Things to ponder

I’ve come across several articles over the past few days that don’t fit into any one blog post on their own, but which nevertheless interested me.  I thought I’d throw them out there and see whether any of them resonated with you, too.

First, from an unabashedly left-wing/progressive point of view, Lance Simmens tells us “Why Our Children should Hate Us“.  It presses all the populist left-wing buttons, but even though I don’t agree with most of the viewpoints he expresses, I think there’s an uncomfortable truth behind his words.  We’ve failed our children because we haven’t challenged conventional ‘wisdom’ enough (if at all), and therefore allowed ourselves and our society to be ‘railroaded’ according to the agenda of pressure groups and spin-doctors.  That applies to all of us, of any and every political persuasion.  Here’s a brief excerpt.

As a father of two millennials, I have been bombarded with what has turned out to be a warranted cynicism, criticism, and rejection of government. As one who devoted nearly 40 years to the promotion of public service and government, I have come to reassess my initial reluctance to such criticisms. The kids have every right to be cynical and critical and as hard as it is for parents to accept it, probably know more than we do.

. . .

I have worked in numerous governmental agencies at senior levels where I attempted to defer to the scientific expertise when contemplating major policy decisions affecting millions of people. To see the systemic corruption that is occurring in government agencies like the Environmental Protection Agency, Department of Energy, Department of Health and Human Services including the Centers for Disease Control and the Food and Drug Administration not only makes me sad but it makes me mad.

We’ve spoken before in these pages about the iniquitous practice known as asset forfeiture.  CopBlock claims that ‘The Drug War is State-Sanctioned Theft‘, alleging that the war on drugs has led to the explosion of this practice across America, and caused harm to thousands of innocent people.

While using cash out of preference or necessity is a perfectly legal activity, it is politically expedient for law enforcement agencies to pretend otherwise because they have incentives to do so. Civil asset forfeiture allows law enforcement agencies to take money, cars, houses, and other property that they suspect of being purchased with the proceeds from criminal activity or of being used in connection with criminal activity. The agencies then either keep or sell the property and use it or the proceeds for their own purposes. It’s such a huge cash cow for law enforcement that in 2014, the amount federal agencies netted through civil asset forfeiture, $5 billion, exceeded the amount Americans lost through burglaries, $3.5 billion. The actual amount seized is even higher than this, since this figure does not include the amounts taken by state and local law enforcement agencies.

Taking money from bad guys, sounds great, right? Oh, there’s a catch.  Cops don’t have to actually prove you committed any crime. They don’t even have to charge you with one. You, on the other hand, need to go to court and jump through whatever hoops the government requires to prove your innocence and get your property back.

According to Geopolitical Futures, things are getting tense in China between government and military.  Their study is titled ‘The Chinese Central Committee and the People’s Liberation Army Face Off‘.

Sources in China have been reporting increasing tension between the Communist Party and the People’s Liberation Army. In many ways, these are reports of the obvious. While the anti-corruption campaign that has been waged by President Xi Jinping is ongoing, he has now shifted his focus to the PLA.

. . .

Xi knows that there is a danger of resistance. Hence the widespread purge letting everyone know who is in charge and how vulnerable everyone is to the Party. Businessmen are readily intimidated by force. But the problem Xi has is that he is also challenging the PLA, which is not nearly as intimidated by force because it is in the end the ultimate force.

Therefore, Xi must come to an agreement with the PLA and any such understanding must begin with the PLA first knowing where the ultimate power lies. Trying to explain to millions of heavily armed men that the ultimate power lies in the hands of people who have far fewer men and weapons at their disposal is a risky business.

Less than ten days ago I noted that the looming pensions crisis in the USA was about to bite hard.  Now the case in question looks set to cost UPS billions of dollars.

UPS told investors that if Treasury approves the CSPF plan to cut benefits, the company would have to take a charge of approximately $3.2 to $3.8 billion.

. . .

While any income statement impact will be adjusted out by analysts, it will be a significant drain on UPS’ cash flow (UPS generated $5 billion in free cash flow in fiscal 2015) as it funds the benefit gap over time.

If it gets bad enough, the Big Brown Truck of Happiness may not be around in its present form for much longer.  That sort of capital outflow can cripple a company.

David Stockman‘s Contra Corner blog points out that the Fed’s zero interest rate policies have led to a significant downturn in the sale of new homes.

ZIRP has … caused raging housing inflation which has caused median monthly mortgage payments for new homes to rise by 20% since 2009. ZIRP has enabled corporate CEOs to game the stock market to massively increase their own pay while encouraging them to cut worker salaries and shift higher paying jobs overseas. That leaves the US economy to create only low skill, low pay jobs that do not pay enough for workers to be able to purchase new homes.

The perverse incentives of ZIRP are why the housing industry languishes at depression levels.

In a nasty, ill-mannered spat, Bloomberg and Zero Hedge are at each other’s throats.  Bloomberg published a so-called ‘exposé’ which claimed to ‘unmask’ the men behind Zero Hedge.  In response, Zero Hedge published personal details about Bloomberg’s source, alleging him to be a disgruntled former employee with serious personal difficulties (including alcohol), and alleging that Bloomberg’s piece was nothing more or less than a hit job.  It’s unsavory on both sides, but does illustrate the extent of the rivalry between supposedly reliable sources in the financial industry.  A lot of money rides on such credibility (or the lack thereof).  From that point of view, it’s interesting.

The Last Refuge points out that Donald Trump threatens the well-laid plans of vested interests, claiming that there are ‘trillions at stake’.  I think the author’s perspective is somewhat alarmist, but he’s right to demonstrate the extent to which the ‘establishment’ will go to defend its turf.  (It also reinforces my earlier point that the ‘establishment’ in America is wealth.)

Thought-provoking reading.

Peter