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2019-11-19 07:00 by Karl Denninger
in Editorial , 203 references Ignore this thread
Warren, Markets, And Apologists
[Comments enabled]

So Christopher Whalen, who has quite a following when it comes to various commentary on banking and such, has put forward the following:

Elizabeth Warren Wants to Crash the Global Financial Markets

Ft. Myers | Sisyphus is a figure from Greek mythology. For sins in mortal life, he was punished by Zeus to forever roll a boulder up a hill in the depths of Hades, only to see it to roll down again.  The Federal Open Market Committee is essentially trapped in the torment of Sisyphus. They keep trying to add liquidity to the domestic US money markets, only to see it leak out into the vast offshore market for dollar funding.


.... And a socialist presidential candidate named Elizabeth Warren is perfectly willing to crash the US financial markets to advance her never ending quest for celebrity and fame. 

Uh huh.

Let's look at the two likely predicates for this claim.

1. Medicare for all.  Various estimates for the cost to the federal government (over 10 years) are out there from Warren's (likely insanely optimistic) $20ish trillion to a more-reasoned (but still likely optimistic) $53 trillion.  What nobody is talking about in opposing her plan is that by eliminating private insurance you now have a single-funded source, and currently the total health care spend is about $4 trillion with $1.576 trillion of that being Federal Government last fiscal year.  If you get rid of all private insurance and plans then the entirety of that $4 trillion winds up on the federal checkbook but the spend from the private side disappears and, presumably, would be taxed back into the Federal Government.  Which pocket you take a $20 bill out of does not matter, and $4 trillion times 10 years is $40 trillion at present spending rates.  But, of course, it's not at present spending rates; at 8% growth, which is where we are now in Medicare and Medicaid over 10 years that number grows to $8.64 trillion.  Take the midpoint and multiply by 10 and you wind up with about $60ish trillion which, incidentally, assumes zero cost savings from rationing and similar which is unlikely.  In other words while the $53 trillion is a horrifying number over 10 years it is in fact a decrease -- that is, an improvement over what is spent now on the trajectory we are on!  The only people who can fail to recognize and note this are those who are apologists for the medical industry rape-job served on your butthole on a daily basis -- or worse, those who directly profit from it.  And yes, this includes a few million (likely 4 million or thereabouts) people employed that never provide any care -- they simply rob you.  Both of those groups deserve a noose for their intentional deception in this regard.

2. Taxing billionaires up the wazoo.  This one requires a bit of examination too.  It sounds bad for the economy in that the usual pablum is that these people are "great innovators" and that the reward for being right, no matter by luck or otherwise, is getting extraordinarily rich since the benefits inure to everyone in society.  That would be a very defensible argument except for one problem: It's a lie.

I challenge you to name one billionaire that hasn't made his or her money from one of the following:

Facial violations of the law that the government refuses to prosecute.  Amazon's Bezos is the poster child for this.  He steadfastly refused to collect and pay sales taxes to the jurisdictions across the nation until he was sued or threatened to be sued repeatedly under the claim of actual nexus.  Note that I cannot find one such case he took to trial and won; every single one of them resulted in a fold and prospective but not retrospective collection of said taxes.  I argue that had he not known he'd lose (in other words, I argue this strategy was a knowing and intentional scam) he would have told the states "screw you, sue me" instead.  Meanwhile there were tens if not hundreds of thousands of local businesses, all of whom collected and remitted said taxes, that were forcibly undercut on pricing by 6-10% on a delivered-cost basis and put out of business.  Not ONE of those firms or their employees got a plugged nickel from Bezos' evasion schemes.  Incidentally, if you think he's a genius for coming up with this he's not; I contemplated the same sort of thing when looking at expanding MCSNet and was told quite-sternly by corporate counsel that I was of course free to try this and he might even come visit me in prison if I did.  You see, I didn't have a political and "oh look at all the jobs" card to play that immunized my actions from prosecution.

It doesn't stop there.  The skirting of said law has continued with the "third party" sales nonsense; Amazon clearly has nexus as it is in fact more than half of the transaction; it constitutes the advertising channel, order processing, payment processing and dispute resolution mechanism along with, in some cases part or all of fulfillment too, all under Amazon's exclusive control.  Yet Amazon still claimed that such doesn't constitute "nexus."  Uh huh.  Never mind other allegations of the firm using the data generated through the platform to identify anyone who gets successful in their sales of a given product and then targeting their suppliers to source and sell the same product without the agency fee overhead, destroying said competitors who foolishly considered Amazon a partner in their endeavors.

How about Michael Bloomberg?  His "terminal" and related services were predicated on what amounted to a negotiated sweetheart and no-competition deal with the data sources.  Yes, he got filthy rich.  Did he do it in a field with a dozen or a hundred competitors?  No.  It sure appears to me that he had zero competitors.  How do you have zero competitors in a billion dollar business if you haven't done something, or a lot of somethings, that prevent entry of said competitors?  Gee, I wonder...

Who else?  Microsoft's Gates?  He actually got attacked for violations of anti-trust law.  Next.

Warren Buffett?  Oh yes, the sweetheart deals nobody else was offered in the 2007/08 crash didn't have anything to do with the magnitude of his success, and those were one-offs, right?  Uh huh.  Sure they were.  Why weren't those deals offered to ordinary people like you and I?  You're telling me Treasury couldn't manage the data flow and accounting when they already do it for Treasury Direct?  Bullcrap.

Zuckerberg?  You're kidding, right?  The repeated and intentionally-hidden abuses of privacy would have led you or I to be not sued but arrested and thrown in prison dozens of times over by now.  Of course when you have billions nobody cares; you wave that "look at all the jobs that will disappear if you arrest me and kill the company" card.  Oh, and what sort of "revolutionary benefit to society" has he brought?  That's a joke, son.

Ellison, Page and Brin?  Yeah, ok.  Go ahead, tell me all about those.

The Waltons?  Walmart has put more small firms out of business and destroyed more jobs in American towns, suppressing wages across the nation than any other company in the history of the United States, and it did a very large part of that by exploiting dollar-a-day slave wages in China.  A nation that, I remind you, is communist and in addition to everything else imprisons Muslims by the millions and then sends in "minders" to******their wives.  This "partnership" isn't exclusive to WalMart, of course -- many other firms do the same damn thing (Apple, Nike, etc, anyone?)  Where are all the scolds in Congress and elsewhere when it comes to this issue?  Oh, I know, they're too busy loving their Nike shoes and iPhones to give a wet crap about the millions imprisoned and what certainly appear to be rapes taking place under official communist party orders by the score.

Then there's Sheldon Adelson, who's money was made conning you into gambling.  Indeed that's consensual, at least.  But lesser-known is that he's very opposed to people finding a way to sate addictions via other means, like for example, marijuana.  After all if you sit around stoned and munch Doritos you probably won't pull a handle on a slot machine.  Sheldon isn't content to just make money off gambling where gambling is one of many competing diversions; he spends a hell of a lot of money suppressing via shady political campaigns other recreational past-times he doesn't want to compete for those dollars he could otherwise capture.  Wait -- isn't suppressing competition rather than winning on the merits the general problem with this billionaire's list?

Of course we'd be remiss if we left out all the "investment and hedge fund" folks, many of whom are nothing more than corporate raiders, putting people out of work, levering up the "business" via all manner of hinky debt deals, taking out their slice of it and when it blows up and everyone loses their job and investments -- except them -- oh well.  How's that all working out for Americans and American workers?

Of course there are a few medical folks in the list who made their billions by raping you to the tune of 500% of what your medical care should cost, getting away with it because, you guessed it, despite 100+ year old law and two USSC decisions saying said law applies to the medical industry nobody committed any crimes.

Are there are a few exceptions in the richest American list?  Sure.  Can I really fault the guy who set up Carnival Cruise lines?  Not much.  I've yet to find any coercion there, at least; people pay money and get a service, and nobody is making them get on board nor can I find evidence of him trying to shut down the national parks, for example, as a means of removing options for tourism dollars.  Or how about Love's truck stops?  Those look like a reasonable deal too although I do give the slant-eye to some of the concentration I'm seeing over the last five or so years.....  one wonders there.

But for most of these guys?  Tell me again how "free market capitalism" is involved in offshoring to slave labor nations that imprison anyone they don't like and then******their wife for good measure, or who get into cahoots with Congress to pass so-called "free trade" bills promising that Mexican wages will rise to parity with the US and, when it doesn't happen (because they knew it wouldn't and planned it that way) they make billions and feel entirely entitled to the spoils of their outrageous scam perpetrated on the American public, never mind all the jobs and people, even entire towns they destroy at the same time.

I admire someone who comes up with a real and truly better mousetrap that actually catches mice and advances the human condition.  Arbitrage in all of its forms, especially when undertaken at gunpoint, isn't part of that -- ever.  When you go down the Forbes 400 list you find damn few people who didn't get on that list through some form of arbitrage, frequently doing things that may not be considered "able to be prosecuted" yet they damn well ought to be and in some cases there's even a law that already exists that's implicated as well, but this is nothing a few well-placed lobbyists and a President who loves a rising stock market can't overcome.

This is the worst sort of advocacy and smear job there is.  These people didn't put a plugged nickel of their own money at risk in any of these schemes beyond, perhaps, the first little shop. Every bit of it beyond that had nothing to do with them, nothing to do with fair and free competition and everything to do with screwing someone else.

As such the whine about the market crashing is just that -- a whine.  A skyrocketing stock market as a result of people bilking 99% of Americans isn't a good thing, it's a terrible thing.  It rewards all manner of unseemly behavior and whether it implicates actual violations of the law or not doesn't matter if nobody will bring charges.

I can easily amass a billion dollars if I can rob banks and yet not spend a day in prison for doing it.  I simply keep robbing them until I have the billion bucks; whether I do it with a gun or via some other means doesn't make a bit of difference when you get to the essence of it.  There is roughly $3 trillion a year in the medical scam a year alone; now add to it the impact of the restraint-of-trade and monopolist actions in other parts of the market and it's entirely possible that perhaps as much as half of US GDP is implicated on an annual basis in some sort of scheme of this sort with nearly all of it inuring to these billionaires balance sheets in some fraction.

Don't get me wrong -- Elizabeth Warren has exactly nothing in common with me when it comes to her political positions.  What she's proposing in the form of Medicare for all says not one word about taking all of the monopolists, including those on the Forbes 400 list, and throwing their asses in prison where they belong.  If she did she actually might be worth a cheer or three, but nope -- that's not her intent.  She merely wants to capture the cash flow on the government side of the ledger, and when you run out of money she'll tell you get stuffed in terms of getting treated and as such you will die.

The important point to remember, however, is that when the money runs out on the private side the exact same thing will happen to you as well.

Whalen, of course, omits that "inconvenient" fact in his opinion, nor does he point out that Trump is doing the same damn thing.

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