2:00PM Water Cooler 7/6/15

By Lambert Strether of Corrente.

Readers, I’m so disconnected from a normal schedule that I thought the third day of the Fourth of July long weekend was today. Hence the full complement of Water Cooler Friday.

TPP/TTiP/TSA

List of traitors in House and Senate, with phone numbers. Hat tip, reader Vatch. Be sure to visit them when they return to the district.

“Leaked Text Shows Trade Agreement Threat to Deregulate Financial Services” [Eyes on Trade].

“The new TPA procedures will apply to several ongoing negotiations, including the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP), the Trade in Services Agreement (TiSA), and the Environmental Goods Agreement, as well as any other new trade initiatives over the next six years if certain conditions are met” [JD Supra].

In recent comments, House Minority Leader Nancy Pelosi (D-CA) explained that TPA means that “[O]ur negotiators have been equipped with carte blanche. They have no excuse. I trust their values.

Like, say, slavery.

2016

Sanders

“Clinton booster Sen. Claire McCaskill of Missouri went on MSNBC’s Morning Joe last week to downplay Bernie’s large crowds, saying that “Well, you know, Rand Paul’s father got massive crowds, Ron Paul. He got the same size crowds. Pat Buchanan got massive crowds. It’s not unusual for someone who has an extreme message to have a following” [Slate]. Well, McCaskill is traiterous scum who voted to surrender our national sovereignty with TPP. So.

“Sanders didn’t need billions of dollars to earn the trust of voters in New Hampshire, or cut Hillary’s lead to only 8 points” [HuffPo]. Good review of the state of play. Just saying:

“[Clinton spokesperson] Palmieri said Sanders’s rise won’t prompt a shift toward negative campaigning and that Sanders’s strong crowds only underscore the differences in the campaigning tactics between the two campaigns” [The Hill]. The negative campaigning will come later, if needed (and Webb and O’Malley will do the softening up). Meanwhile, oppo — which money can buy — will be done through surrogates, not the campaign. Sheesh.

“Much of Sanders’s hour-long stump speech focuses on issues that could affect the wallets of workers like Pinegar. Sanders wants to raise the minimum wage to $15 an hour. He wants to guarantee family leave, sick time and vacation time — Americans are working too long, he says. He wants to make college free. And he promises that as president he would make corporations and the wealthy pay more in taxes while trying to cut taxes for those in lower brackets” [WaPo]. Concrete material benefits, as I’ve been saying for years (hat tip, Anglachel). And a policy-focused hour-long stump speech. Idea: Pay some consultants lavishly to make some cute viral videos.

“[T]he new poll from Quinnipiac University shows Clinton’s lead in [Iowa] down to 19 points. It was 45 points in Quinnipiac polling in May” [WaPo].

““I think we will get some endorsements, but I think it’s very clear to say that Secretary Clinton is the candidate of most of the members of Congress, is the candidate of the Democratic establishment,” Mr. Sanders said on CNN’s “State of the Union.” [Washington Times].

Sanders to make campaign appearance in Portland, Maine [Press-Herald]. Readers? Did anyone go?

Sanders interview [The Nation].

In 1936, when Roosevelt ran for reelection, he welcomed the hatred of what he called “the economic royalists”—today, they’re the billionaire class—and I’m prepared to do that as well. That’s the kind of language the American people are ready to hear.

Ding ding ding ding! None of this “stand between you and the pitchforks” crapola.

Of Governor Jawline: “‘He’s not a shouter,’ Jim Kessler, a senior vice president at the centrist think tank Third Way, said of Mr. O’Malley. ‘He’s a thoughtful and in some ways ponderous person…He doesn’t come across as much of a real populist. The message doesn’t come naturally to him'” [Wall Street Journal]. 

The S.S. Clinton

“Hillary Rodham Clinton said Friday she takes a ‘backseat to no one’ on championing liberal causes, presenting herself as a standard-bearer for Democrats as primary challenger Bernie Sanders generates large, energetic crowds” [AP].

Republican Establishment

“Rick Perry began his speech at the National Press Club on Thursday with an account of the mutilation and lynching of Jesse Washington in Waco, Texas, in 1916” [WaPo].

Republican Clown Car

“A month from now, 10 Republican presidential candidates will walk out onto a primetime debate stage in Cleveland and confront each other face to face for the first time. If the debate were held today, Donald Trump would be one of them” [Bloomberg]. Awesome. I am so hoping for this.

“The Federal Election Commission, a bipartisan agency charged with enforcing and administering the nation’s campaign laws, will next month zoom past a fairly preposterous milestone given its mission: two years without anyone leading its nonpartisan legal office” [Center for Public Integrity]. They don’t call it a two-party system for nothing.

Stats Watch

Gallup US Consumer Spending Measure, June 2015: “Americans’ daily self-reports of spending averaged $90 for the month of June, essentially unchanged from the previous two months” [Bloomberg]. “The latest average is also consistent with the June averages in 2013 and 2014.”

PMI Services Index, June 2015: “Activity in the services sector slowed in June based on the PMI services index” [Bloomberg].

ISM Non-Mfg Index, June 2015: “Rates of growth in ISM’s non-manufacturing report held steady and solid in June” [Bloomberg]. “A strong signal in this report is wide breadth among 18 industries with 15 showing growth with two of the exceptions, however, including mining and construction. Contraction in the latter is a surprise given wide indications of growth in housing. This report is solid but, together with the PMI services index, point to a lack of acceleration for the end of the second quarter.”

“The Conference Board’s Employment Trends Index – which forecasts employment for the next 6 months – improved, but the rate of growth slowed relative to last month. The continuing slowing rate of growth suggests “strong” growth is optimistic” [Econintersect].

“Outright contraction” in commercial paper [Mosler Economics].

China

Yves had some links on the China rout this morning, but I thought I’d add some here, since it’s potentially a very big story. (My priors: I’m a Maine bear!) I hope readers will chime in, especially with better sourcing that will place these financial events in the broader context of the “real economy” in China.  

Headline: “Will the Communist Party Save China’s Volatile Stock Market?” [Time]. Not The Onion.

“The Chinese economy, growing at its slowest pace in decades, has proven unresponsive to repeated cuts to guidance interest rates and banks’ reserve requirements, so Chinese policymakers appear to be turning to reform to help restart investment, removing administrative shackles that hold back lending to productive companies” [Reuters]. Hmm. “Administrative shackles.” And the loanable funds theory, for bonus points.

“China’s market regulator said on Sunday that it would allow the country’s central bank to provide liquidity support to the government-backed margin finance agency, China Securities Finance Corp” [South China Morning Post, “China’s central bank to fund margin finance agency in latest stock market bailout bid”].

“̌Beijing also unveiled over the weekend a CNY120 billion market stabilization fund underwritten by 21 brokerages and a suspension of IPOs” [Forbes].

“Last week, the CSRC relaxed rules on margin lending and cut trading fees, while also pledging to investigate alleged market manipulation” [FT, “Beijing liquidity move fails to spark equities rally”]

“The regulatory tweaks aimed at supporting equities included this shocker: Homes are now acceptable collateral for borrowing to buy more stocks” [Bloomberg].

“Although China’s central government has rolled out a series of market-boosting measures amid the sharp fall in share prices, they will have only a minimal impact because of rampant margin financing on the grey market, analysts say” [South China Morning Post, “Shadow lending limits Chinese government’s moves to boost stock market” ].

“Fred Hu, founder of Primavera Capital and former Goldman Sachs economist, lost his cool. “Whoever invented the term ‘shadow banking’ should be shot,” he said. [Hu] wanted to make the point that shadow banking – which he would prefer to call ‘non-banking lending activity’ – has a useful and necessary purpose. The term ‘shadow’ is pejorative, whereas shadow banking in China provides savers with the means to earn a return above inflation, Hu argued” [Finance Asia]. Is corrupt and Orwellian langauge a zeitgesit indicator of bad times to come?

The little guys entered just as the smart money was leaving: “More than 30 million new individual stock accounts were opened between end-March and mid-June, BNP Paribas notes. Their holders are now, on average, under water. This means that consumer wealth and confidence have been reduced, and so will the growth of their spending,” the bank said” [Reuters]. Is 30 million a big number in China?

“But the high valuations of [the Growth Enterprise Market board (GEM) in Hong Kong and the Small and Medium Enterprise board (SME) in Shenzhen] reflect the dramatic change of China’s economic growth from a labor-driven model to an innovation-driven one” [Forbes].

Margin trading policy timeline  [Macrobusiness]

“[In] The Banker magazine’s annual rankings of the top banks by profits and capital strength Chinese banks dominate [The Independent].

Health Care 

“But I’m growing concerned that for some people — especially older, middle- and lower-income adults — the Affordable Care Act is becoming The Unaffordable Care Act” [Forbes]. Due to underinsurance. Nobody could have predicted….

“Perhaps it is time to revisit the notion of all-payer rate setting in American healthcare. In an all-payer system, all payers — government, private insurance, businesses and individuals — pay the same regional rate, or price, for any given medical service or procedure” [The Hill]. Anything, anything but single payer.

News of the Wired

The Grateful Dead: Tech pioneers [Wired].

“Google unleashes machine dreaming software” [Telegraph].

“Why men should not be ordained for the ministry” [Sojourner].

“Just don’t do it” [Language, a Feminist Guide].

“Conviction of Former Goldman Sachs Programmer Is Overturned” [New York Times]. Funny, I Googled for the headline, and here’s an (almost) identical headine from NC. In 2012.

“Greeks apologise with huge horse” [Daily Mash].

“Man screams ‘f*** the alligators’, jumps in water and is killed by alligators” [Metro]. Attaboy.

“Goffman’s view is that the vast majority of face-to-face social interactions are driven by the logic of the participants’ conceptions of “face” and the “lines” that they assume for the interaction. Moreover, Goffman holds that in many circumstances, the lines available for the person in the circumstance are defined by convention and are relatively few” [Understanding Society]. And so changing the discourse and dragging the Overton Window left is necessary to open up new “lines.” Necessary, but by no means sufficient.

* * *

Readers, feel free to me with (a) links, and even better (b) sources I should curate regularly, and (c) to find out how to send me images of plants. Vegetables are fine! Fungi are deemed to be honorary plants! See the previous Water Cooler (with plant) here. And here’s today’s plant (Alex):

alex_flower

Alex writes:

[D]espite my best efforts, they keep coming back each
year…I just leave them alone and they keep smiling back

Reminds me that my Southern friends scoff that I have to actually plant honeysuckle…

Readers, if any of you did work in the garden over the long weekend, please use the form, and send in some photos to show off your work!

If you enjoy Water Cooler, please consider tipping and click the hat. I need to keep my server up! And pay the plumber….

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

71 comments

  1. Steve H.

    Hey, that cat is Lil BUB! She lives down the street from me!

    (Though she is on the road a lot, that sand is not from around here…)

      1. Steve H.

        Too true. We’re down to three, as far as I can tell, but they are tricksy…

        Apparently, Ms. Lil is also genetically predisposed to travel, as the vibrations help break down osteoclasts, a condition from which her good nature shines through. Transient Void recorded an EP at her home, but my son (who is the bassist) had a sad when he found out she was on tour at the time. The studio does, however, have several backup cats who stepped in and performed well in her stead.

  2. Gabrielg

    About that Goldman Sachs programmer who won the appeal, NC readers might remember the case from a piece Michael Lewis did in Vanity Fair as a spin-off of “Flash Boys”,

    http://www.vanityfair.com/news/2013/09/michael-lewis-goldman-sachs-programmer

    and an excellent Rajiv Sethi post,

    http://rajivsethi.blogspot.com/2013/08/the-spider-and-fly.html

  3. craazyboy

    Well, China. I don’t have any insightful links, because everything I’ve read so far is a bunch of babble*. But I have gut feel. I think China has had their 15 year long Japan, Inc moment and are about to do the Japan sequel.

    This is a funny one.
    “[In] The Banker magazine’s annual rankings of the top banks by profits and capital strength Chinese banks dominate [The Independent].

    Yes, yes. All those ghost city loans are good. So is the largest amount of over investment in industrial capacity the world has ever seen. I’m sure Chinese accounting is exemplary as well.

    * Tho I haven’t checked lately what Michael Pettis has to say. But I’m feeling lazy. Kinda weary of reading about all the parts of the world that are gonna blow up, then overheat, run out of water and finally insects become the dominant species on Earth, as nature always intended.

    1. PlutoniumKun

      Its hard to get anything but babble from China, there is so much contradictory information out there. As you say, Michael Pettis is one of the most informed and balanced commentators.

      The level of leverage in China is crazy, and thats just at the shadow shadow banking system. I’ve quite a few Chinese friends from various parts of the country and it seems everyone, even the most level headed and balanced are involved in some way in a get rich quick scheme. Everyone either has money invested in some unofficial investment fund, or they have money lent to some relative or friend who is giving back unfeasible large returns, or they are scattering money around in apartments or stock markets. I think the potential for instability in the event of a major reverse is very high, its a huge stack of cards.

      Having said all that, I’ve been a skeptic about Chinese growth since I first visited China in 1997, went to a brand new exclusive hotel in a town in the middle of nowhere, and had the gold plated taps fall apart in my hands as soon as I tried to run a shower. I’ve been predicting a collapse since then, and every year I’ve been very, very wrong.

      I do have a feeling though that China is on very dangerous ground at the moment. The stock market drop in itself is something that is manageable – but what seems unique to me is the very panicked reaction of the authorities. Usually they’ve been pretty cool and collected, and haven’t hesitated to change direction if it looks like they’ve made the wrong call. But I get a sense of ‘oh shit, we’ve run out of things we can do’ in the reaction to this. I suspect they know a lot of little people out there have been very badly burnt, and may well panic. The prospect of a billion chinese all trying to extract liquidity from their investments at the same time is very scary indeed. Especially as a fair number of the richest ones already have their bolt holes around the world set up.

      1. Lambert Strether Post author

        I wonder if there is any work done Chinese purchases of real estate in Manhattan, London, Singapore, and other bolt holes. This would provide a leading indicator. (Probably hard to do, since the purchases will be obfuscated.)

        1. PlutoniumKun

          I’ve never come across any figures on Chinese ownership of foreign property – I suspect they’d be worthless if there was any.

          Just to take two examples, a Chinese friend of mine, who is a UK citizen by marriage, owns two apartments in London, each valued at least £400K. Both are in her name, but both were funded by her mother in Beijing. I know her father is a mid to low ranking bureaucrat, when I asked her what her mother does she said to me ‘I honestly don’t know’. I doubt any official figures would include those two apartments. I’m sure there are thousands of equivalents.

          The other example is an ‘almost’ one. A good friend of mine in a southern China city asked me to help invest in an apartment in Europe. She is entirely honest, loathes the government, but has a six figure sum to invest after selling her home when she married. When I asked how she would take the money out she said it would come out in cash in a suitcase, and that she would trust me to put my name on the property. This didn’t come about (partially because I was very reluctant to take responsibility for something like that), but anecdotally there are lots of deals like that going down.

          I’m not sure either that accurate figures if available would be a good indicator for the simple reason that only a few last minute suckers would be trying to invest in foreign property in the face of a crash. Every single Chinese person with any net worth has been arranging a foreign bolt hole since the 1990’s. I don’t think I’ve met a Chinese person who doesn’t operate on the basis that at some stage its all going to come crashing down, and when it does, it will be very handy to have a relative with property somewhere… anywhere outside China. The Great Famine and the Cultural Revolution are clear memories for most Chinese people – either they experienced them or their parents did. They always seem to assume the worst of the government, and that includes dedicated CCP members. I think the main leading indicator of a real problem in China would be to check internet flight ticket prices. If its getting more expensive to fly out of Shanghai, but there are discount tickets available to fly in…. well, you get the picture.

          My comments on this are as a purely amateur outside observer of China, but my reading of the current situation is that the new government is entirely aware of the problems and the potential for contagion. They see the first priority as political – getting a very firm grip on all the levers of power. Then, they will try to enact the deep reforms everyone knows are necessary. They know it will be a very bumpy ride and they will be prepared to do anything necessary, including full political repression, if they judge it is needed to preserve order. But I suspect that they are not confident they have that level of control yet, hence the increasing tendency to panic at any sign of contagion. They can live with lower growth, they can survive a liquidity crisis in the formal banking sector – what they don’t think they can deal with is a collapse of the informal shadow banking sector that so many of the new middle class are dependent upon. This is what I think really scares them.

          1. MyLessThanPrimeBeef

            A safe haven abroad.

            That explains the ‘if we pollute China, if we destroy China, it’s OK. But we gotta make money quickly” attitude.

            And with the cooperation (reluctant or otherwise) of the American consumer, the dream does come true.

            1. different clue

              By now a couple of decades of inertia and deepening poverty make the American consumer default-cooperative. But it didn’t begin that way. Neither the consumers nor the citizens ( often the same people) ever asked for MFN for China. That was a gift of the International Free Trade Conspiracy. The goal was to exterminate enough American production and leave Chinese or other bad-conditions production as the only alternative left.

        2. craazyboy

          The Sidney RE boom has been largely attributed to Chinese investors. Same for Vancouver, Canada. A friend in S. CA has a Chinese CPA whom spends most of her time doing RE deals for Chinese nationals. He says in general, South Orange County is looking very Asian.

          1. MyLessThanPrimeBeef

            One needs to pay to get ahead, that is, for the kids to go to elite universities.

            That’s true of any people, anywhere in the world.

            “Not sure you will be wise, but the Confucian legacy compels us to be as supportive as we can, even paying your college tuition, so you can get ahead.”

        3. Sally

          Well, Donald Trump in his bizarre speech announcing he’s running for President did boast he had ……”just sold an apartment for $15 million to a Chinese man.”

          What was quite funny was he made this boast after complaining about too many people coming to live in the US. I guess if they can pay Trump the cash he has no problem with immigration.

          1. MyLessThanPrimeBeef

            Too bad Donald doesn’t have any Song dynasty Ru ware.

            He could have gotten more than just $15 million…easily. Even questionable Ming Chenghua doucai (some say it’s possible to buy appraisals in Beijing) can go more than that.

          2. different clue

            He wasn’t compaining about people of all kinds in general. He was compaining about Mexicans ( and implicitly Central Americans I suppose) in particular. A quibblesome detail , I know . . . )

  4. Gaylord

    How come there’s no mention of Green Party presidential candidate Dr. Jill Stein in this roundup? Could it be due to the lack of maintream media coverage? Same old, same old.

    1. Lambert Strether Post author

      First, one of the tasks of a functioning political party or movement is to generate media coverage; Occupy did; #BlackLivesMatter does; others have. Second, there’s a form. Send me links on the Greens (that are not GP sites, please). I mention this every so often, and there’s never a response.

    2. ifthethunderdontgetya™³²®©

      I voted for Jill Stein in 2012, and if Bernie Sanders doesn’t win the Dem. nomination, I’ll probably do so again in 2016.

      Having said that, here’s the criticism of the U.S. Green Party:

      What do they do between vanity presidential runs? Any building of the party, such as recruiting candidates for State Houses or Senates? Anything at all besides going off to Europe to be feted by some lefties over there?
      ~

      1. NotTimothyGeithner

        I think the focus needs to be on issue oriented action. Given the restraints and demands of local and state government, it’s difficult to convince voters elected official X is bad and needs to be replaced because X does take care of the schools and roads within the federal framework. I hate to say this even certain local Republicans can seem reasonable.

        As bad as Taliban Bob McDonnell was, he passed a major overhaul of transportation funding and reformed Virginia’s felon voting status laws to prevent another situation like Virginia had when Tim Kaine was governor and chose not to restore voting rights probably because he didn’t want to be called soft on crime. Yes, there is Christie and Walker, but I think the states are too functional within limits and responsive to create a demand for an alternative party. Washington is rotten, but I’m hesitant to say that about other governments in the U.S.

      2. DJG

        In Illinois, way back when the Green Party decided the 2d Blagojevich election, they threw away their qualified victory. They got involved in a couple of those weird Illinois petitions&signatures lawsuits. They lost their ballot status. How many political geniuses do you need to know not to be thaaaat stupid?

        I voted for Stein in 2012, too, but I could barely find other candidates on the Illinois ballot.

        1. C. dentata

          If the Greens were at all serious about effecting change they would be working to change the electoral system to enable empower third parties as advocated at http://www.fairvote.org/, for instance. But they’re more in it for the romance of being pure leftists, as discussed elsewhere here recently. This makes them atomizers rather than organizers.

      3. Tom Allen

        Here’s a list of a couple hundred candidates from last year’s elections. The Green Party fielded candidates not only for state congressional seats but city councils, county boards, judgeships, registrars, auditors, and clerks, to name just a few.

        And here’s a list of over a hundred current officeholders, most of them at the local level.

      4. Jess

        I’m what the political pros call a “high propensity voter”, meaning that I have a history of voting in damn near every election from municipal to presidential. (Only missed one vote, in a primary, in my life, due to a family emergency out of state.)

        Never — I say again, NEVER — has a Green Party candidate or a volunteer for a Green Party candidate ever knocked on my door. Nor have I ever received a piece of campaign mail from the Green Party. I have, on the other hand, during every local election, have candidates knocking on my door to introduce themselves, explain their positions, and ask for my vote.

        The Green Party is a joke, a plaything for dilettantes.

  5. Lambert Strether Post author

    I, for one, welcome our new insect overlords.

    It may be that the ghost cities aren’t the issue. China’s huge, and I’m too lazy to find the link, but I remember reading (my metaphor) that it’s like buying your kids clothes that are too big so that they can “grow into them.”

    What boggles my mind is loosening restrictions for people putting up their houses for margin collateral. That looks like a move to sweep the pieces off the board, and worthy of our own private equity crooks (who IIRC bought up distressed housing for a song).

    But in a way it’s like the Chinese tourists, who make such excellent story fodder for various social gaffes. How many of them are there really? To what extent do they represent the vast Chinese working class?

    1. James Levy

      I think it would be interesting, given someone up the line mentioning Japan and her woes, to consider how the US economy seems to keep chugging along providing a good standard of living for many, perhaps by world standards most, of her citizens. I say that having no real clue as to how this is done, other than the fact that we have a decent amount of gas and oil, enough clean drinking water (for the moment) for almost everyone, and can easily ourselves. And we can print dollars and everyone will take them at 100 cents on the dollar and zero interest. But despite lots of facile explanations that always struck me as dubious, I don’t know why Japan stalled, China is sputtering, and the US still hums along like the energizer bunny. It may have something to do with our astonishing capacity for denial and self-deception, but even that comes up short.

      1. DJG

        I don’t know Chinese history, but Japanese history is characterized by periods of amazing creativity and productivity followed by periods of self-imposed stagnation or stagnation by other causes. So it is as if Japanese culture is cyclical.

        As to the USA, didn’t you answer your own question?: Extractive economy. Agriculture that produces a lot of fairly decent food. A very solid currency. (You didn’t mention: A docile citizenry. A labor force that doesn’t demand much. An elite that lives by slogans.)

      2. craazyboy

        Japan had a monstrous RE bubble. Much worse than the one we had here. Fueled by extreme leverage in commercial property, and 100 year mortgages in residential. Then the much vaunted Japan, Inc multinationals way overinvested in plant and equipment, as if they were planning to take over the world. A stock bubble too. The world finally fought back and forced Japan to re-value their currency in 1985. Then the music stopped – the growth wasn’t there to pay all the leveraged debt. Poof! Then they bailed out the banks and didn’t write off any of the debt(or much of it) and went into a 20 year stasis.

        Same as we are doing know, except we didn’t do it quite as big maybe.

        But the RE and industrial capacity bubbles in China are sounding very similar to Japan.

        1. Uahsenaa

          This. The Japanese were leveraged up to their eyeballs.

          Moreover, having lived there off and on throughout my professional life, the primary reason I don’t prefer their stagnation over the U.S.’s groaf is the growing conservation, xenophobia, and very real radiation concerns.

      3. MyLessThanPrimeBeef

        I think Japan stalled because China happened.

        And China is sputtering because finally, the global reserve currency is not going global due to the elevator not working proper (or at all) to convey new money to the people living on the lower floors. That money is stuck at the penthouse.

        You can only put so much money into global circulation doing color revolutions.

      4. PlutoniumKun

        I think its worth bearing in mind that while Japan is a wealthy country, in per capita terms its not really all that rich (Noah Smith did some figures on this a while ago I can’t find the link right now). Add to that its relative egalitarianism means that while the great majority of Japanese are comfortably off, they would still not be wealthy enough to do much travelling or indulge in other ostentatious displays of wealth. The exception, somewhat ironically, are often young women who, while not so well paid, live at home and aren’t interested in saving, so have plenty of cash to spend on Louis Vitton or whatever catches their fancy (a Japanese friend of mine who worked for LV said that selling LV handbags to Japanese girls was the easiest job in the world). The long term effect of the 1989 crash of course means that most Japanese do not have recourse to capital appreciation and they are very reluctant to borrow. Hence I think the slow demise of the Japanese tourist in various western hotspots (I recall witnessing in Stockholm a Chinese person pointing with glee at how some signs in a department store in Mandarin had visibly been painted over some Japanese writing).

        One of the things which reading Piketty has opened my eyes to is just how important capital accumulation is to visible wealth. A society where middle income earners can exploit property and other asset price rises is visibly much richer than one where people merely earn money to spend. And this wealth builds up over generations – so historically wealthy nations do have a ‘deep’ wealth I think that newly emerging nations can’t match – except through the seemingly inevitable phase of bubble led growth.

      5. Ed

        I haven’t read all the responses, but the short answer is that the US at the moment is remarkably like one of the old Chinese dynasties. It occupies a continental size landmass, with plenty of water and minerals and is able to itself, with no strong natural enemies, a strong ideology that the people buy into, and it gathers tons of tribute from other counties.

        Chinese history indicates that this tends to continue until it can’t. Incidentally, what happens when it can’t is famines and warlords, until one warlord defeats the others and puts everything together again.

    2. PlutoniumKun

      I think a lot of the Chinese we see travelling are paying for their new middle class lifestyles entirely on capital appreciation. I know several Chinese who earn very low wages (the equivalent of maybe $5000 a year or so) in jobs like teaching, but who have quite nice lifestyles based on the appreciation of property bought maybe 5 or 10 years ago through borrowing from relatives. I know one policeman who just quit his job (to the disgust of his wife) on the basis that his wage was tiny compared to his investment income (from a scheme which sounds to me suspiciously pyramid shaped). It reminds me a little of Ireland in the mid 00’s, when at the time it was pointed out that there was a huge dichotomy between the number of people officially on the type of salary capable of buying a top of the range BMW and Merc, and the number of BMW’s and Mercs being imported. Some was hidden wealth and tax dodging, but mostly it was from second mortgages and other less obvious forms of borrowing.

      This isn’t to say there aren’t many high paid Chinese – good accountants and engineers will earn salaries not so different from Europe or the US (I believe Airbus have said they are switching more manufacturing to France because of the costs of skilled labour in China!). But this is really a very small percentage, even if a small percentage of Chinese is still potentially a very large number. I think many ordinary working class Chinese are aware than their living standards are not actually rising as fast as they had hoped. I think the older generation are quite sanguine, they’ve seen so much in their lives. But I think younger Chinese are every bit as terrified of their future as their US or European equivalents.

      1. Steve H.

        Registering appreciation for your comments. They are filling in some of the gaps I have had in the how of it.

        1. PlutoniumKun

          Many thanks – I would emphasise that I’m just an amateur observer, certainly not an expert on the Chinese economy, I’ve been very wrong before!

    3. Uahsenaa

      Well, one response would be to say that the “vast Chinese working class” is not all that vast, at least as we understand it nowadays as those employed in service industries or traditional manufacturing. One thing that i learned from my Chinese compatriots in grad school is that China as a whole is still palpably agrarian, with a large population of subsistence farmers, and those who do work in agriculture for wages make even less than the pittance those who work in the factories do (which is why they go there from the countryside in the first place). And the numbers back them up: nearly a quarter (22%) of the Chinese population is primarily employed in agriculture (either for wage, for profit, or for subsistence), whereas, for comparison purposes, the U.S. is only .2%, a fraction of a percent. Chinese themselves seem to understand this like it’s obvious, yet Western observers regularly buy into the prop that China is a complete industrial powerhouse, when reality does not bear this out.

      This means a very large portion of the Chinese population cannot meaningfully become conspicuous consumers in the way North Americans or Europeans are and that the development of the Chinese economy over the past few decades has all but ignored a substantial sector of its own economy, so, as a result, the PRC’s attempts to increase domestic consumption as a bulwark against fluctuations in trade is immediately hamstrung.

      tl;dr It’s an agrarian economy with the pretense of industry.

      1. JerseyJeffersonian

        Don’t know if this might be so, but if things go really pear-shaped for large numbers of migrants to the cities, having family still on the land to whom one could return might not be a bad thing. It helped here in the US during the Great Depression that there was still a substantial number of family farms to which relatives could repair at need. More hands on the farm might also have helped to increase food production sufficiently to keep the whole family fed.

        Also, if the Chinese have not gone full Agrobusiness in their farming sector, well, that may be a good thing.

    4. MyLessThanPrimeBeef

      How many?

      Yesterday, China warned tourists about going to Turkey…something about the Uighurs.

      ‘Of all the places in the world,’ one might wonder for a non-Uighur Chinese to vacation there.

      It turns out, I think, they go there to see the largest or the second largest* collection of Yuan Dynasty blue and white in the world at the Topkapi museum.

      *Some claim the city of Hohhot (not Howhot), ancient capital of the Mongols, also called Blue City, I believe, in Inner Mongolia has the largest.

  6. diptherio

    To Fresnodan, subgenius, and anyone else interested in cutting-edge passive greenhouse tech, here’s a video tour of the Ott-Kim Conservatory that I posted about this weekend. It’s in Three Forks, Montana, uses zero energy, and produces things like persimmons, kumquats and grapefruit. Here’s a video with talking and not just pretty pictures:

    https://www.youtube.com/watch?v=xrNsn9-wN1s

    1. jo6pac

      I built a small green house with recycled tempered glassed doors. These can by purchased cheap from glass shops. Yes, some trade skills are needed.

      Thanks for the link

      1. SubjectivObject

        Not that all Salvation Army stores are the same, but at one I found a mother load of tempered glass doors (shower doors) which I used to make the sunken greenhouse canopy. The trade skill is making separate frames to hold the variant sized glass panels; mine were riveted aluminium extrusion. The various “frosted” textures of the shower glass is good for moderating glare and temperature. The tempered glass stands up to hail well too.

  7. DJG

    So: This “Nancy Pelosi” must be the woman in American Voices at The Onion:

    WIth this quote, undoubtedly so:

    In recent comments, House Minority Leader Nancy Pelosi (D-CA) explained that TPA means that

    “[O]ur negotiators have been equipped with carte blanche. They have no excuse. I trust their values.“

    1. Brindle

      …or how about:

      “[O]ur negotiators have been equipped with no excuse. They have no values. I trust their carte blanche.”

      Kinda ends up in the same place.

  8. DanB

    “…Moreover, Goffman holds that in many circumstances, the lines available for the person in the circumstance are defined by convention and are relatively few”. Goffman’s first chapter of the “Presentation of Self” (available free online) covers the concept of the definition of the situation -which evolved to the inelegant notion of “lines.” This first chapter should be read in conjunction with Pierre Bourdieu’s conception of the field and habitus (many of his works are free online), which analyzes the elements of who has the power to define a situation. For example, stigmatizing Greeks as lazy chiselers serves to lock in a definition of the situation that at once vilifies them and makes Merkel et al. righteous. While Goffman was politically aloof (he died around 1982), Bourdieu was a staunch critic of neoliberalism.

    1. Lambert Strether Post author

      OK, I’m lazy, I admit it. Could you expand on “Pierre Bourdieu’s conception of the field and habitus”? Enough to make, say, me dangerous in conversation?

      1. anon y'mouse

        guessin’ it’s: (s)he who draws the board sets the limits of how the others are to play. habitus would be independent strategies to maximize an individual’s outcome, based upon what paths they view as having greater probability of successful navigation.

        one doesn’t set out with no map and no plan in this life, unless they are a wastrel like myself.

        if one sees no way for themselves to become a (dentist, plumber, accountant, pilot…), then they usually won’t try to.

        standard disclaimer-i could be wrong.

      2. Jeff W

        From here:

        …Bourdieu sees power as culturally and symbolically created, and constantly re-legitimised through an interplay of agency and structure. The main way this happens is through what he calls ‘habitus’ or socialised norms or tendencies that guide behaviour and thinking. Habitus is ‘the way society becomes deposited in persons in the form of lasting dispositions, or trained capacities and structured propensities to think, feel and act in determinant ways, which then guide them’.

        Habitus is created through a social, rather than individual process leading to patterns that are enduring and transferrable from one context to another, but that also shift in relation to specific contexts and over time. Habitus ‘is not fixed or permanent, and can be changed under unexpected situations or over a long historical period’

        A third concept that is important in Bourdieu’s theory is the idea of ‘fields’, which are the various social and institutional arenas in which people express and reproduce their dispositions, and where they compete for the distribution of different kinds of capital. A field is a network, structure or set of relationships which may be intellectual, religious, educational, cultural, etc. People often experience power differently depending which field they are in at a given moment, so context and environment are key influences on habitus:

        ‘Bourdieu accounts for the tensions and contradictions that arise when people encounter and are challenged by different contexts. His theory can be used to explain how people can resist power and domination in one [field] and express complicity in another’.

        [Citations omitted; emphasis added]

        In other words, it’s a way more complicated sociological version of pretty basic behavioral science: people who control the contingencies of reinforcement and punishment have “power” and different people have different amounts of that control and different amounts of reinforcers/punishers (in the Greek case, euros and the ability to withhold them) at their disposal in different situations. To some degree, that people suggest behaving within the prevailing contingencies is called “realistic” or, perhaps, Realpolitik; behaving in a different way (against the contingencies, to change them, etc.) might be labeled “idealistic.” Contrary to the quote, the theory, at least the part quoted, doesn’t “explain” how people resist in one circumstance and comply in another—it just describes that they do so subject to different environmental conditions. You’d have to look more closely to the prevailing contingencies for an explanation.

        That should make you dangerous enough.

        1. Lambert Strether Post author

          This sounds a lot like creorder. Dunno. Made-up words are a bad sign, to me. But thanks. This is really interesting. (If you look at the death rates, the reproduction of capital is far more lethal than the production. At least in the US.)

          1. Jeff W

            This sounds a lot like creorder. Dunno. Made-up words are a bad sign, to me.

            Huh? I don’t know about Bordier but what I am saying is purely standard behavioral analysis. All it’s saying in behavioral lingo, in terms of Greece, is that the Troika is making funds contingent on austerity—the giving or withholding of funds is contingent on the behavior (austerity) they want. If they don’t get that behavior, they will withhold the funds. (Actually, it’s a bit more complicated because they want everyone to act as if austerity makes sense—which is why Yanis Varoufakis is gone (he refused to do so)—but that’s another topic.) On the other hand, 61.3% of Greeks in the referendum are exerting a form of counter-control (i.e., a No vote) for more counter-control (some influence from them)—they’re saying (if you read the referendum as a “democratic revolt”) “Whatever is going on, we want a greater say”—or, in behavioral terms, they want to be able to arrange the contingencies that they are subject to, if any, to some extent, at least through their elected leaders. (They may not be able to, to the extent they want, obviously.)

            Bordier says arcane stuff like “Habitus is ‘the way society becomes deposited in persons in the form of lasting dispositions’” but “society,” of course, doesn’t get “deposited” “in persons” (it’s like, what, the “sedimentary theory” of human behavior? that’s the type of thing that makes sociology writing all but unreadable). All that’s going on is if you’re in an environment where things like neoliberalism, austerity, the “sanctity” of debt repayment, etc., are all normative (i.e., those things are reinforced in all sorts of ways, subtle and not so subtle), people will tend to align their behavior with that environment—at least until, say, the punishing effects of the actual policies exert their own countervailing influence (as has occurred in Greece); some, of course, (like readers of this blog) will not align their behavior that way because their environment and environmental history (or, to use Bordier’s term, “field”) is different.

            1. Lambert Strether Post author

              That sounds worse than I meant it to sound. I’ve got no quarrel with the ideas. It’s just that “habitus” is hard to use in ordinary conversation, just like “creorder.”

              1. Jeff W

                Got it. Ha, I thought you were saying something along the lines of it sounded like some weird “cult” thing. Thanks for the clarification. (And “habitus,” to me, isn’t just hard to use in conversation—it’s just muddies up something that means, essentially, the prevailing way people act.)

          2. Uahsenaa

            Habitus is one of those things, though, that is immediately recognizable to people who do sociology, anthropology, cultural studies, etc. yet almost unknown outside of them. Nevertheless, if you ever were to find yourself among those types, “habitus” is a good way to characterize yourself as “in the know” and likely to result in far less condescension.

  9. C

    “[Clinton spokesperson] Palmieri said Sanders’s rise won’t prompt a shift toward negative campaigning and that Sanders’s strong crowds only underscore the differences in the campaigning tactics between the two campaigns”

    Yes. One focuses on doing what people want and is therefore popular. The other doesn ot.

  10. Anon

    Re: Obamacare (via Forbes)

    The most pertinent part of the article was this, I think:

    That’s because the limits on out-of-pocket costs ($6,600 for an individual and $13,200 for a family in 2015) amazingly don’t apply to charges from out-of-network providers. And, the Journal says, health plans with limited or “narrow” networks comprise roughly half of all Obamacare exchange networks.

    So, you’re screwed if you do, screwed if you don’t?

  11. flora

    Health Care.

    You and Yves have been accurately reporting the A.C.A. fubar from the beginning. It’s good to know the level of govt corruption (insurance cos and pharma wrote the bill with no cost controls or accountability) that got us to this point. Then there’s the 2009-stimulus bill that included $35 billion for health IT without including any real standards or specifications and the hundreds of IT vendors that rushed to cash in.
    To add to the Forbes article here are a couple quotes from a July 2015 Harpers article:

    “The A.C.A.’s greatest legacy may finally be the fulfillment of a conservative vision laid out three decades ago, which sought to transform American health care into a market-driven system. The idea was to turn patients into shoppers, who would naturally look for the best deal on care — while shifting much of the cost of that care onto those very consumers. In large part, this scheme was the brainchild of J. Patrick Rooney, whose Indianapolis-based Golden Rule insurance company specialized in selling policies to the the healthiest consumers. ….

    “In other words, Rooney and his G.O.P. allies (with, it should be said, Democratic aquiescence) moved American health insurance in a direction contrary to that taken by most every other nation in the developed world. It is also contrary to the needs of those unlucky enough to get sick. Whereas insurers once asked policyholders to pay a nominal $25 or $50 for a doctor’s visit or CT scan, they now require them to foot as much as 25 or even 50 percent of the bill. What looks like a reasonably priced policy, at least in terms of premiums, can bring on sky-high bills and serious debt in no time.”

    “Wrong Prescription”, by Trudy Lieberman, Harpers Magazine, July 2015

    And now those “reasonably priced” policy premiums are going up up up. What a deal.

    1. [email protected]

      And now those “reasonably priced” policy premiums are going up up up.

      The “skyrocketing rates next year” line comes out every July. It’s part of insurance company marketing. The idea is to get you to expect a HUGE rate increase so that when you get one that is less, you are happy about it.

    2. Pete

      I don’t disagree with many of those criticisms… but the ACA is STILL much better (at least IMO) than what we had before it. Guaranteed issue and removal of coverage caps were huge problems.

      Still a long, long way to go of course

  12. JTMcPhee

    αποχαιρετισμός, Yanis Varoufakis! Honorably done. “With your shield, or on it:” you brought yours home. Hope you don’t lose your courage, or your apparent insight.

    Lest we forget that others use the phrase in different contexts, are doing so as we intently blog, in the idiot conflicts of this age as in others, there’s this: http://www.michaelyon-online.com/men-at-war-come-home-with-your-shield-or-on-it.htm.

    And of course let me include this, for the quivery fearful in the Homeland: http://www.nytimes.com/interactive/2015/06/17/world/middleeast/map-isis-attacks-around-the-world.html?_r=0

      1. JTMcPhee

        …and are there “Miracles on 34th Street”? The little Natalie Wood, trying so hard to say of Kris Kringle, ” I believe… I believe… I believe…” In the movie, of course, the love interests marry, and Natalie gets her perfect house, the one Kris had promised…

  13. flora

    Bernie Sanders rally – live stream from Portland, Maine beginning 7:00pm – 8:00 pm EDT.

    https://www.youtube.com/watch?v=6d9poJU6Kiw

    1. Brindle

      Bernie draws 7,500 in Portland. In WaPo comments 95% are pro Sanders.

      http://www.washingtonpost.com/blogs/post-politics/wp/2015/07/06/bernie-sanders-draws-about-7500-people-in-portland-maine/

  14. Schnormal

    “In 1936, when Roosevelt ran for reelection, he welcomed the hatred of what he called “the economic royalists”—today, they’re the billionaire class—and I’m prepared to do that as well. That’s the kind of language the American people are ready to hear.”

    I like how Bernie is echoing/amplifying Varoufakis’s recent shout-outs to FDR (“they are unanimous in their hate for me, and I welcome their hatred”; “And I shall wear the creditors’ loathing with pride.”) and Tsipras last week! (“we have nothing to fear but fear itself”)

    Syriza is doing more for us than we know — i stuck by that Guardian this week like people used to snuggle up to the radio for a fireside chat.

  15. Bill Frank

    Scanning the MSM coverage of Greece and the subtle but clear bias against the “rebellious/irresponsible/radical” Greeks, Meanwhile, back at the table, Tsipras has been given a strong position with the landslide in his pocket. He has a remarkably clear mandate from his people. Sitting across the table are the representatives of the financial elites. Tsipras has the moral high ground as negotiations resume and he knows it. The Greek negotiating stance will be combative and that will cause Holland, most noticeably, to be very uncomfortable. Merkel will not get her must have demands for more austerity, the Greek people have rejected her bloodletting in absolute terms. Ready or not, the Greek people are in the front line of that continuing conflict known as the Class War against the Masses, yeah, it’s a real War, There are many fronts in that all but declared War, but Greece really is ground zero. This has a classic “lines in the sand” feel to it. Some may want the Greeks to cave, while many hope the Greeks continue to loudly say, “NO!” I fear that the Lords of Europe will respond in the harshest of terms if the Greeks don’t capitulate soon. Their consolidated power is under threat and that is unacceptable, not subject to negotiation. I fear the Greek sacrifice may end up being too much for Greece itself to withstand. This is a major battle in the Class War against the Masses and the casualties will likely be high. The Greeks are fighting the good and honorable fight. Solidarity.

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