“China’s Naked Emperors”: Listen Up Jeb, China’s Rulers Have No Idea What They’re Doing
Politicians who preside over economic booms often develop delusions of competence. You can see this domestically: Jeb Bush imagines that he knows the secrets of economic growth because he happened to be governor when Florida was experiencing a giant housing bubble, and he had the good luck to leave office just before it burst. We’ve seen it in many countries: I still remember the omniscience and omnipotence ascribed to Japanese bureaucrats in the 1980s, before the long stagnation set in.
This is the context in which you need to understand the strange goings-on in China’s stock market. In and of itself, the price of Chinese equities shouldn’t matter all that much. But the authorities have chosen to put their credibility on the line by trying to control that market — and are in the process of demonstrating that, China’s remarkable success over the past 25 years notwithstanding, the nation’s rulers have no idea what they’re doing.
Start with the fundamentals. China is at the end of an era — the era of superfast growth, made possible in large part by a vast migration of underemployed peasants from the countryside to coastal cities. This reserve of surplus labor is now dwindling, which means that growth must slow.
But China’s economic structure is built around the presumption of very rapid growth. Enterprises, many of them state-owned, hoard their earnings rather than return them to the public, which has stunted family incomes; at the same time, individual savings are high, in part because the social safety net is weak, so families accumulate cash just in case. As a result, Chinese spending is lopsided, with very high rates of investment but a very low share of consumer demand in gross domestic product.
This structure was workable as long as torrid economic growth offered sufficient investment opportunities. But now investment is running into rapidly decreasing returns. The result is a nasty transition problem: What happens if investment drops off but consumption doesn’t rise fast enough to fill the gap?
What China needs are reforms that spread the purchasing power — and it has, to be fair, been making efforts in that direction. But by all accounts these efforts have fallen short. For example, it has introduced what is supposed to be a national health care system, but in practice many workers fall through the cracks.
Meanwhile, China’s leaders appear to be terrified — probably for political reasons — by the prospect of even a brief recession. So they’ve been pumping up demand by, in effect, force-feeding the system with credit, including fostering a stock market boom. Such measures can work for a while, and all might have been well if the big reforms were moving fast enough. But they aren’t, and the result is a bubble that wants to burst.
China’s response has been an all-out effort to prop up stock prices. Large shareholders have been blocked from selling; state-run institutions have been told to buy shares; many companies with falling prices have been allowed to suspend trading. These are things you might do for a couple of days to contain an obviously unjustified panic, but they’re being applied on a sustained basis to a market that is still far above its level not long ago.
What do Chinese authorities think they’re doing?
In part, they may be worried about financial fallout. It seems that a number of players in China borrowed large sums with stocks as security, so that the market’s plunge could lead to defaults. This is especially troubling because China has a huge “shadow banking” sector that is essentially unregulated and could easily experience a wave of bank runs. But it also looks as if the Chinese government, having encouraged citizens to buy stocks, now feels that it must defend stock prices to preserve its reputation. And what it’s ending up doing, of course, is shredding that reputation at record speed.
Indeed, every time you think the authorities have done everything possible to destroy their credibility, they top themselves. Lately state-run media have been assigning blame for the stock plunge to, you guessed it, a foreign conspiracy against China, which is even less plausible than you may think: China has long maintained controls that effectively shut foreigners out of its stock market, and it’s hard to sell off assets you were never allowed to own in the first place.
So what have we just learned? China’s incredible growth wasn’t a mirage, and its economy remains a productive powerhouse. The problems of transition to lower growth are obviously major, but we’ve known that for a while. The big news here isn’t about the Chinese economy; it’s about China’s leaders. Forget everything you’ve heard about their brilliance and foresightedness. Judging by their current flailing, they have no clue what they’re doing.
By: Paul Krugman, Op-Ed Columnist, The New York Times, July 31, 2015
“Ted Cruz’s Super Stingy Sugar Daddies”: Cruz’s Own Super PAC Hedging Against Him
Ted Cruz’s coterie of supportive super PACs are crawling with cash—but it’s not doing him much good at the moment.
The Republican presidential contender, a first-term senator from Texas, has an unusual network of super PACs in place to boost his White House prospects. Instead of giving his imprimatur to one main super PAC, which is the norm, Cruz has four officially sanctioned super PACs: Keep the Promise PAC, Keep the Promise I, Keep the Promise II, and Keep the Promise III. National Review reported that this set-up is designed to give individual billionaires and their families maximal control over how their cash gets spent.
And there’s the rub. FEC filings show that those four PACs, combined, have taken in a healthy $39 million—but only spent a teeny tiny little fraction of that on the senator’s presidential efforts. And one of the PACs actually donated to one of Cruz’s 2016 rivals.
This news comes as Cruz faces lackluster poll numbers and less than a week before the first GOP debate. RealClearPolitics’ average gives him just 5.2 percent of the vote, lagging behind fellow conservative firebrands Rand Paul and Ben Carson. And a recent Fox News poll showed his support among likely Republican primary voters got cut in half since mid-March—from 10 percent to just 4 percent.
And while Cruz’s PACs have kept their powder dry, other 2016 contenders’ backers are spending big. The Conservative Solutions Project spent seven figures on TV ads touting Sen. Marco Rubio’s record on Iran, per the Tampa Bay Times. And, according to the Cincinnati Enquirer, the John Kasich-backing New Day for America has already spent $1.7 million blanketing New Hampshire televisions with ads touting the Ohio governor’s record.
Candidates who aren’t running for president are getting similar boosts; Pat Toomey, a vulnerable Republican senator in Pennsylvania, is benefitting from a $1.5 million TV, direct mail, and digital video ad campaign from Concerned Veterans for America.
But Ted Cruz doesn’t seem to be getting that kind of love. And in his home state, it’s raised a few eyebrows.
“Are these people really planning to spend this money?” queried one Texas Republican insider, adding that he thought the super PACs’ gun-shy approach to spending was “bizarre.”
So while Cruz has made a host of positive headlines for the cash that his supporting super PACs have raked in, he doesn’t actually seem to have benefitted much from their largesse.
First off, there’s Keep the Promise I, a PAC that gets the bulk of its cash from billionaire investor Robert Mercer. In this quarter of the year, the PAC took in more than $11 million and spent only $536,169.90. The kicker? Of that $536,169.90, a sweet five hundred grand went to a super PAC backing Carly Fiorina—who, of course, is also running for president. Against Cruz.
CNN, which first reported on Carly’s PAC’s money, called the contribution “unusual,” which is certainly a nice way to put it. Of the remaining $36,000 that the PAC spent, $20,000 went to a D.C.-based polling company. The remaining $16,169.90 went to Bracewell and Giuliani LLP for legal consulting. So from April through July of this year, the biggest benefactor of a putatively pro-Cruz super PAC was Carly Fiorina.
“It’s Cruz’s own super PAC hedging against him before the first debate,” said the Republican insider.
Then there’s Keep the Promise II—funded solely by a $10 million donation from Toby Neugebauer, son of Rep. Randy Neugebauer—and Keep the Promise III, funded by the fracking-enriched Wilks family. Those two PACs, combined, raised $25 million this quarter. Keep the Promise II didn’t spend anything, and Keep the Promise III spent just $5,025.
Finally, there’s the Keep the Promise PAC, which doesn’t appear to be dominated by one major donor or donor family. It brought in a comparatively modest $1.8 million this quarter and spent about $97,000. Most of that went to covering legal fees, software, and media production. The PAC also spent $1,698.39 at an Austin Apple Store on a computer. This all means that while this PAC looks like it’s been busier than the other three, it’s still not doing a whole lot.
Cruz’s atypical super PAC situation was designed to give donors more control over how their money got spent. But no one anticipated that these donors would be so stingy—except when it comes to boosting a Cruz competitor.
By: Betsy Woodruff, The Daily Beast, July 31, 2015
“Preparing To Engage In Political Hand-To-Hand Combat”: Chamber Of Commerce Will Go After Incumbent Republicans
One of the things a lot of people have been watching is what the business community – which has typically been pretty conservative – does in response to the Republican dissent into extremism. A lot of the shenanigans pushed by the tea partiers (i.e., debt ceiling crisis) are terribly destabilizing and that is not good for business. We also watched as the business community weighed in on cultural issues when they brought a halt to the Religious Freedom Restoration Act in Indiana recently.
According to Anna Palmer and Jake Sherman, the Chamber of Commerce has about had enough with the nonsense. It’s interesting to note what finally pushed them to that point. It wasn’t the total obstruction employed by Republicans from the beginning of Obama’s presidency – or even the constant hostage crises they created. It’s something that has come more recently.
The early discussions by top-level Chamber operatives like Rob Engstrom and Scott Reed reflect a broad consensus among companies with business before Congress that the political dynamic needs to change on Capitol Hill.
The theory is simple: The Chamber spent some $70 million in 2014, mostly to help Senate Republicans build their majority. But many of their legislative priorities — immigration reform, the renewal of the Export-Import Bank and a long-term highway bill — have been held up by a clutch of conservative lawmakers in the House.
Apparently these business people thought that by giving control of Congress to Republicans – gridlock would end and some things would actually get done. They put the blame for that not happening on the kind of Republicans who joined the ultra-conservative House Freedom Caucus and have made Speaker Boehner’s life miserable. And so the Chamber is in the midst of developing a political strategy to challenge them in their re-election.
The U.S. Chamber of Commerce is gearing up to challenge some House Republicans in primary elections, frustrated after much of its agenda has been stymied by a small pocket of conservative GOP lawmakers.
The influential and well-heeled business group is already eyeing several races, but the plans are still in their infancy and the targets have not yet been decided upon, according to more than a half dozen Republican sources on K Street and Capitol Hill.
The group’s apparent new willingness to engage in hand-to-hand political combat to take out sitting Republicans would represent a major shift for the business community, which has largely shied away from targeting sitting lawmakers.
This will be an interesting story to keep an eye on over the next few months. It speaks to the growing divide in the Republican Party in its march towards extremism. What various entities with traditional ties to the Party do in response will likely tell us whether the GOP can survive and morph into something new or goes the way of the Whigs.
By: Nancy LeTourneau, The Political Animal Blog, The Washington Monthly, August 1, 2015
“It’s Not His Politics That Worries Me”: Donald Trump And The Decline Of American Character–A Cautionary Tale
There is no disputing that Donald Trump is having a significant impact on the 2016 presidential sweepstakes—something that many Americans apparently view as a great step forward on the American political scene.
Indeed, to a portion of the electorate, Trump’s current political success is a positive development that represents the rise of a candidate willing to “tell it like it is”—despite the fact that so much of what Mr. Trump tells us is the precise opposite of telling it like it is.
To other Americans, Mr. Trump’s political rise is little more than a sideshow extravaganza—good for making your favorite news broadcast more entertaining but, ultimately, devoid of substance and doomed to failure.
To me, the rise of Donald Trump is an American tragedy serving as a cautionary tale of what we are becoming as a society and the need to rediscover true American values before they are gone forever.
I don’t offer this viewpoint because of my disagreement with The Donald on his politics.
In truth, I really don’t know what Mr. Trump’s politics are—given the extraordinary disparity between his professed liberal politics of just a few years ago and his hard line approach to political issues of today. Trump 1.0 favored a path to citizenship for illegals and a universal health care system. Trump 2.0 takes a far more conservative approach towards immigration and is critical of anything and everything done by the Obama Administration.
Yet, it is not his politics that worries me. It is his character and how Americans are responding to it that I find so disturbing in terms of the very character of the nation.
If you think character doesn’t matter, I would remind you that being the American President is all about character—and character is often best judged by how successfully we take to heart the lessons passed down from parent to child over many generations.
It is certainly true that Trump has succeeded in fulfilling one of the character traits parents work to instill in their children—the drive to be successful.
While I fear that Trump is taking the lazy way out in his presidential campaign, as demonstrated by his refusal to prepare in favor of just “winging” it in his speeches and the policy pronouncements he has provided, his great success in business could not have happened without the willingness to work hard to accomplish great success. This is a trait that would cause most any American parent to glow with pride.
Certainly, it didn’t hurt that Mr. Trump was provided a running, head start by his own father, a successful real estate developer in his own right who turned his business over to his son. Still, you don’t take a successful business and turn it into a mega-empire without a lot of hard work.
But this is where behavior that would make your parents proud comes to an end.
Can you imagine what your mother would say to you were you to grow up to become an obnoxious braggart who constantly rises to remind anyone who will listen that you are very, very rich? Can you imagine what your father would say if you took it upon yourself to constantly intone on your own remarkable greatness and how anyone who disagrees with you is unworthy of respect or worse?
And can you imagine what your parents and grandparents would think of a society where this borderline psychotic self-aggrandizement is actually appreciated and cheered by the populace?
Many of us were taught that if you have nothing nice to say about someone then you should just say nothing at all.
Of course, I realize that this is a rule that doesn’t apply in the world of politics, particularly when it becomes necessary to respond to a charge or an attack from an opposing politician. Yet, even in the brutal world of politics there have long been rules of engagement when doing battle—and The Donald appears more than willing to happily break them all.
Personal attacks on character are nothing new in American politics. However, it is our tradition that when a presidential candidate has something awful to say about another presidential candidate, it is left to a surrogate to do the dirty work. This has always been the case because of the importance that somebody seeking the presidency be viewed as too principled, too decent and, yes, having far too much character to descend into the gutter.
When John Adams, in the first contested presidential battle in our nation’s history, wanted to take a serious character shot at his opponent, Thomas Jefferson, Adams did not take on the job himself as that would have been in exceedingly bad taste and represent conduct unbefitting a president. Instead, he had his surrogate, Alexander Hamilton, write an article in the Gazette of the United States accusing Jefferson of having an affair with one of his slaves. This was a very big deal at that point in history and likely played a role in Jefferson’s defeat.
When John Quincy Adams was campaigning against Andrew Jackson in the 1828 race for the White House, he did not stand up and accuse Jackson’s mother of being a prostitute and Jackson’s wife of being an adulteress. Instead he left it to the Coffin Handbills distributed by supporters of John Quincy to do the dirty work. Why? Because presidential candidates must show the character necessary to run the nation and getting directly involved with such base attacks would not do.
It remains the case in the modern era to leave it to a surrogate to do the dirty work for those who wish to be the leader of the nation—and with good reason. How a president’s character is viewed plays a serious role in that individual’s ability to succeed in the job, both at home and abroad.
When it comes to letting the nation know how amazing a candidate is and how lucky the country is that a particular candidate would bless us with his or her service to the nation, your parents would quickly remind you that it is best to allow other people to sing your praises rather than to sing your own in symphonic measures.
This is the great tragedy of Donald Trump. For all I know, Trump might have the talent to excel in the job. But there is no way that I would bet on his success given the megalomania that exudes from every pore of his body.
Does anyone remember when the key knock on Obama was that he was arrogant? Yet, many who lodged that charged are the very people who support Trump’s behavior, despite it taking arrogance to a new and previously unseen level.
The willingness of many to now accept such behavior is, in my estimation, a great tragedy in the current state of the nation. When so many would take a positive view of character deficiencies that would once not only disqualify one who seeks to lead the nation but further disqualify that individual from meriting an invitation to cocktail party, we’ve got a serious problem.
Think about it. It used to be that nobody likes a braggart and a bore—now, a significant percentage of the public wants one to be the president.
Is this really what and who we want to be?
I sincerely hope not.
By: Rick Ungar, Contributor, The Policy Page, Forbes, July 24, 2015
“Ignorance Never Takes A Break”: Conservatives Launch Pre-Emptive Attacks On Sec. Julian Castro
One year ago, Julian Castro (former Mayor of San Antonio, TX) was sworn in as the Secretary of the Department of Housing and Urban Development. Many people (including this writer) assume that he is the most likely prospect to be Hillary Clinton’s running mate in 2016. Apparently a lot of conservatives share that assumption because lately they have launched some interesting attacks on Castro.
First of all, there was Samuel Rosado writing in the National Review that Julian Castro was never a “real” mayor.
Julian Castro is often introduced as the former mayor of San Antonio, Texas. Presumably, journalists and the general public think of this as a major accomplishment and a useful dose of executive experience — it is, after all, a city of 1.4 million people. But San Antonio doesn’t work like most high-profile American cities, such as New York and Chicago, which are largely run by their mayors. It runs under the council-manager form of government, meaning the city council appoints a city manager who actually handles the day-to-day operations of government.
It is true that cities around the country vary in terms of the organizational structure of their government. But working with a city manager (who usually handles administrative tasks) in no way strips a mayor of his/her title – much less most of the associated responsibilities.
I would also point out that Sec. Castro served on the San Antonio City Council for four years and is rightly credited with some significant accomplishments as Mayor.
In 2010 Castro created SA2020, a community-wide visioning effort. It generated a list of goals created by the people of San Antonio based on their collective vision for San Antonio in the year 2020. SA2020 then became a nonprofit organization tasked with turning that vision into a reality.
In 2010 he established Cafe College, which offers college guidance to San Antonio area students. In 2012 he led a voter referendum to expand pre-kindergarten education.
But when it comes to ridiculous critiques, it will likely come as no surprise to anyone that Rep. Steve King tops the charts.
What does Julian Castro know? Does he know that I’m as Hispanic and Latino as he? pic.twitter.com/CYmNIdyqLW
— Steve King (@SteveKingIA) July 17, 2015
As I have often said, there are times when the only appropriate response to nonsense like that is to point and laugh. Apparently someone at Wikipedia had the same reaction. Mediaite caught the screen grab with King’s name changed to Esteban Arnaldo “Steba” Rey.
So far the criticism of Castro has been pretty laughable. If he gets the nod as the VP nominee, I’m sure it will only escalate.
By: Nancy LeTourneau, Political Animal Blog, The Washington Monthly, July 19, 2015
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