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2:00PM Water Cooler 8/12/2019

By Lambert Strether of Corrente Trade “Key Moments of the Week Trump’s Trade War Turned Currency Feud” [Bloomberg]. “As China matched President Donald Trump’s higher tariffs and name-calling with painful moves of its own, the arguments from [Peter] Navarro were heard over those of Treasury Secretary Steven Mnuchin and Larry Kudlow. The result was another blast of Trump tariffs and an official U.S. declaration of China as a currency manipulator. China’s response was a boycott of American farm products and a clear signal that its currency, the yuan, can help cushion the tariff blow. Trump’s response to that response was a not-so-subtle softening of dollar policy, delivered by tweet. So a deal that just a few months ago seemed to U.S. officials to be 90% complete has become tough to imagine

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By Lambert Strether of Corrente


“Key Moments of the Week Trump’s Trade War Turned Currency Feud” [Bloomberg]. “As China matched President Donald Trump’s higher tariffs and name-calling with painful moves of its own, the arguments from [Peter] Navarro were heard over those of Treasury Secretary Steven Mnuchin and Larry Kudlow. The result was another blast of Trump tariffs and an official U.S. declaration of China as a currency manipulator. China’s response was a boycott of American farm products and a clear signal that its currency, the yuan, can help cushion the tariff blow. Trump’s response to that response was a not-so-subtle softening of dollar policy, delivered by tweet. So a deal that just a few months ago seemed to U.S. officials to be 90% complete has become tough to imagine any time soon.”

“Forget Tariffs. Here’s a Better Way to Close the Trade Gap” [Barron’s]. “But bipartisan legislation introduced last week by Sens. Tammy Baldwin (D., Wis.) and Josh Hawley (R., Mo.) could help. For nearly four decades, Americans have been consistently spending more than they earn. This is not because Americans have been living large—average spending on consumption and investment grew at the same stable rate from 1947 through 2006—but because people in the rest of the world have been living below their means. Foreigners have been consuming less than they produce and dumping the excess into the U.S. market, displacing American output… The resulting trade deficits have destroyed U.S. jobs and forced U.S. consumers to replace the lost income with debt. The Baldwin-Hawley bill aims to address these defects. The proposal would require the Federal Reserve to keep America’s current account—the difference between national income and national spending—balanced around zero over five-year periods. More specifically, the central bank would have to determine the level of the U.S. dollar needed to balance income and spending, after which it would have to adjust the exchange rate accordingly. That level would be far lower than it is today. “• Hmm. Readers? (And there’s that Josh Hawley again.)


“But what is government itself, but the greatest of all reflections on human nature?” –James Madison, Federalist 51

“They had one weapon left and both knew it: treachery.” –Frank Herbert, Dune

“2020 Democratic Presidential Nomination” [RealClearPolitics] (average of five polls). As of August 7: Biden down to 30.8% (31.4), Sanders flat to 16.5% (16.6%), Warren leaps to 18.3% ( 15.5%), Buttigieg 60 at 6.5% (6.0%), Harris flat at 8.3% (8.4%), Beto back among the bottom feeders. Others Brownian motion. This, in fact, not five, but four polls. C’mon. Let’s have some consistency.

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Biden (D)(1): “Joe Biden Mistakenly Says he Met With Parkland Victims While he Was Vice President” [WHO TV]. President Reagan: gaffes. Presidents Bush: gaffes. President Trump: gaffes. Liberal Democrats love them their gaffe gotchas, and it hasn’t done them a bit of good, has it? They’ve calling the Republicans stupid at least since Reagan, too, and that hasn’t worked either. Nevertheless, they persisted…. (Adding, I’d like to see Biden out on the trail a lot more. I do get the impression the campaign thinks he’s fragile, and has him wrapped up in tissue paper.)

UPDATE Biden (D)(2): “Some labor unions split with Biden on ‘Medicare for All'” [Politico]. “Those supporting Medicare for All — or at least not yet ruling it out — say health care increasingly dominates contract battles, consuming bargaining power that could instead be directed toward raising wages and improving working conditions. ‘When we’re able to hang on to the health plan we have, that’s considered a massive win,’ Sara Nelson, president of the Association of Flight Attendants, told POLITICO. ‘But it’s a huge drag on our bargaining. So our message is: Get it off the table.'” • Nelson would make a fine Secretary of Labor in a Sanders administration.

Buttigieg (D)(1): “Pete Buttigieg makes key 2020 hire” [Politico]. “South Bend (Ind.) Mayor Pete Buttigieg’s presidential campaign has brought on a new senior adviser to connect with Democratic Party leadership and help lead the campaign’s African American support. The new senior adviser, Brandon Neal, has served as the Democratic National Committee’s national political director and has previously done stints working for the National Association for the Advancement of Colored People (NAACP), the Democratic Governors Association, Barack Obama’s 2008 presidential campaign, and Rep. Karen Bass (D-Calif.), the chairwoman of the Congressional Black Caucus. Neal’s portfolio will cover strategy across the campaign.” • Well, when I see “DNC” on a resumé…

Harris (D)(1): “Kamala Harris on reparations for slavery: ‘It can’t just be, ‘Hey … write some checks'” [Des Moines Register]. Harris: “If we’re talking about writing a check, I don’t think it is that simple. And frankly, I don’t support an idea or a notion that after all this, we’re going to say, ‘Okay, I’m going to write you a check, and then be quiet.’ Because that won’t solve the problem, which is the systemic issues that are present and will continue to exist, whether or not you write a check. So I’m just saying it’s just not that simple. And I don’t buy into an argument that it is.” • But reparations, by definition, aren’t about “solving problems.” They’re about making amends. Now, I think that reparations advocates want to “solve problems.” But if that’s all that reparations are, they’re just a budget line item.

UPDATE Harris (D)(2):

Amazing to watch the liberal Democrat nomenklatura actively seeking to inflict brain damage on its loyalists, but that’s where we are.

Sanders (D)(1): Crowd size at the Iowa State Fair:

Since Steve Scully is C-SPAN’s Political Editor, I’m inclined to believe him.

UPDATE Sanders (D)(2): Brilliant advance work:

UPDATE Sanders (D)(3): Sanders views the butter cow:

And every single one of those photographers knows their boss will reward them for a picture of Sanders looking foolish, or committing a gaffe, or having a poor interaction with a voter. No pressure on Sanders! Retail politics is really, really hard. Even as we ridicule it, we should remember that.

UPDATE Sanders (D)(4): “Bernie Sanders Just Suggested a Unique Way to Legalize Marijuana” [Yahoo News]. “In 2016, when Sanders ran for the Democratic presidential nomination, ultimately losing out to Hillary Clinton, one of his many campaign promises was to reform America’s justice system by legalizing marijuana. This made Sanders the first major presidential candidate to support legalizing cannabis, with many of his fellow Democrats also taking that view ahead of the 2020 election. But whereas many of Sanders’ fellow Democrats have offered their support for legalization or decriminalization without laying out a specific plan on how to get that done, Sanders has proposed a unique means of bringing the green rush to the United States. As reported by Newsweek, Sanders would use a presidential executive order to make it so.”

Warren (D)(1): Look forward and not back:

Failure? Really?

UPDATE Warren (D)(2): “Surging in Polls, Elizabeth Warren Now Has a Path to the Nomination” [Ed Kilgore, Common Dreams]. “Recent polls have clearly indicated that Warren is going places. The RealClearPolitics national polling averages* show her as basically tied with Bernie Sanders for second place with Joe Biden’s lead narrowing. The two most recent national polls (from Quinnipiac and Economist–You Gov) place her seven and five points, respectively, ahead of Sanders. Just as important, she’s gaining strength in the early states. A new Monmouth poll** from Iowa places her ten points ahead of Bernie, and just nine points behind Biden, in a state where everyone concedes she has the best organization. In New Hampshire polls, where Biden’s early lead was less formidable, she’s nipping at Sanders’s heels. Warren is in a similar position in Nevada (which holds its caucuses 11 days after the New Hampshire primary), where Politico reported yesterday that she has already built a ‘monster’ of an organization.” • NOTE *,**: Mentioned under polling.

Weld (R)(1): “Insiders 8/11/19: Why Republican Bill Weld is Running Against Trump, Kim Reynolds on the Trade War” (videos) [WHOTV]. “Bill Weld was Libertarian Gary Johnson’s running mate for the 2016 presidential election. Now, the former Massachusetts governor is a Republican again and is trying to beat President Donald Trump.” • Weld is even lazier than Biden.

Williamson (D)(1): “Marianne Williamson Goes for the Gut” [The Atlantic]. “‘We have an amoral economic mind-set that has corrupted our government and hijacked our value systems,’ she told the audience [at the Iowa State Fair… The ‘conventional political establishment’ is the problem, she said, to loud applause, and it’s time for the American people to wake up. ‘While it is true that sometimes Americans are slow to wake up,’ she added, ‘once we do wake up, we slam it like nobody’s business!’ Williamson’s eccentric performances in the first two presidential-primary debates are what put her on the map for many Americans: Hers was the most Googled name in the hours after the first debate, when, speaking in a quasi-Mid-Atlantic accent not unlike Katharine Hepburn’s, Williamson threatened to ‘harness love’ to conquer President Donald Trump. In the second debate, she promised to combat the ‘dark, psychic force’ of hatred in America, and offered a forceful argument for the payment of reparations to descendants of enslaved people in America.” • Like Warren, Williamson’s solutions are out of proportion to her problem statements.

Our Famously Free Press

“Bernie Sanders says that if he’s elected, he’ll reveal whether aliens are real” [CNN]. • Yes, that’s the coverage that CNN gave to Sanders’ interview on Rogan’s show. 100% of it.

This is not a Biden campaign operative, but CNN’s national political reporter, “covering” his campaign:


“Director, Monmouth University Polling Institute”:

Well, so much for Monmouth.

Sanders on pollsters, at the Iowa State Fair:

UPDATE This Twitter account follows and dissects the RCP average. Not a pretty sight:

Realignment and Legitimacy

“Court ruled that ICWA is constitutional” [Indian Country Today]. “The 5th Circuit Court of Appeals unanimously voted to uphold the constitutionality of the Indian Child Welfare Act; overturning a lower district court’s decision in a late decision Friday afternoon…. The case, Brackeen v. Bernhardt, took the initial blow in October 2018 when a federal judge in Texas ruled the legislation unconstitutional. Judge Reed O’Conner ruled that the Indian Child Welfare Act is a “race based statute” that violates the Equal Protection Clause of the Constitution. Passed in 1978, the Indian Child Welfare Act has been praised as the “gold standard” for by national child welfare organizations. The law states when a Native child is up for adoption, homes of family or tribal members are prioritized for placement.”

UPDATE “A Gathering of Comrades” [Current Affairs]. “I had put a lot of hope in DSA, and was worried the convention would reveal them to be held together with band-aids and duct tape. Instead, it felt like a movement in the ascendant.” • Maybe. We’ll see how the “Open Borders” thing plays. Nevertheless, this is a long and good report.

Stats Watch

There are no official statistics of interest today.

Banking: “Leveraged Loans And Collateralized Loan Obligations Have Significant Capital Implications For Banks” [Forbes]. “In the U.S., the largest holders of leveraged loans and CLOs are Citibank, JPMorgan, and Wells Fargo. According to Fitch Ratings analysts, ‘in the US, banks with exposure across underwriting, nonbanking lending, securities holdings and on-balance-sheet exposure are likely to be relatively more affected by a material downturn in leveraged lending.’ It is also important to remember that in a downturn, ‘spillover effects are likely to be greater for banks relative to insurers given their links with non-bank participants and broader activities in the leveraged loan, CLO and credit markets.'”

The Bezzle: “Uber and Lyft Suggest the Days of Cheap Rides Could Be Over” [WIRED]. “Uber and Lyft reported quarterly financial results this week and indicated that their cutthroat competition to woo riders with coupons and other gambits is easing. Lyft officials told investors they had raised prices on routes in some cities in June and touted the company’s upcoming pricing algorithms, which they hinted might be able to more precisely predict what riders might be willing to pay for a ride. Lyft said those pricing changes would boost revenue per rider by next quarter. Uber CEO Dara Khosrowshahi said that his company’s rivalry with the other big San Francisco–based ride-hailing company had cooled—for now. “We and Lyft are big-time competitors here and have been for some period of time, but for now we’re seeing, generally, category positions that are stable,” he told investors Thursday. ‘We are focused on improving profitability in this market.'” • Even a cartel can’t make these turkeys profitable. Next step, a bailout?

Tech: “Researchers find security flaws in 40 kernel drivers from 20 vendors” [ZD Net]. “At the DEF CON 27 security conference today in Las Vegas, security researchers from Eclypsium gave a talk about common design flaws they found in more than 40 kernel drivers from 20 different hardware vendors. The common design flaws is that low-privileged applications can use legitimate driver functions to execute malicious actions in the most sensitive areas of the Windows operating system, such as the Windows kernel…. [Mickey Shkatov, Principal Researcher at Eclypsium] blames the issues he discovered on bad coding practices, which don’t take security into account. ‘This is a common software design anti-pattern where, rather than making the driver only perform specific tasks, it’s written in a flexible way to just perform arbitrary actions on behalf of userspace,’ he told ZDNet. ‘It’s easier to develop software by structuring drivers and applications this way, but it opens the system up for exploitation.’

Honey for the Bears: “Economy at Riskiest Point in a Decade, Lawrence Summers Says” [Bloomberg]. • Hard to imagine Larry Summers involved in a beauty contest, but…

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Today’s Fear & Greed Index: 27 Fear (previous close: 25, Extreme Fear) [CNN]. One week ago: 22 (Extreme Fear). (0 is Extreme Fear; 100 is Extreme Greed). Last updated Aug 12 at 12:48pm. • Restored at reader request. Note that the index is not always updated daily, sadly.

Rapture Index: Closes up one on Drought. “The corn belt has gone from wet to dry” [Rapture Ready]. Record High, October 10, 2016: 189. Current: 185. Remember that bringing on the rapture is a good thing.

The Biosphere

The soil at work:

Bioturbation with and without soil fauna from Wim van Egmond on Vimeo.

Remember, if we truly understood soil, we’d understand why pipelines corrode. But we don’t.

“Socialize Lab Meat” [Jacobin]. “As land use and climate changes both intensify, the capacity of the land to act as a carbon sink and provide ecological services diminishes, dramatically increasing the odds of a global food crisis. What’s telling about the report is that it explicitly recommends a dietary shift to primarily ‘plant-based foods . . .  and animal-sourced food produced in resilient, sustainable, and low-GHG emission systems.’ What the report doesn’t say is that there’s an alternative to reducing meat consumption that doesn’t require any animal agriculture at all. We could grow all our meat in labs, freeing up much of the 80 percent of the world’s arable land currently devoted to raising and feeding livestock. And no one is talking about the fact that this lab meat doesn’t have to be owned and operated by Silicon Valley or giant agro-industrial corporations. If it can be wrested from corporate control, lab meat production could be publicly financed, with intellectual property held in the public trust, and tied to the social and ecological goals of a just economic transition.” •

“Unsavoury science behind lab-grown meat” [NZ Farm Life Media]. “When an animal is butchered, there are a lot of ways that we can test if it is safe to eat. We can observe its behaviour before slaughter and we can inspect the non-meat parts of the carcase such as the lungs and liver for anything out of the ordinary. It is much harder to tell if a bunch of cells in a flask are infected (or malformed in the case of mad cow disease). How are the lab-based meat-mush growers going to ensure that their product is safe to consume on any given day? Also, since the cells are not exposed to natural hormones in the blood, they will have to be treated with hormones and growth promoters so that they will replicate and grow. The protocols used by the proposed lab-meat companies are proprietary and secretive. However, I was able to dig up some humble science papers on how to culture skeletal myocytes (muscle cells) for research. These were being treated with Epidermal Growth Factor, Basic fibroblast growth factor, Dexamethasone, Insulin, Penicillin, Streptomycin, and Fetuin. Your lab-grown meat is doping up like a performance-enhancing body-builder.” • If Apple made meat, they’d glue it together.

“Canadian food supplies at risk if climate change not slowed, new UN report shows” [Canada’s National Observer]. “It is projected that for every degree of global warming, the world’s yield of wheat will fall six per cent, corn by 7.4 per cent, and rice and soybeans both by a little more than three per cent each. Together those four crops account for two-thirds of the calories consumed by people, and with the population growing by 80 million people each year on average, the world needs to produce more food, not less.” • Another story on the latest IPCC report.

“Insect ‘apocalypse’ in U.S. driven by 50x increase in toxic pesticides” [National Geographic]. “America’s agricultural landscape is now 48 times more toxic to honeybees, and likely other insects, than it was 25 years ago, almost entirely due to widespread use of so-called neonicotinoid pesticides… Using a new tool that measures toxicity to honey bees, the length of time a pesticide remains toxic, and the amount used in a year, [Kendra Klein, senior staff scientist at Friends of the Earth US] and researchers from three other institutions determined that the new generation of pesticides has made agriculture far more toxic to insects. Honey bees are used as a proxy for all insects… The study found that neonics accounted for 92 percent of this increased toxicity…. Regulatory agencies such as the EPA have concluded that seed treatment with neonics poses a low risk, [David Fischer, Chief Scientist and Director, Pollinator Safety, at Bayer Crop Science] wrote in an email.”

“‘Shocking,’ ‘blockbuster’ Rosemont Mine ruling has national implications, experts say” [Arizona Daily Star (ER)]. “For decades, the U.S. Forest Service has said it can’t say ‘no’ to a mine on its land. Now, the recent federal court ruling overturning approval of the Rosemont Mine on service land near Tucson will make it harder for the Forest Service to say ‘yes.’ Legal experts say U.S. District Judge James Soto’s July 31 ruling, if upheld in higher courts, will have national repercussions. They’re using words like ‘chaos,’ ‘shocking’ and ‘blockbuster’ to discuss the ruling’s ramifications. The ruling could chill the hard-rock mining industry that has lived under a generally favorable legal climate since Congress passed the 1872 Mining Law to encourage mineral exploration of public lands.” • Two suits were filed by “four environmental groups and… three tribes.” And a lot of quotes from the mining industry, and not many happy dance quotes from the winners!

Health Care

“Kaiser’s net income continues to soar on investment gains” [Modern Healthcare]. “Not-for-profit Kaiser Permanente’s net income jumped 214% in the second quarter of 2019 year-over-year, hitting $2 billion in the quarter that ended June 30, and continuing what has so far been a strong year for the Oakland, Calif.-based health system. Kaiser’s 10% profit margin in the quarter was generated by strong equity returns and an accounting change that since Jan. 1 has boosted the health system’s net income.”

“Covered: A Week-by-Week Look at the 1965 Politics that Created Medicare and Medicaid” [National Academy of Social Insurance (MN)]. “[Bob]. Rosenblatt takes us back to the decisive winter of 1965: A newly reelected President Johnson has large congressional majorities and is committed to the idea of Medicare. Writing as if he were witnessing for the first time the political and legislative events that transpired 50 years ago, Rosenblatt provides us with an informative (perhaps even entertaining) look at leaders in the 89th Congress and other major players. Covered is written with the recognition that the effort to get universal coverage, let alone health care for the elderly and low-income individuals, was – and continues to be – a decades-long fight.” • Ends with: “July 30, 1965 – Post 30 – Johnson Signs Historic Medicare Bill Assuring Health Coverage for Millions.” Quite a resource!

Class Warfare

Supply chain innovation as a terrain of class warfare. Thread:

“The Future of Social Protection: What Works for Non-standard Workers?” [OECD (MN)]. “While new technologies and the new forms of work they create bring the incomplete social protection of non-standard workers to the forefront of the international policy debate, non-standard work and policies to address such workers’ situation are not new: across the OECD on average, one in six workers is self-employed, and a further one in eight employees is on a temporary contract. Thus, there are lessons to be learned from country experiences of providing social protection to non-standard workers. This report presents seven policy examples from OECD countries, including the ‘artists’ insurance system’ in Germany or voluntary unemployment insurance for self-employed workers in Sweden. It draws on these studies to suggest policy options for providing social protection for non-standard workers, and for increasing the income security of on-call workers and those on flexible hours contracts.” • Sounds like tinkering by the side of a Jobs Guarantee, but still useful.

News of the Wired


Truly spectacular:

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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 place it at the start of your mail in parentheses: (thus). Otherwise, I will anonymize by using your initials. See the previous Water Cooler (with plant) here. Today’s plant (MF):

2:00PM Water Cooler 8/12/2019

MF writes: “This is a cactus patch near Victory Trailhead at the western end of the San Fernando Valley. I’d never seen cacti growing in this part of the preserve before (my brother says he has though). This patch has been spreading fairly rapidly and I can also now spot some new patches further in from the trails (don’t really want to walk into the brush there are some rattlers around).” They look like alien beings…

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2:00PM Water Cooler 8/12/2019

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