Showing posts with label money and power. Show all posts
Showing posts with label money and power. Show all posts
Monday, April 15, 2024
Not What We Were Told
Trump "owns" 78.5 million shares. At the closing price today, he has a little over $2 billion in "equity" - that doesn't really exist because he can't access that money for another few-to-several months.
Friday, April 12, 2024
Today's 🤬
If billionaires (along with their coin-operated politicians and judges) aren't in fact above the law, then somebody needs to step up and prove it.
Start putting these assholes in prison.
Sick to fucking death of this shit.
Billionaire Leonard Leo rejects Senate subpoena over supreme court gifts
Progressive groups hail long-brewed move against influential donor but protest lack of summons for Harlan Crow
The big-money rightwing donor Leonard Leo said he would not comply with a subpoena issued by the US Senate judiciary committee, as it investigates undisclosed gifts to conservative supreme court justices that have stoked an ethics crisis at a court already held in historically low public esteem.
Referring to Dick Durbin, the Illinois Democrat who chairs the committee, Leo said: “I am not capitulating to his lawless support of Senator Sheldon Whitehouse [a Democrat from Rhode Island] and the left’s dark money effort to silence and cancel political opposition.”
Democrats on the judiciary committee are concerned with rightwing dark money and its effects on a court stacked 6-3 in favour of conservatives since Donald Trump installed three justices in just four years in power.
Multiple reports, led by the non-profit newsroom ProPublica, have described undisclosed gifts including luxury travel and resort stays given to Clarence Thomas and Samuel Alito, long-serving hardline court rightwingers.
Thomas and Alito deny all wrongdoing. The chief justice, John Roberts, has refused to testify in Congress. The court issued a new ethics code but it is enforceable only by the justices themselves.
In November, the Senate committee voted on party lines to subpoena Leo and the Texas billionaire Harlan Crow, a collector of Hitler memorabilia with close links to Thomas. On Thursday, more than four months later, Leo said he had received a subpoena but a spokesperson for Crow said he did not.
In a statement to the Washington Post, Durbin said: “Since July 2023, Leonard Leo has responded to the legitimate oversight requests of the Senate judiciary committee with a blanket refusal to cooperate. His outright defiance left the committee with no other choice but to move forward with compulsory process. For that reason, I have issued a subpoena to Mr Leo.
“Mr Leo has played a central role in the ethics crisis plaguing the supreme court … This subpoena is a direct result of Mr Leo’s own actions and choices.”
Progressive groups welcomed the Leo subpoena but protested about the lack of one for Crow.
Caroline Ciccone, president of Accountable.US, which has focused on drawing attention to Leo’s coordination of billions of dollars in rightwing political spending, said: “Thanks to … Leo, a full-blown corruption crisis has plagued the high court for over a year, undermining its credibility …
“Today’s subpoena is a critical step toward accountability, and toward ensuring that our high court adheres to the highest possible ethics standards. As a result of the strong leadership of Chairman Durbin and the judiciary committee, we can now begin to get to the bottom of the corruption crisis pervading the supreme court.”
But Ezra Levin, co-executive director of Indivisible, said that though the Leo subpoena was “a long overdue first step towards ensuring accountability” it was also “far from enough”.
“The entire country has been waiting too long for Durbin to take action, and subpoenaing Leonard Leo without simultaneously subpoenaing Harlan Crow is a half-baked attempt at doing his job as judiciary chair.”
Pointing to epochal rulings from the rightwing court including removing the federal right to abortion, loosening gun control and ending race-based affirmative action in colleges, Levin added: “Democrats cannot let this corrupt and compromised supreme court continue to have a strong hold on our fundamental rights without any form of accountability.
“Durbin cannot ignore the overwhelming calls and pressure from his own base. He must continue to exercise his authority … by subpoenaing Harlan Crow, holding the justices and their accomplices accountable, and unrigging a court that was packed by Trump and his Maga supporters.”
- MORE -
Wednesday, April 10, 2024
Thursday, April 04, 2024
What Did I Tell Ya?
What did I fucking tell you?
Exclusive: Trump Media saved in 2022 by Russian-American under criminal investigation
Trump’s social media company went public relying partly on loans from trust managed by person of interest to prosecutors
Donald Trump’s social media company Trump Media managed to go public last week only after it had been kept afloat in 2022 by emergency loans provided in part by a Russian-American businessman under scrutiny in a federal insider-trading and money-laundering investigation.
The former US president stands to gain billions of dollars – his stake is currently valued at about $4bn – from the merger between Trump Media and Technology Group and the blank-check company Digital World Acquisition Corporation, which took the parent company of Truth Social public.
But Trump Media almost did not make it to the merger after regulators opened a securities investigation into the merger in 2021 and caused the company to burn through cash at an extraordinary rate as it waited to get the green light for its stock market debut.
The situation led Trump Media to take emergency loans, including from an entity called ES Family Trust, which opened an account with Paxum Bank, a small bank registered on the Caribbean island of Dominica that is best known for providing financial services to the porn industry.
Through leaked documents, the Guardian has learned that ES Family Trust operated like a shell company for a Russian-American businessman named Anton Postolnikov, who co-owns Paxum Bank and has been a subject of a years-long joint federal criminal investigation by the FBI and the Department of Homeland Security (DHS) into the Trump Media merger.
The existence of the trust has previously been reported by the Guardian and the Washington Post. However, who controlled the account, how the trust was connected to Paxum Bank, and how the money had been funneled through the trust to Trump Media was unknown.
The new details about the trust are drawn from documents including: Paxum Bank records showing Postolnikov having access to the trust’s account, the papers that created the trust showing as its settlor a lawyer in St Petersburg, Russia, and three years of the trust’s financial transactions.
The concern surrounding the loans to Trump Media is that ES Family Trust may have been used to complete a transaction that Paxum itself could not.
Paxum Bank does not offer loans in the US as it lacks a US banking license and is not regulated by the FDIC. Postolnikov appears to have used the trust to loan money to help save Trump Media – and the Truth Social platform – because his bank itself could not furnish the loan.
Postolnikov, the nephew of Aleksandr Smirnov, an ally of the Russian president, Vladimir Putin, has not been charged with a crime. In response to an email to Postolnikov seeking comment, a lawyer in Dominica representing Paxum Bank warned of legal action for reporting the contents of the leaked documents.
There is also no indication that Trump or Trump Media had any idea about the nature of the loans beyond that they were opaque, nor has the company or its executives been accused of wrongdoing. A spokesperson for Trump Media did not respond to a request for comment.
After this story was published, a lawyer representing Trump Media said in a statement: “The Guardian continues to propagate its false narrative that TMTG has these fake connections to Russia. It is a hoax. Litigation will continue on this point and we are confident that The Guardian will ultimately be held responsible for its defamation and this story should be retracted.”
But Postolnikov has been under increasing scrutiny in the criminal investigation into the Trump Media merger. Most recently, he has been listed on search warrant affidavits alongside several associates – one of whom was indicted last month for money laundering on top of earlier insider-trading charges.
Postolnikov and the trust
In late 2021, Trump Media was facing financial trouble after the original planned merger with Digital World was delayed indefinitely when the Securities and Exchange Commission opened an investigation into the merger, Trump Media’s since-ousted co-founder-turned-whistleblower Will Wilkerson recounted in an interview.
Part of the problem was that Trump Media struggled to get financing because traditional banks were reluctant to lend millions to Trump’s social media company in the wake of the January 6 Capitol attack, Wilkerson said.
Trump Media eventually found some lenders, including ES Family Trust, but the sequence of events was curious.
ES Family Trust was established on 18 May 2021, its creation papers show. Postolnikov’s “user” access to the account was “verified” on 30 November 2021 by a Paxum Bank manager in Dominica. The trust was funded for the first time on 2 December 2021.
Trump Media then received the loans from ES Family Trust: $2m on 23 December 2021, and $6m on 17 February 2022.
The loans came in the form of convertible promissory notes, meaning ES Family Trust would gain a major stake in Trump Media because it was offering the money in exchange for Trump Media agreeing to convert the loan principal into “shares of Company Stock”.
Oddly, the notes were never signed. But the investment in Trump Media proved to be huge: while precise figures can only be known by Trump Media, ES Family Trust’s stake in Trump Media is worth between $20m and $40m even after the sharp decline of the company’s share price in the wake of a poor earnings report.
The ES Family Trust account also appears to have benefited Postolnikov personally. As the criminal investigation into the Trump Media deal intensified towards the end of last year, the trust recorded several transfers to Postolnikov with the subject line “Partial Loan Return”.
In total, the documents showed that the trust transferred $4.8m to Postolnikov’s account, although $3m was inexplicably “reversed”.
(On 17 July 2023, Postolnikov received $300,000. On 17 October 2023, Postolnikov received $1.5m, before it was reversed the next day; later the same day, Postolnikov again received $1.5m, which was also reversed. On 19 October 2023, Postolnikov received the $1.5m for a third and final time.)
The reason for the trust’s creation remains unknown. Aside from the money that went to Trump Media, the trust’s statements show the trust has directly invested money with only two other companies: $10.8m to Eleven Ventures LLC, a venture capital firm, and $1m to Wedbush Securities, a wealth management firm.
The current status of ES Family Trust is also unknown. The trust’s address is listed as a residential home in Hollywood, Florida. But, according to the property website Redfin, the six-bedroom home appears to have been sold in December 2023.
The creation papers also contained something notable: a declaration that, if the original trustee – a Paxum employee named Angel Pacheco – stepped down from the role, his successor would be a certain individual named Michael Shvartsman.
Sprawling money-laundering investigation
Last month, federal prosecutors charged Michael Shvartsman, a close associate of Postolnikov, with money laundering in a superseding indictment after previously charging him and two others in July with insider-trading Digital World shares. Shvartsman and his co-defendants pleaded not guilty.
At least part of the evidence against Shvartsman came from a confidential informant for the DHS, court filings show: in one March 2023 meeting with the informant and an associate, Shvartsman mentioned a friend who owned a bank in Dominica and made bridge loans to Trump Media.
“[Shvartsman] stated that a friend of his owns a bank in the island of Dominica and would be able to provide banking services to Russian and Ukraine Nationals if the [confidential informant] had other clients in need of that service,” the DHS report said.
“[Shvartsman’s associate] told the [confidential informant] that he does not think the SEC would be able to go after [Shvartsman] for his part in the investment but mentioned that [Shvartsman] essentially provided ‘bridge financing’ for the firm behind the Truth Social media platform,” it said.
The unredacted parts of the DHS report do not specify whether the “friend” was Postolnikov and what the “bridge financing” referred to – but the report left open the possibility that Shvartsman also had a role with the trust.
A lawyer for Shvartsman declined to comment on his client’s relationship with Postolnikov. A spokesperson for the US attorney’s office for the southern district of New York also declined to comment.
It is unclear whether federal prosecutors are aware that Trump Media was propped up by Postolnikov via ES Family Trust. At the same time, the money-laundering investigation surrounding the Trump Media merger and the scrutiny on Postolnikov appears to have ballooned in recent months.
The investigation into potential money laundering appears to have started after Wilkerson’s lawyers Phil Brewster, Stephen Bell and Patrick Mincey alerted the US attorney’s office in the southern district of New York to the ES Family Trust loans in October 2022.
Months later, in June 2023, the FBI expanded its investigation to work jointly with the Department of Homeland Security’s El Dorado task force, which specializes in money laundering, and its Illicit Proceeds and Foreign Corruption group, which targets corrupt foreign officials who use US entities to launder illicit funds.
Trump’s social media company went public relying partly on loans from trust managed by person of interest to prosecutors
Donald Trump’s social media company Trump Media managed to go public last week only after it had been kept afloat in 2022 by emergency loans provided in part by a Russian-American businessman under scrutiny in a federal insider-trading and money-laundering investigation.
The former US president stands to gain billions of dollars – his stake is currently valued at about $4bn – from the merger between Trump Media and Technology Group and the blank-check company Digital World Acquisition Corporation, which took the parent company of Truth Social public.
But Trump Media almost did not make it to the merger after regulators opened a securities investigation into the merger in 2021 and caused the company to burn through cash at an extraordinary rate as it waited to get the green light for its stock market debut.
The situation led Trump Media to take emergency loans, including from an entity called ES Family Trust, which opened an account with Paxum Bank, a small bank registered on the Caribbean island of Dominica that is best known for providing financial services to the porn industry.
Through leaked documents, the Guardian has learned that ES Family Trust operated like a shell company for a Russian-American businessman named Anton Postolnikov, who co-owns Paxum Bank and has been a subject of a years-long joint federal criminal investigation by the FBI and the Department of Homeland Security (DHS) into the Trump Media merger.
The existence of the trust has previously been reported by the Guardian and the Washington Post. However, who controlled the account, how the trust was connected to Paxum Bank, and how the money had been funneled through the trust to Trump Media was unknown.
The new details about the trust are drawn from documents including: Paxum Bank records showing Postolnikov having access to the trust’s account, the papers that created the trust showing as its settlor a lawyer in St Petersburg, Russia, and three years of the trust’s financial transactions.
The concern surrounding the loans to Trump Media is that ES Family Trust may have been used to complete a transaction that Paxum itself could not.
Paxum Bank does not offer loans in the US as it lacks a US banking license and is not regulated by the FDIC. Postolnikov appears to have used the trust to loan money to help save Trump Media – and the Truth Social platform – because his bank itself could not furnish the loan.
Postolnikov, the nephew of Aleksandr Smirnov, an ally of the Russian president, Vladimir Putin, has not been charged with a crime. In response to an email to Postolnikov seeking comment, a lawyer in Dominica representing Paxum Bank warned of legal action for reporting the contents of the leaked documents.
There is also no indication that Trump or Trump Media had any idea about the nature of the loans beyond that they were opaque, nor has the company or its executives been accused of wrongdoing. A spokesperson for Trump Media did not respond to a request for comment.
After this story was published, a lawyer representing Trump Media said in a statement: “The Guardian continues to propagate its false narrative that TMTG has these fake connections to Russia. It is a hoax. Litigation will continue on this point and we are confident that The Guardian will ultimately be held responsible for its defamation and this story should be retracted.”
But Postolnikov has been under increasing scrutiny in the criminal investigation into the Trump Media merger. Most recently, he has been listed on search warrant affidavits alongside several associates – one of whom was indicted last month for money laundering on top of earlier insider-trading charges.
Postolnikov and the trust
In late 2021, Trump Media was facing financial trouble after the original planned merger with Digital World was delayed indefinitely when the Securities and Exchange Commission opened an investigation into the merger, Trump Media’s since-ousted co-founder-turned-whistleblower Will Wilkerson recounted in an interview.
Part of the problem was that Trump Media struggled to get financing because traditional banks were reluctant to lend millions to Trump’s social media company in the wake of the January 6 Capitol attack, Wilkerson said.
Trump Media eventually found some lenders, including ES Family Trust, but the sequence of events was curious.
ES Family Trust was established on 18 May 2021, its creation papers show. Postolnikov’s “user” access to the account was “verified” on 30 November 2021 by a Paxum Bank manager in Dominica. The trust was funded for the first time on 2 December 2021.
Trump Media then received the loans from ES Family Trust: $2m on 23 December 2021, and $6m on 17 February 2022.
The loans came in the form of convertible promissory notes, meaning ES Family Trust would gain a major stake in Trump Media because it was offering the money in exchange for Trump Media agreeing to convert the loan principal into “shares of Company Stock”.
Oddly, the notes were never signed. But the investment in Trump Media proved to be huge: while precise figures can only be known by Trump Media, ES Family Trust’s stake in Trump Media is worth between $20m and $40m even after the sharp decline of the company’s share price in the wake of a poor earnings report.
The ES Family Trust account also appears to have benefited Postolnikov personally. As the criminal investigation into the Trump Media deal intensified towards the end of last year, the trust recorded several transfers to Postolnikov with the subject line “Partial Loan Return”.
In total, the documents showed that the trust transferred $4.8m to Postolnikov’s account, although $3m was inexplicably “reversed”.
(On 17 July 2023, Postolnikov received $300,000. On 17 October 2023, Postolnikov received $1.5m, before it was reversed the next day; later the same day, Postolnikov again received $1.5m, which was also reversed. On 19 October 2023, Postolnikov received the $1.5m for a third and final time.)
The reason for the trust’s creation remains unknown. Aside from the money that went to Trump Media, the trust’s statements show the trust has directly invested money with only two other companies: $10.8m to Eleven Ventures LLC, a venture capital firm, and $1m to Wedbush Securities, a wealth management firm.
The current status of ES Family Trust is also unknown. The trust’s address is listed as a residential home in Hollywood, Florida. But, according to the property website Redfin, the six-bedroom home appears to have been sold in December 2023.
The creation papers also contained something notable: a declaration that, if the original trustee – a Paxum employee named Angel Pacheco – stepped down from the role, his successor would be a certain individual named Michael Shvartsman.
Sprawling money-laundering investigation
Last month, federal prosecutors charged Michael Shvartsman, a close associate of Postolnikov, with money laundering in a superseding indictment after previously charging him and two others in July with insider-trading Digital World shares. Shvartsman and his co-defendants pleaded not guilty.
At least part of the evidence against Shvartsman came from a confidential informant for the DHS, court filings show: in one March 2023 meeting with the informant and an associate, Shvartsman mentioned a friend who owned a bank in Dominica and made bridge loans to Trump Media.
“[Shvartsman] stated that a friend of his owns a bank in the island of Dominica and would be able to provide banking services to Russian and Ukraine Nationals if the [confidential informant] had other clients in need of that service,” the DHS report said.
“[Shvartsman’s associate] told the [confidential informant] that he does not think the SEC would be able to go after [Shvartsman] for his part in the investment but mentioned that [Shvartsman] essentially provided ‘bridge financing’ for the firm behind the Truth Social media platform,” it said.
The unredacted parts of the DHS report do not specify whether the “friend” was Postolnikov and what the “bridge financing” referred to – but the report left open the possibility that Shvartsman also had a role with the trust.
A lawyer for Shvartsman declined to comment on his client’s relationship with Postolnikov. A spokesperson for the US attorney’s office for the southern district of New York also declined to comment.
It is unclear whether federal prosecutors are aware that Trump Media was propped up by Postolnikov via ES Family Trust. At the same time, the money-laundering investigation surrounding the Trump Media merger and the scrutiny on Postolnikov appears to have ballooned in recent months.
The investigation into potential money laundering appears to have started after Wilkerson’s lawyers Phil Brewster, Stephen Bell and Patrick Mincey alerted the US attorney’s office in the southern district of New York to the ES Family Trust loans in October 2022.
Months later, in June 2023, the FBI expanded its investigation to work jointly with the Department of Homeland Security’s El Dorado task force, which specializes in money laundering, and its Illicit Proceeds and Foreign Corruption group, which targets corrupt foreign officials who use US entities to launder illicit funds.
Tuesday, March 12, 2024
I Will Stop You
I think Trump has been worried that he might not get the old money Republicans to go along with his hare-brained schemes, so he's emphasizing his intentions to serve the plutocracy by telling us straight out that he's all for shit-canning every progressive policy that's been put in place since FDR.
- Privatize Social Security
- Voucherize Medicare
- Kill Obamacare outright
- Eliminate EPA and OSHA (and the departments of Energy and Education, et al)
In a democracy, even very poor people have power thru the various agencies and regulatory bodies that their votes got politicians to create, and push those politicians to maintain.
In a plutocracy, people who don't have the money don't have the power.
Monday, March 11, 2024
Say What Now?
There's a definite probability that Trump is trying to do his usual Pay-For-Play thing, but I think it's at least as likely that Trump turned against it because it signals an effort in Congress to get something done, and Trump's whole schtick is that nobody can do anything without him. ("Only I can fix it")
And of course, there's some probability that Trump is playing monkey in the middle again, setting up the conflict and looking for his profit opportunity, which kinda knits the whole thing together.
Steve Bannon, the one-time adviser to Donald Trump, suggested on Saturday that the former president was paid off after a shift in stance on TikTok.
TikTok, the immensely popular video-sharing app known for its predominantly young audience, has once again come under scrutiny from U.S. lawmakers. The app is currently owned by Chinese tech company, ByteDance, which has spurred significant suspicion that its abundance of user data is being furnished to the Chinese government.
While ByteDance and TikTok have dismissed these accusations, lawmakers have continued to consider their options. A bipartisan bill put forward by members of the House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party last week would work to "incentivize divestment of TikTok" by ByteDance by blocking it from appearing in American app stores and granting Executive Branch authority to take similar action in the future against social media companies operated by a "foreign adversary."
Lawmakers on the House Committee on Energy & Commerce advanced the legislation last week in a 50-0 bipartisan vote to the full U.S. House of Representatives. TikTok, meanwhile, characterized the bill as a ban, and urged users to encourage their local representatives to block it.
Despite his past stances in favor of action against TikTok for its Chinese ties, Trump, the leading candidate for the 2024 GOP presidential nomination, wrote in a Truth Social post on Thursday that he opposed the recent bill, citing his oft-repeated false claims about widespread voter fraud during the 2020 presidential election.
"If you get rid of TikTok, Facebook and Zuckerschmuck [CEO Mark Zuckerberg] will double their business," the former president wrote. "I don't want Facebook, who cheated in the last Election, doing better. They are a true Enemy of the People!"
In response to this post, reports noted that the seeming shift in stance from Trump came after a meeting with Jeff Yass, a conservative hedge fund manager who has a $33 billion stake in TikTok. Yass, according to Intelligencer, has been allegedly threatening to pull support from GOP lawmakers who back the bipartisan divestment bill.
American Plutocracy 101: The rigging of the system lies in a rich guy exerting influence over policy by waving his checkbook at the decision-makers.
Bannon, who led Trump's successful 2016 presidential campaign and served as a White House adviser for the first several months of Trump's presidency, took to Gettr to make his suspicions about the situation clear.
"Simple: Yass Coin," he wrote in a post that included a link to an Axios story about Trump's flip on TikTok, without providing further evidence. Newsweek has not seen any evidence that Trump's meeting with Yass and his stance on TikTok are connected.
Newsweek reached out to Trump's office via email for comment on Saturday afternoon. Any responses received will be added to this story in a later update.
In August 2020, Trump issued an executive order ordering ByteDance to sell its U.S. assets and destroy all data within 90 days.
"There is credible evidence that leads me to believe that ByteDance Ltd.... through acquiring all interests in musical.ly...might take action that threatens to impair the national security of the United States," the order read.
Wednesday, March 06, 2024
Vote Your Values
... and recognize that your values guide your interests - but sometimes it has to go the other way, and your interests drive your values.
Don't abandon your belief in your better self. Just understand that you have a lesser chance to be that better self if you don't survive some of the more mundane - even crass and distasteful - things in life along the way.
It may involve issuing a few fat lips and bloody noses.
In the meantime, the plutocracy is rollin' along, singin' a song.
Tuesday, February 20, 2024
Uncle Vlad To The Rescue (?)
Have you been wondering how and when the Russian &/or Saudi money was going to show up and pull Trump's fat outa the fire?
I have nothing but my own suspicions and speculation on this, but we're talking Donald-fucking-Trump here, and that should be enough to throw the rosiest-thinking Pollyanna into a deep and dark purple funk.
Maybe Trump did a deal on some of those state secret thingies before the feds caught him (?)
The stock linked to Donald Trump's Truth Social platform is flying high.
Read this before you invest.
You know you're buying a quality stock when the prospectus reads like a police blotter
Donald J. Trump has a long record of business failures and bankruptcies.
But after getting kicked off Twitter in 2021 he launched Truth Social, a social-media site.
Truth Social, his would-be Twitter rival, is a high-risk, speculative operation with few hard numbers behind it. It's already the subject of subpoenas, from regulators and a grand jury, even though it's barely off the ground. Oh, and Trump is not required to use the social-media site much - if at all - to communicate with the public, notably if voters were to return him to the White House. You buy the stock at your own peril.
That's not me talking. That's ... er ... the new stock-market prospectus for Truth Social. It has just been filed here with the U.S. Securities and Exchange Commission.
In case you missed it, yes: Donald Trump is trying to come back to Wall Street.
He's in advanced talks to list Truth Social on the stock market by merging its parent company, Trump Media & Technology Group, with a publicly traded shell company, Digital World Acquisition Corp. (DWAC).
See: DWAC up over 15% as it moves to buy Trump Media & Technology Group - but here's a potential snag
Trump faces mounting legal woes, as well as having a presidential campaign to manage. Meanwhile, Digital World has been in trouble with the Securities and Exchange Commission, and recently agreed to pay $18 million to settle fraud charges relating to this potential merger.
But never mind all this. Digital World Acquisition Corp.'s stock is suddenly flying high, as Trump heads toward the presidential nomination for the Republican Party - for a third straight time. The stock has tripled in price since the Iowa caucuses in January to $48, potentially valuing the business at $6.5 billion.
Opinion: Cha-ching! Trump makes $4 billion from his election campaign
But the prospectus for the deal, which runs to nearly 600 pages, is a doozy.
It reveals all the reasons investors jumping on the MAGA train might want to think twice, or even three times, before taking the plunge.
"A number of companies that were associated with President Trump have filed for bankruptcy," the prospectus reminds investors. "There can be no assurances that TMTG will not also become bankrupt. ... A number of companies that had license agreements with President Trump have failed. There can be no assurances that TMTG will not also fail."
In case you've forgotten, "The Trump Taj Mahal, which was built and owned by President Trump, filed for Chapter 11 bankruptcy in 1991," recalls the stock-market prospectus. "The Trump Plaza, the Trump Castle, and the Plaza Hotel, all owned by President Trump at the time, filed for Chapter 11 bankruptcy in 1992."
Trump Hotels & Casino Resorts, founded by Trump in 1995, "filed for Chapter 11 bankruptcy in 2004," it continues. "Trump Entertainment Resorts, Inc., the new name given to Trump Hotels & Casino Resorts after its 2004 bankruptcy, declared bankruptcy in 2009."
You know what gamblers say, that the house always wins? Well, Donald Trump and his failed casino operation are your refutation.
Trump Hotels & Casino Resorts had trouble with the law on the way down, too. "On January 16, 2002, the SEC issued a cease and desist order against Trump Hotels & Casino Resorts, Inc. (THCR) for violations of the anti-fraud provisions of the Exchange Act," the prospectus reveals.
I've written about Trump Hotels & Casino Resorts before. Ordinary investors, drawn to the stock by the perceived, by them, allure of the Trump name, ended up relieved of their shirts, pants and shoes and were left standing on the Atlantic City boardwalk in their undergarments.
Yes, Trump himself pocketed millions. Stockholders pretty much lost everything.
From the archives (July 2015): Donald Trump was a stock-market disaster
You know you're buying a quality stock when the prospectus reads like a police blotter
Donald J. Trump has a long record of business failures and bankruptcies.
But after getting kicked off Twitter in 2021 he launched Truth Social, a social-media site.
Truth Social, his would-be Twitter rival, is a high-risk, speculative operation with few hard numbers behind it. It's already the subject of subpoenas, from regulators and a grand jury, even though it's barely off the ground. Oh, and Trump is not required to use the social-media site much - if at all - to communicate with the public, notably if voters were to return him to the White House. You buy the stock at your own peril.
That's not me talking. That's ... er ... the new stock-market prospectus for Truth Social. It has just been filed here with the U.S. Securities and Exchange Commission.
In case you missed it, yes: Donald Trump is trying to come back to Wall Street.
He's in advanced talks to list Truth Social on the stock market by merging its parent company, Trump Media & Technology Group, with a publicly traded shell company, Digital World Acquisition Corp. (DWAC).
See: DWAC up over 15% as it moves to buy Trump Media & Technology Group - but here's a potential snag
Trump faces mounting legal woes, as well as having a presidential campaign to manage. Meanwhile, Digital World has been in trouble with the Securities and Exchange Commission, and recently agreed to pay $18 million to settle fraud charges relating to this potential merger.
But never mind all this. Digital World Acquisition Corp.'s stock is suddenly flying high, as Trump heads toward the presidential nomination for the Republican Party - for a third straight time. The stock has tripled in price since the Iowa caucuses in January to $48, potentially valuing the business at $6.5 billion.
Opinion: Cha-ching! Trump makes $4 billion from his election campaign
But the prospectus for the deal, which runs to nearly 600 pages, is a doozy.
It reveals all the reasons investors jumping on the MAGA train might want to think twice, or even three times, before taking the plunge.
"A number of companies that were associated with President Trump have filed for bankruptcy," the prospectus reminds investors. "There can be no assurances that TMTG will not also become bankrupt. ... A number of companies that had license agreements with President Trump have failed. There can be no assurances that TMTG will not also fail."
In case you've forgotten, "The Trump Taj Mahal, which was built and owned by President Trump, filed for Chapter 11 bankruptcy in 1991," recalls the stock-market prospectus. "The Trump Plaza, the Trump Castle, and the Plaza Hotel, all owned by President Trump at the time, filed for Chapter 11 bankruptcy in 1992."
Trump Hotels & Casino Resorts, founded by Trump in 1995, "filed for Chapter 11 bankruptcy in 2004," it continues. "Trump Entertainment Resorts, Inc., the new name given to Trump Hotels & Casino Resorts after its 2004 bankruptcy, declared bankruptcy in 2009."
You know what gamblers say, that the house always wins? Well, Donald Trump and his failed casino operation are your refutation.
Trump Hotels & Casino Resorts had trouble with the law on the way down, too. "On January 16, 2002, the SEC issued a cease and desist order against Trump Hotels & Casino Resorts, Inc. (THCR) for violations of the anti-fraud provisions of the Exchange Act," the prospectus reveals.
I've written about Trump Hotels & Casino Resorts before. Ordinary investors, drawn to the stock by the perceived, by them, allure of the Trump name, ended up relieved of their shirts, pants and shoes and were left standing on the Atlantic City boardwalk in their undergarments.
Yes, Trump himself pocketed millions. Stockholders pretty much lost everything.
From the archives (July 2015): Donald Trump was a stock-market disaster
"Trump Shuttle, Inc., launched by President Trump in 1989, defaulted on its loans in 1990 and ceased to exist by 1992," the prospectus continues, referring to the short-haul airline. "Trump University, founded by President Trump in 2005, ceased operations in 2011 amid lawsuits and investigations regarding that company's business practices."
This, let me remind you, is not the fake-news liberal media talking. It's the stock-market prospectus for Trump's own, current business.
"Trump Vodka, a brand of vodka produced by Drinks Americas under license from The Trump Organization, was introduced in 2005 and discontinued in 2011," it goes on. "Trump Mortgage, LLC, a financial services company founded by President Trump in 2006, ceased operations in 2007. GoTrump.com, a travel site founded by President Trump in 2006, ceased operations in 2007. Trump Steaks, a brand of steak and other meats founded by President Trump in 2007, discontinued sales two months after its launch." Two months.
But Truth Social will be different, right?
There is also a long section in the prospectus listing all of the former president's current legal troubles (while eschewing that word, former). You always know you're buying a quality stock when the prospectus reads like a police blotter.
Then there's the Truth Social deal itself.
Trump Technology & Media Group "aspires to build a media and technology powerhouse to rival the liberal media consortium and promote free expression," the prospectus reads.
Total Truth Social sign-ups to date? Er... 8.9 million people.
In the nine months to September 2023, the business suffered a $10.6 million operating loss on just $3.4 million in sales.
Meanwhile, somehow. it racked up $37.7 million in interest expenses.
If you want more financial details about Truth Social before investing, you are not alone. The board of Digital World, the would-be merger partner, admits that it, too, would like more financial details.
Alas, Trump's business "did not provide the Digital World Board with TMTG's financial projections in connection with the Digital World Board's bring-down due diligence process," the board reveals.
Oh, well. Can't have everything.
Some of this may be because the people running Truth Social - led by CEO Devin Nunes, formerly a Trump-aligned member of the U.S. House of Representatives from rural south-central California - don't actually have too much data. "[I]nvestors should be aware that since its inception, TMTG has not relied on any specific key performance metric to make business or operating decisions," the prospectus reports. "Consequently, it has not been maintaining internal controls and procedures for periodically collecting such information, if any." My italics.
The Trump operation has chosen not to track these metrics. It reports: "At this juncture in its development, TMTG believes that adhering to traditional key performance indicators, such as signups, average revenue per user, ad impressions and pricing, or active user accounts including monthly and daily active users, could potentially divert its focus from strategic evaluation with respect to the progress and growth of its business."
Which is to say Truth Social didn't want numbers distracting it from the business. You could call this the Alternative Facts School of Business Administration.
But the real peach here is that, although investors are buying this stock in the hope that Donald Trump will do for Truth Social what he did for Twitter, there is actually no guarantee he will use it much, or at all. Even if he is elected president.
That's because, the prospectus reveals, Donald Trump's agreement with Truth Social is limited. Yes, he is required to post certain of his social-media messages there first. But only nonpolitical ones, made from his "personal (i.e., non-business)" accounts. And the Truth Social exclusivity on each post only lasts for six hours.
Oh, and Trump can even cancel this agreement with 30 days' notice, "at any time on or after February 2, 2025." In other words, shortly after Inauguration Day.
And even until then, who is to decide which social-media posts are political, and therefore exempt from the exclusivity agreement? Guess.
"President Trump ... may post social media communications from his personal profile that he deems, in his sole discretion, to be politically-related on any social media site at any time," the prospectus warns. My italics.
It adds: "As a candidate for president, most or all of President Trump's social media posts may be deemed by him to be politically related."
As a result, it warns, investors "may lack any meaningful remedy if President Trump minimizes his use of Truth Social."
Trump will own at least 58% of the stock in the new company, giving him total control and minority investors nothing but hope. What could possibly go wrong?
Friday, September 29, 2023
It's A Wonderment
Melania wants a new contract. So how's the smart money betting on this thing?
Does she and her legal gang see something coming down the road that makes them believe she needs to get a better while she still can?
Is it the mercenary shit we've always thought it was?
Sure hope she's good and careful around staircases and windows and stuff.
- Melania Trump is reportedly renegotiating the terms of her prenuptial agreement with Donald Trump, per Page Six.
- The former first lady previously revisited the terms in 2017, according to a biography.
- Lawyers told Insider renegotiating may be smart amid the legal troubles Donald Trump faces.
Now, as Donald Trump maintains his position as the top GOP contender for the 2024 Republican nomination, all the while besieged by a mountain of growing legal troubles, Melania Trump could be wise to revisit those terms yet again, two lawyers told Insider.
A dishy report from Page Six on Thursday said that the former first lady has already done just that, citing two anonymous sources who told the outlet Melania Trump "quietly" renegotiated the terms of a new "postnup" agreement with her husband over the last year.
Insider was unable to independently confirm the report. Representatives for Donald Trump and several acquaintances of Melania Trump did not immediately respond to Insider's requests for comment.
Renegotiating a prenup isn't solely reserved for couples experiencing marital woes, attorneys told Insider. Reevaluating the legal agreement is common among those who anticipate future financial turbulence, as well.
Trump is facing four criminal indictments and a civil action in Manhattan, in which a judge ordered that the Trump Organization's New York corporate charters be revoked.
"She may well want additional protections for herself and her son," said Bill Beslow, a high-powered New York City divorce lawyer who represented Marla Maples in her 1999 split from Trump.
Beslow could not confirm any details of the current Trump couple's prenup, but said generally, protecting your stake in the marital assets is important, he said, "if you think the whole roof may fall in on you."
Melania Trump may also want to take advantage of the leverage she has at this moment, according to Beslow, whose clients include Demi Moore, Nicole Kidman, Al Pacino, Linda Evangelista, and Mia Farrow.
"She may be saying 'this is what you need to do, if you want me on your side, if you want me on the campaign trail, if you want me in the courtroom,'" he said.
"And he may need her not to do certain things," Beslow added. "What's that worth for him, for example, for her not to write a book?"
Melania Trump has thus far removed herself from her husband's 2024 presidential campaign, forgoing public appearances alongside Donald Trump on both the trail and in court.
As Donald Trump's litany of legal troubles mount, so too do his likely legal fees, Neama Rahmani, president of West Coast Trial Lawyers, told Insider.
"There's a possibility that when it's all said and done, Trump isn't going to be in a good financial state," Rahmani told Insider.
"She may be trying to protect herself," he added.
Beslow, however, cautioned against jumping to the conclusion that a prenup-renegotiation means the Trump marriage is on the rocks.
Spouses in high-power, high-asset marriages do renegotiate their prenups for benign reasons — such as a gesture of generosity, he said.
But more nefarious motivations can also come into play. A prenup can be changed to keep marital property out of the hands of creditors.
"The spouse who is having financial difficulties, or facing financial difficulties, may want to transfer assets out of his or her name," Beslow said.
"That would be all with the view toward avoiding the seizure of those assets," he added.
Regardless of what happens come 2024, Melania Trump is wise to renegotiate the agreement now, Rahmani said.
"To the extent that you can get money from the marriage now, before his creditors get to him, that's something you should consider," he said.
Thursday, September 21, 2023
Money
... always money.
It’s hard to quantify the value of painter and all-around cultural icon Bob Ross, but $9.85 million is a good start.
The very first on-air painting from the very first episode of Ross’ beloved series “The Joy of Painting” is looking for a new owner after being kept safe for decades by one of the show’s early volunteers.
“A Walk in the Woods” was painted live on-air in January of 1983, and typifies everything the public came to love about Ross and his art-positive mission. It depicts a placid woodland scene in shades of gold and blue, painted with Ross’ preferred “wet on wet” technique, with deceptively complex-looking brushstrokes and, of course, an abundance of happy little trees. In the lower lefthand corner, Ross’ signature stands out in red.
The work was acquired by Minneapolis-based art gallery Modern Artifact earlier this year. Before that, it was owned by a one-time volunteer at the Falls Church, Virginia PBS station where the first season of “The Joy of Painting” was aired. The volunteer bought it in November of 1983 at a station fundraising auction, just months after it was painted. It has been verified as authentic by Bob Ross Inc.
The very first on-air painting from the very first episode of Ross’ beloved series “The Joy of Painting” is looking for a new owner after being kept safe for decades by one of the show’s early volunteers.
“A Walk in the Woods” was painted live on-air in January of 1983, and typifies everything the public came to love about Ross and his art-positive mission. It depicts a placid woodland scene in shades of gold and blue, painted with Ross’ preferred “wet on wet” technique, with deceptively complex-looking brushstrokes and, of course, an abundance of happy little trees. In the lower lefthand corner, Ross’ signature stands out in red.
The work was acquired by Minneapolis-based art gallery Modern Artifact earlier this year. Before that, it was owned by a one-time volunteer at the Falls Church, Virginia PBS station where the first season of “The Joy of Painting” was aired. The volunteer bought it in November of 1983 at a station fundraising auction, just months after it was painted. It has been verified as authentic by Bob Ross Inc.
Friday, August 11, 2023
Corrupt AF
Clarence (Rent-A-Judge) Thomas is dirty, and he has enough company at SCOTUS to give Trump a fair shot at getting himself off the hook.
Clarence Thomas is not a rich man. Not rich the way he's always wanted to be rich. Even at $300,000 a year, he's not rich.
Guys like Leonard Leo's gang of billionaire plutocrats know this. And they know Thomas can be treated to some of the mega-perks enjoyed by the über wealthy, which gives him the feeling of power he's always coveted, which gives them a pretty fair shot at getting what they want.
Power is what money is about. Every dollar is a Power Coupon.
If you have power, you can get money
If you have money, you can get power
You never see one without the other
Thomas has a lifetime membership in the most exclusive club in world, and he knows it's next to impossible to throw him out, and all he has to do is rationalize his way to making decisions that favor his plutocrat benefactors. And the kicker is that even when he's in the minority - when the court's decision goes against his paymasters' interests - he can still get paid for having dissented in their favor.
Accountability can't just be retroactive and remedial. It has to be preventative.
I think the problem we're faced with - how do we take appropriate action against an offender when the offense is obvious and action is warranted - is very much at the root of the opposing ideologies we're trying to deal with. I see it as a matter of having to combat the conservatives' insistence that "The Free Market" can and should be extended - to rid ourselves of this cumbersome democracy thing, and replace it with "Free Market Government".
The right wing has made it a cornerstone of their movement to stand against regulation at every opportunity. They believe the market will always correct for any harm being done by whatever company causing whatever problem. We know by history and experience that this is not true. And even if the company is "punished" retroactively by losing profits &/or taking a bad PR hit, the customers (aka: people) who have suffered because of that company's actions or neglect can never be truly made whole again.
So we have to do sensible things that mitigate risk and prevent harm, and that means we have to regulate.
This common sense approach has to be applied to government as well - especially when we're talking about a piece of the government that is currently holding itself above the law - believing it's not subject to the checks & balances that were written into the US Constitution.
Thursday, July 27, 2023
The Past Is Not Past
A coal miner lies dying of Black Lung Disease while his miner sons keep watch. West Virginia,1976.
The disease was most common in the 60s and 70s, but then incidence plummeted with the passage of mine safety laws.
Now it’s on the rise again.
Fuck Joe Manchin, and his dark money paymasters in the Dirty Fuels Cartel.
Thursday, July 13, 2023
Fuckery With Purpose
There's no mystery about the student loan problem - or with Biden's difficulty in helping to get people out from under an unfair debt burden.
- Erosion of Real Wealth
- The near elimination of Labor's participation in Productivity Gains over the last 25 years
- Predatory lending practices
- GOP running interference for the lenders
In the early days of the Covid-19 pandemic, the federal government stopped requiring regular payments of student loan debt — a pause that has lasted more than three years. But student loan repayment had been dwindling for at least a decade before the pause.
You can imagine the stock of outstanding student debt as an overflowing bathtub: More students purchasing more undergraduate and advanced degrees at increasing tuition prices is the water gushing out of the faucet, and non-repayment is a blockage in the drain. The drain is blocked because despite what economists, policy-makers and educational administrators claim, a college degree doesn’t always “pay off.”
In recent years, many Americans with student loans weren’t making enough money to pay even the accumulating interest on their debt, let alone make progress on the principal. Wage stagnation is a long-running phenomenon that worsened after the Great Recession. But an important additional source of student loan misery is the widening and diversifying nature of the Americans who take them out. It’s increasingly the case that people who were always going to have low earnings no matter their educational attainment are also overloaded with student debt — think of underpaid teachers who acquired expensive master’s degrees for only a modest pay increase. The promise of higher education leading directly to high incomes is hollow.
Regardless of what happens after the scheduled resumption of payments in September and to the Biden administration’s plans for partial student debt forgiveness following the Supreme Court’s ruling in June, we predict that most of the outstanding balances — not to mention the roughly $100 billion in new loans issued every year — won’t ever be repaid. In the meantime, while the administration and the courts wrangle over the executive branch’s ability to waive student debt under existing law, student debtors feel forced to downsize their life plans. They delay or forgo marriage and family formation, homeownership, retirement and their children’s education: a profound failure of social reproduction.
Our student debt research uses credit reports, both from an annual, representative cross-section of student borrowers and from a single group of borrowers we’ve been following since 2009. We found that counterintuitively, the repayment pause was the best thing that ever happened to help student loans get repaid. That’s because in normal times, student debt balances mostly increase, thanks to monthly interest payments many borrowers are unable to keep up with. In 2020, 60.7 percent of outstanding student loans had a higher balance than when they were first issued. By 2022, that number had declined to 53.7 percent because interest was waived during the pandemic and some borrowers continued to pay down their principal.
The chart below compares repayment progress on loans in our 2020 cross-section with progress in 2022. The group with increasing balances shrank enormously during the repayment pause. Notably, Black and Latino borrowers had more loans with increasing balances before the pause; they benefit disproportionately while it remains in effect.
Student borrowers are not a monolithic group, and some demographic groups fare far better with their education debt than others. From the group of 2009-era debtors we’ve been following, we learned that female, Black and Latino borrowers generally saw their loan balances continue to increase above their 2009 level; male, white and Asian borrowers generally were able to make progress in paying their balances down (albeit not to zero — and the standard repayment term on federal loans is 10 years).
The diverging trajectories of Americans with student loans
On average, male, white and Asian borrowers made progress on their loans between 2009 and 2022. Female, Black and Latino borrowers had increasing balances until the repayment pause came into effect.
These divergent trajectories are due to structural inequalities in the labor market, which disadvantaged workers try to overcome with increased educational attainment. More advantaged workers don’t need to borrow as much to earn a decent salary and can start paying off the debt they do take on more quickly. The pandemic repayment pause changed the game, causing balances that had been increasing over the prior decade to start to fall. A student loan system in which borrowers do not generally repay their student loans during normal times, but in which they do repay them when they’re not required to, cannot be said to be functioning well.
This situation is the fruit of a tacit agreement among state legislatures, college administrators and the federal government dating back to the 1970s: defund public colleges and universities and shift them to a tuition-based revenue model, with the federal government backstopping the system with student debt so that more students can continue to obtain more expensive education. This change was justified by the idea that higher education “pays off” in the labor market.
Opportunities for middle-class employment without a college degree have certainly dwindled. But increasing the educational credentials required for any given job or salary doesn’t magically make pay go up. It just means the higher education system gets to take a larger slice of a worker’s lifetime earnings on the front end. And if the debt can’t be repaid, taxpayers swallow the loss on the back end — but only after the borrower has endured years of mounting balances and their negative consequences for wealth accumulation and creditworthiness.
This odd structure — in which federal funding comes in the form of student loans that won’t ever be repaid, as opposed to direct funding of colleges and universities — lets school administrators off the regulatory hook. In theory, the market of students selecting their preferred college experience is supposed to discipline schools’ financial conduct. In reality, it does not. This is why college administrators resist free-college proposals that amount to direct federal funding in return for capping tuition: They fear their socioeconomically segregated business models wouldn’t survive the regulatory scrutiny attached to those dollars.
The $1.7 trillion tower of mostly unrepayable student debt is a symbol of education policy failure. Unfortunately, politicians in both parties seem unable to think outside the neoliberal box that got us here. Republicans in Congress have proposed limits to federal loans, barring students from the system once their balances reach a certain threshold. That is an exclusionary vision that seeks to return higher education to its pre-G.I. Bill status as a bastion of white privilege for a tiny elite.
You can imagine the stock of outstanding student debt as an overflowing bathtub: More students purchasing more undergraduate and advanced degrees at increasing tuition prices is the water gushing out of the faucet, and non-repayment is a blockage in the drain. The drain is blocked because despite what economists, policy-makers and educational administrators claim, a college degree doesn’t always “pay off.”
In recent years, many Americans with student loans weren’t making enough money to pay even the accumulating interest on their debt, let alone make progress on the principal. Wage stagnation is a long-running phenomenon that worsened after the Great Recession. But an important additional source of student loan misery is the widening and diversifying nature of the Americans who take them out. It’s increasingly the case that people who were always going to have low earnings no matter their educational attainment are also overloaded with student debt — think of underpaid teachers who acquired expensive master’s degrees for only a modest pay increase. The promise of higher education leading directly to high incomes is hollow.
Regardless of what happens after the scheduled resumption of payments in September and to the Biden administration’s plans for partial student debt forgiveness following the Supreme Court’s ruling in June, we predict that most of the outstanding balances — not to mention the roughly $100 billion in new loans issued every year — won’t ever be repaid. In the meantime, while the administration and the courts wrangle over the executive branch’s ability to waive student debt under existing law, student debtors feel forced to downsize their life plans. They delay or forgo marriage and family formation, homeownership, retirement and their children’s education: a profound failure of social reproduction.
Our student debt research uses credit reports, both from an annual, representative cross-section of student borrowers and from a single group of borrowers we’ve been following since 2009. We found that counterintuitively, the repayment pause was the best thing that ever happened to help student loans get repaid. That’s because in normal times, student debt balances mostly increase, thanks to monthly interest payments many borrowers are unable to keep up with. In 2020, 60.7 percent of outstanding student loans had a higher balance than when they were first issued. By 2022, that number had declined to 53.7 percent because interest was waived during the pandemic and some borrowers continued to pay down their principal.
The chart below compares repayment progress on loans in our 2020 cross-section with progress in 2022. The group with increasing balances shrank enormously during the repayment pause. Notably, Black and Latino borrowers had more loans with increasing balances before the pause; they benefit disproportionately while it remains in effect.
Student borrowers are not a monolithic group, and some demographic groups fare far better with their education debt than others. From the group of 2009-era debtors we’ve been following, we learned that female, Black and Latino borrowers generally saw their loan balances continue to increase above their 2009 level; male, white and Asian borrowers generally were able to make progress in paying their balances down (albeit not to zero — and the standard repayment term on federal loans is 10 years).
The diverging trajectories of Americans with student loans
On average, male, white and Asian borrowers made progress on their loans between 2009 and 2022. Female, Black and Latino borrowers had increasing balances until the repayment pause came into effect.
These divergent trajectories are due to structural inequalities in the labor market, which disadvantaged workers try to overcome with increased educational attainment. More advantaged workers don’t need to borrow as much to earn a decent salary and can start paying off the debt they do take on more quickly. The pandemic repayment pause changed the game, causing balances that had been increasing over the prior decade to start to fall. A student loan system in which borrowers do not generally repay their student loans during normal times, but in which they do repay them when they’re not required to, cannot be said to be functioning well.
This situation is the fruit of a tacit agreement among state legislatures, college administrators and the federal government dating back to the 1970s: defund public colleges and universities and shift them to a tuition-based revenue model, with the federal government backstopping the system with student debt so that more students can continue to obtain more expensive education. This change was justified by the idea that higher education “pays off” in the labor market.
Opportunities for middle-class employment without a college degree have certainly dwindled. But increasing the educational credentials required for any given job or salary doesn’t magically make pay go up. It just means the higher education system gets to take a larger slice of a worker’s lifetime earnings on the front end. And if the debt can’t be repaid, taxpayers swallow the loss on the back end — but only after the borrower has endured years of mounting balances and their negative consequences for wealth accumulation and creditworthiness.
This odd structure — in which federal funding comes in the form of student loans that won’t ever be repaid, as opposed to direct funding of colleges and universities — lets school administrators off the regulatory hook. In theory, the market of students selecting their preferred college experience is supposed to discipline schools’ financial conduct. In reality, it does not. This is why college administrators resist free-college proposals that amount to direct federal funding in return for capping tuition: They fear their socioeconomically segregated business models wouldn’t survive the regulatory scrutiny attached to those dollars.
The $1.7 trillion tower of mostly unrepayable student debt is a symbol of education policy failure. Unfortunately, politicians in both parties seem unable to think outside the neoliberal box that got us here. Republicans in Congress have proposed limits to federal loans, barring students from the system once their balances reach a certain threshold. That is an exclusionary vision that seeks to return higher education to its pre-G.I. Bill status as a bastion of white privilege for a tiny elite.
And there's that razor blade.
The Biden administration proposes to regulate (some) colleges based on whether their students can eventually repay their student loans and to force all programs to disclose post-graduation earnings and debt burden before students enroll. Those proposals cling to the idea that the labor market is where the value of an education is ultimately determined. Colleges can convincingly object that they don’t control their students’ lives after graduation and would be penalized for enrolling needier students.
So, NYT, Biden shouldn't go for a little tempering regulation because the people who're acting all shitty now would act shitty?
To get a handle on the student debt crisis, the government will eventually have to redesign its relationship with American higher education. The current era of tuition-based revenue models has colleges competing for the students who can pay full freight, which can relegate the neediest students to the least-resourced institutions. A healthier system would look more homogenous, with students from all over the income scale spread across institutions nationwide, instead of being an elite scramble between students and schools to fill a few open seats at the top.
IDK what the fuck you're talking about, NYT. And I have no idea why you seem to think the Republicans are suddenly going to reverse themselves and get all cuddly with a Dept Of Education that they've been actively and publicly trying to kill for 25 years.
What political system are you even watching?
To get there, the Department of Education should make institution-level eligibility for federal student loans contingent on a uniform, very low cost of attendance for undergraduates and affordable tuition levels for professional programs. The structure of federal student loans should reflect society’s long-term needs, not just those of employers and universities preying on the generosity of the student loan program and of students desperate for jobs in an economy that feels ever more winner-take-all.
One way of ensuring and backstopping those policy goals could be the creation of a new federal university system, in which the campuses would be homogeneous in terms of financial and other resources and the student bodies socioeconomically diverse, rather than the other way around. But it’s more comfortable and politically convenient to continue to fight the culture war over higher education than to confront the facts about the causes and consequences of this ugly mountain of student debt. The Supreme Court has ruled. The Biden administration is searching for a new way forward. It’s time for a change of course.
Sunday, June 18, 2023
Balanced Reporting
... my ass.
Why It Seems Everything We Knew About the Global Economy Is No Longer True
While the world’s eyes were on the pandemic, the war in Ukraine and China, the paths to prosperity and shared interests have grown murkier.
When the world’s business and political leaders gathered in 2018 at the annual economic forum in Davos, the mood was jubilant. Growth in every major country was on an upswing. The global economy, declared Christine Lagarde, then the managing director of the International Monetary Fund, “is in a very sweet spot.”
Five years later, the outlook has decidedly soured.
“Nearly all the economic forces that powered progress and prosperity over the last three decades are fading,” the World Bank warned in a recent analysis. “The result could be a lost decade in the making — not just for some countries or regions as has occurred in the past — but for the whole world.”
A lot has happened between then and now: A global pandemic hit; war erupted in Europe; tensions between the United States and China boiled. And inflation, thought to be safely stored away with disco album collections, returned with a vengeance.
But as the dust has settled, it has suddenly seemed as if almost everything we thought we knew about the world economy was wrong.
The economic conventions that policymakers had relied on since the Berlin Wall fell more than 30 years ago — the unfailing superiority of open markets, liberalized trade and maximum efficiency — look to be running off the rails.
During the Covid-19 pandemic, the ceaseless drive to integrate the global economy and reduce costs left health care workers without face masks and medical gloves, carmakers without semiconductors, sawmills without lumber and sneaker buyers without Nikes.
The idea that trade and shared economic interests would prevent military conflicts was trampled last year under the boots of Russian soldiers in Ukraine.
And increasing bouts of extreme weather that destroyed crops, forced migrations and halted power plants has illustrated that the market’s invisible hand was not protecting the planet.
Now, as the second year of war in Ukraine grinds on and countries struggle with limp growth and persistent inflation, questions about the emerging economic playing field have taken center stage.
Globalization, seen in recent decades as unstoppable a force as gravity, is clearly evolving in unpredictable ways. The move away from an integrated world economy is accelerating. And the best way to respond is a subject of fierce debate.
Of course, challenges to the reigning economic consensus had been growing for a while.
“We saw before the pandemic began that the wealthiest countries were getting frustrated by international trade, believing — whether correctly or not — that somehow this was hurting them, their jobs and standards of living,” said Betsey Stevenson, a member of the Council of Economic Advisers during the Obama administration.
The financial meltdown in 2008 came close to tanking the global financial system. Britain pulled out of the European Union in 2016. President Donald Trump slapped tariffs on China in 2017, spurring a mini trade war.
But starting with Covid-19, the rat-a-tat series of crises exposed with startling clarity vulnerabilities that demanded attention.
As the consulting firm EY concluded in its 2023 Geostrategic Outlook, the trends behind the shift away from ever-increasing globalization “were accelerated by the Covid-19 pandemic — and then they have been supercharged by the war in Ukraine.”
It was the ‘end of history.’
While the collapse of the Soviet Union cleared the way for the domination of free-market orthodoxy, the invasion of Ukraine by the Russian Federation has now decisively unmoored it.
The story of the international economy today, said Henry Farrell, a professor at the Johns Hopkins School of Advanced International Studies, is about “how geopolitics is gobbling up hyperglobalization.”
Old-world style great power politics accomplished what the threat of catastrophic climate collapse, seething social unrest and widening inequality could not: It upended assumptions about the global economic order.
Josep Borrell, the European Union’s head of foreign affairs and security policy, put it bluntly in a speech 10 months after the invasion of Ukraine: “We have decoupled the sources of our prosperity from the sources of our security.” Europe got cheap energy from Russia and cheap manufactured goods from China. “This is a world that is no longer there,” he said.
Supply-chain chokeholds stemming from the pandemic and subsequent recovery had already underscored the fragility of a globally sourced economy. As political tensions over the war grew, policymakers quickly added self-reliance and strength to the goals of growth and efficiency.
“Our supply chains are not secure, and they’re not resilient,” Treasury Secretary Janet L. Yellen said last spring. Trade relationships should be built around “trusted partners,” she said, even if it means “a somewhat higher level of cost, a somewhat less efficient system.”
“It was naïve to think that markets are just about efficiency and that they’re not also about power,” said Abraham Newman, a co-author with Mr. Farrell of “Underground Empire: How America Weaponized the World Economy.”
Economic networks, by their very nature, create power imbalances and pressure points because countries have varying capabilities, resources and vulnerabilities.
Russia, which had supplied 40 percent of the European Union’s natural gas, tried to use that dependency to pressure the bloc to withdraw its support of Ukraine.
The United States and its allies used their domination of the global financial system to remove major Russian banks from the international payments system.
China has retaliated against trading partners by restricting access to its enormous market.
The extreme concentrations of critical suppliers and information technology networks has generated additional choke points.
China manufactures 80 percent of the world’s solar panels. Taiwan produces 92 percent of tiny advanced semiconductors. Much of the world’s trade and transactions are figured in U.S. dollars.
The new reality is reflected in American policy. The United States — the central architect of the liberalized economic order and the World Trade Organization — has turned away from more comprehensive free trade agreements and repeatedly refused to abide by W.T.O. decisions.
Security concerns have led the Biden administration to block Chinese investment in American businesses and limit China’s access to private data on citizens and to new technologies.
And it has embraced Chinese-style industrial policy, offering gargantuan subsidies for electric vehicles, batteries, wind farms, solar plants and more to secure supply chains and speed the transition to renewable energy.
“Ignoring the economic dependencies that had built up over the decades of liberalization had become really perilous,” Mr. Sullivan, the U.S. national security adviser, said. Adherence to “oversimplified market efficiency,” he added, proved to be a mistake.
While the previous economic orthodoxy has been partly abandoned, it is not clear what will replace it. Improvisation is the order of the day. Perhaps the only assumption that can be confidently relied on now is that the path to prosperity and policy trade-offs will become murkier.
NYT runs a long report on the fucked-up-edness of the world economic structure, and forgets that journalism can be straightforward and honest without being poisonously neutral about the extremely shitty consequences of an economy that delivers practically all the benefits to the Ownership Class while leaving everybody else to scramble for table scraps.
Ya mean to say that if you deliver enormous wealth and power to a few people without regard to making sure they don't abuse their privilege, they'll prob'ly end up being total assholes about it by using their wealth and power just to get more wealth and power?
Gosh - whoodathunk it.
And don't forget to look for the part that rationalizes Trump's "populism".
While the world’s eyes were on the pandemic, the war in Ukraine and China, the paths to prosperity and shared interests have grown murkier.
When the world’s business and political leaders gathered in 2018 at the annual economic forum in Davos, the mood was jubilant. Growth in every major country was on an upswing. The global economy, declared Christine Lagarde, then the managing director of the International Monetary Fund, “is in a very sweet spot.”
Five years later, the outlook has decidedly soured.
“Nearly all the economic forces that powered progress and prosperity over the last three decades are fading,” the World Bank warned in a recent analysis. “The result could be a lost decade in the making — not just for some countries or regions as has occurred in the past — but for the whole world.”
A lot has happened between then and now: A global pandemic hit; war erupted in Europe; tensions between the United States and China boiled. And inflation, thought to be safely stored away with disco album collections, returned with a vengeance.
But as the dust has settled, it has suddenly seemed as if almost everything we thought we knew about the world economy was wrong.
The economic conventions that policymakers had relied on since the Berlin Wall fell more than 30 years ago — the unfailing superiority of open markets, liberalized trade and maximum efficiency — look to be running off the rails.
During the Covid-19 pandemic, the ceaseless drive to integrate the global economy and reduce costs left health care workers without face masks and medical gloves, carmakers without semiconductors, sawmills without lumber and sneaker buyers without Nikes.
The idea that trade and shared economic interests would prevent military conflicts was trampled last year under the boots of Russian soldiers in Ukraine.
And increasing bouts of extreme weather that destroyed crops, forced migrations and halted power plants has illustrated that the market’s invisible hand was not protecting the planet.
Now, as the second year of war in Ukraine grinds on and countries struggle with limp growth and persistent inflation, questions about the emerging economic playing field have taken center stage.
Globalization, seen in recent decades as unstoppable a force as gravity, is clearly evolving in unpredictable ways. The move away from an integrated world economy is accelerating. And the best way to respond is a subject of fierce debate.
Of course, challenges to the reigning economic consensus had been growing for a while.
“We saw before the pandemic began that the wealthiest countries were getting frustrated by international trade, believing — whether correctly or not — that somehow this was hurting them, their jobs and standards of living,” said Betsey Stevenson, a member of the Council of Economic Advisers during the Obama administration.
The financial meltdown in 2008 came close to tanking the global financial system. Britain pulled out of the European Union in 2016. President Donald Trump slapped tariffs on China in 2017, spurring a mini trade war.
But starting with Covid-19, the rat-a-tat series of crises exposed with startling clarity vulnerabilities that demanded attention.
As the consulting firm EY concluded in its 2023 Geostrategic Outlook, the trends behind the shift away from ever-increasing globalization “were accelerated by the Covid-19 pandemic — and then they have been supercharged by the war in Ukraine.”
It was the ‘end of history.’
Today’s sense of unease is a stark contrast with the heady triumphalism that followed the collapse of the Soviet Union in December 1991. It was a period when a theorist could declare that the fall of communism marked “the end of history” — that liberal democratic ideas not only vanquished rivals, but represented “the end point of mankind’s ideological evolution.”
Associated economic theories about the ineluctable rise of worldwide free market capitalism took on a similar sheen of invincibility and inevitability. Open markets, hands-off government and the relentless pursuit of efficiency would offer the best route to prosperity.
It was believed that a new world where goods, money and information crisscrossed the globe would essentially sweep away the old order of Cold War conflicts and undemocratic regimes.
Associated economic theories about the ineluctable rise of worldwide free market capitalism took on a similar sheen of invincibility and inevitability. Open markets, hands-off government and the relentless pursuit of efficiency would offer the best route to prosperity.
It was believed that a new world where goods, money and information crisscrossed the globe would essentially sweep away the old order of Cold War conflicts and undemocratic regimes.
Really? What a buncha fuckin' idiots (I get to say it that way because I used to be one of those fuckin' idiots - now I'm a different kind of fuckin' idiot)
Unfettered Free-Market Capitalism can be labeled a lot of ways, but "democracy-promoting" isn't on the list.
Have you seriously never been in a company meeting where somebody disagrees with some new policy decision, and says something like, "Well I didn't vote for that", only to have the boss come back with "This isn't a democracy, dummy" ?
Jesus H Fuq - we have to recover some sense of reality or we're just going to keep volunteering to get hosed by these fuckers.
There was reason for optimism. During the 1990s, inflation was low while employment, wages and productivity were up. Global trade nearly doubled. Investments in developing countries surged. The stock market rose.
The World Trade Organization was established in 1995 to enforce the rules. China’s entry six years later was seen as transformative. And linking a huge market with 142 countries would irresistibly draw the Asian giant toward democracy.
China, along with South Korea, Malaysia and others, turned struggling farmers into productive urban factory workers. The furniture, toys and electronics they sold around the world generated tremendous growth.
The favored economic road map helped produce fabulous wealth, lift hundreds of millions of people out of poverty and spur wondrous technological advances.
But there were stunning failures as well. Globalization hastened climate change and deepened inequalities.
In the United States and other advanced economies, many industrial jobs were exported to lower-wage countries, removing a springboard to the middle class.
Policymakers always knew there would be winners and losers. Still, the market was left to decide how to deploy labor, technology and capital in the belief that efficiency and growth would automatically follow. Only afterward, the thinking went, should politicians step in to redistribute gains or help those left without jobs or prospects.
Companies embarked on a worldwide scavenger hunt for low-wage workers, regardless of worker protections, environmental impact or democratic rights. They found many of them in places like Mexico, Vietnam and China.
Television, T-shirts and tacos were cheaper than ever, but many essentials like health care, housing and higher education were increasingly out of reach.
The job exodus pushed down wages at home and undercut workers’ bargaining power, spurring anti-immigrant sentiments and strengthening hard-right populist leaders like Donald Trump in the United States, Viktor Orban in Hungary and Marine Le Pen in France.
In advanced industrial giants like the United States, Britain and several European countries, political leaders turned out to be unable or unwilling to more broadly reapportion rewards and burdens.
Nor were they able to prevent damaging environmental fallout. Transporting goods around the globe increased greenhouse gas emissions. Producing for a world of consumers strained natural resources, encouraging overfishing in Southeast Asia and illegal deforestation in Brazil. And cheap production facilities polluted countries without adequate environmental standards.
It turned out that markets on their own weren’t able to automatically distribute gains fairly or spur developing countries to grow or establish democratic institutions.
Jake Sullivan, the U.S. national security adviser, said in a recent speech that a central fallacy in American economic policy had been to assume “that markets always allocate capital productively and efficiently — no matter what our competitors did, no matter how big our shared challenges grew, and no matter how many guardrails we took down.”
The proliferation of economic exchanges between nations also failed to usher in a promised democratic renaissance.
Communist-led China turned out to be the global economic system’s biggest beneficiary — and perhaps master gamesman — without embracing democratic values.
“Capitalist tools in socialist hands,” the Chinese leader Deng Xiaoping said in 1992, when his country was developing into the world’s factory floor. China’s astonishing growth transformed it into the world’s second largest economy and a major engine of global growth. All along, though, Beijing maintained a tight grip on its raw materials, land, capital, energy, credit and labor, as well as the movements and speech of its people.
Money flowed in, and poor countries paid the price.
The World Trade Organization was established in 1995 to enforce the rules. China’s entry six years later was seen as transformative. And linking a huge market with 142 countries would irresistibly draw the Asian giant toward democracy.
China, along with South Korea, Malaysia and others, turned struggling farmers into productive urban factory workers. The furniture, toys and electronics they sold around the world generated tremendous growth.
The favored economic road map helped produce fabulous wealth, lift hundreds of millions of people out of poverty and spur wondrous technological advances.
But there were stunning failures as well. Globalization hastened climate change and deepened inequalities.
In the United States and other advanced economies, many industrial jobs were exported to lower-wage countries, removing a springboard to the middle class.
Policymakers always knew there would be winners and losers. Still, the market was left to decide how to deploy labor, technology and capital in the belief that efficiency and growth would automatically follow. Only afterward, the thinking went, should politicians step in to redistribute gains or help those left without jobs or prospects.
Companies embarked on a worldwide scavenger hunt for low-wage workers, regardless of worker protections, environmental impact or democratic rights. They found many of them in places like Mexico, Vietnam and China.
Television, T-shirts and tacos were cheaper than ever, but many essentials like health care, housing and higher education were increasingly out of reach.
The job exodus pushed down wages at home and undercut workers’ bargaining power, spurring anti-immigrant sentiments and strengthening hard-right populist leaders like Donald Trump in the United States, Viktor Orban in Hungary and Marine Le Pen in France.
In advanced industrial giants like the United States, Britain and several European countries, political leaders turned out to be unable or unwilling to more broadly reapportion rewards and burdens.
Nor were they able to prevent damaging environmental fallout. Transporting goods around the globe increased greenhouse gas emissions. Producing for a world of consumers strained natural resources, encouraging overfishing in Southeast Asia and illegal deforestation in Brazil. And cheap production facilities polluted countries without adequate environmental standards.
It turned out that markets on their own weren’t able to automatically distribute gains fairly or spur developing countries to grow or establish democratic institutions.
Jake Sullivan, the U.S. national security adviser, said in a recent speech that a central fallacy in American economic policy had been to assume “that markets always allocate capital productively and efficiently — no matter what our competitors did, no matter how big our shared challenges grew, and no matter how many guardrails we took down.”
The proliferation of economic exchanges between nations also failed to usher in a promised democratic renaissance.
Communist-led China turned out to be the global economic system’s biggest beneficiary — and perhaps master gamesman — without embracing democratic values.
“Capitalist tools in socialist hands,” the Chinese leader Deng Xiaoping said in 1992, when his country was developing into the world’s factory floor. China’s astonishing growth transformed it into the world’s second largest economy and a major engine of global growth. All along, though, Beijing maintained a tight grip on its raw materials, land, capital, energy, credit and labor, as well as the movements and speech of its people.
Money flowed in, and poor countries paid the price.
In developing countries, the results could be dire.
The economic havoc wreaked by the pandemic combined with soaring food and fuel prices caused by the war in Ukraine have created a spate of debt crises. Rising interest rates have made those crises worse. Debts, like energy and food, are often priced in dollars on the world market, so when U.S. rates go up, debt payments get more expensive.
The cycle of loans and bailouts, though, has deeper roots.
Poorer nations were pressured to lift all restrictions on capital moving in and out of the country. The argument was that money, like goods, should flow freely among nations. Allowing governments, businesses and individuals to borrow from foreign lenders would finance industrial development and key infrastructure.
“Financial globalization was supposed to usher in an era of robust growth and fiscal stability in the developing world,” said Jayati Ghosh, an economist at the University of Massachusetts Amherst. But “it ended up doing the opposite.”
Some loans — whether from private lenders or institutions like the World Bank — didn’t produce enough returns to pay off the debt. Others were poured into speculative schemes, half-baked proposals, vanity projects or corrupt officials’ bank accounts. And debtors remained at the mercy of rising interest rates that swelled the size of debt payments in a heartbeat.
Over the years, reckless lending, asset bubbles, currency fluctuations and official mismanagement led to boom-and-bust cycles in Asia, Russia, Latin America and elsewhere. In Sri Lanka, extravagant projects undertaken by the government, from ports to cricket stadiums, helped drive the country into bankruptcy last year as citizens scavenged for food and the central bank, in a barter arrangement, paid for Iranian oil with tea leaves.
It’s a “Ponzi scheme,” Ms. Ghosh said.
Private lenders who got spooked that they would not be repaid abruptly cut off the flow of money, leaving countries in the lurch.
And the mandated austerity that accompanied bailouts from the International Monetary Fund, which compelled overextended governments to slash spending, often brought widespread misery by cutting public assistance, pensions, education and health care.
Even I.M.F. economists acknowledged in 2016 that instead of delivering growth, such policies “increased inequality, in turn jeopardizing durable expansion.”
Disenchantment with the West’s style of lending gave China the opportunity to become an aggressive creditor in countries like Argentina, Mongolia, Egypt and Suriname.
Self-reliance replaces cheap imports.
The economic havoc wreaked by the pandemic combined with soaring food and fuel prices caused by the war in Ukraine have created a spate of debt crises. Rising interest rates have made those crises worse. Debts, like energy and food, are often priced in dollars on the world market, so when U.S. rates go up, debt payments get more expensive.
The cycle of loans and bailouts, though, has deeper roots.
Poorer nations were pressured to lift all restrictions on capital moving in and out of the country. The argument was that money, like goods, should flow freely among nations. Allowing governments, businesses and individuals to borrow from foreign lenders would finance industrial development and key infrastructure.
“Financial globalization was supposed to usher in an era of robust growth and fiscal stability in the developing world,” said Jayati Ghosh, an economist at the University of Massachusetts Amherst. But “it ended up doing the opposite.”
Some loans — whether from private lenders or institutions like the World Bank — didn’t produce enough returns to pay off the debt. Others were poured into speculative schemes, half-baked proposals, vanity projects or corrupt officials’ bank accounts. And debtors remained at the mercy of rising interest rates that swelled the size of debt payments in a heartbeat.
Over the years, reckless lending, asset bubbles, currency fluctuations and official mismanagement led to boom-and-bust cycles in Asia, Russia, Latin America and elsewhere. In Sri Lanka, extravagant projects undertaken by the government, from ports to cricket stadiums, helped drive the country into bankruptcy last year as citizens scavenged for food and the central bank, in a barter arrangement, paid for Iranian oil with tea leaves.
It’s a “Ponzi scheme,” Ms. Ghosh said.
Private lenders who got spooked that they would not be repaid abruptly cut off the flow of money, leaving countries in the lurch.
And the mandated austerity that accompanied bailouts from the International Monetary Fund, which compelled overextended governments to slash spending, often brought widespread misery by cutting public assistance, pensions, education and health care.
Even I.M.F. economists acknowledged in 2016 that instead of delivering growth, such policies “increased inequality, in turn jeopardizing durable expansion.”
Disenchantment with the West’s style of lending gave China the opportunity to become an aggressive creditor in countries like Argentina, Mongolia, Egypt and Suriname.
Self-reliance replaces cheap imports.
While the collapse of the Soviet Union cleared the way for the domination of free-market orthodoxy, the invasion of Ukraine by the Russian Federation has now decisively unmoored it.
The story of the international economy today, said Henry Farrell, a professor at the Johns Hopkins School of Advanced International Studies, is about “how geopolitics is gobbling up hyperglobalization.”
Old-world style great power politics accomplished what the threat of catastrophic climate collapse, seething social unrest and widening inequality could not: It upended assumptions about the global economic order.
Josep Borrell, the European Union’s head of foreign affairs and security policy, put it bluntly in a speech 10 months after the invasion of Ukraine: “We have decoupled the sources of our prosperity from the sources of our security.” Europe got cheap energy from Russia and cheap manufactured goods from China. “This is a world that is no longer there,” he said.
Supply-chain chokeholds stemming from the pandemic and subsequent recovery had already underscored the fragility of a globally sourced economy. As political tensions over the war grew, policymakers quickly added self-reliance and strength to the goals of growth and efficiency.
“Our supply chains are not secure, and they’re not resilient,” Treasury Secretary Janet L. Yellen said last spring. Trade relationships should be built around “trusted partners,” she said, even if it means “a somewhat higher level of cost, a somewhat less efficient system.”
“It was naïve to think that markets are just about efficiency and that they’re not also about power,” said Abraham Newman, a co-author with Mr. Farrell of “Underground Empire: How America Weaponized the World Economy.”
Economic networks, by their very nature, create power imbalances and pressure points because countries have varying capabilities, resources and vulnerabilities.
Russia, which had supplied 40 percent of the European Union’s natural gas, tried to use that dependency to pressure the bloc to withdraw its support of Ukraine.
The United States and its allies used their domination of the global financial system to remove major Russian banks from the international payments system.
China has retaliated against trading partners by restricting access to its enormous market.
The extreme concentrations of critical suppliers and information technology networks has generated additional choke points.
China manufactures 80 percent of the world’s solar panels. Taiwan produces 92 percent of tiny advanced semiconductors. Much of the world’s trade and transactions are figured in U.S. dollars.
The new reality is reflected in American policy. The United States — the central architect of the liberalized economic order and the World Trade Organization — has turned away from more comprehensive free trade agreements and repeatedly refused to abide by W.T.O. decisions.
Security concerns have led the Biden administration to block Chinese investment in American businesses and limit China’s access to private data on citizens and to new technologies.
And it has embraced Chinese-style industrial policy, offering gargantuan subsidies for electric vehicles, batteries, wind farms, solar plants and more to secure supply chains and speed the transition to renewable energy.
“Ignoring the economic dependencies that had built up over the decades of liberalization had become really perilous,” Mr. Sullivan, the U.S. national security adviser, said. Adherence to “oversimplified market efficiency,” he added, proved to be a mistake.
While the previous economic orthodoxy has been partly abandoned, it is not clear what will replace it. Improvisation is the order of the day. Perhaps the only assumption that can be confidently relied on now is that the path to prosperity and policy trade-offs will become murkier.
Thursday, May 25, 2023
The Powell Memo
1971- the push to bring government back under the thumb of the corporate plutocrats.
Saturday, May 06, 2023
Meet The New King
I have little use for obscenely rich people - even less for obscenely rich people who prance around in capes and silly hats, waving magic wands, while other goofy-looking guys wearing robes and dresses and sashes call them "god-anointed sovereigns".
But anyway, I think it's important to chronicle some of the weirder episodes of the world's political madness, so here's a video to show what a ridiculously unnecessary spectacle it is.
Saturday, April 15, 2023
Little Piggies
Can we talk about maybe scrutinizing the bankers and fund managers and investment houses who're risking money that doesn't really belong to them?
Maybe we should look into how they continue to socialize that risk while privatizing the profits - if we only had the bucks to put the teeth back into the watchdog's head.
So let's not stop with blaming only those few hucksters who Trump their way thru billions of dollars in startup money that never leads to anything but losses, and lawsuits that never get filed because there's no point in going after some broke-ass clown who made you look a fool. Let's make sure we're also talking about politicians who are actually defunding the police by refusing to legislate adequate budgets for the SEC, and the IRS, and the various other entities that are supposed to be keeping these assholes in line.
In the meantime, a little disinfecting sunlight is in order, no matter who's caught pissin' in the punch bowl.
Recent charges, convictions and sentences all indicate that the start-up world’s habit of playing fast and loose with the truth actually has consequences.
SAN FRANCISCO — Faking it is over. That’s the feeling in Silicon Valley, along with some schadenfreude and a pinch of paranoia.
Not only has funding dried up for cash-burning start-ups over the last year, but now, fraud is also in the air, as investors scrutinize start-up claims more closely and a tech downturn reveals who has been taking the industry’s “fake it till you make it” ethos too far.
Take what happened in the past two weeks: Charlie Javice, the founder of the financial aid start-up Frank, was arrested, accused of falsifying customer data. A jury found Rishi Shah, a co-founder of the advertising software start-up Outcome Health, guilty of defrauding customers and investors. And a judge ordered Elizabeth Holmes, the founder who defrauded investors at her blood testing start-up Theranos, to begin an 11-year prison sentence on April 27.
Those developments follow the February arrests of Carlos Watson, the founder of Ozy Media, and Christopher Kirchner, the founder of software company Slync, both accused of defrauding investors. Still to come is the fraud trial of Manish Lachwani, a co-founder of the software start-up HeadSpin, set to begin in May, and that of Sam Bankman-Fried, the founder of the cryptocurrency exchange FTX, who faces 13 fraud charges later this year.
Taken together, the chorus of charges, convictions and sentences have created a feeling that the start-up world’s fast and loose fakery actually has consequences. Despite this generation’s many high-profile scandals (Uber, WeWork) and downfalls (Juicero), few start-up founders, aside from Ms. Holmes, ever faced criminal charges for pushing the boundaries of business puffery as they disrupted us into the future.
The funding downturn may be to blame. Unethical behavior can largely be overlooked when times are good, as they were for tech start-ups in the 2010s. Between 2012 and 2021, funding to tech start-ups in the United States jumped eightfold to $344 billion, according to PitchBook, which tracks start-ups. More than 1,200 of them are considered “unicorns” worth $1 billion or more on paper.
But when the easy money dries up, everyone parrots the Warren Buffett proverb about finding out who is swimming naked when the tide goes out. After FTX filed for bankruptcy in November, Brian Chesky, the chief executive of Airbnb, updated the adage for millennial tech Founders: “It feels like we were in a nightclub and the lights just turned on,” he tweeted.
In the past, the venture capital investors who backed start-ups were reluctant to pursue legal action when they were duped. The companies were small, with few assets to recover, and going after a founder would hurt the investors’ reputations. That has changed as the unicorns have soared, attracting billions in funding, and as larger, more traditional investors including hedge funds, corporate investors and mutual funds have entered the investing game.
“There is more money at stake, so it just changes the calculus,” said Alexander Dyck, a professor of finance at the University of Toronto who specializes in corporate governance.
The Justice Department has also been urging prosecutors to “be bold” in its pursuit of more business frauds, including at private start-ups. Thus, charges for founders of Frank, Ozy Media, Slync and HeadSpin and expectations of more to come.
IRL, a messaging app that investors valued at $1 billion, is being investigated by the Securities and Exchange Commission for allegedly misleading investors about how many users it had, according to reporting from The Information. Rumby, a laundry delivery start-up in Ohio, allegedly fabricated a story of financial success to secure funding, which its founder used to buy himself a $1.7 million home, according to a lawsuit from one of its investors.
News outlets have also reported unethical behavior at start-ups including Olive, a $4 billion health care software start-up, and Nate, an e-commerce start-up claiming to use artificial intelligence. A spokeswoman for Olive said the company has “disputed and denied” the reported allegations.
All of this creates an awkward moment for venture capital investors. When start-up valuations were soaring, they were seen as visionary kingmakers. It was easy enough to convince the world, and the investors in their funds — pension funds, college endowments and wealthy individuals — that they were responsible stewards of capital with the unique skills required to predict the future and find the next Steve Jobs to build it.
But as more start-up frauds are revealed, these titans of industry are playing a different role in lawsuits, bankruptcy filings and court testimonies: the victim that got duped.
Notice how there's nothing here about how Granny's nest egg may have gone down the shitter - the real problem is that rich people got conned.
Alfred Lin, an investor at Sequoia Capital, a top Silicon Valley firm that put $150 million into FTX, reflected on the cryptocurrency disaster at a start-up event in January. “It’s not that we made the investment, it’s the year-and-a-half working relationship afterwards that I still didn’t see it,” he said. “That is difficult.”
Venture capital investors say their asset class is among the riskiest places to park money but holds the potential for outsize rewards. The start-up world celebrates failures, and if you’re not failing, you’re viewed as not taking enough risks. But it is unclear whether that defense will hold as the scandals become more humiliating for everyone involved.
Investors are increasingly asking consultants like RHR International to help identify the telltale signs of “Machiavellian narcissists” who are more likely to commit fraud, said Eden Abrahams, a partner at the firm. “They want to tighten up the protocols around how they’re assessing founders,” Ms. Abrahams said. “We had a series of events which should be prompting reflections.”
Start-ups have many of the conditions most associated with fraud, Mr. Dyck said. They tend to employ novel business models, their founders often have significant control and their backers do not always enforce strict oversight. It is a situation that’s ripe for bending the rules when a downturn hits. “It’s not surprising we’re seeing a lot of frauds being committed in the last 18 months are coming to light right now,” he said.
When Ms. Javice was trying to sell her college financial planning start-up, Frank, to JPMorgan Chase, she told an employee not to share exactly how many people used Frank’s service, according to an S.E.C. complaint. Later, she asked the employee to fabricate thousands of accounts, assuring her staff that such a move was legal and that no one would end up in “orange jumpsuits,” the complaint said.
Ms. Javice faces four counts of fraud. This past week, JPMorgan accused her of transferring money to a shell company after the bank uncovered her alleged fraud.
Outcome Health, which sold drug ads on screens in doctors’ offices, raised $488 million from investors including Goldman Sachs, the Google-affiliated fund CapitalG and the family of Gov. J.B. Pritzker of Illinois while making public claims of breakneck growth and profitability. In reality, the company had missed its revenue targets, was struggling to manage its debt load and was overbilling its customers.
Yet investors plowed money in anyway and even allowed Outcome Health’s co-founders, Mr. Shah and Shradha Agarwal, to cash out $225 million worth of shares. One of the company’s smaller investors, Todd Cozzens of Leerink Partners, said he was not deterred by red flags like missing revenue targets and other “sloppiness,” because “they could have cleaned that up.” The company crossed into fraud when it altered a sales report, which would have been difficult for outsiders to detect, he said.
“This was a great business model and the product was working, but these founders got really greedy,” he said. “They wanted more.” Mr. Cozzens’ firm lost 90 percent of its $15 million investment.
Mr. Shah was convicted of 19 counts of fraud and Ms. Agarwal of 15. A spokesman for Mr. Shah said that the verdict “deeply saddens” him and that he plans to appeal. Ms. Agarwal’s counsel said they were reviewing the verdict and considering her options.
Slync’s founder, Mr. Kirchner, lied to investors about Slync’s business performance and used the money raised to buy himself a $16 million private jet, among other misappropriations, according to an S.E.C. complaint. When one investor dug into Slync’s finances, Mr. Kirchner told the person that Slync was in the process of switching to a new financial service provider, the complaint said. The investor wired $35 million.
A Slync spokesman said the company has appointed a new chief executive, is cooperating with the government’s investigations, and “looks forward to a just resolution of this matter.”
FTX raised nearly $2 billion from top investors including Sequoia Capital, Lightspeed Venture Partners and Thoma Bravo, giving it a valuation of $32 billion. The company was so poorly run that it didn’t even have a complete list of people who worked there, according to a report issued by the company’s new management this month. Mr. Bankman-Fried told colleagues at one point that FTX’s sister hedge fund, Alameda Research, was “unauditable” and that the team sometimes found $50 million in assets lying around that they had lost track of. “Such is life,” he wrote.
Sequoia, which commissioned a glowing profile of Mr. Bankman-Fried to publish on its website, apologized to investors after the company collapsed. It also deleted the profile.
Mr. Lin explained at the start-up event that venture capital industry was ultimately a business based on trust. “Because if you don’t trust the founders that you work with,” he said, “why would you ever invest in them?”
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