On Friday night in Cologne Germany, Wrongo and Ms. Right had the chance to see a great young female duo who play classical music. Sophie Moser (violin) and Katja Huhn (piano) played selections for a mostly American audience. They perform under the name Duo Moser-Huhn. Here they are playing the Romanian Folk Dances by Bartok, composed in 1915. Sophie was a child prodigy, and plays an Amati violin built in 1743. They have few YouTube performances, so hopefully, you will enjoy this:
On to cartoons. Der Donald is on his first overseas tour as president. He is in Saudi as this is written, before his big speech on Islamic Terrorism. So you will already know just how well that was received by the 50 or so heads of state in the audience.
Trump prepares for landing:
Opinions on his Middle East visit vary:
John Fugelsang called Trump’s meeting with the Pope “His Holiness meets His Assholiness”:
Bluebells, Brussels Belgium April 2017 photo by Francois Lenoir
In many ways, it is too easy to criticize Donald Trump. While we can have differing opinions on matters of policy, they only account for a few of the issues Wrongo has with Trump. Most are his unfathomable attempts to avoid telling the truth. Consider his interview with The Economist which posted the entire transcript on Thursday. Let’s focus on this excerpt:
The Economist: Another part of your overall plan, the tax reform plan. Is it OK if that tax plan increases the deficit? Ronald Reagan’s tax reform didn’t.
Trump: Well, it actually did. But, but it’s called priming the pump. You know, if you don’t do that, you’re never going to bring your taxes down.
[Snip]
Economist: But beyond that it’s OK if the tax plan increases the deficit?
Trump: It is OK, because it won’t increase it for long. You may have two years where you’ll…you understand the expression “prime the pump”?
Yes. We have to prime the pump.
It’s very Keynesian.
We’re the highest-taxed nation in the world. Have you heard that expression before, for this particular type of an event?
Priming the pump?
Yeah, have you heard it?
Yes.
Have you heard that expression used before? Because I haven’t heard it. I mean, I just…I came up with it a couple of days ago and I thought it was good. It’s what you have to do.
Ok, so how did the guy from the Economist keep a straight face? The reporter is thinking John Maynard Keynes, the great British Economist, who came up with the idea of “priming the pump” in the 1930’s. By the way, Keynesian pump-priming is temporary government spending to boost temporarily weak demand. It is designed to boost growth, (and jobs) during a downturn, but we can’t assume that it will boost the economy’s growth rate.
Trump’s idea for pump-priming is more tax cuts. He’s following classic trickle-down economics, and claims that his tax cuts will boost investment, productivity growth, and labor supply, and thus raise the long-term growth rate of the economy. In this regard, Trump conflates Keynes, who’s been proven right, with Arthur Laffer, who wasn’t.
But, didn’t Trump graduate from Wharton with a business degree? Nobody gets out of Wharton without knowing that Keynes was the “pump primer”. And his saying that he coined the phrase ‘prime the pump’ a few days ago? Unfortunately, there are only two explanations: first, Trump is 70 years old and his cognitive skills are starting to desert him. Or second, he is a pathological liar.
Wrongo wants to go with #2.
He just wants to sell America something with his name stamped on it. But since America isn’t buying a hotel, he’s trying to sell Trumponomics, Trumpcare, etc. He does not really care about the details, he just wants to pass it, and to claim it is a success. That’s America’s tragedy.
So with Comeygate, Trumpcare and pump-priming, we all need to unplug and try, just try to relax on Saturday. We had a full moon and clear skies over the fields of Wrong on Thursday, so today we listen to “Claire du Lune” by Claude Debussy. It is the third movement of “Suite bergamasque”. Its name comes from Verlaine’s poem Clair de Lune, “moonlight” in French. Here it is played by Dame Moura Lympany, British pianist, who died in 2005:
Those who read the Wrongologist in email can view the video here.
For the past few days, it has been “All Comey, all the time”, both in America and around the world.
You can count Wrongo as one of those who thinks that Comey made some huge mistakes trying to position himself after his take-down of Hillary Clinton, and her self-inflicted email disaster. You can also count Wrongo as thinking that Hillary’s loss was mostly her own fault. That means that you can also count Wrongo as agnostic regarding whether the Russians were behind the hack into the Democratic National Committee, or that their intervention was because they wanted to help Trump win the election.
Democrats argue that Trump and/or members of his administration are “soft on Russia”. Democrats have adopted a neo-con worldview that just a few years ago, they would have hated: That policies are either pro-America or pro-Russia. And, it’s in that pro-Russian box that Democrats are trying to stuff The Donald.
This makes Democrats blind to the possibility that people (even Trump!) could genuinely believe that it’s in America’s interest to be friendlier to Russia. That we could cooperate on certain issues without being agents of Putin. Perhaps you remember that Obama said just that in his first term.
It’s the kind of game that has become acceptable in today’s Washington swamp.
Wrongo isn’t happy with Comey’s performance as FBI director, but we now stand on the edge of a precipice without him. He ran into trouble because AG Loretta Lynch had to recuse herself during the Clinton email investigation. That led to his free-lancing, and his inexplicable testimony. Then AG Sessions had to recuse himself from any Russia-related investigation. And shortly thereafter, the tempo of the investigation changed, and Comey needed someone to approve additional resources for the Russia investigation. The WSJ reported:
Comey started receiving daily instead of weekly updates on the investigation, beginning at least three weeks ago…Comey was concerned by information showing possible evidence of collusion.
Now, the firing of Comey opens up the FBI and the DOJ, by custom and tradition an agency that is independent from politics, to outside political control, to a new director forcing a reduction in funding or other resources critical to the investigation.
Ostensibly, the issue isn’t the fact that Comey was fired. It’s about the timing. In turn, that is directly linked to the fact that the FBI is investigating Trump. Most think that the FBI Russia operation was breathing down the neck of the Trump campaign and their operatives. They think that the Comey firing is an effort to slow down, or wind down, the investigation prematurely.
The question is, will the new FBI director do either of those things? Wouldn’t the FBI agents involved in the investigation revolt/go public if a new director defunded the effort, and/or reduced the commitment to it? And the FBI is not running the investigation by itself. Their investigation is overseen by prosecutors. We heard this week that there is a grand jury. We hear that they’re issuing subpoenas. That’s not being done by the FBI. It’s being done by prosecutors in the DOJ.
And that’s where the ball sits. The American people have to rely on AG Jeff Sessions, who may be recused, but who guarantees that? Or it rests with Deputy AG Ron Rosenstein, who is in the job for a couple of weeks. Or it rests with a to-be-appointed FBI Director. Bloomberg is reporting that Trump is considering former Congressman and former FBI agent Mike Rogers, who is far too political, or former New York City Police Commissioner Ray Kelly, who is all hat and no cattle.
There are hundreds of thousands of stories and millions of words being written about this. Trump shouldn’t expect this to go away.
In fact, he should publicly support getting to the bottom of it, rather than acting like Richard Nixon. That didn’t end well.
Some music: Here are the Waifs, an Australian blues/rock band formed in 1992, fronted by two sisters, doing “Crazy Train”. It’s the train America is on right now:
Those who read the Wrongologist in email can view the video here.
Lanterns lit last week for Buddha’s Birthday, Samgwangsa Temple, Busan, South Korea – photo by Jason Teale
Yesterday, Wrongo mentioned that Russia might prove helpful to Donald Trump in his efforts to deal with a nuclear-capable North Korea (NK). Today, Stratfor has a column about Russia’s relationship with NK. Rather than quote extensively from a long article, Wrongo has condensed from it, particularly about the history of Russia/North Korean relations.
History gives perspective: The Soviet Union and the US were the actors that split North and South Korea at the end of WWII. In the 1950s, both Koreas became a proxy battleground, pitting the communist North against the US-aligned South. After China and North Korea agreed to an Armistice with the UN and South Korea in 1953, the Soviets helped to build up the military and security forces in NK, ensuring its stability. Some Soviet-era military equipment is still in use today.
The Soviets were a key NK economic partner throughout the Cold War. They accounted for nearly half of NK’s foreign trade in the 1970s and 1980s. After the collapse of the Soviet Union, trade dropped off. China now accounts for 90% of NK’s imports, but about a third of that is Russian-sourced.
Putin saw the strategic value of good relations with NK, including how Russia could manipulate its influence in the region to pressure NK, or to put pressure the US and South Korea. Russia has criticized NK’s nuclear weapons tests and ballistic missile programs, and participated in the six-party nuclear disarmament talks along with China, the US, Japan and North Korea and South Korea.
In 2014, Russia joined in levying sanctions against NK, halting supplies of ships, helicopters and minerals in response to its continued nuclear tests. But, neither China nor Russia has cut their economic or military ties with NK. And both governments have opposed expanded sanctions or regime change.
Russia and NK have improved ties since the breakdown in Russia’s relations with the West over Crimea and Ukraine. In 2014, Moscow officially settled NK’s Soviet-era debt of $11 billion, forgiving most of it. NK granted Russian business executives long-term multiple-entry visas for the first time. In addition, Russia has provided millions of dollars’ worth of food aid to NK in recent years, including nearly half of the country’s grain imports.
One way that the two countries have expanded their cooperation is through the employment of temporary NK workers in Russia. Nearly 50,000 North Koreans were granted Russian work permits in 2015. In April, Russia’s parliament passed a bill allowing NK workers to travel visa-free to Vladivostok. Russia estimates that North Korea receives $170 million in remittances from its workers in Russia.
No doubt, Russia sees its relationship with NK as small potatoes. But Russia is not small potatoes for NK. While it will not replace China as NK’s primary partner, Russia has the capacity to play spoiler to the US plans to control NK’s nuclear ambitions. Today, Russia has its hands full with Syria, Crimea and Ukraine. But, its influence on the North Koreans can give it leverage, in the event that America’s Orange Negotiator needs help making a deal on the Korean peninsula.
Putin could add weight to China’s effort to lean on NK, forcing NK to come to the table. In return, His Orangeness might be persuaded to go easy on Putin’s goals in Ukraine or Syria, in addition to whatever he will owe China, if the pressure succeeded.
Russia can’t solve our problem with NK, but it might be able to move the dial enough either to play the spoiler, or to be an ally in any American efforts to defuse the Korean problem.
Here is a martial song from North Korea: “Leader, Just Give Us Your Order!” Don’t you just wonder what that order will be?
https://www.youtube.com/watch?v=UICK5ZiPdVg
Those who read the Wrongologist in email can view the video here.
Warning! Don’t scroll through the comments, it weakens the mind. A recent one says:
“Comrade Kim Jong Un, just give us the order to wipe out all imperialists and to reunificate Korea!”
Last Thursday, Iran, Russia and Turkey signed a memorandum on the creation of “de-escalation” zones in Syria. This represents the beginning of a new phase in the Syrian civil war. If the agreement and the cease-fires it envisions hold up, it could become a de facto partition of the country into zones of influence, some based on religious sect, and a recognition that at this point, neither the regime nor the rebels can win this conflict.
A glance at the placement of the proposed “de-escalation zones” shows that they are jihadi dominated areas under the protection and support of foreign sponsors; Saudi Arabia, Israel, Turkey, the Gulf States and possibly, the US.
The text of the agreement says the de-escalation zones allow for an improvement of the humanitarian situation and to “create favorable conditions to advance a political settlement of the conflict.” In the zones mapped out under the agreement, the use of weapons, including “aerial assets, shall be ceased.”
The agreement was not signed by the Syrian regime, which is interesting. This means that Iran, Turkey and Russia are the guarantors of the facts on the ground post-agreement, and it shifts the conflict from one between the regime and the various opposition rebel groups, to one between the powerful foreign proxies that have sent weapons and in some cases, their armed forces into the country.
The US was not a direct participant in the negotiations for the agreement, but was present as an observer during the discussions. US Secretary of State Tillerson and his Russian counterpart, Sergei Lavrov, stayed in touch during the discussions.
The agreement shows the degree to which Russia has outmaneuvered the US and is dictating terms in Syria. This sends a clear message to Trump that while the Americans are putting down roots in northeast Syria with the Kurdish YPG, the US role is not formally recognized by Turkey, Iran or Russia despite the fact that the area is de facto under US protection.
It remains to be seen if this agreement is the beginning of the map for a new Syria or just breathing space before the next round of war.
This is a gift for Donald Trump. He consistently called for safe zones while campaigning, so he can easily support this move. Also, Putin and Trump seem to be tacitly co-operating to keep Turkey out of parts of northern Syria. A question is whether the US will go along with the plan. The US plans to stay in Syria to finish off ISIS, while the other powers prefer to finish off the rebels fighting the Assad regime first.
Despite that, ISIS still controls much of the land mass of Syria, albeit not its population centers.
The answer may depend on how much the White House wants to take at least some of the credit for bringing peace to Syria, and Thursday’s agreement may be the best shot America’s got.
Clearly, Putin is thinking in terms of a “grand strategy”, where the Syria situation is one of a number of critical elements of a possible US-Russia relationship. If the US-Russia relationship can be genuinely reset in a better direction, then it will impact many fronts: Perhaps Putin can get Trump to agree to Putin’s land grab in Crimea and the Donbass region of Ukraine. Perhaps they can work together to end the civil war in Syria, defeating ISIS along the way.
Notably, when Tillerson and Lavrov spoke last week, Syria and North Korea were two topics on their agenda. Maybe Russia could prove to be a more important factor in the North Korea situation than most realize.
So wake up Trump administration! Take that baby step forward by supporting the de-escalation agreement. If it fails, the other guys are to blame. If it succeeds in stabilizing the refugee situation while leading to a political solution in Syria, the credit will partially accrue to America. To help them wake up, here are the Rolling Stones with “Start Me Up” from their 1981 album “Tattoo You”:
Those who read the Wrongologist in email can view the video here.
Tulips, Lisse Netherlands, April 2017 – photo by Peter Dejong
We ended the week with Republicans in the House passing the latest version of Trumpcare by a vote of 217-213. All Democrats voted against it, with 20 Republican members defecting to join them. The changes Republicans made to get this version of bill through the House will not be what passes in the Senate. It’s up to Mitch McConnell to craft a bill that can get through the Senate using the budget reconciliation process, which will require 51 votes to pass.
That will most likely be the “real” bill, and then the negotiations between the House and Senate versions will begin.
The problem for America is that the Senate has to pass something awful enough that the House will still vote for it. We are a long way from replacing Obamacare, but Republicans now own the process whereby tens of millions of Americans losing health insurance.
If that isn’t enough to worry about, Buzzfeed has a long read about tiny drones that can be used in a swarm to kill people:
A very, very small quadcopter, one inch in diameter can carry a one- or two-gram shaped charge. You can order them from a drone manufacturer in China…A one-gram shaped charge can punch a hole in nine millimeters of steel…You can fit about three million of those in a semi-tractor-trailer. You can drive up I-95 with three trucks and have 10 million weapons attacking New York City. They don’t have to be very effective, only 5 or 10% of them have to find the target.
The concept is achievable, while the potential consequences are unthinkable:
There will be manufacturers producing millions of these weapons that people will be able to buy just like you can buy guns now, except millions of guns don’t matter unless you have a million soldiers. You need only three guys to write the program and launch them. So you can just imagine that in many parts of the world humans will be hunted…This is the ever-present cloud of lethal autonomous weapons.
They could be here in two to three years.
— Stuart Russell, professor of computer science at the University of California Berkeley
They are called lethal autonomous weapons systems (LAWS); weapons that have the ability to independently select and engage targets once a human releases the machine to perform: no supervision, no recall, and no stop function.
Can we prevent them? Nope, they already exist. Many countries including the US already have (much larger) systems with autonomous modes that can select and attack targets without human intervention: Israel’s Harpy and second-generation Harop, can enter an area, hunt for enemy radar, and kamikaze into it, regardless of where they are set up, as long as the radars are operating.
The Pentagon now is testing drone swarm technology: Weapons moving in large formations with one controller somewhere far away on the ground clicking computer keys. Think hundreds of small drones moving as one, like a lethal flock of bees. You can see a YouTube video of a US drone swarm test here. 103 mini drones were released from two US fighter jets during the test. The drones operate autonomously and share a distributed brain. These drones will make it economical to target people (troops?) in other countries, en masse, without having to send in our own soldiers, or declare war.
Why are we wasting even more human potential devising even more ways to kill each another?
Sorry, this story adds to your stress levels after a tough week, but Wrongo thought you should know. OTOH, with all that is going on, you really need soothing. Wrongo is going for some Stumptown Colombia El Admirador coffee and a listen to “Spring”, from Vivaldi’s Four Seasons, arranged for four pianos.
On Saturday, Wrongo scoffed at David Brooks, who said that Donald Trump’s foreign policy moves:
…have been, if anything, kind of normal…
Another part of US foreign policy that is FAR from normal is our effort to square the circle between our NATO ally Turkey, and our Kurdish allies in Syria and Iraq, who are fighting with us to eliminate ISIS as a force in Syria.
Last Tuesday, Turkey triggered a crisis when it launched airstrikes on US-backed YPG Kurdish fighters. The YPG is a Syrian sister organization of the Kurdish PKK Party in Turkey. Turkey believes the YPG and the PKK are terrorist groups whose goal is to destabilize Turkey.
Within Syria, US Special Forces are embedded with the YPG and are coordinating YPG’s moves against ISIS around Raqqa. The Turkish airstrikes killed at least 18 people, destroying the group’s headquarters. The airstrikes triggered heavy artillery and mortar exchanges between Turkish troops and Kurdish forces along the border, raising concerns that Turkey might send its forces into Syria, something the US opposes.
The YPG wants to divert forces from the attack on Raqqa to protect against further Turkish adventures, something the US doesn’t want. Now we learn that the US has placed some of its very limited military resources in Syria between the Turks and the Kurds in an effort to calm the hostilities. From the WSJ:
American forces have started patrolling the Turkey-Syria border to prevent further clashes between Turkish troops and Kurdish fighters, which could undermine the fight against Islamic State, U.S. officials said Friday.
This is the second time we had to break up the fight between the Turks and the Kurds in Syria. We made a similar move last month in Manbij, a northern Syrian town at the epicenter of a fight between Kurdish forces, Syrian government troops and Turkish-backed militants.
We have become our own UN-style peacekeeping force between Turkey and our Kurdish allies in the midst of our very real effort to take Raqqa from ISIS.
So, where are we going with Turkey, the Kurds and Syria? In the ME, the Kurds are one of the few groups the US can trust to perform militarily. They have fought alongside our troops in this region for years. In the past, we have sold them out in favor of Iraqi and Turkish geopolitical desires more than once.
OTOH, Turkey is a NATO ally, one who is the enemy of our Kurdish allies. We have several Airbases in Turkey which help with the fight against ISIS in Iraq and Syria. If the Turks asked us to leave, our military effectiveness in the ME would be seriously weakened.
More than 25 million Kurds live in the region straddling the borders of Turkey, Iraq, Syria, and Iran. They are the fourth-largest ethnic group in the ME, but they do not have a permanent nation-state. The Kurds can see that a state could be created from the NE portion of Syria, and the region they already control in Iraq, if the Turks, along with Syria and its allies would allow it to happen.
Where does the US stand on this? Would we back the Turkish aspiration to control a Syrian buffer area between the Kurds to the East in Syria and in Iraq, and the Kurds in the West in Syria?
Would Russia, Syria, and Iran allow Turkey to succeed at that? What would happen if Russia and Iran moved against Turkey, if the Turks established a foothold in Northern Syria? Would the US come to Turkey’s defense?
Turkish President Erdogan is visiting Trump in DC in mid-May. Last Friday, Mr. Erdogan said he would personally urge Mr. Trump to stop working with the YPG, but Trump plans to directly arm them. What will the US response be to Erdogan, who looks more like a dictator controlling our only Islamic NATO ally?
Time for Trump and the State Department to wake up and solve the complex issues in Syria. Who knew being president would be so hard? This is not a time for shooting from the hip, or for deal-making, but for establishing principles for the end game in Syria with our most difficult NATO partner.
To help Trump and Tillerson wake up, here is the progressive rock band Yes, Rock And Roll Hall Of Fame inductees. The ceremony was broadcast Saturday night on HBO. The band’s co-founder, Jon Anderson, reunited for a performance of “Roundabout” from 1971. He’s here with bassist Geddy Lee, guitarist Steve Howe, keyboardist Rick Wakeman, guitarist Trevor Rabin and drummer Alan White:
Those who view the Wrongologist in email can view the video here.
Welcome to spring, which has brought a dandelion horror show to the fields of Wrong. Apparently, these are mutant dandelions, completely immune to the weed killer we put down three weeks ago.
But that is far from the only horror show underway in the lives of average Americans. The Trump 100-day roasting or celebration, depending on your viewpoint, is underway today. The NYT’sDavid Brooks has a perceptive look at the Trump presidency so far: (emphasis by Wrongo)
I wish we had a president who had actual convictions and knowledge, and who was interested in delivering real good to real Americans. But it’s hard to maintain outrage at a man who is a political pond skater — one of those little creatures that flit across the surface, sort of fascinating to watch, but have little effect as they go.
Hard to maintain outrage? Brooks, (not a Wrongo fave) elsewhere minimizes the real and potential damage that the country will face with our Orange Overlord. He still is commander-in-chief and, as such, has his (figurative) finger propped on the (figurative) nuclear button, and can order military action at a moment’s notice. Yesterday, Trump said that
There is a chance that we could end up having a major, major conflict with North Korea. Absolutely…
That should have made David Brooks cringe, but it didn’t, Brooks opined that:
His foreign policy moves have been, if anything, kind of normal…
Really? Trump says whatever is on top of his mind, words that North Korea’s Kim Jong-un just might take as a pre-invasion threat. That could lead to war with millions of South Koreans, Japanese, or American citizens paying the price for Trump’s bellicosity.
Think about how the Trumpets created a nuclear scare in mid-April: NBC News reported that they were considering a pre-emptive nuclear strike:
EXCLUSIVE: US may launch preemptive strike if North Korea reaches for nuclear trigger, intelligence officials say http://nbcnews.to/2owFmep
After some hysteria, including the false (inaccurate?) reporting of the location of our Aircraft Carrier Carl Vinson, which wasn’t steaming toward a North Korea confrontation, cooler heads have prevailed, and we are now talking about direct talks with the NK’s. Not much of this is new. Consider this from 2010 by Mark Landler of the NYT:
President Obama’s patience with China had been fraying for months, and by November 2010 he was fed up. Meeting with President Hu Jintao in Seoul, South Korea, Mr. Obama warned that if China did not do more to curb North Korea’s bellicose behavior, he would have to take steps to shield the United States from the threat of a nuclear missile attack from the North.
Sounds like where we are today, although the GOP likes Trump’s mas macho ways better than it liked Obama’s.
Once we are done insisting that China will fix this problem for us, and it turns out there’s no real Plan B, Trump will have to consider what it takes to strike a bargain with the North Koreans, or we’ll learn to live in the same dangerous situation that Japan and South Korea already face.
Onward to something that both calms and soothes. Wrongo is going for Chai Latte this morning, along with his Saturday music. Your mileage may vary.
Edward Elgar composed the Enigma Variations between October 1898 and February 1899. It is an orchestral work comprising fourteen variations on a theme. The “Nimrod” is variation IX. This variation is sometimes used at British funerals, memorial services, and other solemn occasions, like your review of Trump’s first 100 days in office. Here is Daniel Barenboim conducting the Chicago Symphony at Carnegie Hall in 1997 in Elgar’s “Nimrod” variation:
Those who read the Wrongologist in email can view the video here.
African Elephants clearly are not deficit hawks. But, neither are most Republicans in Congress, despite all their complaining about spending that adds to the deficit. Trump’s tax proposal is out. It’s interesting that the administration decided it was a good idea to put a vague blueprint laying out big tax cuts on a single sheet of paper.
As President Trump’s top economic advisers faced a barrage of questions on Wednesday about the tax plan they had just unfurled, there was one that they struggled most to answer: how to keep the “massive tax cuts” they proposed from ballooning the federal deficit…Republican budget hawks will need to decide whether they want to stick to the arguments of fiscal responsibility that they used to bludgeon Democrats during the Obama era.
More from the NYT: (emphasis by the Wrongologist)
Mick Mulvaney, director of the Office of Management and Budget, who was a fierce critic of deficits when he was a member of Congress, offered a glimpse of the rationale his former colleagues might embrace. “As a conservative, that bothers me a little bit,” he said Tuesday on CNN of the possibility that Mr. Trump’s tax plan would increase the deficit. “But we also look at deficits through sort of a different lens.”
While we haven’t yet seen definitive estimates of the cost of Trump’s one-pager, it will certainly add to the deficit, and the negative numbers range up to an additional $6 Trillion over the next 10 years.
And when Treasury Secretary Mnuchin says that Trump’s tax plan “will pay for itself,” he isn’t credible. He also told ABC News that he couldn’t guarantee that middle-class families wouldn’t pay more under the proposal:
I can’t make any guarantees until this thing is done and it’s on the president’s desk. But I can tell you, that’s our number one objective in this…
Word salad. Helping the middle class is the furthest thing from their minds. Trump, Mnuchin, Ryan and the rest want to give a targeted stimulus to the rich and corporations.
They disguise tax cuts by calling them “tax reform”. Whatever they call it, they want the biggest tax cut for rich people that they can push through the House and Senate. Calling it “tax reform” is useful because “yuuge tax cuts for the rich” won’t be all that popular politically.
It’s inevitable that “middle class families” will end up paying more. Somebody’s got to pay for that massive military buildup. And the GOP cries of deficit piety are a shell game. Here is Kevin Drum:
When does this nonsense stop? Republicans aren’t deficit hawks. They haven’t been since the Reagan era. Republicans used to be deficit hawks, but the whole point of the Reagan Revolution was that tax cuts were more important than deficits. Their only concern about the deficit these days is as a handy excuse for opposing any increase to social welfare programs.
Trump’s tax plan is the same old Republican orthodoxy that has been around for decades.
Wrongo recommends this article from Fortune Magazine in 1955: “How Top Executives Live”. The GOP constantly says that if the 1% are forced to pay high taxes, they won’t work as hard to innovate and create jobs. This article, from the time when personal tax rates went from 40%-75%, shows they didn’t need low taxes back then to work hard:
The successful American executive, for example, gets up early–about 7:00 A.M.–eats a large breakfast, and rushes to his office by train or auto. It is not unusual for him, after spending from 9:00 A.M. until 6:00 P.M. in his office, to hurry home, eat dinner, and crawl into bed with a briefcase full of homework. He is constantly pressed for time…
Wrongo is cranky about the GOP’s desire to always shift the tax burden downward, and about their success in doing it. What Trump will get passed is another round of debt-financed upper-class tax cuts.
That will suit Trump and Ryan just fine.
Let’s go out with some music that references the life and times of Jonathan Demme, director of “Silence of the Lambs” and “Philadelphia”, who died on Wednesday. Demme also directed the best Rock movie ever made, “Stop Making Sense” featuring the Talking Heads. Here is “Life in Wartime” live, and that’s Parliament – Funkadelic’s Bernie Worrell on keyboards. This isn’t the first time Wrongo has posted this video:
https://www.youtube.com/watch?v=obAtn6I5rbY
Those who read the Wrongologist in email can view the video here.
Cougar with Radio Collar – Griffith Park, Los Angeles, via Nature Photography
Retailers are closing thousands of stores and going bankrupt at a rate not seen since the Great Recession, and tens of thousands of people are losing their jobs as a result. Although thanks to insolvency experts like Bankruptcy Calgary operated by Hudson & Company, solutions are available to help individuals struggling with debt, the atmosphere for retailers seems far more bleak.
Retailers blame Amazon and other online vendors for the lack of physical sales nowadays. This could be true as more and more people do seem to find it easier to order online than physically enter a store to purchase a product. With e-commerce sales booming, more businesses seem to be offering online products. These e-commerce sites can use recurring billing, if they please, to increase their sales. This works by turning customers who would only purchase something once into customers who are regularly making a payment. However, one reason that many businesses seem to succeed is due to software, like samcart, offering their customers a hassle-free checkout. This means that the whole process of ordering online is becoming so much easier for the consumer that it’s not surprising that retail stores are beginning to feel the effects.
While some brick-and-mortar retailers are doing well, many are losing money. The Atlantic reports that:
Overall retail employment has fallen every month this year. Department stores, including Macy’s and JC Penney, have shed nearly 100,000 jobs since October-more than the total number of coal miners or steel workers currently employed in the US.
But the e-commerce industry won’t rescue out-of-work retail employees. Most warehouses are regional, and located far from residential areas, which means they might not be within a reasonable commuting distance for displaced workers. By contrast, retail stores are typically located near residential centers. E-commerce warehouses also employ fewer people than retail stores, since the warehouses are increasingly automated, and no longer need to buy roll cages from PHS Teacrate or other companies due to not needing stock delivered to smaller stores.
One of the reason so many real world retailers are hitting the wall so hard is that private equity leverage and asset stripping made them particularly vulnerable. While the losses to online retailers would have forced some downsizing regardless, the fact that so many are making desperate moves in parallel is in large measure due to the fact that…their private equity (PE) overlords have made them fragile.
That’s a new angle for evaluating Amazon’s performance: it’s not that retailers are closing because Amazon is expanding, but Amazon is expanding because retailers are closing. Jeff Bezos should be thanking the PE firms for looting the retail industry.
The Federal Reserve’s low interest rates also made it easier for Private Equity funds to load these retailers up with debt. Management could borrow more money than necessary, pay themselves cash bonuses, and claim “interest rates are low; making payments will be easy“.
They would even show you the math. Of course, that math assumed that store sales would continue climbing in the future. If sales fell, high debt payments could quickly become an outsized burden.
The Private Equity all-stars often follow a particular deal model. After purchasing the retail company, the PE firm sells the real estate owned by the retail company to another entity (owned by the PE fund). Then the retail company makes lease payments to its new landlord. This splitting of the assets into an operating company and a property company allows the PE fund manager to make a cash distribution to its investors early on, producing a quick return on the deal. Later, the property company will be sold.
The problem with this approach is that businesses that choose to own their real estate are typically seasonal businesses, as all retailers are. Or they are low margin businesses particularly vulnerable to the business cycle, like restaurants. Owning their property reduced their fixed costs, making them better able to ride out bad times.
To make this picture worse, the PE firms often “sell” the real estate to itself at an inflated price, which justifies saddling the operating business with high lease payments, making the financial risk in the operating company even higher. Of course, those high rents make the property company look more valuable to prospective investors, who may fail to look close enough at the retailer who is paying the rents.
Companies with little debt generally can survive lower sales. They can engage in cost-cutting, maybe encourage some employees to retire early, etc. It’s easier to survive if they own their own property. But when you’ve got a lot of debt, and servicing that debt requires that sales continue to rise quarter after quarter without fail, then things become a LOT more fragile.
Trump claims he’s created 500,000 new jobs in his first 100 days. Notice that he doesn’t say what these jobs are, or where they were created. Certainly they weren’t in Retail. Or Coal. Or Steel. Those jobs aren’t coming back.
Here is Jonathan Richman with his 1990 song “Corner Store” which laments what towns have lost to the malls:
Those who read the Wrongologist in email can view the video here.
Takeaway Lyric:
Well, I walked past just yesterday
And I couldn’t bear that new mall no more
I can’t expect you all to see it my way
But you may not know what was there before
And I want them to put back my old corner store.
