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Why the world’s big debt loads may be here to stay

Illustration of the earth with the land in the shape of a percent sign.
Illustration: Brendan Lynch/Axios

Staggeringly high government debt levels around the globe may stick — a huge shift from previous years that could come despite the warnings of economic damage this dynamic may cause.

Why it matters: Aging populations, worsening partisanship, steepening interest rates and other factors could make it less feasible for governments to reduce their debt — even if they want to.

What they’re saying: “[D]ebt reduction, while desirable in principle, is unlikely in practice,” International Monetary Fund economist Serkan Arslanalp and University of California, Berkeley, professor Barry Eichengreen write in a new paper.

  • Ballooning government debt worldwide won’t decline significantly in the coming years as in decades past, they argue. “Countries are going to have to live with this new reality as a semipermanent state.”

Details: The paper, presented Saturday before global central bankers and leading economists at the Kansas City Fed’s Jackson Hole conference, says a collision of new forces will make it difficult to trim debt.

  • Demographics: Aging populations mean governments must spend more on health care and pensions.
  • Green transition: In the U.S. and elsewhere, governments are ramping up spending to finance the transition to a greener economy.
  • Interest rates: Higher borrowing costs mean any growing debt load will get even more expensive to service. (Meanwhile, inflating the debt away is not a “sustainable route to reducing high public debts,” the authors note.)
  • Politics: Political polarization and divided government make long-lasting policy arrangements to trim the debt— raising taxes or cutting spending— “even more challenging than in the past,” the authors write.

Of note: Stronger-than-expected economic growth — caused by, say, a larger increase in productivity — could stabilize debt-to-GDP ratios.

…click on the above link to read the rest…

The fall of an empire

Illustration of a gas pump with the hose forming a descending stock trend line.

Illustration: Aïda Amer/Axios

The decline of ExxonMobil has been remarkable in its magnitude and unexpectedness.

Why it matters: While all major oil companies are facing troubles, Exxon has fallen the farthest, in large part because it has made the biggest bets on oil and gas — and the smallest bets on renewable energy.

  • While rival BP has recently promised to get to zero net emissions by 2050, Exxon has been doubling down on fossil fuels with moves like a spectacularly ill-timed $41 billion acquisition of XTO energy in 2009 and its major expansion in the Permian Basin in 2017.

Driving the news: Exxon reported a loss of $680 million in the third quarter of this year, bringing its losses for 2020 as a whole up to $2.37 billion. (In 2008, by contrast, it made a profit of $46 billion.)

  • The company also announced it would shed up to 15% of its workforce over the next two years, including roughly 1,900 U.S. layoffs, mostly at its Houston HQ.
  • By the numbers: Exxon and Mobil combined had 390,000 employees in 1980. By 2017, that number had shrunk to less than 70,000.

Losses and layoffs notwithstanding, Exxon is still spending roughly $15 billion on sending a $3.48-per-share dividend to shareholders this year.

  • Few if any analysts believe such a payout is sustainable. “We have doubts about the sanctity of the dividend longer-term,” Edward Jones analyst Jennifer Rowland told Reuters.

Flashback: The oil giant was the largest company in the world, measured by market value, as recently as 2013.

  • A 700-page corporate biography by Columbia University journalism dean Steve Coll was entitled “Private Empire” and compared the company’s power and reach to that of the United States itself.
  • When CEO Rex Tillerson became U.S. Secretary of State in 2017, it was not obvious that he was gaining power or influence.

…click on the above link to read the rest of the article…

Fake News After Mueller

Fake News After Mueller

Raphael The school of Athens 1509-11

Allow me to start with a question: Has anyone seen any of the main newspapers and networks who went after Donald Trump for 3 years accusing him of colluding with “the Russians”, apologize to either Trump, or to their readers and viewers, for spreading all that fake news now that Robert Mueller said none of that stuff was real, that they all just made it up?

I’ve seen only one such apology, albeit a very good and thorough one, from Sharyl Attkisson for The Hill. But one is a very meager harvest of course. With over 500,000 articles on collusion published on the topic, as Axios said -leading to 245 million social media ‘interactions’, shouldn’t there be more apologies, if only so people can hold on to their faith in US media for a while longer?

Apologies to President Trump 

With the conclusions of special counsel Robert Mueller’s probe now known to a significant degree, it seems apologies are in order. However, judging by the recent past, apologies are not likely forthcoming from the responsible parties. In this context, it matters not whether one is a supporter or a critic of President Trump. Whatever his supposed flaws, the rampant accusations and speculation that shrouded Trump’s presidency, even before it began, ultimately have proven unfounded. Just as Trump said all along. Yet, each time Trump said so, some of us in the media lampooned him. 

We treated any words he spoke in his own defense as if they were automatically to be disbelieved because he had uttered them. Some even declared his words to be “lies,” although they had no evidence to back up their claims.

 …click on the above link to read the rest of the article…

Murphy’s Law: Big Tech Must Serve as Censorship Subcontractors

Murphy’s Law: Big Tech Must Serve as Censorship Subcontractors

In a recent tweet, US Senator Chris Murphy (D-CT) warned that “Infowars is the tip of a giant iceberg of hate and lies that uses sites like Facebook and YouTube to tear our nation apart.” His solution: “These companies must do more than take down one website. The survival of our democracy depends on it.”

Yes, odd as it might seem, Senator Murphy believes that the future of America can only be secured by suppressing information and discussion he doesn’t like. That sentiment seems to be going around. David McCabe  of Axios reports on a leaked policy paper from the office of US Senator Mark Warner (D-VA). Two of its most dangerous proposals:

“[N]ew federal funding for media literacy programs that could help consumers sort through the information on online platforms.” In other words, well-financed government propaganda to make sure we hear what Mark Warner wants us to hear (and think what he wants us to think about what we hear elsewhere).

“[R]equiring web platforms to label bot accounts or do more to identify authentic accounts, with the threat of sanction by the Federal Trade Commission if they fail to do so.” America’s long tradition of anonymous and pseudonymous political speech — not least among it the Revolution-era pamphlets of Thomas Paine — shouldn’t be subject to the veto of Mark Warner or Chris Murphy.

Then, a good laugh: “The size and reach of these platforms demand that we ensure proper oversight, transparency and effective management of technologies that in large measure undergird our social lives, our economy, and our politics.”

Since when has government ever produced proper oversight, transparency, or effective management of anything? And what could possibly go wrong with eviscerating the First Amendment to give these jokers “oversight” or “management” powers over technologies that undergird our politics? What’s really going on here?

…click on the above link to read the rest of the article…

How Facebook and Google threaten public health – and democracy

The sad truth is that Facebook and Google have behaved irresponsibly in the pursuit of massive profits. And this has come at a cost to our health

woman holds smartphone
‘Substance cannot compete with sensation, which must be amplified constantly, lest consumers get distracted and move on.’ Photograph: Anadolu Agency/Getty Images

This admission, by one of the architects of Facebook, comes on the heels of last week’s hearings by Congressional committees about Russian interference in the 2016 election, where the general counsels of Facebook, Alphabet (parent of Google and YouTube), and Twitter attempted to deflect responsibility for manipulation of their platforms.

The term “addiction” is no exaggeration. The average consumer checks his or her smartphone 150 times a day, making more than 2,000 swipes and touches. The applications they use most frequently are owned by Facebook and Alphabet, and the usage of those products is still increasing.

In terms of scale, Facebook and YouTube are similar to Christianity and Islam respectively. More than 2 billion people use Facebook every month, 1.3 billion check in every day. More than 1.5 billion people use YouTube. Other services owned by these companies also have user populations of 1 billion or more.

Facebook and Alphabet are huge because users are willing to trade privacy and openness for “convenient and free.” Content creators resisted at first, but user demand forced them to surrender control and profits to Facebook and Alphabet.

The sad truth is that Facebook and Alphabet have behaved irresponsibly in the pursuit of massive profits. They have consciously combined persuasive techniques developed by propagandists and the gambling industry with technology in ways that threaten public health and democracy.

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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