Naked Capitalism has the article Is China’s Debt Crackdown Hitting California’s Commercial Real Estate Bubble?.

This comes at a time when the Chinese government is cracking down on capital flows from China to other countries, particularly to fund real estate projects, and when it is also cracking down on the ballooning debt of Chinese conglomerates, after a reckless binge of buying up everything in sight. HNA, Anbang, and other conglomerates are now being forced to unload these toys. In HNA’s case, this includes the $305 million deal to sell a building in Manhattan a year ago. And it has put numerous other recent acquisitions on the market.

Anbang Insurance Group, which had purchased the Waldorf Astoria in New York for nearly $2 billion in 2014 and which in 2016 handed Blackstone Group $5.5 billion for a portfolio of 15 hotel properties, collapsed and has been taken over by Chinese regulators, and its founder was sent to prison. Now these investments are up for sale.

Chinese regulators are apparently not afraid to regulate, unlike their USA counterparts.

For a long time, as I have been reading Modern Money Theory (MMT) blogs, I have noted that some commentators have been warning about the untenable situation with Chinese private debt. Until recently, I could not understand what they were talking about. The whole point of MMT is that countries like China that are sovereign in their own currency cannot run out of money and default on their debt. Michael Hudson has been publishing a lot of material lately that has clarified the point that I had missed. Public debt of the Chinese government is not a problem just as I had thought, but private sector debt is quite another matter. That was the also the whole point of MMT, also, but I couldn’t connect the dots.

Compound interest on the private debt gets to be a drag (overhead) on the economy. Compound interest grows exponentially, but there is no economy in the world where the productive capacity of the economy can grow exponentially for very long. One way or another, the government will have to intervene to put an end to an unsustainable growth bubble of private debt. Michael Hudson has been publishing lately about erasing debt, so the economy could restart with a clean slate.

In the current situation, the Chinese government may have a different plan on how to puncture the bubble. As Naked Capitalism put it,

China gets a cold and California real estate gets pneumonia.

As investors frequently say, the action that will burst the bubble will come from an unexpected place. I have certainly have not been expecting the Chinese government to be the one to burst capitalism’s bubble.

Naked Capitalism has the article Venezuela Coup Attempt Part of US Plan to Remake Latin America.

The Wall Street Journal has just published an important, disheartening story, U.S. Push to Oust Venezuela’s Maduro Marks First Shot in Plan to Reshape Latin America. The Trump Administration has apparently decided to embark on a large-scale interventionist campaign to reverse supposed undue influence of Russia, China, and Iran in Latin America. Venezuela and Cuba are the first targets, and Nicaragua is next on the list. John Bolton, in too obvious a nod to Bush’s “axis of evil” has called them the “troika of tyranny”.

One would think the fact that our “remake the world in our image” plans worked out so well in the Middle East might curb US adventurism. And it isn’t just that we made a mess of Iraq, failed to break Iran, and failed to install new regimes in Afghanistan and Syria. The New American Century types are deep in denial that this geopolitical tussle not only cost the US greatly in terms of treasure, but it also wound up considerably enhancing Russia’s standing.

It is no accident that Bolton and Abrams of the New American Century fame have suddenly come back into the USA government.

The reason why Trump is so desperate for the wall is that he knows what flood of refugees is coming in response to his planned activities in Latin America.

The Nation has the article How the Right Is Using Venezuela to Reorder Politics.

The social-democratic wing of the Democratic Party must find a way to put forth a compelling counter-vision.

The article covers many important aspects of the situation in Venezuela. However, here is one excerpt I want to mention.

And the left Democrats want to keep the political debate focused on domestic politics: saner taxes, Medicare for All, and a Green New Deal are, in the context of the horridness of US domestic politics, a lot to take on.

Recognition of this desire of the left Democrats is exactly why Trump is trying to turn the focus to foreign affairs. The left Democrats have to be ready for evasive action by Trump to turn the political situation his way. If you ignore what he is doing to go around you, then he will succeed in out flanking you.

Another excerpt that struck me is the following:

“They want to make us into Venezuela,” he [Trump] said recently. As social rights—to health care, to education, to a decent life—gain in popularity, the right has perfected the “but Venezuela” response. In doing so, it conveys a whole, fairly coherent worldview. Ocasio-Cortez, say Republicans, is “hellbent” on turning Americans into “Venezuelan socialists”

Actually the fight is to turn back control to the oligarchs in Venezuela which is exactly what is going on in the USA with our oligarchs. Our oligarchs and the Venezuelan oligarchs want all wealth to flow to them. They want to keep the already down-trodden in their state of debt bondage, so that the oligarchs can have the run of the place.

January 29, 2019

It pays to follow links when they are offered.

Minnesota Representative Ilhan Omar provided the strongest statement: “We cannot hand pick leaders for other countries on behalf of multinational corporate interests,” she said. “If we really want to support the Venezuelan people, we can lift the economic sanctions that are inflicting suffering on innocent families, making it harder for them to access food and medicines, and deepening the economic crisis.” Those sanctions had considerable Democratic Party support.

Here is the referenced statement.

If we really want to support the Venezuelan people, we can lift the economic sanctions that are inflicting suffering on innocent families, making it harder for them to access food and medicines, and deepening the economic crisis. We should support dialogue, not a coup!

However, the comments tend to completely negate this statement. We don’t know who the commenters are, nor do we know what axe they have to grind. However, it does seem a little disingenuous to refer to his comment as “the strongest statement” without acknowledging that there is vehement dissent to that comment.

January 29, 2019

Here is a video recommended to me. It clarifies and confuses. Catastrophic Consequences What’s Really Happening in Venezuela.

New Economic Perspectives has the article Understanding Modern Money – Video.

Randall Wray presents in English the German version of his book “Understanding Modern Money”. The intro is in German, Randy’s presentation is in English.

No matter how much I think I understand about Modern Money Theory(MMT), I always gain additional insight by listening to the founders of MMT.

Now I understand what Wray means when he says that when government issues money, it is a debt on the government’s books. What the government owes you when you give it back its money is the cancellation of any debt you owe the government. Most of the debt you will owe the government is in the form of taxes, fees, or fines (or perhaps something you buy from the government, like a government published book). If you don’t have any debts to the government like these, then there is nothing the government owes you if you give it back some of its money.

This is one of the books that Wray mentions in the video: Margaret Atwood – Payback: Debt and The Shadow Side of Wealth.

The Real News Network has the discussion Defusing the Crisis: A Way Forward for Venezuela.

Venezuelan Sociologist Edgardo Lander and TRNN’s Greg Wilpert discuss how Venezuela got into its current international, economic, and political crisis and what it might take to get out of it.

Here is a somewhat more reasoned discussion of the issues facing Venezuela. It is certainly not up to the USA to decide anything for Venezuela. We can’t even have a reasoned discussion in the USA about our own politics. It would be silly to imagine that we can impose on Venezuela what we cannot even achieve in the USA.

The Real News Network has the panel discussion Attempted Coup in Venezuela with Abby Martin, Greg Wilpert, Paul Jay.

They don’t call this The Real News Network for nothing. You wonder how much the oligarchs’ media mouthpieces know they are lying to us, as opposed to being incredibly naive. I have no respect for Andrea Mitchell, but I used to think that Lester Holt had a smidgen of integrity.

Associated Press, for example, had an article that just came out today talking about how the Trump administration has been meeting with governments all over the country, all over the Latin American region, basically trying to get them to be on the same page. Juan Guaido himself snuck out of Venezuela and traveled throughout Latin America to make sure that everybody’s on the same page. This was an agreement, I mean, to do this. And actually it’s kind of surprising in a way that they managed to get away with it, because the Maduro government seemed to have been taken by surprise by all of this. But this was really planned in the long term.

I also wonder if the government shutdown in the USA was a distraction from the planning of this Venezuelan coup d’état.

The Real News Network has the video Is the US Orchestrating a coup in Venezuela?

Lucas Koerner in Venezuela analyzes the current developments with TRNN’s Sharmini Peries and Greg Wilpert

In the first few seconds of this video the lies of the USA oligarchs’ news media are exposed. I had been wondering how the USA intelligence agencies managed to get those huge crowds of opposition into the streets. These pictures that the USA oligarchs’ media have presenting were not at all what they pretended they were.

The report that I heard on the oligarchs’ NBC outlet never mentioned that the Venezuelan economic distress is being caused by USA sanctions that are strangling the economy. I shouted “bullshit” at the TV when they reported in this mendacious way.

Deficit Owls has posted the video from England called Money for Nothing.

We made this video essay as a pseudo Q&A to explain how the UK monetary system works. It’s based on 10 years of factual research. We explain money creation, tax, deficit, banks, fraud and debt.

Just be aware that the narrator has the pedagogical style of making firm statements in the beginning, and then later taking back some of the assumptions you might have inferred by what he said. I don’t particularly like that style, but he does say some things a little differently from the way you have heard it explained by USA proponents of MMT. Perhaps his style might suit your learning style better.

At first, I got hung up on his claim that the Government has to sell bonds to make up the difference between what it collects in taxes and what it spends. According to my understanding of MMT, this is completely false, unless Great Britain has a law like the USA does that says the central bank cannot give money directly to the treasury. If that is true, then it is only the law that requires the Government to sell bonds. There is no reason why this law has to exist, if the government didn’t want this law. This video initially and incorrectly leaves open the possibility that there is some law of economics that requires bond sales.

This is the impression I got from the first half of the video. Half way through the video, just after I stopped to write my above comment, he essentially did say that the need to sell bonds to make up the deficit is just a policy decision. This essentially negated (or clarified) what he had said earlier about the need to sell bonds. I don’t particularly like the pedagogic style of explaining something and then partially negating it later.

He did it again on another topic. I think his explanation of money creation by private banks is a little flawed. What he left out is what happens when a borrower takes the loan money out of the bank to spend it with someone who uses a different bank. This is when the lending bank has to be concerned about whether it has the money to cover the withdrawal because the recipient of the borrower’s payment is not going to put that money back into the same bank. He says nothing about the help (a loan) that the bank might need from the central bank to cover any shortfall.

The way I look at it, one of the businesses private banks are in his getting money wholesale, and lending it at retail. If the money that gets lent stays within the community of one bank’s customers, then it is really inexpensive for that bank to make a profit. When the lending bank does not have to pay anything for the money it created when it made the loan, then the interest it charges the borrower is almost all profit.

ZD Net has the article Ubuntu Core doubles down on Internet of Things which also includes the video below.

Canonical’s Ubuntu is best known for its Linux desktop, but the company really makes it money from the cloud. And, founder Mark Shuttleworth has said, the Internet of Things (IoT). So, it comes as no surprise that Ubuntu Core is bringing Ubuntu 18.04 Long Term Support (LTS) codebase to embedded devices.

As of this writing of this post, ZD Net inserts the wrong video. Here is the direct link to the ccorrect video The Role of Regulation in IoT Security

New Economic Perspectives has the article #AOC and MMT Spook the AEI.

William K Black expends the effort to write the critique of an article that I read, ‘Modern Monetary Theory’ Is a Joke That’s Not Funny. I was unwilling to spend my time criticizing the article. If I had Black’s skill, I might have said what was in Black’s article.

I’ll just give you an excerpt of the final summary that I have also been noticing.

There is only one reason that emerges from Strain’s text. His first sentence stresses that Alexandria Ocasio-Cortez supports MMT. The only other MMT proponent he identifies is Stephanie Kelton. The far right is obsessed with #AOC – and with her looks. Stephanie Kelton receives large numbers of comments, even in student course ratings, that focus on her looks rather than her prowess as an economist and teacher. This pattern is a common manifestation of misogyny, particularly against female economists. The variant of the Medusa myth that Strain explicitly uses emphasizes Medusa’s “beaut[y].” Strain’s variant of the Medusa myth is the one that combines female beauty and female rage into a ‘monster’ that destroys men. Strain’s Medusa metaphor and myth is another sad example of the far right’s obsession with #AOC in particular and strong women in general.