Relevant and even prescient commentary on news, politics and the economy.

Goats and Dogs, Eco-Fascism and Liberal Taboos

When remembered at all, Edward Abbey is mostly thought of as an environmentalist and anarchist but there is no gainsaying the racism and xenophobia on display in his 1983 essay, “Immigration and Liberal Taboos.” The opinion piece was originally solicited by the New York Times, which ultimately declined to publish it — or to pay him the customary kill fee. It was subsequently rejected by Harper’s, The Atlantic, The New Republic, Rolling Stone, Newsweek, Mother Jones and Playboy before finally being published in the Phoenix New Times as “The Closing Door Policy.”

Various white nationalist blogs applaud what they view as Abbey’s foresightedness and forthrightness regarding immigration, presumably oblivious to how those views relate to his ideas about wealth inequality, industrial development and authoritarianism. Conversely, Abbey fans on the left who seek to insulate his nature writing from the taint of his anti-immigrant bigotry ignore the way in which, as Michael Potts put it, “a xenophobic and racist image of the immigrant as pollution… map[s] cultural and ethnic prejudices on to an idealised landscape.” (Dumping Grounds: Donald Trump, Edward Abbey and the Immigrant as Pollution) Abbey’s admirers on both the right and the left thus resort either to blinkers or lame apologetic to redeem him for their political preferences.

My interpretation is that Abbey was a curmudgeon and contrarian whose intended target was liberal hypocrisy. Immigrants were merely “collateral damage” of his colorful diatribes. In the pursuit of being provocative, though, he revealed more than he bargained for about his prejudices. It is precisely this flawed complexity, though, that makes Abbey’s writing a kind of Rosetta Stone for deciphering the dire social hieroglyphics of our time. Presumably, Abbey did not think of himself as racist. He was indignant when accused of racism. But the institutions of the society he grew up in transmit racism in their DNA.

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Recycling is Broken

Lloyd Alter at treehuggers: The only thing that really works for recycling is full producer responsibility. If a producer sells a product, the container is theirs and the contents belong to the customer. This is how it used to work with beer, pop, milk, water for the water cooler. It is what consumers and producers have to get back to achieve zero waste and a circular economy.

California has a long history of calling for deposits on both PET plastic, aluminum, and bottles under the California Redemption Value (CRV). At one time the recycler ePlanet had 600 facilities collecting drop off recyclables throughout California where people could get their deposits back.

On August 5, ePlanet closed down the remaining 284 recycling plants laying off 700 workers. In a statement:

With the continued reduction in state fees, decreased pricing of recycled aluminum and PET (polyethylene terephthalate) plastic, and the rise in operating costs from minimum wage requirements, required health and workers compensation insurance; ePlanet has concluded the operation of these recycling centers and supporting operations is no longer sustainable.”

A three-month investigation by Consumer Watchdog found the reason for the failing California recycling system which left consumers fewer options each year on where to redeem their empties. It also found special interests such as grocery chains, beverage distributors, and trash haulers could get rich at the consumer’s expense.

Besides the closures limiting where to take recyclables, grocery and big box stores are not taking back empties either in spite of a law requiring them to do so. Accounting scams by retailers such as Walmart and also beverage distributors are prevalent. They undercount the paid deposits for each item they sell and by under reporting they keep the difference.

Over the last five years CalRecycle (state agency) which oversees California’s beverage container recycling program has not publicly imposed a fine on distributors scamming the system or retailers not taking recyclables back. CalRecycle has purposely accumulated an ~$300 million reserve as of 2018 rather than disburse the funds to recycle centers to help them survive.

The commercial fraud and state agency issues need to be resolved.

Also troubling the industry today is the availability of less costly virgin material. Virgin PET is cheaper than cost of cleaning and processing of recycled material which is due to the abundance of natural gas. There is also an abundance of recyclable aluminum in the market today which has driven prices down. Prices have dropped from “75 cents per pound last year to 55 cents, the lowest it has been since 2009.” Since the golden-haired child in the White House has imposed tariffs on China, the Chinese have imposed tariffs on US scrap imports which is part of the reason for the low prices created by a growing US glut. Lower price results in increased recycling costs for consumers today and especially in rural areas. Then too with the price drop I would think US manufacturers could use recyclable material more readily than virgin material. It is just a matter of making them do so.

The results of a failed recycling system scream for a solution and one which product and package manufacturers will not like. If product manufacturers want to use aluminum and plastic for packaging their products such as soda, water, etc. than they have to take it back and work with the packaging manufacturers to recycle it into more packaging or other uses. Today, the packaging does not go back to the user of the packaging, the product manufacturers, and is recycled outside of their responsibility. This enables them to side step the responsibility.

We have to go beyond a circular economy and get rid of single-use plastics entirely. It is clearer every day that passes the US never had a real recycling system. It was just a very long linear onegoing from the producer through our homes to China.

treehugger’s Lloyd Alter “Today’s recycling is BS.”

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Q2 Credit conditions were decidedly mixed

by New Deal democrat

Q2 Credit conditions were decidedly mixed

Credit conditions are one of my categories of long leading indicators. I track the Chicago indexes weekly, but the more comprehensive Senior Loan Officer Survey only comes out once per quarter.

The 2nd Quarter Survey was published earlier this week. I have a post describing what it shows up at Seeking Alpha.

As usual, clicking on the link at reading should give you good information, and reward me with a little jingle.

P.S. I have all the graphs queued up and ready for my long leading forecast through midyear 2020. Now I just have to get motivated enough to write all the descriptions….

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Long Treasuries vs The Long Wave

Since the early 1990s, I published this chart every month on the back cover of my publication until I retired a couple of years ago.  I thought it was a great piece of marketing to remind readers that I was a long run bull on interest rates.

Readers might not pay much attention or remember claims that I was bullish, but they would pay attention to and remember this.  I even had bond managers walk out over this chart in the middle of my presentation.

Now just felt like a good time to publish it again.

Click on image to enlarge it for better viewing.

 

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Notes on the June JOLTS report: weakness but no imminent downturn

Notes on the June JOLTS report: weakness but no imminent downturn

I’m still on vacation, so continue to expect light posting. But I thought I’d take a look at the one piece of data that came out this week, the June JOLTS report.

First of all, the “hiring leads firing” mantra continues to be true:

[Note: data averaged quarterly to cut down on noise.] Interesting that hiring has been essentially flat for a full year, and total separations (“firing”) for the past three quarters.

 

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Krugman on Trump and Trade: Not Tariffic

Krugman on Trump and Trade: Not Tariffic

I’m no fan of the Trump tariff tantrum, but weak criticism of it does no one a service.  And while I agree with Paul Krugman on a lot of things, he has a long history of being misguided on trade policy.  Alas, his op-ed in today’s New York Times continues the legacy of the Bad Krugman, not the good one.

Before getting to the theoretical meat, let’s take a moment to observe the holes in his argument that should have been identified and vetted before publication.

1. He cites a graphic from the Peterson Institute for International Economics that claims that Trump’s tariffs on Chinese goods have risen to 21.5% this month from 3.1% under Obama (under the Most Favored Nation provision).  Applied to $500 billion in imports from China, that comes to almost $100 billion more in tariff collections, right?  Not so fast.  He reproduces a FRED chart that shows tariff revenue rising by only about $35 billion during the same period.  He hedges a bit (“the revenue numbers don’t yet include the full range of Trump tariffs”) and then tries to squirm his way out of the evidence that US consumers aren’t really paying $100 billion more for these goods.  We’ll get to the squirm in a moment, but note that some portion of the tariff will be paid by Chinese producers in the form of lower prices to maintain market share, and the evidence suggests that this portion is much too great to simply handwave away.

 

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Scenes from the July employment report

Scenes from the July employment report

First things first: I’m on a vacation for part of this week, so don’t be surprised if there are no postings for a few days.

The July employment report continued a string of good headline numbers with weak leading internals. Let’s take a look.

In the good news department, the U6 underemployment rate declined to yet another new expansion low of 7.0%. This is mainly due to the continuing decline in the involuntarily part time employed. The only three months it has been better than that since the modern series started were three months in the year 2000:

When we go further and take a look at those who aren’t even in the labor force, because they aren’t looking for a job, but say they want a job now, we’re about 0.2% above the 2000 lows and about 0.5% above the all-time lows in 2007:

 

 

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Free Market Government

This post will be especially confused. I am thinking about cash bail and how it is unacceptable that richer people have more liberty than poorer people. For some reason my thoughts turned to Jeffrey Epstein currently held without bail, because of course. Now he hasn’t been convicted yet, and I do support the 5th and 6th amendments, so I have a problem. I will try to solve the problem.

I’m going to start with Hobbes, Locke, Mill and Nozick (which one here is not like the others ?). I don’t believe that the moral law contains an article about private property — I think private property is a very useful even necessary social institution, but not a transcription of objective moral truth (this is following Michael Walzer sometimes colleague of Robert Nozick). But for this post, I will assume there are natural rights to private property (following Locke). And, like the listed guys, I will pretend that there is an actual social contract and that people are bound only by contracts they accept. I will go for 3 out of 4 and say they can’t be accepted under the threat of force. The guy who’s not like the other is Hobbes who was an absolutist and claimed that signatures extracted by force counted (his example not mine was armed robbery).

I conclude two things. One is that the maximum morally acceptable tax rate is roughly 100%. The other is that I can set bail for Epstein. Granting Locke, Mill, Nozick and von Hayek all they can imagine demanding, I end up concluding that they have (almost) nothing. I will discuss this after the jump.

But here I will try to focus on financial bail. The problem isn’t that people can buy temporary liberty with private property. The problem is the cash part, which favors the non liquidity constrained, and also the incorrect application of equality under the law. People must be treated equally. Dollars must not be treated equally. It’s one or the other. Bail should be set as a fraction of the defendant’s wealth (including human wealth that is future labor earnings). Currently, the idea is that bail is a number of dollars possibly adjusted for wealth. There is no way to get to justice starting with the idea that all dollars are, more or less to first approximation, equal.

Also high bail. With no liquidity constraint problem, there is no reason to have bail proportional to anything. I think the rule is simple, show up or any correct spelling of your name is a legally valid signature. You don’t play by our rules (showing up for your trial) and there will no longer be any concept of forging your signature. Everyone has the right to sign for you (especially including the Bailiff who will write checks to the state worth the balance of every known account in your name). Any future claim that you have exclusive ownership of anything will not be enforced. And by exclusive that means your claim that you own something any more than I do.

Epstein might still run away, but he would be running barefoot (someone would have taken his private jets, automobiles, and shoes). Natural rights do not include a natural right to have the state prosecute someone for forging your signature.

Now the dollar value of everything you own bail would be greater the richer the defendant. This is fair and equal. It implies discrimination against some dollars, which is no problem.

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The housing choke collar

The housing choke collar

I have a new post up at Seeking Alpha, discussing how, even though sales went down last year, and have already bottomed, house prices have as usual, followed into decline with a lag.

Beyond that, I discuss the concept of a “housing choke collar,’ similar to the “oil choke collar” I used to write about in 2010-14, whereby prices repeatedly approach the tipping point of unaffordability, causing sales to drop off, causing interest rates and prices to decline, making housing more affordable … and the cycle repeats.

One item that didn’t make it into that article, because I was trying to be concise and not digress, was this graph of the median income of renters that Kevin Drum posted a couple of weeks ago:


Kevin Drum has repeatedly been trying to make the case that, really, housing hasn’t gotten expensive at all compared to historical values — and gotten a lot of blowback (correctly, imo). His take on the above graph is that it shows that renters aren’t stressed at all.

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