Sunday, April 7, 2019

The Greatest Disrupter of the 21st Century… ?

The Greatest Disrupter of the 21^st Century… ?

Ms. Wilson-Raybould said on Facebook on Tuesday night that she will speak with her supporters about what to do next.

“I did what I was SNC-Lavalin required to do and what needed to be done based on principles & values that must always transcend party,” she wrote.

- Trudeau and Liberal Party Expel 2 Ex-Ministers at Center of Storm, New York Times

JM Hamilton (4-7-2019)

Playing out in real time - just North of the US border - is a Canadian story that presents lessons for all Western democracies.

This paradigm has all the things JM Hamilton loves to write about: political dynasty; corporate rule; crony capitalism; a two-tiered justice system; a liberal darling, whose political career maybe on the ropes; the power of monopolies; the corporate co-option of left of center political parties; the rise of feminism & minorities, and the erosion of white male dominance & privilege; and of course, what is likely to be the great disrupter of the 21^st Century.

Tout d'abord, un peu de context (First, a little context). Justin Trudeau comes from a privileged background – his father, Pierre, served as Canadian PM (Prime Minister) for 15 years, during the late sixties through the early eighties – and continuing in his father’s considerable wake, is presently the Canadian PM. Mr. Trudeau is the leader of Canada’s Liberal Party (in the US, the equivalent to establishment Dems on economic & foreign policy, while, definitively, more liberal leaning on social policy issues), and entered Canada’s executive office in 2015.

Mr. Trudeau is up for reelection later this year.

In 2015, Mr. Trudeau ran on a fairly liberal platform, with, perhaps, its signature position being a new inclusive leadership. In short, his cabinet would not be made up exclusively of Ottawa & Ontario insiders, or other persons of privilege, but would draw upon women and First Nations' talent, as well. Mr. Trudeau is a champion of the homosexual community, women’s rights & empowerment, and called for – and has followed through upon – highly responsible & heavily regulated cannabis legalization (making Canada the second country to legalize recreational cannabis). Canadian pot stocks have been on a tear, since recreational sales began last year.

On economics, Trudeau is an advocate for Canadian business, and an ardent free trader (albeit w/ a nod to populist upheaval, advocating more progressive trade agreements that attempt to look after the environment, labor, and afford responsible regulation). On foreign policy, the Trudeau government stood alone & was quick to call out the Saudi Monarchy for human rights violations, presciently, even before the Khashoggi killing. In short, as w/ any leader, Trudeau is a champion of his country’s economy. In many respects then, some have referred to PM Trudeau as the Anti-Trump, that is bi-lingual, polished, socially liberal, witty, and urbane.

If the reader is beginning to think JMH is a fan of Mr. Trudeau & his policies, you’d be about 90% accurate. Mr. Trudeau has even paid reparations to well deserving, and long abused, First Nations' children and Canada’s gay community (an issue, reparations, that some Americans are beginning to hear more about, from the 2020 Democratic field of POTUS candidates). As for reservations about the Canadian PM, there’s the issue that has brought down many left of center governments, that is to say, the center-left’s love affair with big business, or crony capitalism.

And before we finally launch into the key issues at hand, and at an abundance of fairness to Mr. Trudeau, Canada is not the United States (which many Canadians are thankful for every day). Canada is resource rich, and much of the economy is resource driven, not the least of which is Alberta’s oil sands. W/ only about 10% of the population of the US, Canada doesn’t have the deep bench of businesses the US possesses to generate employment & jobs. Like the US, many business sectors w/in Canada are concentrated, not the least of which is Canadian banking (which is highly regulated, eminently profitable, and does not posses anywhere near the risk that Wall St. banks present to the US taxpayer).

The bottom line, not only is Mr. Trudeau a liberal, but clearly, he walks the walk; and Canadians enjoy a nationalized healthcare system that frees them up from worry, and allows them considerably more freedom to pursue other activities (whether it be the arts, entrepreneurial endeavors, leisure, or philanthropic pursuits).

Acte deux, le drame (Act Two, The Drama): And now, the scandal. It appears that a Canadian engineering firm, SNC-Lavalin, was - allegedly - caught paying bribes to the Gaddafi/Libyan government. Allegedly, SNC-Lavalin lobbied for deferred prosecution, in lieu of criminal prosecution (which, if found guilty under criminal statute, would have prevented the firm from obtaining Canadian government contracts for a ten year period). Right on time, the Canadian legislative body did their part last year, in passing a deferred prosecution law.

And then came the heat. Canadian Attorney General, Wilson-Raybould, appears to have been placed under considerable pressure to agree to deferred prosecution for SNC-Lavalin, by many members of Mr. Trudeau’s government, including the PM himself. And yet, Ms. Wilson-Raybould would not yield. Even when the firm, allegedly, threatened to relocate, Canada’s first, First Nations Justice Minister would not yield to the demand for deferred prosecution. Ms. Wilson-Raybould was subsequently demoted, from Canada’s AG (aka Justice Minister) to Minister of Veteran Affairs. Shortly after her demotion, Ms. Wilson-Raybould wrote:

It has always been my view that the Attorney General of Canada must be non-partisan, more transparent in the principles that are the basis of decisions, and, in this respect, always willing to speak truth to power. This is how I served throughout my tenure in that role.

In February of this year, Minister Wilson-Raybould resigned from the Trudeau cabinet, followed by another woman cabinet minister, Ms. Jane Philpott (President of the Canadian Treasury Board).

On April 2, 2019, Mr. Trudeau expelled both women from the Liberal Party, citing the division created w/in the party, and a taped conversation. Meanwhile, Trudeau and Liberal Party poll numbers have dropped, particularly among women. The very next day, approximately thirty women turned their backs on the PM, during a young female leadership conference w/in the Canadian House of Commons.

Des leçons, toujours des leçons (Lessons, always lessons): The lessons from this Shakespearean tragedy are too numerous to count, and yet, several core truths w/ application to the US, and many Western democracies, are striking. W/in the US, Dems in particuar should take note.

Let’s start with the obvious :

The whole SNC-Lavalin Affair speaks to the defective form (i.e. crony) of capitalism that has infected Western economies and governments. Moreover, it speaks to a two-tiered justice system, whereby w/ political influence, size & scale, the elite and multinationals receive deferred prosecution (a slap on the wrist), whereas citizens and smaller business owners would face criminal prosecution (& likely, jail time, for the same criminal infractions). It is this very brand of crony government, and the rigged economy, that citizens throughout the West are up in arms about, as reflected in the recent rejection of center left & right political parties.

The Canadian example is spot on w/in the US. Here in America, corporations & multinationals have amassed so much power – through uncontrolled concentration – that they, directly & indirectly, dictate economic and public policy to the various branches of US government and The Federal Reserve. Regulatory & government capture is the order of the day, at the expense of the consumer, labor, innovation, opportunity, and ever-increasing wage & wealthy inequality. Monopolies operating w/in the US take advantage of the US government and markets, while moving core operations offshore to mitigate taxes and exploit EM labor. The threat of corporations cutting jobs - if they do not get their way on any number of issues - is nothing exclusive to Canada; but is ever present w/in the US as well… and is little more than extortion.

The SNC-Lavalin Affair draws attention to the fact that it is no longer democratic/representative government that is calling the shots, but rather, multinationals & monopolies. Moreover, while CEOs and their lobbyist are always crying out for greater scale, and thereby, less competition… the resulting monopolies give politicians – who might like to do the right thing – far less room to maneuver. In short, politicians – over time - have placed a great deal of the nation’s economic output w/in chosen industries, that have consolidated into cartel & monopoly. So that, by way of example, instead of allowing Wall Street banks to fail (circa 2008), instead, the public witnessed taxpayer funded bailouts for US banks and the billionaire class (ongoing to this very day). And possibly arriving soon, another round of Fed QE, all the better to goose a range bound stock market.

And the great disrupter of the 21^st Century? My guess is that it won’t be AI, and is not likely to be automation, or a rising China totalitarian menace… of course, anyone of these are capable of providing considerable disruption to world economies and governments. But rather, the great disrupter of the 21^st Century is likely to be women. Women have been put upon for centuries, and in some countries are, to this very day, treated like chattel, property, and second-class citizens. Women, in particular, know what it is like to be the victims of a crony – male dominated– system, where they, homosexuals, and minorities are exploited, persecuted, & often victims of patriarchal & paternalistic attitudes. Too many women are treated w/ condescension by their white male colleagues.

This means, many women – in the interests of taking one for the team, or surrendering ethics & values – aren’t likely to play ball.

That’s not to say women aren’t capable, like men, of great corruption (or averting their eyes - like men - to go along and get along); but as women rise up in the ranks w/in business and government, certainly more women than men are likely to call attention to corruption, unfairness, and inequities w/in the system (as they, and their children, are often the victims of same). In the business world, it’s been documented that more gender diverse corporate boards, and management teams, produce better results for the company. Taking one for the team, or being a team player, is not in the long-term interests of the team – or a nation – if the team is corrupt or playing by rules that constitute a double standard or are unethical.

Calling out a lack of ethics w/in a team doesn’t make one a traitor, it makes one a leader, seeking to improve the team and/or a nation.

In the SNC-Lavalin Affair, Mr. Trudeau (as much as it pains me to write this) appears to have chosen party and power, before ethics and policy. The counter argument against Mr. Trudeau, and the Liberal Party, is that as the leader of the team, the PM should have shown his support for his cabinet ministers/team members, Madams Wilson-Raybould & Philpott, over what appears to be a corrupt Canadian multinational looking to escape justice.

Meanwhile, former Ministers Wilson-Raybould & Philpott, as they have admitted, have shown the audacity & bravery to speak truth to power.

In another era, these women would have never seen their respective positions of power (and that’s to Mr. Trudeau’s credit); as heretics & iconoclasts, these women would have likely been burned at the stake, by an all white male jury. Most fortunately, we live in a new era, and women are calling men out on centuries of abuse, gross corruption, and global warfare, itself…. And the world already is, and will likely become, a much better place, as women rise w/in power structures (formerly the exclusive domain of men).

Here in the states, some of the more dynamic POTUS candidates, today, are women of considerable stature, brimming w/ excellent ideas, and women who have refused to join the male insider’s club. Of course, JMH writes of Senator Elizabeth Warren & Representative Tulsi Gabbard.

At the end of the day, it’s great to be a team player, but if the team is corrupt, it’s time to pick up the ball and head home. Canadian Ministers Wilson-Raybould & Philpott should be heralded for having the bravery & brass ovaries to call it as they see it. At risk to their careers & for the betterment of Canada, they spoke – and continue to speak - truth to power.

These women are an example to us all.

Copyright JM Hamilton Publishing 2019

The Squealing of the Pigs…

You know, Paul, Reagan proved that deficits don't matter. We won the mid-term elections, this is our due.

- Dick Cheney, former CEO of Halliburton, former VP of the United States.

I’m a big believer that deficits do matter.

- Larry Fink, CEO of Blackrock

By J.M. Hamilton 3-9-2019

One of the great things about growing up a military brat was the experience of moving every three to four years, if not sooner, and seeing different places, meeting new people, and experiencing different cultures. Something happened this week that brought me all the way back to the ninth grade.

My family had just moved to exurbs outside of San Antonio, and my new high school had one the largest agriculture (ag) barns in the State of Texas, if not the largest. And among the typical teen groups of that era – freaks, jocks, nerds, and socials – was a new group I really hadn’t encountered before, called the kickers. The kickers were the ag girls & boys, and they spent a lot of time down at the school barn. Some of these kids would go on to college at Texas A&M.

That first Texas Spring, I heard all kinds of loud animal noises – squeals & screams – coming from the high school barn. I turned to one of my classmates, wearing a FFA blue corduroy jacket, and asked him, “What is that god-awful noise?”

The fifteen year old pulled out his pouch of Red Man, placed some tobacco in his cheek, pushed back his Resistol a little bit off his brow, and listened to the crying of the animals.

Finally, he said, “It’s nut cutting time. And the boars, they don’t like it. They don’t like it at all.”

What brought about my high school flashback, this week, was all the squealing the academic and financial elite are engaged in over MMT (Modern Monetary Theory). Ironically, while the elites maybe screaming about it, MMT has been the monetary policy of the United States, arguably, since the 2008 crash.

MMT is the belief that deficits don’t matter, because as the US possesses its own currency, it does not have to rely upon taxation, or borrowing from foreign governments, to finance federal deficits (which have been running close to, or at, on average, a trillion dollars a year, since the 2008 crash… this is projected to continue as far as the eye can see, thanks to the Trump tax cuts). Instead, deficits can be monetized by the US central bank, or the Federal Reserve… we saw this in action, post-crisis, w/ the advent of QE or quantitative easing (basically, the Fed buying US treasuries and private debt). Fortunately or unfortunately, depending upon one’s perspective, the Fed is the most powerful branch of government w/in the US and the least understood by the public. That is to say, the Fed, w/ a little help from its friends at Treasury, can print money to finance the national debt, and as of late seemingly, w/ few or limited repercussions.

So why then, the elite’s cacophony of crying and squealing?

After all, the Federal Reserve has been helping to finance the national debt, which has ballooned from approximately $10 trillion in 2008 to $22 trillion plus, today. Haven’t the elite been the beneficiaries of QE and Fed intervention into private and public debt markets? Didn’t the stock market soar; weren’t Wall Street banks, shadow banking, and the elite bailed out; didn’t asset prices rise stratospherically; taxes for the wealthy – cut; military contactors enriched by credit card wars; didn’t the rich get richer… thanks to the Fed and MMT?

Absolutely.

And therein lies the rub or the tension. The financial elite – which owns the government and has captured fiscal, foreign, monetary, and tax polices (not to mention all four branches of government) – really doesn’t mind the Fed financing deficits, as long as they are the beneficiaries. But the second a few Dems, and some liberals, talk about taking the Fed’s bazooka and firing it at real problems, like: a planet in flames; free college education; an economic bill of rights; and wage & wealth inequality (last seen at these levels, during the Gilded Age)… well, then there’s a problem.

The elite, as I recently argued, have rigged a perpetual profits machine, and the engines of that machine are the Federal Reserve and the debt driven economy. And the elite like the financialization of the US economy; they like the rigged system they have built for themselves; they like – w/in the US – the preeminence of Wall Street banking, shadowing banking, and the ultra- mercenary, private equity machine. It requires so little effort to mint profits from cartel & monopoly, and gutting a company’s credit line and employee pension.

Finance is the tail that wags the Main Street dog, and the Lords of Finance – who own the establishment politicians – aren’t about to give that up. They want the conduit for Fed policy to remain the Wall Street banks & the stock market; they like trickle-down monetary policy, as it effectively, sterilizes the money flowing out of the Fed, and for the most part, keeps it out of the public’s hands.

In this manner, inflation is contained.

Inflation, Weimar Germany hyper-inflation, is the primary argument that the academic and financial elite raise against MMT.

What inflation JM? Great question… glad you asked.

Many economists and financial eminentos (as well as myself) predicted that as a result of the Fed’s balance sheet expansion, the mopping up of US debt, and all the liquidity and money printing injected by the central bank into the economy that inflation would set in. But inflation hasn’t set in… which would debase the buying power of the dollar, as well as, harm faith in the dollar as a storehouse of value. Why?

First, thanks to the Fed’s cheap money policies, M&A has exploded. This has created cartels & monopolies, which exert monopsony power over a thoroughly defeated US labor market. In short, here in the US, as workers compete for fewer and fewer well paying jobs against global labor (thank you automation, AI, & industry consolidation, as well), wages are suppressed, while management and the ownership class take nearly all income gains .

Second, as the US imports many of its products, due to the offshoring of labor & manufacturing, EM nations are exporting their disinflation – exceptionally low wages – to the United States (which is good if you are a consumer, and absolutely sucks, if you are an American w/ a high school education, or less, and are attempting to find a well paying job). A quick shout out to my favorite news show, Bloomberg Surveillance, for bringing up this salient point this week.

And third, all the central banks are doing it. If the US was alone in suppressing interest rates, expanding its balance sheet, and engaged in debt monetization, through QE… The US dollar would no longer be the world’s fiat currency. But as the BOJ, the ECB, and the PBOC are all engaged in monetary sleight of hand, as well as other central banks, the impact to the dollar appears minimal. As a result, the almighty US dollar and the Federal Reserve – for now – have suffered no ill effects. In short, there’s a cartel of central banks engaged in monetary welfare for the global kleptocracy, and as long as they play nicely together, the currencies cannot be played off one another (such that it alters the various currencies' balance of power).

Bottom line: Inflation is nowhere to be seen. That is to say, as long as global M&A – and industry consolidation - continues at its extraordinary pace, it remains an employers’ job market… and as long as the plutocracy continues to keep all the economic gains of the global economy for itself (effectively, sterilizing central bank largesse), and central banks continue in lockstep w/ the same easy money policies, directed through a cartel of global banks… don’t expect inflation anytime soon.

Forcing the issue further is nation state debt itself… the central banks can only allow interest rates to creep up so high (higher interest rates would contain M&A and provide interest income to retirees and savers), before nation state debt service loads wreak havoc on government budgets.

So does MMT work, can it work? JMH can tell you this, it has worked exceptionally well for the 1% for a decade, to such an extent that we now live in a Neo-Gilded Age.

What liberals are talking about, in regards MMT, is the end of sterilization in the money supply, & largesse, issued forth by the Fed. And the end of monetary sterilization – monetary policy nut cutting time, if you will - is what causes the elites to squeal, like barnyard animals in springtime.

If the Fed largesse was to shift away from Wall Street, and be redirected at the American public - via a Green New Deal, a jobs guarantee, or a UBI – wages would rise, and this would crimp profits in the private sector. And this is what is so upsetting to the robber barons… the fact that their perpetual profits machine, loaded w/ debt, may suffer a rise in wages.

Moreover, workers - unlike the financial elite – tend to spend the money they make, and if aggregate demand outstripped aggregate supply, this, in turn, could actually bring about inflation (the very inflation, the Fed is said to have long sought). A possible rise in inflation, in turn, may cause greater scrutiny of our cartel and monopoly driven economy… the primary biz model of the cartel & monopoly economy is to restrict the supply of products & services - or fix price - to drive profit maximization.

With populism all the rage, the elites don’t want that kind of scrutiny. The model won’t bear it.

As with all things economic & monetary, when treading in unfamiliar territory, the keys to implementing an economic bill of rights, a jobs guarantee, and a UBI - financed by the Federal Reserve & MMT – would be to do so at a gradual pace. Arguably, the benefits of MMT, to date, have accrued exclusively to the 1%. Therefore, it’s long past time to spread the wealth, by redirecting Fed largesse to policies that directly help the 99%.

As for a Green New Deal, that can’t wait.

Here, the elite need only ask themselves: What good is being wealthier than King Midas, if the planet is destroyed?

Weimar Style

Short to intermediate term, I have to side w/ Cheney on deficits… longer term, unless we want to go to negative yields (which would erode debt and the principle itself, as has been done in other countries – see Germany & Japan), I have to side w/ Mr. Fink. Eventually, the national debt will have to be addressed, via a haircut.

At the end of the day, the elite have already jumped the Rubicon, and are fully engaged in MMT (aka QE). They have captured government and government policies (especially, the Fed & monetary policy) for their own personal enrichment. The elite favor deficits and debt when it enriches them, but are terrified of spreading the wealth to the 99%: partly because of their insatiable lust for profits; unmitigated greed; and partly, because they fear, greatly, a highly successful Northern European socialist model placed w/in the US.

(The elites, also, like to believe they are self-made, when in reality many are as socialist as they come. That is, their wealth, often, was obtained by crony contacts w/in government, and a rigged system. MMT, in the hands of liberals, would upend the top-down/trickle-down approach of our economy, and redirect, to a greater degree, to a bottom-up approach, or a 99% first tack).

After all, how are you going to keep boys and girls down on the farm - and dependent upon slave wages, multiple jobs, & Oxycontin - once they’ve had a taste of a highly successful mixed economy, European model (w/ a healthy dose of socialism to ameliorate the effects of a predatory, crony-capitalist system)?

The longer term solution, of course, and what will, almost, inevitably happen – as the entire house of debt is unsustainable - is there will need to be a, gradual, national debt write down. And only central banks have that kind of power to forgive that much debt. Stakeholders in our current catastrophic debt levels, those who make income off that debt – banks, shadow banking, and multinationals - are all that stand in the way of a longer term solution, and, likely, an inescapable write down (that will free up global governments to serve the will of the people & enterprise, via fiscal & monetary policies).

In the meantime, please consider hearing protection to muffle the screams & squealing.

Copyright JM Hamilton Publishing 2019

Regulatory Capture in the Age of Trump

FAA employees warned as early as seven years ago that Boeing Co. had too much sway over safety approvals of new aircraft, prompting an investigation by Department of Transportation auditors who confirmed the agency hadn’t done enough to “hold Boeing accountable.”

- Boeing Had Too Much Sway in Vetting Own Jets, FAA Was Told – Bloomberg

By JM Hamilton (3-24-2019)

JMH spends a great deal of time describing the financial elite’s capture and takeover of the US government - indeed, most Western governments - via fiscal, foreign, judicial, monetary, and regulatory policy capture. The term “capture” can seem, at times, so ubiquitous that after awhile it can lose all sense of meaning.

This week, we break down regulatory capture in particular, and offer up some recent examples. There are two primary reasons to visit this issue: a) regulatory capture demonstrates how short-term myopia, driven by greed, often gets the better of the management & ownership class; and b) recent examples of regulatory capture, and the subsequent fallout, are piling up like so many wrecked cars, during an ice-storm on a miserable winter night.

Investopedia offers up the following definition of regulatory capture:

Regulatory capture is an economic theory that says regulatory agencies may come to be dominated by the industries or interests they are charged with regulating. The result is that the agency, which is charged with acting in the public's interest, instead acts in ways that benefit the industry it is supposed to be regulating.

That pretty much describes it. Regulatory capture has been around for decades, if not for centuries. None other than Adam Smith described the tendency of private enterprise to seek out favors from government, not the least of which are: removal of government oversight, and grants of monopoly, so as to maximize profits. Commercial interests often believe that if they can just rid themselves of those pesky regulators, they can send their products and services to market faster, and start generating revenue and profits sooner. Besides, as any capitalist - or establishment Dem or Republican - will tell you, markets are self-regulating. And that last part - markets are self-regulating - might be partially true within a healthy capitalist economy, as defined by many businesses competing w/in the same products or services sector. One major slip up - on a failed product or harmful service launch - and your company could very well become toast, as your competitors fill the product & reputational void.

But in today’s monopoly economy, healthy regulatory bodies - designed to protect consumers, labor, and yes, even companies and investors from possible ruin - are more important than ever before. In short, regulatory bodies, properly functioning, aren’t designed to thwart business, but rather, provide the rules of the road – the guardrails, if you will - for a healthy and safe economy, benefiting all factions: consumer, labor, management; & ownership.

Perhaps that is why successive Dem and GOP administrations – who all too often have willingly bought into the neoliberal paradigm (that markets are self-regulating) – have not only damaged (& underfunded) rules enforcement, regulations, and the regulatory bodies themselves, but also, in some cases, done irreparable harm to the businesses & investors they attempted to help through deregulation. But perhaps no administration has done more to make a farce of deregulation, & regulation, than the corrupt & crony Trump government. The Trump administration has allowed the revolving door to spin like a top between industry insiders & lobbyist, and the regulatory bodies.

To such as extent, the fox no longer guards the regulatory henhouse, but instead, the fox has purchased both the farm and the henhouse.

Under POTUS Trump, the regulatory swamp runneth over.

Here then, some ongoing & recent examples, of regulatory capture gone horribly wrong.

Boeing, the FAA, and the 737 MAX 8: It took two downed aircraft, the loss of more than three hundred lives, and globally, aviation regulators shutting down the 737 MAX 8, before the Trump administration and the FAA grounded and shutdown Boeing’s plane. Since then, it’s come out that the FAA has not only abrogated its responsibilities, but basically, has relied upon Boeing to self-regulate and certify the safety of its aircraft. Meanwhile, as the plane remains grounded, Boeing is suffering: unprecedented reputational costs; economic damages, as airlines pursue the loss of revenue from grounded equipment; cancelled existing and, possibly, future orders of the 737 MAX 8; future litigation from families of the deceased travelers on the two doomed aircraft; likely, shareholder litigation; a criminal investigation is underway; and significant loss of market cap – now running into the billions – as Boeing’s stock shares tank.

And thanks to industry consolidation, Boeing is likely too big to fail. Could a taxpayer funded bailout be around the corner?

We’ll find out. Here again, is an underfunded regulatory body, the FAA, that used to be respected around the world, and now, is a laughingstock. The black box, from the doomed Ethiopian crash? Sent to France for review and analysis. The FAA, along w/ Boeing, not only failed the customers & flight crews of the two doomed aircraft, but it also arguably failed itself, as a regulatory body, and the employees, management, and ownership at Boeing.

But ultimately, the blame goes to Congress – particularly the GOP - for underfunding regulatory bodies for decades, and failing to control the revolving door between the regulatory bodies and the industries the regulators were designed to oversee. Basically, crony capitalism in overdrive.

The FTC, the Justice Department, Failed Antitrust Enforcement, and Industry Consolidation on an Unprecedented Scale: In the last couple of weeks, Americans have seen the completion of several monster media mergers, like: Disney/Fox and AT&T/Time Warner. Now, Americans can receive their entertainment content and news – live streamed or televised – from several corporate leviathans.

And US news content will continue to increasingly become more homogenized, and sanitized, so that real news about government corruption, and the capture of our regulatory bodies by major corporations, conveniently, never makes it on the air, or, at most, receives very abbreviated attention. Increasingly, national news shows – overseen by their corporate masters – are often devoid of content, superficial, and substance free. Want real news, you'll need to read it from several different sources.

Here, blame the Justice Department and the FTC, not only for media concentration and cartel formation, but also concentration and vertical integration in industry after industry.

The formation of cartels and monopolies – and the failure of the FTC, Justice Department, & courts to enforce antitrust laws - has played no small role in: the formation of a Neo-Gilded Age; unprecedented wage & wealth inequality; the crushing of jobs, opportunity, & innovation; but also, a dearth in the number of startups and the elimination of animal spirits.

Want to know why the American Dream is dead? Look no further than the failure to expand and enforce antitrust laws.

The Federal Reserve, the Office of the Comptroller of the Currency, FDIC, et al., and Wall Street & US Banks: The Federal Reserve is one of the primary regulators of Wall Street banks. And today, Congress, the Fed, and various regulatory agencies are back at it: rolling back banking & derivatives regulations; lowering capital requirements (thanks to off balance sheet transactions, & offshore subsidiaries, who knows if the capital presently required is sufficient?); and enabling Wall St banks, US banks, and largely unregulated shadow banking to set America up for the next crisis.

Whether it’s allowing self-dealing (see the ISDA), the continuation of a derivatives & swaps market worth hundreds of trillions in notional value, watering down & dragging out rule making & enforcement (see the Volcker Rule), or allowing junk debt to continue to be rolled up into CDOs or CLOs and often, sold as an investment grade security instruments… the Federal Reserve, Congress, and the regulatory authorities were at the center of the 2008 crisis and will likely, be at the center of the next financial storm.

Complicit in all this, Congress often relies upon the banking industry, and their lobbyist, to write regulatory legislation that is vague, and ultimately, largely relies upon underfunded & understaffed financial regulatory bodies to interpret & enforce. Predictably, Congress, owned by the banks, passes the buck onto captured regulatory authorities. Moreover, some financial enforcement falls at the state level… all of which, further contributes to barriers of entry and the preeminence of the existing Wall Street banking order.

At this point, it would be hard to argue that Wall Street banks provide few, if any, products & services that are for the public good. Many Wall Street bank products & services have an angle, or binary outcome: their enrichment and the counterparties’ or public’s loss (see Wall Street’s role in financing private equity and LBOs). To this day, Wall Street banks remain too big to fail, the bulk of the derivatives sold are used for speculation and gambling, and yet, these banks remain federally insured (that is to say, reinsured by the US taxpayer).

And the banking cartel is responsible for the transmission of the Fed’s monetary policy, which now serves – nearly exclusively – surprise, Wall Street banks and the stock market. Ultimately, the Wall Street cartel serves itself, first & foremost, not the American economy, and certainly not, the majority of Americans.

What goes up is supposed to land, not crash…. Like Boeing’s planes & stock valuation.

We could go on and on.

The Congress insisting that the DEA not investigate Big Pharma over the opioid crisis; the Congress working with Big Pharma & the FDA to keep patented medication protected and existing drug monopolies & monopolistic pricing in place.

Is the EPA complicit in the growing Bayer, Monsanto, and Roundup scandal?

More than likely, yes.

At the center of regulatory capture is the stock market as the sin qua non of all economic endeavor, and the market’s constant need for higher and higher stock valuations and dividends. The market demands monopoly and monopolistic returns. The market demands that the consumer and labor always come last, and that regulatory authorities bow down to the very industries they are supposed to regulate. And the monopolies always insist that they need scale, colossal scale, to compete on the global stage; but that scale often comes – not w/ economies of scale – but diseconomies of scale. That is to say, the monopoly or multinational becomes so byzantine & Kafkaesque that no CEO, or management team, could possibly possess the ability to run, effectively, these giants.

Add in C-Suite pay packages, and the regulatory doom loop is complete:

The stock market + CEO pay packages + captured regulatory authorities & Congress = products, services, and business outcomes that are – all too often – detrimental to consumers, labor, the taxpayer, and in the long run, investors and shareholders (REPEAT).

Just ask the management team at Bayer, who purchased Monsanto, or perhaps, ask Boeing how regulatory capture - and FAA ownership - has worked out for them?

Some call it regulatory capture… JMH would argue its karma working its way around, inevitably, to bite the apex predators where it hurts most, in the wallet.