Monthly Archives: August 2021

The S&P 500 Enters Summer Doldrums

We've officially hit the doldrums of summer for the S&P 500 (Index: SPX). Not much happened in the last week to affect the expections investors have for the future. Consequently, not much happened with stock prices, which traded within a narrow range during the week.

Alternative Futures - S&P 500 - 2021Q3 - Standard Model (m=-2.5 from 16 June 2021) - Snapshot on 30 Jul 2021

The index continues to generally follow the trajectory associated with investors focusing on 2022-Q1 in setting current day stock prices. Beyond that, even though the Federal Reserve's Federal Open Market Committee met during the week, nothing they said after their meeting was unexpected. What little news there was to move markets in the week ending July 2021 follows below....

Monday, 26 July 2021
Tuesday, 27 July 2021
Wednesday, 28 July 2021
Thursday, 29 July 2021
Friday, 30 July 2021

We’ll be taking a closer look at U.S. stock market dividends tomorrow, but if you want to see one of our main sources for dividend declaration news, check out Seeking Alpha’s Market Currents filtered for dividends.

Week-end Wrap – Political Economy – August 1, 2021


Week-end Wrap – Political Economy – August 1, 2021

by Tony Wikrent

Strategic Political Economy

U.S. Population Growth, an Economic Driver, Grinds to a Halt 

[Wall Street Journal, via Naked Capitalism 7-26-2021]

America’s weak population growth, already held back by a decadelong fertility slump, is dropping closer to zero because of the Covid-19 pandemic.

In half of all states last year, more people died than were born, up from five states in 2019. Early estimates show the total U.S. population grew 0.35% for the year ended July 1, 2020, the lowest ever documented, and growth is expected to remain near flat this year.

Some demographers cite an outside chance the population could shrink for the first time on record. Population growth is an important influence on the size of the labor market and a country’s fiscal and economic strength.

I placed this under “Strategic Political Economy” because it exemplifies everything that is wrong with how almost everyone thinks of political economy. “How many people you have” is a holdover from feudalistic mercantile zero-sum economics. The real important measure of the health of a country is the productive power of human labor to sustainably transform nature into needed goods and services. This is Hamiltonian political economy in its essence. Science and technology. 

1791 Report to Congress on the Subject of Manufactures, most especially “Section II: As to an extension of the use of Machinery…” viz.:
“The employment of Machinery forms an item of great importance in the general mass of national industry. ‘Tis an artificial force brought in aid of the natural force of man; and, to all the purposes of labour, is an increase of hands…”

Hamilton is explicit on this issue: “To cherish and stimulate the activity of the human mind, by multiplying the objects of enterprise, is not among the least considerable of the expedients by which the wealth of a nation may be promoted.” And in his December 1790 Second Report on the Public Credit, Hamilton wrote, “the intrinsic wealth of a nation is to be measured, not by the abundance of the precious metals, contained in it, but by the quantity of the productions of its labor and industry….”

The more productive power, the better. If there is economic activity that is not productive — i.e, private equity, Wall Street and the City of London — then as the climate crisis worsens, it becomes ever more crucial to discourage, curtail, and even punish that useless economic activity. 

Having one person in the active labor force support three or four or more people is exactly where we want to go. With technology in hand, an entire factory producing a few hundred thousand light bulbs each day can be operated by a tea, of just a few dozen people. The real danger is allowing the rentiers and financier seize such a huge chunk of economic rewards, and convince us they deserve it because of their “hard work.” By such myths and means are we killing our own civilization. 

Update to Limits to Growth: Comparing the World3 Model with Empirical Data 

Gaya Herrington [KPMG, via Naked Capitalism 7-31-2021]

“The Deflationary Bloc”

[Phenomenal World, via Naked Capitalism Water Cooler 7-26-20]

“Despite taking place in different contexts, the processes which allowed for the formation of deflationary coalitions exhibited some common features: governments empowered rentiers, gave some citizens nominal gains as consumers, ensured access to certain classes of growth assets for powerful constituencies, and repurposed the institutions of “big government capitalism” to support financial deregulation. Redistributing gains away from workers, financial deregulation integrated global economies in a manner that allowed states to pursue growth strategies benefiting an exclusive class of rentiers. This new class supported deflationary policies long after inflation posed an imminent threat. In the United States, financial deregulation and its attendant deflationary political coalition were embedded in the politics of housing.”

We need to begin holding the PMC and elites personally responsible for policy outcomes….

Bankruptcy and elite impunity 

Cory Doctorow [Pluralistic, via Naked Capitalism 7-30-2021]

The total claims against the Sacklers add up to $2t, but they're only going to pay $4b. Though the sums are large, the pattern is an old one, and familiar to private equity watchers – after all, 3 in 10 US bankruptcies involve a PE firm flushing a company it ruined.

Tkacik reminds us of the last time the bankruptcy system breached public consciousness, when PE giant Apollo Global Management trashed Caesars Palace and asked a bankruptcy judge to let them keep the billions they embezzled.

For example: Bezos can claim the company he built has strict regulations to ensure driver and public safety, but in reality, the corporate structure he created, using contractors and outsources, results in exactly the opposite: 

Amazon Delivery Companies Routinely Tell Drivers To Bypass Safety Inspections 

[CNBC, via Naked Capitalism 7-31-2021]

American Education Is Founded on White Race Theory

[New Republic, July 29, 2021]

The conservative hysteria over critical race theory is ultimately a refusal to acknowledge that the country’s classrooms have always taught a white-centric view of U.S. history.

Industrial Policy Coming Into Vogue After China Cleans US Clock by Using It
Yves Smith, July 30, 2021 [Naked Capitalism]

Actually, USA excels at industrial policy — when it tries it. In fact, it’s how USA was built. The entire electronics and computer industry exists today because the Office of Naval Research and the Army Ordnance Department deliberately decided to share the technology developed in government and government-funded labs during World War Two. The creation of an entire new industry can be traced to a single event – the Moore School lectures at University of Pennsylvania in August 1945.

There is a long tradition of the military being the driver for creating new technologies and industries. Metal cutting and forming machine tools developed at the national armories were deliberately seeded into civilian companies in the 1830s to 1850s. The Navy introduced systematized scientific knowledge of designing and building steam engines in the 1850s and 1860s, basically creating the profession of mechanical engineering. Radio Corporation of America was founded in 1919 at the instigation of the Navy as a silent partner. The Navy played the exact same role in the creation of Cray Research in the 1970s. In the 1950s through 1970s, the three major developments in aerodynamics — the area rule, supercritical wings, and winglets — were developed by NASA scientist Richard Whitcomb at Langley Research Center. In the 1950s, the frozen food industry was saved and put on a solid foundation by the efforts of USDA research labs. This is just a handful of examples from the hundreds, even thousands of examples of successful USA government industrial policies.

Every single technology in cell phones began as a USA government research program, as detailed by Mariana Mazzucato in her 2013 book The Entrepreneurial State: Debunking Public vs. Private Sector Myths.

But this history does not conform to the free market / free enterprise mythology favored by financiers and rentiers, so it really is not taught.

The Pandemic

Israel says Pfizer Covid vaccine is just 39% effective as delta spreads, but still prevents severe illness 

[CNBC, via Naked Capitalism 7-25-2021]

“CDC mask decision followed stunning findings from Cape Cod beach outbreak” [ABC, via Naked Capitalism Water Cooler 7-30-21]

A week after the crowds descended upon Provincetown, Massachusetts, to celebrate the Fourth of July — the holiday President Joe Biden hoped would mark the nation’s liberation from COVID-19 — the manager of the Cape Cod beach town said he was aware of ‘a handful of positive COVID cases among folks’ who spent time there. But within weeks, health officials seemed to be on to something much bigger. The outbreak quickly grew to the hundreds and most of them appeared to be vaccinated. As of Thursday, 882 people were tied to the Provincetown outbreak. Among those living in Massachusetts, 74% of them were fully immunized, yet officials said the vast majority were also reporting symptoms. Seven people were reported hospitalized…. All indications now are that the Provincetown outbreak investigation is among the pieces of new evidence behind the CDC’s decision to ask Americans to once again put on their masks indoors, even if they are vaccinated.”

As coronavirus surges, GOP lawmakers are moving to limit public health powers 

[Washington Post, via Naked Capitalism 7-26-2021]

In some states, anger at perceived overreach by health officials has prompted legislative attempts to limit their authority, including new state laws that prevent the closure of businesses or allow lawmakers to rescind mask mandates. Some state courts have reined in the emergency and regulatory powers governors have wielded against the virus. And in its recent rulings and analysis, the U.S. Supreme Court has signaled its willingness to limit disease mitigation in the name of religious freedom….

The measures, as described by the Network for Public Health Law, include a North Dakota law that prohibits a mask mandate, even during an outbreak of tuberculosis, and a new Montana law that prohibits the use of quarantine to separate people who have probably been infected or exposed but are not yet sick. Many bills are modeled on legislation originally crafted by conservative think tanks and activist groups, according to state lawmakers who introduced them.

Among them is the American Legislative Exchange Council (ALEC), which has touted its model legislation aimed at reining in emergency powers so it is more “narrowly tailored to serve a compelling public health or safety purpose.”

How Covid vaccine incentives failed America

[MSNBC, via The Big Picture 7-30-2021]

America has a long history of requiring vaccinations. Why so much resistance when it comes to Covid?

….No longer can the country be held hostage to the stubbornness and selfishness of those who are making it impossible for America to move past the pandemic. And we’ve seen proof that mandates work in dislodging the holdouts.

Last week in France, where vaccinations hover around 40 percent, President Emmanuel Macron announced this exact policy would begin in August. Within 72 hours, more than 3 million people booked online vaccination appointments….

In the United States, however, it’s the responsible Americans who are being forced to change their behavior. In Los Angeles County, mask-wearing is again mandatory — even for those who are fully vaccinated. There’s a push to do the same in New York City, even though nationwide more than 99 percent of people still dying from Covid-19, and the overwhelming majority of those who are hospitalized, are not vaccinated. Since unvaccinated people cannot be trusted under the honor system to wear a mask in indoor settings, the rest of us have to go back to the way things were before vaccines became readily available.

Why should the Americans who have done the right thing for themselves, their families and their communities be forced to sacrifice on behalf of those who act as though their “personal choices” have no consequences?


[Twitter, via Naked Capitalism Water Cooler 7-30-21]


The Vaccine Aristocrats Matt Taibbi, TK News. I cannot forbear from quoting the lead:

On This Week With George Stephanopoulos this past Sunday, a bafflegab of Washington poo-bahs including Chris Christie, Rahm Emmanuel, Margaret Hoover, and Donna Brazile — Stephanopoulos calls the segment his “Powerhouse Roundtable,” which to my ear sounds like a Denny’s breakfast sampler, but I guess he couldn’t name it Four Hated Windbags — discussed vaccine holdouts.

Congress fails to extend federal eviction moratorium – which ends after July 31 – before going on recess 

[Business Insider, via Naked Capitalism 7-31-2021]

The carnage of mainstream neoliberal economics

One Step Forward, Two Steps Back in the Struggle Against Anti-Democratic Corporate Trade Rules 

[Foreign Policy in Focus, via Naked Capitalism 7-29-2021]

Restoring balance to the economy

Striking Alabama Coal Miners Taking Protest Back To New York 

[, via DailyPoster 7-31-2021]

Striking Alabama coal miners traveled to New York City this week to picket the corporate office of BlackRock, the largest shareholder in Warrior Met Coal, the Alabama company the workers have been on strike against since April. You can donate to their strike pantry here and read excellent coverage of the strike here.

How Unions and Their Allies Are Trying to Hold Amazon Accountable 

[Capital and Main, via DailyPoster 7-31-2021] 

“In California, labor advocates are supporting Assembly Bill 701, which would require all warehouse employers to provide workers with a written description of expected quotas, the number of tasks to be performed within a given time and potential adverse employment action. In other words, the employer has to share the metrics and the penalties for not meeting them.”

Climate and environmental crises

A Soil-Science Revolution Upends Plans to Fight Climate Change 

[Quanta, via Naked Capitalism 7-28-2021]

A new generation of soil studies powered by modern microscopes and imaging technologies has revealed that whatever humus is, it is not the long-lasting substance scientists believed it to be. Soil researchers have concluded that even the largest, most complex molecules can be quickly devoured by soil’s abundant and voracious microbes. The magic molecule you can just stick in the soil and expect to stay there may not exist….

The consequences go far beyond carbon sequestration strategies. Major climate models such as those produced by the Intergovernmental Panel on Climate Change are based on this outdated understanding of soil. Several recent studies indicate that those models are underestimating the total amount of carbon that will be released from soil in a warming climate. In addition, computer models that predict the greenhouse gas impacts of farming practices — predictions that are being used in carbon markets — are probably overly optimistic about soil’s ability to trap and hold on to carbon.

Nuclear power’s reliability is dropping as extreme weather increases 

[Ars Technica, via Naked Capitalism 7-25-2021]

Heat has been one of the most direct threats, as higher temperatures mean that the natural cooling sources (rivers, oceans, lakes) are becoming less efficient heat sinks. However, this new analysis shows that hurricanes and typhoons have become the leading causes of nuclear outages, at least in North America and South and East Asia. Precautionary shutdowns for storms are routine, and so this finding is perhaps not so surprising. But other factors—like the clogging of cooling intake pipes by unusually abundant jellyfish populations—are a bit less obvious.

Overall, this latest analysis calculates that the frequency of climate-related nuclear plant outages is almost eight times higher than it was in the 1990s. 


Institutionalists = Obstructionists

[Twitter, via Naked Capitalism Water Cooler 7-29-21]


Pelosi disputes Biden’s power to forgive student loans 

The Hill, via Naked Capitalism 7-29-2021]

Department of Injustice


[Intercept, via Naked Capitalism 7-26-2021]

Disrupting mainstream economics

Monetary Faith
Philip Pilkington

One immediate problem: not all investment is created equal. Too much bad investment that does not lead to the future production of goods and instead leads to mass bankruptcies might lead to inflation….

Market overconfidence is easy to study because stock analysts regularly publish their expectations. Actual earnings growth can vary widely from expectations.15 Financial market analysts, on average, forecast earnings growth at approximately thirteen percent a year. But the actual average earnings growth is around seven percent a year. In short, financial markets seem to think that firms will have roughly double the earnings growth that they actually experience.

It looks as if markets are not very good at pricing future outcomes. Since CEOs seem prone to overconfident mood swings too, it is hard to see any evidence that there is a channel from the money rate of interest, through the speculative markets, via the overconfident CEOs, all the way to the optimal rate of investment that keeps the economy running just right. Given the number of moving parts, the chance that an optimal rate of investment would arise in response to even a correctly estimated natural rate seems extraordinarily slim….

Perhaps economists should go right back to basics and think of the rate of interest as the classical economists did until the nineteenth century: as a distributional variable. From this perspective, the interest rate is simply the rate of increase of purchasing power held by those who hold savings in risk-free assets. This contrasts with both the rate of increase of purchasing power of those who own physical capital—the rate of profit—and the rate of increase of purchasing power of those who sell their labor—the rate of change of wages.

These three variables overlap with three social classes: rentiers, capitalists, and workers. These should not be thought of as distinct people or agents. Rather they are functions of their income sources. A person may be a worker when receiving wages and a rentier when accumulating a pension via the stock and bond markets. The question of where to set the interest rate then becomes a distributional matter: how much should rentiers’ income increase every year relative to the income of capitalists and workers?

The economist Luigi Pasinetti responded by defining a fair rate of interest, one stemming “from the principle that all individuals, when they engage in credit/debit relations, should obtain, at any time, an amount of purchasing power that is constant in terms of labor.”16 The idea is that the rate of increase of income for every class—rentier, capitalist, worker—should be tied to the productivity of the worker, that is, to the real wealth that the economy is able to produce given today’s level of technological development. Holding these rates constant to one another ensures that the income generated by the economy is distributed evenly. Setting the interest-rate policy rule then becomes simple:

 This rule is quite like the old Scholastic notion of a fair price. Marc Lavoie points this out when he writes:

Thus, in a world with no technical progress and no inflation, the nominal interest rate ought to be zero, as was argued by the Church at the time [i.e., the Middle Ages] when these conditions were roughly fulfilled.18


In other words, usury is only to be tolerated as a means to distribute some constant share of the growing economic pie to savers. This share is kept constant by assuming that it—together with wages and profits—only grows in line with the technical innovations that allow for more productive industry. The Scholastics may have had a cruder understanding of the macroeconomy than possessed today, but their instincts were correct. If it looks like a duck and quacks like a duck, then it is probably a duck. And if it looks like a yield on rentier assets and is spent like a yield on rentier assets, then it is probably a yield on rentier assets.

Information Age Dystopia

“Privacy Implications of Accelerometer Data: A Review of Possible Inferences”

[Association for Computer Machinery, via Naked Capitalism Water Cooler 7-30-21]

“It has been shown in experiments, however, that seemingly innocuous sensors can be used as a side channel to infer highly sensitive information about people in their vicinity. Drawing from existing literature, we found that accelerometer data alone may be sufficient to obtain information about a device holder’s location, activities, health condition, body features, gender, age, personality traits, and emotional state. Acceleration signals can even be used to uniquely identify a person based on biometric movement patterns and to reconstruct sequences of text entered into a device, including passwords. In the light of these possible inferences, we suggest that accelerometers should urgently be re-evaluated in terms of their privacy implications, along with corresponding adjustments to sensor protection mechanisms.”

A republic… if you can keep it

“Washington is a lobbying boom town under Biden”

[Roll Call, via Naked Capitalism Water Cooler 7-28-21]

“It’s worth noting that individual contribution limits, which adjust for inflation, are $2,900 per election this cycle.”

Lambert Strether: “Unlike, say, the minimum wage. Sometimes things are just so crystal clear, aren’t they?”

“Two Kinds of Pride in American Politics”

[Benjamin Studebaker, via Naked Capitalism Water Cooler 7-30-21]

“I’ve been thinking about pride’s role in politics. When I say pride, I am not talking about mere self-respect. I am thinking about vanity, about the insidious mistake of thinking we are superior to others when in fact we are their equals. This is pride in the grim, nasty, old-fashioned sense. I think there are two kinds of pride running amok today. One is associated with entrepreneurs, with those who consider themselves ‘self-made.’ The other is associated with professionals, with those who consider themselves ‘educated.” • Neither is correct, surely. More: “Both of these forms of pride have the same function–they enable rich and powerful people to justify contempt for the American worker. The entrepreneur scorns the worker for failing to figure out how to hustle, while the professional scorns the worker for failing to accept “knowledge” from the experts who possess it. On these two grounds, the worker is told that they are unworthy of the social goods which are necessary for any person to reach their potential. They are told that they cannot enjoy access to quality healthcare, affordable housing, true education, affordable energy, and even sustenance. They are blamed for the situations they are in, and no effort is made on their behalf. The Republican Party is dominated by entrepreneurs, and the Democratic Party is dominated by professionals. Neither party thinks the workers morally deserve access to a set of basic, fundamental economic rights. Both are deeply prideful and deeply wicked, in different ways. The proud Republican tells the worker to figure it all out on their own, while the proud Democrat tells the worker that their interests and needs cannot be a priority until they accept the “knowledge”. Caught between a rock and the hard place, the worker is condemned to endless toil, with no time and no energy left for escape. All the worker can do is persevere and hope for a brighter future, in this life or the next.”

“In the Race Against Nina Turner, GOP Donors Fund Shontel Brown”

[The Intercept, via Naked Capitalism Water Cooler 7-28-21]

“With Clinton and Sanders again pitted against each other, this time via state-level surrogates, the special election race for Ohio’s 11th Congressional District has been described as a reflection of “party tensions.” In addition to Clinton, Democratic establishment figures like Rep. Jim Clyburn, D-S.C., and well-funded super PACs have rallied behind Brown, while progressives like Rep. Alexandria Ocasio-Cortez, D-N.Y., and Justice Democrats have coalesced to support Turner. Undergirding these tensions are donors with long histories of support for Republican candidates who are now funding Brown’s campaign, either directly or via the political action committee Democratic Majority for Israel, a major backer of her campaign. Most notable among them is New England Patriots owner Robert Kraft, a close ally of Donald Trump who donated $1 million to Trump’s inauguration and has supported a slew of Republican candidates.”

Lambert Strether: “And there’s a long, long list of Republican donors. Why, it’s almost like liberal Democrat and Republicans are on the same team! (And you can just imagine the pearl-clutching if a Trump ally was donating to Turner. Yet, oddly, the major media are silent…)”

How Joe Biden Defanged the Left: The White House has used access to quiet would-be progressive critics.

Alexander Sammon,  July 26, 2021 [The American Prospect]

Recounts Obama enforcer Rahm Emmanual’s “veal pen.” 

How Biden Can Profitably Piss Off Republicans: Promoting good policy can also compel the GOP to defend the indefensible.

Eleanor Eagan, July 29, 2021 [The American Prospect]