2:00PM Water Cooler 10/13/2017

October 14, 2017
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Trade

“Black carbon in shipping and aviation: A G20 imperative on trade and climate emissions” [International Centre for Trade and Sustainable Development]. “Black carbon [BC] is a major component of “soot,” including in transportation sector emissions. Unless there are significant changes in policies at many levels of governance, total global BC emissions are expected to rise for decades. Although BC transportation emissions are reported to be decreasing in some countries, they are increasing in most of the world, and transportation is still the dominant sectoral source of BC in ‘developed’ countries…. Since G20 countries account for about three-fourths of international trade, they have a major stake in trade-related BC emissions, and they have an opportunity as well as a responsibility to control the BC emissions of shipping and aviation.”

“Doubts are increasing about whether the three sides can reach a deal: Negotiators are more or less halfway through their allotted schedule, with only two chapters closed and many make-or-break issues still undecided — including whether the pact will include a controversial “sunset review” provision pushed by the United States that would terminate it after five years unless the three countries agree to extend it” [Politico]. “United Steelworkers International President Leo Gerard welcomed a sunset review for NAFTA, telling reporters Thursday at an AFL-CIO-hosted briefing that had the original deal included such a clause, the trade pact would not be in effect today. The NAFTA renegotiation ‘needs to have a sunset review because if it doesn’t meet the commitments, it ought to go back to the drawing board or it ought to die,’ Gerard said.”

“In one sign of [NAFTA] civil society activity, there are signs that say “NAFTA Fix It Or Nix It” in the yards of several houses in a working-class neighborhood near the [Pentagon City Sheraton Hotel]. We asked Public Citizen if they knew how the signs got there and got this response: ‘The mighty coalition that helped build a majority in Congress against the TPP is now pushing for a NAFTA deal we could support, which means canvassing neighborhoods nationwide where folks like those living across the street from the negotiating venue are demanding a NAFTA replacement that works for people and the planet’” [Politico]. That signage: Cheeky!

“But as soon as NAFTA has been repackaged, the spotlight is expected to be pointed at the U.S. trade agreement with Central America” [California Apparel News]. “Central America, with its hundreds of clothing factories, is a big player in the apparel industry, exporting most of its production to the United States…. The region is a top manufacturer of basic T-shirts, underwear, sweatshirts, pants, synthetic activewear and socks. In the Dominican Republic, a member of the Central American free-trade agreement, which also includes the United States, Guatemala, Honduras, Nicaragua, El Salvador and Costa Rica, the HanesBrands employs some 8,000 people.”

“A trade battle between the U.S. and several African countries is forming over an unlikely commodity: used clothing. Several nations—including Kenya, Uganda and Tanzania—are moving to restrict the imports of secondhand goods that are the primary source of clothing across much of Africa, saying the cheap items undermine their efforts to nurture domestic textile production” [Wall Street Journal]. “Apparel provides the kind of light manufacturing that would help East African countries compete with Bangladesh, Vietnam and other low-cost producers, but for now the competition is coming from donated clothes.”

Politics

Puerto Rico

A new day, a new tweet:

New Cold War

“What Facebook Did to American Democracy” [The Atlantic]. This is a very interesting, and non-hysterical article full of linky goodness. That said, I’m somewhat skeptical, for two reasons: First, it’s written from inside the creative class bubble. And the second is related: I have yet to see anecdotal, on-the-ground — outside the bubble — reports that Facebook ads influenced a single vote, and I keep track. Perhaps that’s because reporters didn’t ask the question. Perhaps voters weren’t even conscious of Facebook’s influence. But I would have expected interview panels, like those Stanley Greenberg runs, to have overcome both those obstacles. I expected the article to provide a theory of the case for “Russian meddling,” and in fact it does not. On that topic, as I keep saying, granting the narrative, if $100K in Facebook ads can defeat Clinton’s billions and the entire Democrat donor class, then there’s a lot more causation to look for than Facebook ad buys. Oh, and I don’t use Facebook hardly at all any more. I haven’t seen anybody change their mind about anything because of it.

Obama Legacy

“CTU, SEIU join push for community benefits agreement with Obama Center” [Chicago Tribune (DB)]. “We cannot trust Rahm Emanuel to keep his word and we cannot trust him with this project unless agreements are codified into law.” And then there’s this:

For months, organizers have been pushing for a community benefits agreement that would lock in certain amenities as the Obama Presidential Center is built. Recently, former President Barack Obama said he doesn’t agree that a community benefits agreement is the right tool for this project and instead asked the community to trust his vision, which would be inclusive.

Uh huh.

2016 Post Mortem

“Hillary Clinton in talks with Columbia University to take on professor role” [New York Daily News]. “The former U.S. Secretary of State and presidential nominee is in talks with Columbia University to take on a formal role at the Ivy League — and potentially house her archives there, multiple sources told the Daily News.”

2018

“With 25 Democratic Senate seats up next year, ten in states Trump carried, five in states the former real estate developer won by 19 points or more, this should be a year for the GOP to expand its current narrow 52-48 majority. Under different circumstances, the GOP could hope to boost their Senate numbers by four to seven seats, perhaps even reaching the magic 60-seat Senate super-majority level that could break filibusters on party line votes. But given their current disarray, Republicans will need to fight hard to gain any new seats, and losing one or two of their own seats would put their majority in jeopardy” [Cook Political Report].

“What’s driven down the approval ratings for both McConnell and Ryan is a drop in approval among GOP voters. Ryan’s favorable rating among Republicans dropped 26 points from February to September of 2017 (+49 to +23). McConnell’s dropped 23 points (from +15 to -8). Meanwhile. Trump remains popular among Republican voters with a favorable rating of 77 percent. In other words, Republicans have soured on their party leaders but not on the president. This gives Democrats room to attack Republican leaders and the “establishment” without risk of turning off or turning out GOP voters who are supportive of Trump” [Cook Political Report]. And so, because Democrats are still chasing wealthy Republican suburbanites rather than expanding their base, their first ad buy of the season attacks Paul Ryan and the “Washington Establishment.”

“For the first time in a decade, a plurality of people see the economy as moving in the right direction and 64 percent see the economy as growing. The voters give Trump significant credit for the economic upswing, and any read on his approval ratings have to take into account that moving the economy forward these days is seen as Job No. 1 for the president” [Mark Penn, The Hill]. Yes, that Mark Penn, but it’s hard to read those consumer sentiment figures any other way, and I’m a Maine bear.

“Trump’s overall net approval rating is far below where we would expect it to be if the usual relationship between economic and overall approval ratings held for him” [FiveThirtyEight]. Fair enough, but it’s not a question of whether Trump’s rating is usual, but whether it’s enough.

“Collins to remain in Senate, bypass run for Maine governor” [CNN].

Health Care

“Trump scraps Obamacare subsidies in surprise late-night announcement” [Guardian]. “In California, the state attorney general Xavier Becerra said he was prepared to sue the Trump administration to protect the [cost-sharing reduction subsidies (CSRs)]. Eric Schneiderman, the attorney general of New York state, followed suit.” In the same way that Trump’s Executive Order must go through the rule-making process, the subsidies policy will undergo court challenge. Nevertheless, what was done with “a pen and a phone” can be undone with a pen and a phone.

“Loren Adler, the associate director of the University of Southern California–Brookings Schaeffer Initiative on Health Policy, pointed out that the pain for insurers might be only temporary. ‘Insurers will likely win an injunction to continue CSR funding, in which case this is about temporary uncertainty and one-year premium hikes’” [The Atlantic]. So, a second set of court challenges.

“The Daily 202: Throwing a bomb into the insurance markets, Trump now owns the broken health-care system” [WaPo]. Two bombs, on the same day. First, the association plans. Then, late at night, ending “$7 billion in annual subsidies to health insurers allow around 7 million low-income Americans to afford coverage.” Maybe Trump owns it, maybe not. We keep hearing that the Republicans will “pay a political price,” but they haven’t had to pay it yet. You can’t beat something with nothing, as the old adage goes, and if the Democrats think they’ll win 2018 or 2020 with some minor tweaks, they’re mistaken.

“President Donald Trump has privately told at least one lawmaker that the payments may continue if a bipartisan deal is reached on heath care, according to people familiar with the matter on Capitol Hill and in the health-care industry” [Wall Street Journal].

“Single Payer Is Not a Principle” [Harold Pollack, Democracy]. “Building on Romneycare and the Heritage Foundation’s individual mandate, Democrats also hoped their plan’s considerable Republican DNA would gain some Republican support, or at least calm the white-hot partisan opposition President Clinton encountered 15 years before.” Indeed. So it’s absolutely critical that we allow the strategists and pundits who hoped that would be true in 2009 dominate discussion today, and structure the policy alternatives.

Trump Transition

“The “mom and pop” business owner who loves Trump’s tax plan is a lobbyist for Oracle who will save billions” [Boing Boing (Re Silc)].

Realignment and Legitimacy

“Democracy is like fun: you can’t set your mind to having it” [Aeon].

“Establishment Republicans mystified by their base should look at Ed Gillespie’s campaign” [Vox]. “Establishment Republicans mystified by the party’s grassroots activists and rank-and-file members, in short, should consider taking a look at their own campaigns and policy rhetoric.”

Stats Watch

Consumer Price Index, September 2017: “Moderation in both housing [!] and medical costs [!!] is the dovish story behind September’s consumer price report” [Econoday]. “Medical care actually went into reverse at minus 0.1 percent. Prescription drugs were very soft here, down 0.6 percent with nonprescription drugs down 1.4 percent. Apparel is also in the negative column at minus 0.1 percent to end a positive run of gains while both new and used vehicles fell, down 0.4 and 0.2 percent respectively.” And: “Using these measures, inflation was soft year-over-year again in September (although inflation picked up month-to-month, with gasoline prices up sharply due to Hurricane Harvey). Overall these measures are mostly below the Fed’s 2% target (Median CPI is slightly above)” [Calculated Risk].

Consumer Sentiment, October 2017 (preliminary): “Consumer sentiment is surging this month, to a 101.1 preliminary index for October which is up a very sharp 6 points from September and the highest reading in 13 years” [Econoday]. “Full employment is a big plus for consumers amid early indications that wages may finally be moving higher. The expectation that inflation will remain low is another factor boosting confidence in income.” And: “Surveys of Consumers chief economist, Richard Curtin, makes the following comments: “The October gain was broadly shared, occurring among all age and income subgroups and across all partisan viewpoints. The data indicate a robust outlook for consumer spending that extends the current expansion to at least mid 2018.’” Musical interlude

Business Inventories, August 2017: “Business inventories rose 0.7 percent as expected in August, matching the 0.7 percent rise in business sales and keeping the inventory-to-sales ratio at a steady and lean 1.38 for the 3rd month in a row” [Econoday]. “This is a balanced and very favorable report, indicating that inventory growth, which is a positive for GDP, is rising strongly and in line with underlying demand.”

Retail Sales, September 2017: “Hurricane effects inflated the headline gain for the September retail sales report which nevertheless does show fundamental strength” [Econoday]. “Yet after stripping out autos and gas, retail sales still managed a very strong 0.5 percent gain. Restaurants are a key positive, jumping 0.8 percent in the month to reverse a run of weakness in prior months. Two possible hurricane-related gains are grocery stores, up a rare 1.0 percent in the month, and building materials which spiked 2.1 percent. But the Commerce Department, which compiles this report, made no comment on any direct effects from the hurricanes.” And: “The increase in September was slightly below expectations, however sales in July and August were revised up” [Calculated Risk]. And: “The relationship between year-over-year growth in inflation adjusted retail sales and retail employment are now correlating” [Econintersect].

Retail: “Black Friday remains the top shopping day of the season, according to RetailMeNot. The other top 10 predicted shopping days are: November 27 (Cyber Monday), December 16, December 9, December 2, December 15, November 25 (Black Saturday), November 26 (Cyber Sunday), December 17 and December 10” [247 Wall Street]. I don’t see December 24 on that list; that’s when I do all my shopping.

Retail: “Holiday hiring growth in distribution centers appears to be leveling off, but that may be because the payrolls are growing throughout the year. Amazon.com Inc. is adding 120,000 seasonal workers to help fill holiday orders this year, topping the hiring plans of other major retailers. The total is the same number of temporary workers that Amazon brought in a year ago” [Wall Street Journal].

Retail: “U.S. auto makers are shifting production into an even lower gear as they cope with weaker demand and growing inventories. General Motors Co. is temporarily closing one Detroit factory that produces slow-selling sedans…, and will pare back the assembly line by some 20% even when the plant resumes operations” [Wall Street Journal]. “It’s one of the steepest moves yet by a U.S. auto manufacturer as they cope both with lagging sales and demand that’s shifting from sedans to sport-utility vehicles. A more-than 21% slide in sales of the Buick LaCrosse, for instance, has left left dealers with a roughly 10-month supply of the car in a field where a two-month supply is considered healthy.” The LaCrosse is Buick’s “flagship sedan.” I assumed the problem was that it’s a terrible car, but Consumer Reports says it isn’t (although the 2017 model is greatly improved).

Commodities: “China’s impact on global commodities is expanding into a new, significant area: trading in metals futures and the critical information that goes along with it. Shanghai is encroaching on London as the hub of the metals trading world, the WSJ’s Amrith Ramkumar reports, a shift that investors say threatens to erode the reliability of copper, zinc and aluminum prices as a read on the global economy” [Wall Street Journal].

The Bezzle: “Bitcoin Is Now Bigger Than Goldman Sachs and Morgan Stanley” [Fortune]. “[B]itcoin’s rally has driven the value of all tokens currently in circulation up to $97 billion, according to Cryptocurrency Market Capitalizations. That’s higher than even the market capitalizations of Wall Street giants Morgan Stanley($89 billion) and Goldman Sachs ($93 billion)…. The market capitalization of all 1,165 cryptocurrencies currently being tracked by Cryptocurrency Market Capitalizations, including bitcoin, has reached $179 billion.”

Mr. Market: [Analysts Viktor Shvets and Chetan Seth write:] “[W]e believe that an ongoing financialization is the only politically and socially acceptable answer” [MarketWatch]. “This implies that liquidity must continue to grow, volatilities must be controlled and neither demand nor supply can yield higher cost of capital. Thus, risks facing investors are that either [central banks] and/or China misjudge extent to which reflation is dependent on inflating asset values and China’s fixed investment. We remain constructive on financial assets, not because we believe in a sustainable recovery, but because we back the perpetual leveraging ‘doomsday’ machine.” Readers, thoughts? Does this boil down to “Don’t fight the Fed”?

The Fed: “Warsh Might Be Just The Asset Wheeler Dealer That Trump Wants At The Fed” [DealBreaker]. “Because Yellen and other officials have no idea, really, what sort of impact asset sales would have on markets and the economy, and because the bank has never attempted anything like large-scale asset sales, they have attempted to make the process of balance sheet reduction as conservative as possible. Warsh mostly waved those concerns aside in 2010, suggesting instead that the bank should proactively look to push assets out of its door in a controlled but nevertheless far more aggressive fashion.”

Today’s Fear & Greed Index: 75 Extreme Greed (previous close: 77, Extreme Greed) [CNN]. One week ago: 92 (Extreme Greed). (0 is Extreme Fear; 100 is Extreme Greed). Last updated Oct 13 at 11:49am.

Class Warfare

“Meta-analysis of field experiments shows no change in racial discrimination in hiring over time” [Proceedings of the National Academy of Sciences]. From the abstract: “Since 1989, whites receive on average 36% more callbacks than African Americans, and 24% more callbacks than Latinos. We observe no change in the level of hiring discrimination against African Americans over the past 25 years, although we find modest evidence of a decline in discrimination against Latinos. Accounting for applicant education, applicant gender, study method, occupational groups, and local labor market conditions does little to alter this result. Contrary to claims of declining discrimination in American society, our estimates suggest that levels of discrimination remain largely unchanged, at least at the point of hire.”

“Amazon Studios chief Roy Price suspended following harassment allegation” [Reuters].

News of the Wired

“These two studies found that correcting misperceptions works. But it’s not magic” [Poynter Institute].

“Same Data, Different Stories” [Glenna Shaw].

“Some advice for survivors and those writing about them” [Hypatia.ca].

“An estimated 14 million couples date from far away, and even more are open to it, with 58% of singles saying they’d date long distance, according to data from StatisticBrain. The average pair lives 125 miles apart and sees each other once a month” [Moneyish].

“Human relationships will never go out of style. But as robotics technology and artificial intelligence (AI) advance, and robots gain greater ‘social’ abilities, we humans will form relationships with our robot helpers. We may even come to feel as though they are our friends” [MarketWatch]. “We treat Robbie the Robot as one of the family!” For robot, read “slave.” After all, your friends don’t have “Off” switches, right?

* * *

Readers, feel free to contact me at lambert [UNDERSCORE] strether [DOT] corrente [AT] yahoo [DOT] com, with (a) links, and even better (b) sources I should curate regularly, (c) how to send me a check if you are allergic to PayPal, and (d) to find out how to send me images of plants. Vegetables are fine! Fungi are deemed to be honorary plants! If you want your handle to appear as a credit, please put it in the subject line. Otherwise, I will anonymize by using your initials. See the previous Water Cooler (with plant) here. Today’s plant (Katy):

Katy writes: “A 6 lb., 14 oz. cabbage that I grew in a flower pot on my back deck. I turned it into a gallon of kimchi.”

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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.

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