster and disruptive new companies; PanAm and terrorism. Toys ‘R’ Us, Payless Shoes, Radio Shack and Gymboree were all once bright stars-stars that all fell in 2017.

She misses an opportunity to single out special cases like Toys ‘R’ Us. This bankruptcy did not occur because the original company had a bad business plan. The only disaster that befell the company was the attack by vulture capitalists who took the company private. These vulture capitalists used other people’s money (money from investors in their vulture capital business) to take Toys ‘R’ Us private. They then stripped the assets out of the company to pay huge salaries and fees to themselves. They also loaded up the company in debt to pay themselves even more salaries and fees. When the company ran out of assets to keep itself in business, they abandoned the company to bankruptcy court. The businesses that were owed money by Toys ‘R’ Us, the people who lent money to Toys ‘R’ Us, and the people whose pensions, jobs, and health insurance depended on Toys ‘R’ Us, were all left holding an empty bag. The vulture capitalists walked away fat and happy. Elizabeth Warren makes no mention of holding the vulture capitalists accountable for what they did.

Washington’s risky calculation of currency war

Global Times has the article Washington’s risky calculation of currency war.

A depreciating yuan would be favorable to China’s exports, but also put pressure on China’s capital flight, stimulate inflation and affect the market’s expectation of the country’s economic outlook. Why would China manipulate toward such a mixed blessing?

The renminbi’s recent fast depreciation is obviously a result of multiple market factors. And among them, the trade war launched by the US is a major driving force.

Here is a point of view I don’t expect that you will read in the USA’s corporate media. I wonder if #45 thought about this possibility when he started the trade war.

Bill Black: Trump Sees Europe as a “Foe” Because of Key Misinformed Advisor

New Economic Perspectives has the interview Bill Black: Trump Sees Europe as a “Foe” Because of Key Misinformed Advisor.

As I started to listen to this I was thinking that one of my favorite economists was going to say something that I didn’t like, but it turns out he was right on point for things after we got past the introduction.

If I had read the introduction below before I started watching the video, maybe I wouldn’t have been so nervous.

President Trump’s belief that the European Union’s trade policies are more unfair towards the United States than just about any other trading partner is woefully misinformed and the result of his reliance “nutcase” trade advisor Peter Navarro, says NEP’s Bill Black.