Thursday, March 30, 2017

National (In)security

What a Trump Presidency Really Means for Americans at the Edge 

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By Rajan Menon

Donald Trump’s supporters believe that his election will end business as usual in Washington. The self-glorifying Trump agrees and indeed his has, so far, been the most unorthodox presidency of our era, if not any era. It’s a chaotic and tweet-driven administration that makes headlines daily thanks to scandals, acts of stunning incompetence, rants, accusations, wild claims, and conspiracy theories.  On one crucial issue, however, Trump has been a complete conformist. Despite the headline-grabbing uproar over Muslim bans and the like, his stance on national security couldn’t be more recognizable. His list of major threats -- terrorism, Iran, North Korea, and China -- features the usual suspects that Republicans, Democrats, and the foreign policy establishment have long deemed dangerous.

Trump’s conception of security not only doesn’t break the mold of recent administrations, it’s a remarkably fine fit for it.  That’s because his focus is on protecting Americans from foreign groups or governments that could threaten us or destroy physical objects (buildings, bridges, and the like) in the homeland.  In doing so, he, like his predecessors, steers clear of a definition of “security” that would include the workaday difficulties that actually make Americans insecure.  These include poverty, joblessness or underemployment, wages too meager to enable even full-time workers to make ends meet, and a wealth-based public school system that hampers the economic and professional prospects, as well as futures, of startling numbers of American children. To this list must be added the radical dangers climate change poses to the health and safety of future citizens. 
Trump may present himself as a maverick, but on security he never wavers from an all-too-familiar externally focused and militarized narrative.
Barack Obama wrote a bestselling book titled The Audacity of Hope.  Perhaps Donald Trump should write one titled The Audacity of Wealth.  During the presidential campaign of 2016 he morphed unashamedly from plutocrat to populist, assuring millions of people struggling with unemployment, debt, and inadequate incomes that he would solve their problems.  The shtick worked.  Many Americans believed him. Fifty-two percent of voters who did not have a college degree chose him.  Among whites with that same educational profile, he did even better, winning 67% of their votes. 
Unemployment, underemployment, stagnant wages, and the outsourcing of production (and so jobs) have hit those who lack a college degree especially hard.  Yet many of them were convinced by Trump’s populist message.  It made no difference that he belonged to the wealthiest 0.00004% of Americans, if his net worth is the widely reported $3.5 billion, and the top 0.00002% if, as he claims, it’s actually $10 billion
Former Louisiana Governor Huey Long, perhaps the country’s best-known populist historically speaking, was born and raised in Winn Parish, a poor part of Louisiana.  In the 1930s, his origins and his far-reaching ideas for redistributing wealth gave him credibility.  By contrast, Trump wasn't cut from humble cloth; nor in his present reincarnation has he even claimed to stand for the reallocation of wealth (except possibly to his wealthy compatriots).  His father, Fred Trump, was a multimillionaire who, at the time of his death in 1999, had a net worth of $250 million, which was divided among his four surviving children.  The proportional allocations are not publicly known, though it’s safe to assume that Donald did well.  He also got his start in business -- and it wasn’t even an impressive one -- thanks to lavish help from Fred to the tune of millions of dollars.  When he subsequently hit rough patches, Dad’s connections and loan guarantees helped set things right.
A man who himself benefited handsomely from globalization, outsourcing, and a designed-for-the-wealthy tax code nonetheless managed to convince coal miners in West Virginia and workers in Ohio that all of these were terrible things that enriched a "financial elite" that had made itself wealthy at the expense of American workers and that electing him would end the swindle.
He also persuaded millions of voters that foreign enemies were the biggest threat to their security and that he’d crush them by “rebuilding” America’s military machine.  Worried about ISIS? Don’t be.  Trump would “bomb the shit out of them.”  Concerned about the nuclear arms race?  Not to worry.  “We’ll outmatch them at every pass and outlast them all.”
Yet few if any Americans lie awake at night fearing invasion by another country or the outbreak of nuclear war.  Fifteen years after 9/11, terrorism still ranks high on the American list of concerns (especially, the polls tell us, among Republicans).  But that danger is not nearly as dire as Trump and the U.S. national security state insist it is.  A litany of statistics shows that deaths from car crashes leave death-by-terrorist in the dust, while since 2002 even bee, hornet, and wasp stings have killed more Americans annually in the United States than “Islamic terrorists.”
Since 9/11, only 95 Americans -- 95 too many, let it be said -- have been killed in terrorist attacks in the U.S.  Not one of the perpetrators was a tourist or someone on another type of temporary visa, and several were non-Muslims.  Nor were any of them refugees, or connected to any of the countries in Trump's two Muslim bans.  Indeed, as the journalist Nick Gillespie notes, since the adoption of the 1980 Refugee Act no refugee has been involved in a terrorist attack that killed Americans.  
Still, Trump’s hyperbole has persuaded many in this country that terrorism poses a major, imminent threat to them and that measures like a 90-day ban on travel to the United States by the citizens of certain Muslim countries will protect them.  (A recent poll shows that 54% of the public supports this policy.)  As for terrorist plots, successful or not, by white far-right extremists, the president simply hasn’t felt the urge to say much about them.
In other words, President Trump, like candidate Trump, embraces the standard take on national security.  He, too, is focused on war and terrorism.  Here, on the other hand, are some threats -- a suggestive, not inclusive, list -- that genuinely make, or threaten to make, millions of Americans insecure and vulnerable.
Poverty: According to the U.S. Census Bureau, in 2015, 43 million Americans, 13.5% of the population, lived below the poverty line ($11,700 for an individual and $20,090 for a three-person household) -- an increase of 1% since 2007, the year before the Great Recession.  For children under 18, the 2015 poverty rate was 19.7%.  While that was an improvement on the 21.1% of 2014, it still meant that nearly a fifth of American children were poor.
The working poor: Yes, you can have a job and still be poor if your wages are low or stagnant or have fallen. The Bureau of Labor Statistics (BLS) uses a conservative definition for these individuals: “People who spent at least 27 weeks in the labor force during the year -- either working or looking for work -- but whose incomes were below the poverty level.” Though some studies use a more expansive definition, even by the BLS’s criteria, there were 9.5 million working poor in 2014.
        Even if you work and bring in wages above the poverty line, you may still barely be getting by.  Oxfam reports that 58 million American workers make less than $15 an hour and 44 million make less than $12 an hour.  Congress last raised the minimum hourly wage to $7.25 in 2007 (and even then included exceptions that applied to several types of workers).  That sum has since lost nearly 10% of its purchasing power thanks to inflation.
Wage stagnation and economic inequality: These two conditions explain a large part of the working-but-barely-making-it phenomenon.  Let’s start with those stagnant wages.  According to the Economic Policy Institute (EPI), for about three decades after World War II, hourly wage increases for workers in non-supervisory roles kept pace with productivity increases: at 91.3% and 96.7%, respectively.  Then things changed dramatically.  Between 1973 and 2013, productivity increased by 74.4% and wages by only 9.2%.  In other words, with wages adjusted for inflation, the average American worker made no more in 2013 than in 1973.  
As for economic inequality, the EPI reports that from 1980 to 2013 the income of the top 1% of wage earners increased by 138% compared to 15% for the bottom 90%.  For those at the lowest end of the wage scale it was even worse. In those years, their hourly pay actually dropped by 5%.
When was the last time you heard Donald Trump talk about stagnant wages or growing economic inequality, both of which make his most fervent supporters insecure? In reality, the defunding of federal programs that provide energy subsidies, employment assistance, and legal services to people with low incomes will only hurt many Trump voters who are already struggling economically.
Climate change: There is a scientific consensus on this problem, which already contributes to droughts and floods that reduce food production, damages property, and threatens lives, not to speak of increasing the range of forest fires and lengthening the global fire season, as well as helping spread diseases like cholera, malaria, and dengue fever.  Trump once infamously described climate change as a Chinese-fabricated “hoax” meant to reduce the competitiveness of American companies.  No matter that, in recent years, the Chinese government has taken serious steps to reduce greenhouse gas emissions.  
Now, President Trump is gearing up to take the U.S. out of the climate change sweepstakes entirely. For instance, he remains determined to withdraw the country from the 2015 Paris Agreement (signed by 197 countries and so far ratified by 134 of them) aimed at limiting the increase in global temperature to a maximum of two degrees Celsius during this century.  Scott Pruitt, his appointee to run the Environmental Protection Agency, denies that climate change is significantly connected to “human activity” and is stocking his agency with climate change deniers of like mind. Needless to say Pruitt didn’t balk at Trump’s decision to cut the EPA’s budget by 31%.
Nor do Trump and his team favor promoting alternative sources of energy or reducing carbon emissions, even though the United States is second only to China in total emissions and among the globe’s largest emitters on a per-capita basis. Trump seems poised to scale back President Obama’s plan to increase the Corporate Annual Fuel Efficiency Standard -- created by the government to reduce average automobile gas consumption -- from the present 35.5 miles per gallon to 54.5 miles per gallon by 2025, end the 2015 freeze on leases for coal mining on federal land, and ease power plant emission limits. Worse yet, Trump’s America First Energy Plan calls for producing more oil and gas but contains nary a word about climate change or a green energy strategy. If you want a failsafe formula for future environment-related insecurity, this, of course, is it.
Bogus Remedies
Candidate Trump certainly did tap into a deepening sense of insecurity about wage stagnation, the disappearance of good working-class jobs, and increasing economic inequality.  But in the classic national security mode, he has artfully framed these problems, too, as examples of the economic hardship that foreign countries have inflicted on America. And the four remedies he offers, all rooted in a nationalistic economic outlook, won’t actually help American workers, could hurt them, or are at best cosmetic.
First, he favors renegotiating multilateral trade deals like NAFTA and wasted no time withdrawing the United States from the Trans-Pacific Partnership, accords which he believes hurt American workers.  Second, he wants to impose tariffs of 35% to 45% on imports from countries such as Mexico and China that he accuses of unfair trade practices. Third, at least on the campaign trail he pledged to punish countries like China, Japan, and Germany for supposedly devaluing their currencies in order to boost their exports unfairly at America’s expense.  Fourth, he’s high on slapping a border tax on companies that import from their branches or subcontractors abroad the components needed to make products to be sold in the United States, as well as on firms that simply import finished products and sell them locally.
Some of these punitive moves, if actually pursued, will only provoke retaliation from other countries, harming American exporters and consequently the workers they employ.  Tariffs will, of course, also increase the cost of imported goods, hurting consumers with low incomes the most, just as taxing U.S. corporations for importing from their subsidiaries abroad will increase the prices of locally made goods, possibly reducing demand and so jobs.  
Even the nullification of trade pacts, whatever positives might be involved, won’t bring industries like steel, textiles, and basic machine-making that once provided good jobs for the working class back to the United States.  Trump blames China for the decline in manufacturing employment, as does one of his top economists, Peter Navarro.  (Despite holding a Harvard Ph.D. in economics, Navarro evidently doesn’t grasp that trade deficits don’t have a major effect on employment and that protectionism doesn’t cut trade deficits.)
What’s really required are policies that help displaced manufacturing workers to get decent jobs now, while addressing wage stagnancy, which has been significantly aided and abetted by a sharp decline in union membership in recent decades.  According to the Bureau of Labor Statistics, between 1983 and 2015 membership in public-sector unions held reasonably steady.  Not so for private-sector union membership, which plunged from 12 million in 1983 to 7.6 million in 2015.  As a result, workers have been increasingly incapable of combatting wage stagnation through collective bargaining.  Tellingly enough, however, as of 2015, the median weekly paycheck of unionized workers was still 21% larger than that of workers who did not belong to a union.  
Consider Trump’s business history when it comes to labor (including the hiring and stiffing of undocumented workers), as well as the make up of his immensely wealthy, Goldman Sachs-ified economic team, and the Republican Party’s attitude toward unions.  Then ask yourself: How likely is it that this administration will be well disposed toward unionization or collective bargaining?
And don’t forget automation, a subject Donald Trump has essentially been mum about.  It has contributed decisively to job loss and wage stagnancy by reducing or even eliminating the need for labor in certain economic sectors.  As economists Michael Hicks and Srikant Devraj have demonstrated, increased productivity through automation has been far more crucial in reducing the need for human labor in U.S. manufacturing than outsourced jobs and imports.  Thanks to labor-displacing technologies, U.S. manufacturing output actually increased in value by 17.6% between 2006 and 2013 while the workforce continued to shrink.
Another source of wage stagnancy is rising economic inequality, which stems partly from the fierce corporate focus since the 1980s on boosting quarterly earnings and paying dividends that will keep shareholders happy, even if that requires incurring debt, rather than increasing workers’ wages.  
Alternative Policies
Trump claims that he will create more jobs by lowering the corporate tax rate.  At 35% -- 38.9% including the average state tax -- the American corporate tax rate is significantly higher than the global average (29.5%).  Nonetheless, the familiar high-corporate-taxes-kill-jobs narrative that Trump trumpets is simplistic. More than 60% of American companies are so-called S corporations.  They pay no corporate tax: they pass their profits on to stockholders who then report the gains when filing income tax returns.  And even the corporations that do pay taxes manage to reduce the burden significantly through such steps as claiming accelerated depreciation on equipment and establishing offshore companies whose books reflect their profits.  As a result, their true tax rate isn’t anything like 38.9%.  High corporate taxes aren’t what stops companies from creating jobs or paying workers more, which means that changing that rate won’t fix any problems, not for American workers anyway.
There are other solutions to low wages and unemployment, even if President Trump will never favor them.  
Investing more in public education, for example.  Local property taxes and state monies still count heavily in funding public schools. (Federal support is less than 15%.)  So the quality of a school can depend greatly on the zip code in which it’s located, especially because parents in wealthy neighborhoods normally raise more money to help their schools than their non-affluent counterparts can.  School quality can also depend on how wealthy your state is.
Though other factors doubtless play a role, in general, the better the quality of the school, the greater the likelihood that a child will go to college and the stronger his or her income and prospects will be.  Increasing federal funding to schools that lack adequate resources could improve matters.  But if you expect President Trump and Secretary of Education Betsy DeVos to consider such a proposition, think again.
Raising the minimum wage significantly could also help reduce income inequality and the number of working poor. Democrats have favored raising the minimum wage to $10.10, which, it is believed, would reduce the number of people living in poverty by an estimated 4.6 million.  That’s hardly an outlandish proposal.  Some experts, like former Labor Secretary Robert Reich, have called for a minimum wage of $15 an hour, though they are in the minority.  But even certain mainstream economists, like Princeton’s Alan Krueger, support a $12 rate and reject the right-wing claim that it would kill jobs.
Don’t expect the Trump administration (or the GOP) to push for any form of such a policy. Take a look at the members of the president’s Strategic and Policy Forum (SPF), whose duties include providing advice on job creation, and you'll realize that such a relatively modest goal will be off the table for at least the next four years.  You’ll find representatives from the Blackstone Group, Walmart, IBM, General Motors, Boeing, and General Electric in the SPF, but not one labor advocate.  Case closed.  
Prepare for Business as Usual
The net worth of Trump’s cabinet (the president excluded) is $5 billion, and that’s a conservative estimate (no pun intended).  By some calculations, it may be $13 billion.  According to Politifact’s Tom Kertscher, that “modest” $5 billion figure exceeds the net worth of the bottom one-third of all American families.  Now, what likelihood do you think there is that Trump would ever implement policies that threatened to transform the distribution of wealth and power in America to the detriment of the economic class from which he and his cabinet hail?  (In that spirit, remember that candidate Trump proposed a tax plan that would focus on the wealthiest Americans by cutting the top tax rate from 39.6% to 25% and eliminating the estate tax, 90% of which is paid by the country’s wealthiest 10%.)
It’s much easier to scapegoat outsiders, whether China, Japan, Mexico, and Germany (whose government Trump trade adviser Navarro has also accused of currency manipulation), or undocumented workers who generally hold jobs in the U.S. that require lower skills, pay less, and that most American citizens avoid.  It’s also easier to stick with the standard militarized conception of national security and, for good measure, hype the perils posed by Islam, which for Steve Bannon, Trump’s chief political strategist, and Stephen Miller, his senior adviser on policy, amounts to a synonym for extremism and violence, even if Islamic terrorists pose the most miniscule of threats to most Americans.   
Not surprisingly, Trump proposes to increase the country’s already staggering defense spending for next year by another $54 billion.  To put that increment in perspective, consider that Russia’s total defense spending in 2015 was $66 billion and Britain’s $56 billion, while the United States already spends more on defense than at least the next seven countries combined.  (In fairness to Trump, Senators John McCain and Mac Thornberry, respectively the chairmen of the Senate Armed Services Committee and the House Armed Services Committee, want to bulk up the defense budget even more.)
Trump also seems determined to stay the course on America’s forever wars in Afghanistan and Iraq. Neither he nor his generals show any sign of abandoning the Obama-era strategy of whack-a-mole drone strikes and raids by Special Operations forces against terrorist redoubts around the world (as witness a recent failed special ops raid in Yemen and 24 drone strikes -- half of the maximum number that the United States launched against that country in any preceding year). Trump has already deployed 400 Marines as well as Army Rangers to fight ISIS in Raqqa, Syria, and another thousand troops may soon be heading that way.  And General John Nicholson, commander of the US-led military coalition in Afghanistan, has called for “a few thousand” additional troops for that country.
So expect President Trump to dwell obsessively on threats that have a low probability of harming Americans, while offering no effective solutions for the quotidian hardships that actually do make so many citizens feel insecure. Expect, as well, that the more he proves unable to deliver on his economic promises to the working class, the more he’ll harp on the standard threats and engage in saber rattling, hoping that a continual atmosphere of emergency and vulnerability will disarm critics and divert attention from his failures.  
In the end, count on one thing: voters who were drawn to Trump because they believed he would rein in interventionism abroad and deal with festering problems at home are in for a disappointment.

Venezuela Fake News Debunked: Assembly Not Annulled, No Coup

The Supreme Court ruled that the National Assembly was in contempt of the constitution in January 2016.

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As the usual suspects attack the Bolivarian government in Venezuela for a ruling today by the Supreme Court of Justice, claiming that there has been a "coup" and that the country has fallen into a dictatorship, the Venezuelan government has denounced this attempt at destabilizing the government.

Following an appeal filed by the Venezuelan Corporation of Petroleum to Article 33 of the Organic Law of Hydrocarbons on the creation of joint ventures, the court ruled that since the National Assembly continues to be in contempt of the constitution, the top court will "ensure the rule of law" and will exercise parliamentary powers where necessary.
"As long as the disrespect and invalidity of the proceedings of the National Assembly persists, this Constitutional Chamber will ensure that the parliamentary powers are exercised directly by this Chamber or by the body it has in place to ensure the rule of law," said the ruling.
The U.S. issued a condemnation saying that the "Venezuelan Supreme Court's March 29 decision ... usurp(ed) the power of the democratically-elected National Assembly." Opposition leader Julio Borges, who was 'elected' president of the parliament by his fellow opposition legislators in spite of the ruling, described this as a "coup" and called for the court to be disavowed.
OAS Secretary General and opposition ally Luis Almagro called the ruling a "self-coup," while Peru withdrew its ambassador to the country. On Twitter, the phrase "coup d'etat" was trending although on the streets of Venezuela everything was calm, with no interruption in governance.
While the reactions have been plentiful, the ruling from the top court was not actually anything new, nor does it actually imply a dissolution of the country's national assembly and its powers.
Here is what is really going on.
National Assembly has been in contempt of the Constitution since 2016
On Jan. 5, 2016, the Supreme Court declared the National Assembly in contempt of the constitution for swearing in three opposition lawmakers whose elections were temporarily suspended for voting irregularities in the state of Amazonas. Given that it has been operating with non-verified people acting as legislators, the court has said all of the assembly's actions are illegal.
Amazonas candidates tried to buy votes
There are recordings in which the then secretary of the government of Amazonas, Victoria Franchi offered sums of money to groups of people to vote for the opposition candidates. Therefore, the court suspended the election results from the state. However, the National Assembly flaunted this ruling and swore them in as deputies.
National Assembly could restore its status easily, but has refused
According to constitutional lawyer Enrique Tineo Suquet, the National Assembly could easily resolve its legal status by requesting the body's elected president call for a session to remove the three lawmakers and hold new elections for the positions. Tineo Suquet said that despite this, the assembly has decided to remain in contempt.
It's all in the Constitution: National Assembly not annulled
Article 336.9 of the country's constitution gives powers to the Constitutional Chamber of the Supreme Court to resolve any situation that may arise among the state powers. According to Venezuela's Constitution, the functions of the constitutional branch of the Supreme Court include acting "to resolve constitutional controversies arising between any of the organs of Public Power."

The Ticking Time Bomb That Will Wipe Out Virtually Every Pension Fund In America

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By Michael Snyder

Are millions of Americans about to see the big, juicy pensions that they were counting on to fund their golden years go up in flames in the biggest financial disaster in U.S. history? When Bloomberg published an editorial entitled “Pension Crisis Too Big for Markets to Ignore“, it simply confirmed what a lot of people already knew to be true.  Pension funds all over America are woefully underfunded, and they have been pouring mind boggling amounts of money into very risky investments such as Internet stocks and commercial mortgages.  Just like with subprime mortgages in 2008, this is a crisis that everyone can see coming well in advance, and yet nothing is being done about it.
On a day to day basis, Americans generally don’t think very much about pensions.  Most of those that have been promised pensions simply have faith that they will be there when they need them.
Unfortunately, the truth is that pension plans all over the country are severely underfunded, and this has already resulted in local fiascos such as the one that we just witnessed in Dallas.
But what happened in Dallas is just the very small tip of a very large iceberg.  According to Bloomberg, unfunded pension obligations on a national basis “have risen to $1.9 trillion from $292 billion since 2007″…
As was the case with the subprime crisis, the writing appears to be on the wall. And yet calamity has yet to strike. How so? Call it the triumvirate of conspirators – the actuaries, accountants and their accomplices in office. Throw in the law of big numbers, very big numbers, and you get to a disaster in a seemingly permanent state of making. Unfunded pension obligations have risen to $1.9 trillion from $292 billion since 2007.
And of course that $1.9 trillion number is not actually the real number.
That same Bloomberg article goes on to admit that if honest math was being used that the real number would actually be closer to 6 trillion dollars…
So why not just flip the switch and require truth and honesty in public pension math? Too many cities and potentially states would buckle under the weight of more realistic assumed rates of return. By some estimates, unfunded liabilities would triple to upwards of $6 trillion if the prevailing yields on Treasuries were used. That would translate into much steeper funding requirements at a time when budgets are already severely constrained. Pockets of the country would face essential public service budgets being slashed to dangerous levels.
So where are all of these pensions eventually going to come up with 6 trillion dollars?
That is a very good question.
Ultimately, even if financial conditions stay as stable as they are right now, a whole lot of people are not going to get the money that they were promised.
But things will get really “interesting” if we see a major downturn in the financial markets.  According to Dave Kranzler, if the stock market were to fall by 10 percent or more and stay there for a number of months, that “would cause every single public pension fund to blow up”.  And Kranzler is also deeply concerned about the tremendous amount of exposure that these pension funds have to commercial mortgages…
Circling back to the mall/REIT ticking time-bomb, while the Fed can keep the stock market propped up as means of preventing an immediate nuclear melt-down in U.S. pensions (all of which are substantially “maxed-out” in their mandated equities allocation), the collapse of commercial mortgage-back securities (CMBS) will have the affect of launching a nuclear sub-missile directly into the side of the U.S. financial system.
The commercial mortgage market is about $3 trillion, of which about $1 trillion has been packaged into asset-backed securities and stuffed into yield-starved pension funds. Without a doubt, the same degree of fraud of has been used to concoct the various tranches in these CMBS trusts that was employed during the mid-2000’s mortgage/housing bubble, with full cooperation of the ratings agencies then and now. Just like in 2008, with the derivatives that have been layered into the mix, the embedded leverage in the commercial mortgage/CMBS/REIT model is the financial equivalent of the Fukushima nuclear power plant collapse.
I have previously talked about the ongoing retail apocalypse in the United States which threatens to make so many of these commercial mortgage securities go bad.  It is being projected that somewhere around 3,500 stores will close in the months ahead, and this is going to absolutely devastate mall owners.  In turn, it is inevitable that a lot of their debts will start to go bad, and pension funds will be hit extremely hard by this.
But the coming stock market crash is going to hit pension funds even harder.  Stocks are ridiculously overvalued right now, and if they simply return to “normal valuations”, pension funds are going to lose trillions of dollars.
We are talking about a financial tsunami that will be absolutely unprecedented in our history, and yet investors continue to act like the party can last forever.  In fact, we just learned that margin debt on Wall Street has just hit another brand new record high
The latest data from the New York Stock Exchange show margin debt, or cash borrowed to buy shares, hit a record $528.2 billion in February, up from its prior high of $513.3 billion in January.
Of course my regular readers already know that margin debt also shot up to dramatic peaks just before the last two stock market crashes as well
Prior periods when margin debt hit records occurred around stock market peaks, including 2000 when the dot-com stock boom went bust, and 2007 when stocks began to crater amid early signs of trouble in the housing market ahead of the 2008 financial crisis.
Margin debt jumped 22% from the end of 1999 before peaking in March 2000 at $278.5 billion, the same month stocks peaked. In 2007, margin debt shot up to $381.4 billion in July, three months before stocks topped.
We are perfectly primed for the greatest financial disaster in American history, and yet very few people are sounding the alarm.
This massive financial bubble is a ticking time bomb, and when it finally goes off it is going to wipe out virtually every pension fund in the United States.

Saving the Venezuelan Amazon: mega-nature reserve? Or mega-mining frontier?

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By Lucio Marcello

Venezuela is set to hand over 12% of the nation's territory in the upper headwaters of the Amazon to mining corporations, writes Lucio Marcello, with 150 companies from 35 countries poised to devastate the army-controlled 'special economic zone'. But resistance is growing, and a counter-proposal aims to protect the area's precious biodiversity, indigenous cultures and water resources in a new South Orinoco Mega Reserve.

Within Venezuela, the operation has been widely described as an 'ecocide' and a 'silent genocide', as it would result in habitat degradation, forced relocation and urbanisation of traditional communities.
On 24th February 2016, with no debate within Parliament or civil society, the Venezuelan government decreed that the upper reaches of the Amazon Rainforest, amounting to 12% of the country's landmass, were to become a Special Economic Zone devoted to mining gold, diamonds, coltan, iron and bauxite.
The name chosen for the new zone was the 'Arco Minero del Orinoco' (Orinoco Mining Arc), after the arc-shape made by the course of the Orinoco, Venezuela's main river. The zone is now under military control, and constitutional rights have been restricted.
The area also happens to constitute a significant portion of the Guiana shield, a very ancient mineral-rich geological formation spanning Colombia, Venezuela, Guyana, Suriname, French Guiana and Brazil, which is facing increasing threats from both small and large-scale mining operations.
Rising opposition to the Arco Minero
Concerted legal action was taken on 31st May 2016 by former ministers to request that the supreme court revoke the creation of the Arco Minero, and a broad civil society movement came together in July 2016 to form the 'Plataforma por la Nulidad del decreto del Arco Minero del Orinoco' (Platform for the Annulment of the Orinoco Mining Arc decree).
Those opposing the decree consider it to be unconstitutional and in breach of several laws protecting the land rights of indigenous people and existing natural reserves against mining.
On 27th November, the Supreme Court dismissed the appeal on grounds of violation of the constitution (writ of amparo) as baseless, given the 'strategic importance' of mining for the country. Nevertheless, the legal action continues.
On 2nd December 2016, three Venezuelan NGOs (Provea, Laboratorio de Paz and GTAI-Ula) addressed the Inter-American Commission on Human Rights (IACHR) to denounce that indigenous people had not given free prior and informed consent to the Arco Minero.
Government representatives had to admit that no environmental impact assessment had been undertaken, while claiming support from indigenous people, whose rights to free association have been curtailed and funnelled towards governmental organisations with limited grassroots support (Laboratorio de Paz investigation, 2014).
IACHR should issue a report and recommendations imminently (within three month of the hearing).
Venezuela's systemic crisis
Venezuela is in the midst of a deep systemic crisis, with widespread hunger, very limited access to medicines and healthcare, and escalating violence and human rights abuses permeating all aspects of society. Its oil-dependent economy has been suffering since oil prices started falling in 2014.
The country plunged into a downward spiral, both spurred and worsened by widespread corruption and the mismanagement of existing resources and productive activities: over the years, the wealth derived from oil was not reinvested, but rather spent on imports or squandered; not only were many fields left untilled, the very oil extracting facilities upon which the entire economy depended had not been maintained.
Venezuela intends to use the revenue generated by mining to get out of the country's crisis, but at what cost? Many people describe the operation as bringing 'pan para hoy y hambre para mañana' (bread today and hunger tomorrow).
The Arco Minero also goes hand in hand with exploitation of the Orinoco Oil Belt (Faja Petrolifera del Orinoco), immediately north of the Orinoco river, the largest extra-heavy oil deposits in the world, in the form of tar sands whose characteristics and potential impact on the environment are directly comparable to the tar sands of Alberta in Canada.
Restructuring the economy in a sustainable manner and taking measures to address the severe problems at hand without perpetuating a rentier state model, whether based on oil or mining, is actually a viable alternative.
Although Venezuela's interest in renewables is currently low (tellingly, Venezuela has yet to ratify the Paris Climate Change agreement), the country's wind and solar power potential is huge. Tourism could be another great asset to the country, as long the county's natural environment is preserved.
Unfortunately, the rentier model and widespread corruption seem to have been the driving forces of what has been described as a severe man-made crisis, and the mind-set behind a very disconcerting set of solutions.
Guayana: what are its real assets?
The Arco Minero (111,843.70 km2) corresponds to 24% of Guayana, the region within Venezuela south of the river Orinoco (458,344 km2), comprising the states of Amazonas, Bolivar and Delta Amacuro.
Guayana constitutes the upper reaches of the Amazon rainforest, and is of outstanding natural importance: it holds 60% of the country's freshwater resources and 50% of its animal biodiversity. The Arco Minero is mostly forested (64%), with rainforests, primarily found in Area 4. amounting to over a third of forested areas.
A number of Natural Reserves and National Parks collectively referred to as ABRAE (Áreas Bajo Régimen de Administración Especial - Areas under Special Administration) protect ~70% of Guayana from mining and other forms of environmental degradation, but protection measures are not always enforced effectively.
Immediately south of the Arco Minero lies Canaima National Park, a Unesco world heritage site, now threatened by encroaching mining operations (550 / 30,000 km2 are already affected, according to RAISG, the Red Amazónica De Información Socioambiental Georreferenciada).
Guayana is also the home of 19 indigenous peoples, whose way of life is in principle safeguarded by Venezuela's 1999 constitution. Even though only 12% of their lands have been demarcated, around two thirds of these are located within ABRAE, conferring some degree of protection, at least on paper. As many as 11 different peoples (Pemon, Yekuana, Karina, Enepa, Mapoyo, Arawak, Piaroa, Sanema, Akawayo, Jodi/Hoti and Pume) are directly affected by the Arco Minero.
Climate change and drought are already taking their toll on Venezuela: water scarcity has a direct effect on the generation of electricity, as 60% of the country's electricity is generated by a set of four dams along the Caroni river (the major tributary of the Orinoco), whose flow in recent years has been severely affected by droughts, to the point that the government has had to ration electricity several times over the past years.
Now more than ever it would seem critical to maintain tree cover and an intact rainforest ecosystem.
Guayana has been purported to hold the second largest gold reserve in the world, estimated at 7,000 tonnes, worth some $200 billion dollars. Gold is not a recent discovery though, as the area has long been taken over by illegal mining operations.
In recent years, as many as 70,000 impoverished Venezuelans have left their homes to make a living in illegal mines and some estimates suggest that a total of 150,000 illegal miners (including Colombians and Brazilians) are operating across the entire region.
Living conditions are difficult, worsened by a severe malaria epidemic originating around mining sites, as tree cover is replaced with stagnant water pools, the perfect breeding ground for mosquitoes. The entire area is managed by criminal organisations, and mining is affecting local communities and indigenous people in particular, leading to social erosion and to a drastic increase in prostitution, as 'wealth' is generated in the mines.
According to another RAISG report, mining is already the main driver of deforestation in Guayana, Venezuela being the only country where Amazon rainforest deforestation rates increased between 2000 and 2013.
Arco Minero Plans (the Motor Minero)
In the government's view, Arco Minero plans are also in place to put an end to illegal mining, and the authorities claim that mining operations will be restricted to those areas already affected by illegal mining within the Arc, rather than the entire Arc.
While illegal mining is recognised by all parties as a serious issue, the government's solution to have more mining is at odds with the ecosystem services provided by the rainforest and with the lives of indigenous people.
As mentioned above, mining is currently not restricted to the Arco Minero: significant illegal mining operations are conducted across the rest of Guayana, and these are likely to continue undisturbed.
A confirmation of this can be seen in recent reports suggesting an increase in illegal mining in areas where operations can be only equipped and fuelled by rivers passing through the Arco Minero, suggesting that no effective measures have been put in place over the past year to curb this practice.
Within Venezuela, the operation has been widely described as an 'ecocide' and a 'silent genocide', as it would result in habitat degradation, forced relocation and urbanisation of traditional communities.
Gregorio Mirabal, leader of Venezuela's non-governmental indigenous organisation ORPIA (Organización Regional de Pueblos Indígenas del Amazonas) has clearly stated the indigenous people's opposition to the Arco Minero, also voiced by many other indigenous organisations.
Furthermore, there is precedent for mining companies to start with a relatively small and defined project and then expand following the results of explorations in surrounding areas. The recent case of Belo Sun mining in Brazil is emblematic: after a localised site downstream of the Belo Monte Dam, the company is now interested in a 120 km 'strike' of gold within a greenstone belt.
The interests at stake are huge, as gold is only one of the several minerals the region abounds with, which include diamonds, coltan, copper, iron and bauxite. As many as 150 corporations from 35 different countries have been enlisted in the project, though only a few names have so far been revealed.
These include Gold Reserve, Barrick Gold and Energold from Canada (gold), CAMC Engineering Co. and Yankuang Group from China (coltan and gold respectively), Afridiam from DR Congo (diamonds, gold and coltan), Bedeschi from Italy and Guaniamo Mining Company from the USA.
Coltan is particularly important for its strategic role in electronics and in the military sector, and has been the first industrial-scale mining operation to get the green light, with projected reserves worth $100 billion.
The newly-approved coltan mines are located in Area 1 close to where the Parguaza river meets the Orinoco, at the border with Colombia, where 10,000 hectares inhabited by the Piaroa indigenous people have been granted for 20 years to a new entity named 'Parguaza corporation'.
The decision was taken in spite of Piaroa opposition (and with bribery attempts), and also in the absence of a mining plan, let alone an environmental assessment.
Environmental impacts
Gold mining comes with huge environmental risks: aside from deforestation, habitat fragmentation and the impact on local communities through forced processes of 'modernisation', it also causes significant pollution.
Though development of the Arco Minero might not include the use of mercury (which has caused and is still causing widespread water pollution across the entire Amazon basin), toxic waste generated by modern mining includes water contaminated with cyanide, which is stored in large tailings dams.
The Venezuelan government promises that the Arco Minero will be a model 'clean' and 'eco-socialist' mining project. However, even in state-of-the-art mining operations, tailing dams are prone to leaking and contamination of waterways. Just over the last year, two cyanide spills occurred at Barrick Gold's mega-mines in Argentina, and the company was forced to suspend operations temporarily.
In addition, given the large volume of earth needed to extract 1 gram of gold (estimates are 1-1.5 tons of earth), the waste generated is enormous, and the area used for extraction is essentially dead thereafter, with little chance of it ever being recovered for other uses.
In Venezuela, large-scale gold mining is not an absolute novelty, it has already left deep scars at Las Cristinas and Las Brisas mining sites (see satellite image).
An alternative vision: the South Orinoco Mega-Reserve
Former senator Alexander Luzardo, co-author of the environmental section of Venezuela's constitution, has put together a counter-plan to the Mining Arc, demanding the Arco Minero project to be scrapped and strengthening and extending the protected status of the regions south of the Orinoco River.
This has now become a law proposal under the name of 'Mega Reserva del Sur del Orinoco', the South Orinoco Mega-Reserve, and has been championed by Americo De Grazia, an opposition leader working within the Arco Minero parliamentary sub commission. It envisages a complete ban of mining, the protection of indigenous peoples, of the Orinoco river basin and of the rainforest at large, and the promotion of tourism and sustainability.
The proposal is currently being discussed by Venezuela's National Assembly, where the majority is held by a coalition opposing the Maduro government, responsible for launching the Arco Minero project.
Why now?
Plans for the Arco Minero were first outlined by President Chavez in 2010, spurred by a spell of low oil prices and by geological surveys started in 2006 that led to the discovery of significant coltan deposits.
The plans mark a U-turn from Chavez's previous climate change-conscious sustainable development intents. Venezuela's current crisis seems to have come as the perfect opportunity to move forward with the project 'for the public good'.
The government's lack of transparency and clampdown on media, combined with the military hold over the Arco Minero, means that information is filtering through in tiny propaganda snippets (for example the celebration of the Mining Arc's first 'clean' gold bar), stifling the opportunities for real debate.

More journalistic investigations and coverage on Venezuelan and international media are warranted to expose this potentially catastrophic operation and to lend strength to the alternative plans put forward by the large number of people and organisations wanting Venezuela to protect its already fragile rainforests.

Ford warns of layoffs to cut inventories as Trump boasts of “JOBS! JOBS! JOBS!”

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By Shannon Jones

Ford Motor Company is warning of impending short-term layoffs at several of its factories to reduce a backlog of unsold vehicles. The announcement came amid a continuing drop off in car sales, with Ford’s sales slumping 2.5 percent through February.
Ford Chief Financial Officer Bob Shanks told analysts, “Don’t be surprised” if the company temporarily idles assembly lines at several North American factories in the coming months. Automotive News indicated that Ford’s car plants were the most likely to see temporary layoffs, including the Michigan Assembly Plant outside of Detroit and the company’s Cuautitlan Assembly Plant in Mexico.
Automotive News reported that Ford’s Kansas City Assembly Plant (KCAP) could also face temporary layoffs. The Kansas City facility builds Ford’s popular F-150 pick-up.
The new threat to jobs came the same day President Trump touted the announcement by Ford of investments at facilities in Michigan, claiming his administration is promoting job growth. In reality, there has been a continuing stream of temporary and permanent layoff announcements since Trump has taken office.
The layoffs at Ford are the latest product of a continuing slowdown as the seven-year boom in US auto sales winds down. They follow the temporary shutdown of five Ford assembly plants in late 2016 to cut back on unsold inventory. In early 2017, Ford closed KCAP for a week.
General Motors has announced 4,600 permanent job cuts since December. It laid off 2,000 workers in January when it eliminated shifts at its Lordstown, Ohio, Assembly Plant and Lansing Grand River factory in Michigan. This was followed by the elimination of the second shift at the General Motors Detroit-Hamtramck plant with the loss of some 1,300 jobs in early March. Another 1,100 workers are scheduled to be laid off at the GM Delta Township plant outside Lansing on May 12 with the elimination of the facility’s third shift.
Continuing auto layoffs in the US take place under conditions of a global restructuring of the auto industry that has seen the sale of GM’s Opel division in Europe to French carmaker PSA and the threat to the jobs of some 40,000 workers across the continent. GM also recently announced the layoff of 600 workers at its CAMI plant in Ontario, Canada, on the eve of contract negotiations. These cost-cutting measures are part of moves to free up cash to hand over to investors by accelerating its $14 billion stock buyback program.
The Ford announcement of further temporary layoffs comes as Trump is touting the supposed boost in auto employment promoted by his reactionary pro-corporate and nationalist policies. In a ceremony Tuesday, in which Trump signed an executive order opening federal lands to coal mining companies and rolling back modest Obama-era environmental regulations in the name of expanding coal mining jobs, the president praised the announcement by Ford of “massive new spending on three big plants in the state of Michigan.”
Then, in a statement posted Tuesday on Twitter, Trump wrote, “Big announcement by Ford today. Major investment to be made in three Michigan plants. Car companies coming back to US. JOBS! JOBS! JOBS!”
The comments were in response to an announcement by Ford that it was investing $1.2 billion in three Michigan plants. The company plans to invest $850 million at its Michigan Assembly Plant to make the new Ford Ranger and Bronco. It is also spending $150 million to expand capacity at its Romeo engine plant and is spending $200 million to build a new advanced data center next to its Flat Rock, Michigan, plant.
Michigan’s Democratic congresswoman Debbie Dingell also praised the Ford announcement, claiming the moves “bolster the company’s dedication to building its highest tech vehicles here in the US and strengthen its commitment to America workers.”
In fact, the Ford announcement did not represent new investments, but a restating of plans it agreed to as part of the 2015 contract negotiations with the United Auto Workers (UAW). Under terms of that sellout deal, the UAW agreed to allow the Detroit automakers to significantly expand the number of super-exploited temporary workers and provide paltry raises for senior workers while maintaining the hated two-tier wage system. The goal was to slash US production costs in line with the policy of “insourcing” by the Obama administration—i.e., luring investment in the US based on promises of cheap labor.
Ford’s plans for retooling Michigan Assembly are line with the plans of all the major US-based automakers to wind down passenger car production in the US to concentrate production of more-profitable light trucks and SUVs. Ford is shifting production of the C-Max hatchback and the Focus from Michigan Assembly to an existing facility in Sonora, Mexico, and switching over production to the Bronco and Ranger.
For its part, Fiat Chrysler has announced the six-month shutdown of a portion of the Jeep complex in Toledo, Ohio, for retooling for a new version of the Jeep Wrangler. The move affects 3,200 workers, many of whom are temporary and not eligible for extended unemployment benefits.
Trump’s role in supposedly saving jobs at Ford follows his trumpeting of claims to have preserved the jobs of workers at the Carrier heating furnace factory in Indianapolis, Indiana. The agreement negotiated by Trump was a boondoggle for Carrier. It only preserved a portion of the jobs at the plant in a deal that entailed federal tax changes and deregulation that would save the company more than the $65 million it would get by shifting production to Mexico.
The so-called jobs program of Trump is based on a massive intensification of the exploitation of the working class, combined with tax handouts to business and the elimination of environmental, health and safety regulations. This goes hand-in-hand with the promotion of strident American nationalism, blaming workers in Mexico, China and other countries for taking the jobs of American workers. The nationalist program of Trump is designed to drive a wedge between American workers and their brothers and sisters overseas while laying the groundwork for trade war and world war.
This nationalist program is being eagerly embraced by the unions, in particular the UAW, which has long promoted economic nationalism and sought to stoke up animosity between American workers and workers in Asia, Latin America and Europe. Earlier this month, UAW President Dennis Williams appeared on a platform with Trump and the CEOs of the Big Three automakers at a rally in Ypsilanti, Michigan. At the event, Trump delivered a fascistic diatribe in which he called for the unity of workers, the government and corporations against the supposed foreign menace.
The reality is that the ultra-right demagogy of Trump is in line with the program of the UAW, which seeks to divert workers’ anger over the loss of jobs and continuing attacks on living standards in the direction of xenophobia and militarism. This is complemented by its role in suppressing the struggles of autoworkers in the name of preserving the “competitiveness” of American auto companies against their overseas rivals.
True to form, the UAW has not raised any opposition to the recent layoffs by US automakers, defending the cuts as dictated by “market demand.”