Central Banks Wage War on Markets: Bill Bonner Says They Will Lose; Fed Up Yet?
Central Banks Wage War on Markets: Bill Bonner Says They Will Lose; Fed Up Yet?
This article is published in collaboration with Scutify, where you can find real-time markets and stock commentary from Robert Marcin, Cody Willard and others. Download the Scutify iOS App, the...
This article is published in collaboration with Scutify, where you can find real-time markets and stock commentary from Robert Marcin, Cody Willard and others. Download the Scutify iOS App, the Scutify Android App or visit Scutify.com.
Daily Reckoning founder Bill Bonner thinks central banks are waging war on the markets. He also believes they will lose.
I wholeheartedly agree with Bonner's rationale. Let's tune in.
This is a guest post courtesy of Bill Bonner and the Daily Reckoning.
Why the Feds Will Lose Their War on the Markets
The markets continue to dawdle. Not much conviction in either direction.
We've already looked at the War on Poverty, the War on Drugs and the War on Terror.
So let's move on...using our new lens to look at another of the feds' fake wars.
Dirty War
No war was ever officially declared against the markets.
But for four decades the feds conducted covert operations...a dirty war in which they've tried to mislead, obstruct, and suppress market forces.
They used fake money, fake savings, and fake interest rates to confuse investors, businesses, and consumers.
They didn't say so directly, but their purpose was to give out false signals so that people would change their behaviour.
'Demand' was too weak, they said. What to do about it?
They flooded the system with phony savings (credit).
Price signals were distorted. Credit limits seemed to disappear. Debt limits were eased.
Then, in 2008, the war turned hot...with the feds actively and overtly holding down interest rates to push up stock and bond prices.
In response to the crisis they caused - by encouraging too much debt in the housing sector - they claimed that the 'free market' had failed.
They were just responding to the 'emergency', they said.
Soon, everybody got in on the act - expressing an opinion about how high (or low) interest rates should be.
Force and fraud
Believe it or not, an activist group called 'Fed Up' argues that raising rates is...you guessed it...racist!
Institutional Investor magazine reports that a group funded by 32-year-old Facebook cofounder Dustin Moskovitz is lobbying against rate increases on the grounds that higher rates are bad for US workers. From the website:
'The truth about the economy is obvious to most of us: not enough jobs, not enough hours, and not enough pay - particularly in communities of color and among young workers.
'Some members of the Federal Reserve think that the economy has recovered. They want to raise interest rates to slow down job growth and prevent wages from rising faster. That's a terrible idea.
'We stand with millions of workers and their families in calling on the Federal Reserve to adopt pro-worker policies for the rest of us. The Fed can keep interest rates low, give the economy a fair chance to recover, and prioritize full employment and rising wages.'
What? Who are these people? Do they have tails? Horns?
They're right about one thing: When the Fed tries to control the economy, it is politics, not markets, at work.
Markets work by persuasion and voluntary exchange. Politics works on force and fraud. Fed Up is a political organisation trying to influence how the force and fraud is applied.
But let's look at the feds' War on Markets through our now-familiar scope.
Victory is impossible
First, is this a war the feds can win?
No. Of course not.
Markets can be suppressed, delayed, and denied...but never eliminated.
Markets do not stop working just because you try to bend, distort, and even outlaw them. Victory is impossible.
The market for drugs does not stop just because the feds make them illegal. Instead, they reprice illegal drugs, taking into account the increased cost of doing business.
Nor does poverty disappear just because the feds make war on it.
'The poor will always be with you,' said Jesus, wisely.
Wealth and poverty are relative; there will always be some rich and some poor. Passing laws will not change that.
And 'terrorism'?
Those who do not have access to conventional armies always resort to unorthodox attacks.
That's what American colonists did when they launched their war against the British in 1775.
It's what the Jews did when they launched their 'insurgency' against the British in Palestine in 1939.
And it's what the Maquis did during the occupation of France by the Nazis during the Second World War.
Terror won't stop any time soon. Nor will markets cease to function.
Bubbles, bankruptcies, and misery
Second, does the enemy gain strength from the 'war' against it?
Well, yes and no.
Markets work perfectly well whether you make war on them or not. Governments can put any price on anything they want. But only markets can tell you what they are worth.
Just look at what happened in the Soviet Union. Or China, pre-1979. Or Venezuela.
Who bought anything from China when the communists were setting prices?
Who goes to Venezuela to do his shopping today?
We visited Russia soon after the Soviet Union was disbanded. Markets were just opening up. But after 70 years of price fixing, there was almost nothing to buy. Almost everything that was being sold had been pilfered from the army. We bought a pair of boots for $1.00. We still have them. The soles are so stiff they barely bend.
There are really only two types of economies - command economies and market economies. The latter work for everyone - but you never know who the real winners will be. The former work only for the commanders. Then, when they have stolen everything there was to steal, markets reassert themselves.
Economies are price-discovering, information-generating learning systems. On the world market, every economy has access to the same resources, more or less. It's what you do with them that counts.
Dictating prices is like teaching students that Japan won the Second World War...or saying that two plus two equals five...or rounding off Pi to three just to make it easier to remember.
But the more fake information you give out, the more valuable real information becomes.
A war the feds will ultimately lose
Third, did it create a new, corrupt Deep State industry? And fourth, do the combatants on both sides gain as the public loses?
Not exactly.
This is different from other 'wars' announced by the Deep State. This is how the insiders fund their other wars...and how they shift trillions of dollars from the public to themselves.
The War on Markets distorted almost all industries and corrupted the entire economy.
As reported here many times, suppressed interest rates alone probably cost savers as much as $10 trillion since 2008. Goosing up asset prices probably shifted another $10 trillion or so to the people who own them (typically, the elite).
As in all of these fake wars, the casus belli is phony.
Markets do not hurt people; they help them. Price signals, set by markets, are essential. Otherwise, you don't know whether you're adding wealth or subtracting it.
Trying to suppress free markets or abolish them always leads to confusion, bubbles, bankruptcies, and misery. Economies weaken; people grow poorer.
Since 2008, wages have been stagnant or falling for most people...GDP growth has declined and is now probably negative...productivity growth has declined more than any time in the last 40 years...world trade levels are back to 2009 levels...and the bounce-back from the Great Recession was the weakest on record.
For now, the war serves its real purpose: to increase the power and wealth of the Deep State insiders.
But it is a war that the feds will ultimately lose.
Trying to suppress markets is like putting a giant cork in the mouth of a volcano. It doesn't stop the eruption; it just makes it more violent.
Regards,
Bill Bonner,
For The Daily Reckoning, Australia
End Bonner - Mish Start - Fed Up
Let's start with three truths by Bonner.
By Scutify
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Why Rising Police Budgets Aren’t Making Cities Safer
Minneapolis, the city where Philando Castile was killed by a police officer while being profiled and stopped in his car for the 49th time, spends 36 percent of its general fund budget on policing...
Minneapolis, the city where Philando Castile was killed by a police officer while being profiled and stopped in his car for the 49th time, spends 36 percent of its general fund budget on policing.
Read the full article here.
Despite Shocking Reports of Fraud at Charter Schools, Lawmakers Miss Opportunity to Increase Oversight
The Nation - May 9, 2014, by Zoë Carpenter - Between 2003 and 2008, a Minnesota charter school executive named Joel Pourier embezzled more than $1.3 million from his school, the Oh Day Aki Charter...
The Nation - May 9, 2014, by Zoë Carpenter - Between 2003 and 2008, a Minnesota charter school executive named Joel Pourier embezzled more than $1.3 million from his school, the Oh Day Aki Charter School. While students at Oh Day Aki went without field trips and supplies for lack of funds, Pourier bought houses and cars and tossed bills at strippers. Because his school received federal funding—charter schools are privately run but many receive significant public financing—taxpayers were, in effect, subsidizing his lavish lifestyle.
Pourier’s case is just one of many collected in a new report by the Center for Popular Democracy and Integrity in Education that documents shocking misuses of the federal funds being funneled into the poorly regulated charter industry. The report examined fifteen states with large networks of charter schools and found that more than $100 million in public money had been lost to fraud, waste and other abuse. “Despite rapid growth in the charter school industry, no agency, federal or state, has been given the resources to properly oversee it,” the report says. “Given this inadequate oversight, we worry that the fraud and mismanagement that has been uncovered thus far might be just the tip of the iceberg.”
On Friday, lawmakers in the House largely missed an opportunity to strengthen oversight of charter schools, passing a bill to encourage charter school growth by boosting federal funding without including several amendments that were offered to increase transparency and accountability. The bill, called the Success and Opportunity through Quality Charter Schools Act, increases federal funding for charters from $250 million to $300 million. The bill received wide bipartisan support—it passed by a overwhelming 360-45— although it is being championed by GOP leaders, who tout charter expansion and “school choice” as a central part of their anti-poverty agenda. “This legislation is about upwards mobility,” said majority leader Eric Cantor, who also took the opportunity to bash New York City mayor Bill di Blasio for his position on charter school co-locations.
Very few Democrats pushed back on the legislation, in part because it includes a few provisions sought by charter critics, including allowing charters to prioritize special-needs students and English language learners in the admissions process. Still, this is the first reauthorization of the federal charter program since 2001, and the charter sector has vastly changed and expanded since then. The fact that Democrats did not rally around bids for better oversight indicates how murky the party’s education platform has grown. Charter advocates are increasingly vocal on the left, helping to secure new federal resources; meanwhile, financial and political support for traditional public schools is quietly eroding.
“We’ve essentially agreed to almost all of the elements that were in the original Republican bill and made almost no effort to level the playing field” between charters and traditional public schools, Arizona Representative Raúl Grijalva told me on Wednesday. Grijalva was one of the three Democrats who voted against the charter bill in committee. “Incrementally, more and more of the resources are going to the public charters. There are no additional resources going to the traditional public schools. They’re getting poorer and darker, in terms of the complexion of the kids that are going there.”
“Why is it that we think this is such a valid method of instruction and structure that we are willing to invest nine figures worth of federal money in those programs when we’re starving programs like Title 1 and IDEA?” asked Representative Tim Bishop of New York. Title 1 provides funding for schools with a high proportion of low-income students; IDEA supports services for special needs children. Both have seen sizable cuts in recent years.
On Thursday, the House Rules Committee refused to allow debate on amendments from Grijalva regarding open board meetings, public audit requirements and conflict of interest guidelines—regulations that traditional public schools work under. Before the full vote on Friday, lawmakers rejected an amendment to enforce conflict of interest guidelines for people affiliated with federally funded charters, and another from Democratic Representative Gwen Moore, which would have put aside 2 percent of federal grant money for charters and given it to states to use for oversight. “We often say, ‘Oh yeah, they’re going to audit themselves,’” Moore said on the floor. “With what? Audits cost money.”
Though charters receive federal funding, they are run like private businesses, and in general are not subject to the same kind of oversight as traditional public schools are. “Charter schools are public schools, so they should be held to the same accountability standards as traditional public schools, including those in the [the Elementary and Secondary Education Act] and other federal requirements,” the National Education Association wrote in anticipation of the House vote.
The Center for Popular Democracy report serves as a timely warning against using federal dollars to convert public education into an industry with inadequate regulation. “Without sufficient regulations to ensure true public accountability, incompetent and/or unethical individuals and firms can (and have) inflict great harm on communities,” says the report, which references the damage done recently by allowing industries like banking and lending to expand rapidly without an adequate safety net. The report follows a memorandum from the Department of Education’s Office of the Inspector General that states that state officials are failing “to provide adequate oversight needed to ensure that Federal funds [were] properly used and accounted for.”
Supporters of increased oversight point out that issues of transparency and accountability are distinct from larger ideological debates about charters. Grijalva told me that oversight provisions would not have interfered with the original intention of the bill, which he characterized as encouraging the expansion of charters across the country. “I think public charters are going to be difficult if not impossible to uproot, and that’s not the intention,” Grijalva said. “But if we’re playing on the same field and if this is…a philosophy of market-driven education where competition will produce the best results in our institutions, then let’s make the competition equal. Let’s make disclosure fair and open, let’s make sure that there’re no inside deals.”
Florida Representative Frederica Wilson, who has sharply criticized the charter movement in the past, explained that she voted for the bill because it offered a few minor improvements, and because defeating it would not strike a serious blow to charters. Still, she expressed frustration with the overall lack of support for traditional public education among her colleagues. “This is wrong, what we’re doing. We should be investing in public education, and not investing in charters. And I am frustrated with the White House as they step out to support charters,” she said.
President Obama and his education secretary Arne Duncan have both issued strong praise for the charter movement. Although Duncan has chastised charters for allowing bad actors to flourish among their ranks, instead of pressing for oversight he instead has encouraged charters to clean up their own act.
“The education department, from that administrative side, has been a promoter of this market-driven public education system,” Grijalva said. Referring to his colleagues on the Hill, he continued, “I think there’s been a reluctance to criticize that from some people.”
A similar bill has been introduced in the Senate, with the backing of senators from both parties. However, Senator Tom Harkin, the chair of the Education Committee, has said he is committed to overhauling No Child Left Behind through a reauthorization of the full Elementary and Secondary Education Act—which includes the federal charter program—instead of a piecemeal approach. The ESEA is long overdue for an update, and with Republicans using their unambiguous support for privatized education as a campaign platform, sooner or later Democrats will have to confront the growing chasm within their ranks.
Source
Poll: Voters like Charter Schools but Want More Oversight
The Seattle Times - March 12, 2015, by Leah Todd - Voters want greater oversight for charter schools and more assurance that charters — independently run but publicly funded schools — won’t hurt...
The Seattle Times - March 12, 2015, by Leah Todd - Voters want greater oversight for charter schools and more assurance that charters — independently run but publicly funded schools — won’t hurt other public schools by drawing students away, a new national poll suggests.
Two education policy groups that are generally skeptical of charters — In the Public Interest and the Center for Popular Democracy — conducted the poll, which involved interviews with 1,000 randomly selected registered voters from across the country.
They found that while the public is mostly supportive of charter schools, most voters surveyed said they wanted better financial auditing and oversight. Though nearly one in three respondents said they knew nothing about charter schools, 62 percent said they would prefer to decrease or keep the same number of charters in their area.
A lack of choice about where to send children to school wasn’t a major issue among the voters interviewed — only about 10 percent listed that as a top concern.
The top areas of concern for those surveyed were lack of parental involvement, too much focus on standardized tests and large class sizes.
The voters surveyed overwhelmingly supported audits of charter schools’ finances to detect fraud or waste, and said that before a charter school opens, its impact on nearby public schools should be studied.
The former is already happening in Washington state, where the charter school commission has increased its oversight of the state’s lone charter following financial and organizational problems. The commission has added more financial reporting to its charter application process and has ordered a state audit into the school’s finances.
This year, lawmakers in six states considered bills to limit the number of charter schools in their states, and nine states proposed increasing charter-school transparency and adding oversight, according to Kyle Serrette, director of education at the Center for Popular Democracy.
In Washington, Sen. Jeannie Darnielle, D-Tacoma, proposed a bill that would mandate performance audits for charters and allow no more than three charter schools to open simultaneously in any single school district. The bill died in committee.
You can dig into more of the poll’s results here.
Source
La “Reforma” tributaria es un ataque disfrazado contra las comunidades de color
La “Reforma” tributaria es un ataque disfrazado contra las comunidades de color
Después de que miles de electores acudieron en masa a Washington DC para detener a los republicanos en su intento de derogar la ley de atención médica, pensamos que habíamos ganado cuando los...
Después de que miles de electores acudieron en masa a Washington DC para detener a los republicanos en su intento de derogar la ley de atención médica, pensamos que habíamos ganado cuando los republicanos del Congreso pusieron fin a la propuesta Cassidy-Graham.
Lea el artículo completo aquí.
Cities Are Saying ‘No’ to ICE by Canceling Their Contracts With the Agency
Cities Are Saying ‘No’ to ICE by Canceling Their Contracts With the Agency
The stunning victory of 28-year-old Democratic Socialist Alexandria Ocasio-Cortez in the New York primary on June 26 pushed the call to “abolish ICE” suddenly and powerfully onto the national...
The stunning victory of 28-year-old Democratic Socialist Alexandria Ocasio-Cortez in the New York primary on June 26 pushed the call to “abolish ICE” suddenly and powerfully onto the national stage. (ICE, of course, is the acronym for the Immigration and Customs Enforcement agency.) But even before big-name politicians like Kirsten Gillibrand and Bill de Blasio began taking up the call, a growing anti-ICE rebellion had begun reverberating across city and county legislatures in response to the Trump administration’s brutalizing “zero-tolerance” immigration policy.
Read the full article here.
Let cities better help their retirees
In less than 20 years, one in every five Americans will be over the age of 65 and we will live longer than any generation before us. For those without adequate savings for retirement, those added...
In less than 20 years, one in every five Americans will be over the age of 65 and we will live longer than any generation before us. For those without adequate savings for retirement, those added years will be a time of uncertainty and dependency rather than leisure.
Connecticut is the latest state seeking to stave off this looming crisis in elder poverty, passing legislation to provide access to a state-sponsored retirement plan for the 600,000 Connecticut residents who do not have a plan through their employers. The bill will automatically enroll workers in businesses with five or more workers in a retirement plan overseen by a new quasi-public authority. Connecticut joins California, Illinois, and more than a dozen other states pushing for state-sponsored plans to encourage workers to save for retirement.
The accelerated pace of activity follows decades of wage stagnation that have left the average American worker with just half of what workers saved in the 1970s. Half of those nearing retirement have no retirement savings at all and those that do have savings have only enough to provide a median income of around $400 per month.
At the same time, employers have largely abandoned defined benefit pension plans that once guaranteed a minimum level of security based on salary and length of service, opting instead for plans that put the onus on workers to build up their own retirement accounts. Today, more than half of American workers have no private pension coverage at all.
Those who retire without a pension or sufficient savings will depend largely on Social Security for their retirement income, a system that will grow increasingly burdened as baby boomers retire, leaving fewer workers to cover the costs of each retiree.
This daunting reality has spurred states like Connecticut to act.
Innovation at the state level, however, is currently hindered by the federal Employment Retirement Security Act (ERISA), which generally preempts state action on private sector pensions. State legislatures have had to build language into bills making any plan contingent on an exemption from federal ERISA requirements. This burden creates uncertainty for both workers and state administrators, preventing many states from even exploring the possibility of a plan.
In response, the Department of Labor (DOL) is currently developing a safe harbor rule that would clarify how states can bypass ERISA requirements. The rule would let states develop the retirement security model that best suits their residents, while also learning from the successes and missteps of other state plans.
While the proposed DOL rule is a great first step, it does not go far enough in its present form. The rule is limited to states, but cities such as New York are also considering similar plans. They should be afforded the same opportunity to ensure a secure retirement for their residents.
In developing its rule, the DOL should aim to reach the largest possible number of workers, including those whose state legislatures are unable or unwilling to address retirement security. Including cities also allows for more tailored programs when demographics and industries vary widely across a state.
Preventing an elder poverty crisis will require creative solutions at all levels of government. The DOL should ensure that federal regulations foster that creativity, rather than stifle it.
By ANDREW FRIEDMAN
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JPMorgan's Dimon defends Trump advisory role, deregulation
JPMorgan Chase & Co (JPM.N) Chief Executive Jamie Dimon on Tuesday responded to criticism from angry shareholders of his role advising President Donald Trump on economic matters, saying he...
JPMorgan Chase & Co (JPM.N) Chief Executive Jamie Dimon on Tuesday responded to criticism from angry shareholders of his role advising President Donald Trump on economic matters, saying he would help "any president" in office.
At the bank's annual meeting in Wilmington, Delaware, several attendees demanded answers from Dimon about his role on a White House business council and JPMorgan's involvement with financial deregulation efforts in Washington.
Read the full article here.
What are ‘community schools?’ You can find out Tuesday
In general, community schools incorporate “engaging, culturally relevant” instruction and health care services — physical, social and emotional — that are offered before, during and after school,...
In general, community schools incorporate “engaging, culturally relevant” instruction and health care services — physical, social and emotional — that are offered before, during and after school, according to the Center for Popular Democracy.
Read the full article here.
Zara Can't Seem to Stop Racially Discriminating Against Its Employees and Shoppers
Zara Can't Seem to Stop Racially Discriminating Against Its Employees and Shoppers
Another day, another discriminatory incident at Zara. When the chain first came to the U.S., like many women, I was thrilled. I loved Zara's designer looks sold for a fraction of designer prices....
Another day, another discriminatory incident at Zara. When the chain first came to the U.S., like many women, I was thrilled. I loved Zara's designer looks sold for a fraction of designer prices. I had outgrown Forever 21 and was excited that the creation of an upscale, sophisticated wardrobe was within my reach.
Oh, and the blazers. I love, love, loved a Zara blazer.
Unfortunately, my love has faded as allegations of discrimination against both employees and customers continue to multiply. The latest incident took place in an East End Toronto store. Cree Ballah, an employee, is filing a lawsuit for discrimination after managers asked her to take her braids out of a bun, and then attempted to "fix" her hair outside of the store in a busy mall in full view of other employees and customers.
“They took me outside of the store and they said, 'We're not trying to offend you, but we're going for a clean, professional look with Zara and the hairstyle you have now is not the look for Zara,” Ballah said.
“It was very humiliating, it was unprofessional,” she continued.
“My hair type is also linked to my race, so to me, I felt like it was direct discrimination against my ethnicity in the sense of what comes along with it,” said Ballah, who describes herself as bi-racial. “My hair type is out of my control and I try to control it to the best of my ability, which wasn't up to standard for Zara.” (Interestingly, Zara has no formal policy regarding employees' hairstyles, as long as they look professional.)
If that was the end of the story, then I’d probably be filling my online shopping cart with their new Palm Springs collection right about now. But, last year Zara's former U.S. general counsel filed a $40 million dollar lawsuit against the retail giant, claiming he was discriminated against for being Jewish, American, and gay. During his time at the company (from January 2008 to March 2015), he reported receiving homophobic emails, witnessing anti-Semitic remarks that were made in his presence, and that Spanish employees were assured of more job security and received greater pay raises despite his strong performance reviews and growing company profitability.
Then the Center for Popular Democracy released a survey of New York–based Zara employees, titled “Stitched with Prejudice: Zara USA’s Corporate Culture of Favoritism.” The report found that black employees are more dissatisfied with their hours than white employees, are reviewed more harshly by management, and are less likely to be promoted.
I took note of that report, but also saw that the sample included a very small number of employees. Plus, I had shopped at several Zara stores in Manhattan and never had a problem, but admittedly, ignorance is bliss.
As time marched on, however, more and more stories made headlines and it seemed not even Zara customers were safe from discrimination. In 2015, a Muslim woman was refused entrance to a Paris store because she was wearing a hijab. And the Center for Popular Democracy study also found that black customers are far more likely to be targeted as potential thieves than white customers. "The "Stitched with Prejudice" report describes a practice within Zara of referring to suspected shoplifters as “special orders,” leading to the racial profiling of black shoppers as soon as they enter the store.
In 2014, the retailer received backlash for a children’s shirt that drew comparisons to a Holocaust uniform. And in 2007, the store withdrew handbags from their store that featured swastikas.
As luck would have it, my cognitive dissonance regarding Zara wasn't to last. Last summer, while shopping in a Zara in my hometown of Los Angeles, I bought a mini-skirt that I wasn’t quite sure of and asked a sales associate if I could return it if I changed my mind. She said yes, and added that I didn’t even need my receipt to do so. Well, a week later I found myself in that exact situation.
The skirt was a little too short for my taste, so I attempted to return it (and of course I had lost the receipt). I was informed by the sales associate that the item had gone on sale and I would have to return or exchange it at the sale price. I offered to provide the sales associate (and then her manager) with both my credit card number (so they could look up the transaction), as well as my credit card statement to confirm that I had in fact paid full price for the item.
Admittedly, the interaction may not have been motivated by racial bias. The employees may have been tired, underpaid or having a bad day and that’s why they spoke to me in a way that left me feeling angry and humiliated. However, something didn’t feel right about the experience. And when I combined all of their missteps together I decided that I could no longer be a Zara customer. Thus far, I haven’t spent one dollar at a Zara store in about a year.
My personal experience aside, my advice for Zara executives is to get it together and do it fast. The world is more connected than ever before, and multiple allegations of gender, ethnic and religious intolerance are tipping the scales against you (no matter how cute your spring collection is). If more and more of these stories continue to come to light, I won’t be the only former fan girl voting against what appears to be a disgusting company culture by keeping my credit card firmly in it’s wallet.
By xoJane
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2 months ago
2 months ago