OSHA’s Big ‘Oops’

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By Carmel Richardson

The bureaucracy’s reversal on the vaccine mandate for businesses is a win for state sovereignty, not to mention the American people

After delaying two months before producing a rule pursuant to the White House’s September announcement that businesses with 100 employees or more would have to require the Covid-19 vaccine, the Department of Labor has now suspended enforcement of the Biden administration’s vaccine mandate for private businesses.

The rule was initially challenged by Texas Attorney General Ken Paxton, along with the states of Louisiana, Mississippi, and South Carolina, who filed a lawsuit requesting a preliminary and permanent injunctive relief to stop the mandate from being enforced. A total of 12 states are suing to block the federal vaccine mandate for employers. After the federal appeals court temporarily halted the order, the Department of Justice requested the halt to be lifted, but the appeals court upheld the stay.

The 5th Circuit Court of Appeals said in its ruling that the Occupational Safety and Health Administration (OSHA) should “take no steps to implement or enforce the mandate until further court order,” writing that the administration’s vaccine and testing mandate was “fatally flawed.” The court ordered OSHA not to enforce the requirement “pending adequate judicial review” of a motion for a permanent injunction. The court’s decision prompted OSHA to suspend the rule.

The court’s shutdown confirms what many suspected when OSHA delayed for weeks before publishing the rule: The legal grounds for enforcing a federal vaccine mandate on private businesses seems to be shaky at best. And yet, does it matter? Plenty of private businesses have already required their employees to take the shot, and are unlikely to roll that back, even in the wake of OSHA’s reversal. The Biden administration, too, is still pushing ahead, urging businesses to continue to implement an employee mandate, even if the state lacks the power to enforce it. Besides, how many people, besides those who are paid to read the news, are paying close enough attention to know the difference?

Once again, what matters seems less and less to be the actual tenets of law, and more and more to be who holds the reigns of power. Like with the eviction moratorium extension, the Biden administration has effectively said “maybe it’s illegal, but we’re going to try anyway.” Except this time, a few states rattled the cage.

The key silver lining here, thus, is a glimmer of state sovereignty. The pressure of a handful of states saying no, thank you, we’ll decide if we want to mandate a vaccine in our state, is significant, whether it weighed directly or indirectly on the decision. This was a win for localism, and it can and should be the model for governors and state legislatures going forward. Appeals to constitutionalism may fall on deaf ears, but four states—or 12—can keep the bureaucratic arm of the federal government out of local affairs if they have the courage to take serious action.

*****

This article was published on November 18, 2021, and is reproduced with permission from The American Conservative.

OSHA’s Big “Oops!”

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By Carmel Richardson

The bureaucracy’s reversal on the vaccine mandate for businesses is a win for state sovereignty, not to mention the American people

After delaying two months before producing a rule pursuant to the White House’s September announcement that businesses with 100 employees or more would have to require the Covid-19 vaccine, the Department of Labor has now suspended enforcement of the Biden administration’s vaccine mandate for private businesses.

The rule was initially challenged by Texas Attorney General Ken Paxton, along with the states of Louisiana, Mississippi, and South Carolina, who filed a lawsuit requesting a preliminary and permanent injunctive relief to stop the mandate from being enforced. A total of 12 states are suing to block the federal vaccine mandate for employers. After the federal appeals court temporarily halted the order, the Department of Justice requested the halt to be lifted, but the appeals court upheld the stay.

The 5th Circuit Court of Appeals said in its ruling that the Occupational Safety and Health Administration (OSHA) should “take no steps to implement or enforce the mandate until further court order,” writing that the administration’s vaccine and testing mandate was “fatally flawed.” The court ordered OSHA not to enforce the requirement “pending adequate judicial review” of a motion for a permanent injunction. The court’s decision prompted OSHA to suspend the rule.

The court’s shutdown confirms what many suspected when OSHA delayed for weeks before publishing the rule: The legal grounds for enforcing a federal vaccine mandate on private businesses seems to be shaky at best. And yet, does it matter? Plenty of private businesses have already required their employees to take the shot, and are unlikely to roll that back, even in the wake of OSHA’s reversal. The Biden administration, too, is still pushing ahead, urging businesses to continue to implement an employee mandate, even if the state lacks the power to enforce it. Besides, how many people, besides those who are paid to read the news, are paying close enough attention to know the difference?

Once again, what matters seems less and less to be the actual tenets of law, and more and more to be who holds the reigns of power. Like with the eviction moratorium extension, the Biden administration has effectively said “maybe it’s illegal, but we’re going to try anyway.” Except this time, a few states rattled the cage.

The key silver lining here, thus, is a glimmer of state sovereignty. The pressure of a handful of states saying no, thank you, we’ll decide if we want to mandate a vaccine in our state, is significant, whether it weighed directly or indirectly on the decision. This was a win for localism, and it can and should be the model for governors and state legislatures going forward. Appeals to constitutionalism may fall on deaf ears, but four states—or 12—can keep the bureaucratic arm of the federal government out of local affairs if they have the courage to take serious action.

*****

This article was published on November 18, 2021, and is reproduced with permission from The American Conservative.

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There’s No Denying the Socialist Roots of Fascism

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By Foundation for Economic Education (FEE)

In the past few decades, there has been a deep discussion about the ideological roots of fascism, and above all, a great misunderstanding about the collectivist principles that this authoritarian movement promulgated. To understand this ideology better, it is necessary to know in depth the life, beliefs, and principles of both its political leaders (such as Benito Mussolini) and its philosophical leaders (such as Giovanni Gentile).

Mussolini was an Italian military man, journalist, and politician who was a member of the Italian Socialist Party for 14 years. In 1910, he was appointed editor of the weekly La Lotta di Classe (The Class Struggle), and the following year he published an essay entitled “The Trentino as seen by a Socialist.” His journalism and political activism led him to prison, but soon after he was released, the Italian Socialist Party—increasingly strong and having achieved an important victory at the Congress of Reggio Emilia—put him in charge of the Milanese newspaper Avanti!

This intense political activism was followed by World War I, which marked a turning point in Mussolini’s life. In the beginning, the leader of the Socialist Party was part of an anti-interventionist movement, which opposed Italy’s participation in World War I. However, he later joined the interventionist group, which earned him expulsion from the Socialist Party.

Mussolini participated in the war and went on to take advantage of the dissatisfaction of the Italian people, due to the few benefits obtained by the Treaty of Versailles. He then blamed his former comrades of the Socialist Party for it, and that is when he started the formation of the Fasci Italiani di Combattimento, which later would become the Italian Fascist Party.

Based strongly on the nationalist sentiments that flourished as a result of the combat, Mussolini came to power by the hand of violence, fighting against the traditional socialists and shielding himself in the famous squadron of the black shirts. It was only then that the ideological complex of fascism would begin to take shape.

Practically everyone knows that Karl Marx is the ideological father of communism and socialism and that Adam Smith is the father of capitalism and economic liberalism. Do you know, in contrast, who the mind behind fascism is? It’s very likely that you don’t, and I can tell you in advance that the philosopher behind fascism was also an avowed socialist.

Giovanni Gentile, a neo-Hegelian philosopher, was the intellectual author of the “doctrine of fascism,” which he wrote in conjunction with Benito Mussolini. Gentile’s sources of inspiration were thinkers such as Hegel, Nietzsche, and also Karl Marx.

Gentile went so far as to declare “Fascism is a form of socialism, in fact, it is its most viable form.” One of the most common reflections on this is that fascism is itself socialism based on national identity.

Gentile believed that all private action should be oriented to serve society. He was against individualism, for him there was no distinction between private and public interest. In his economic postulates, he defended compulsory state corporatism, wanting to impose an autarkic state (basically the same recipe that Hitler would use years later).

A basic aspect of Gentile’s logic is that liberal democracy was harmful because it was focused on the individual which led to selfishness. He defended “true democracy” in which the individual should be subordinated to the State. In that sense, he promoted planned economies in which it was the government that determined what, how much, and how to produce.

Gentile and another group of philosophers created the myth of socialist nationalism, in which a country well directed by a superior group could subsist without international trade, as long as all individuals submitted to the designs of the government. The aim was to create a corporate state. It must be remembered that Mussolini came from the traditional Italian Socialist Party, but due to the rupture with this traditional Marxist movement, and due to the strong nationalist sentiment that prevailed at the time, the bases for creating the new “nationalist socialism,” which they called fascism, were overturned.

Fascism nationalized the arms industry, however, unlike traditional socialism, it did not consider that the state should own all the means of production, but more that it should dominate them. The owners of industries could “keep” their businesses, as long as they served the directives of the state. These business owners were supervised by public officials and paid high taxes. Essentially, “private property” was no longer a thing. It also established the tax on capital, the confiscation of goods of religious congregations and the abolition of episcopal rents. Statism was the key to everything, thanks to the nationalist and collectivist discourse, all the efforts of the citizens had to be in favor of the State.

Fascism claimed to oppose liberal capitalism, but also international socialism, hence the concept of a “third way,” the same position that would be held by Argentine Peronism years later. This opposition to international socialism and communism is precisely what has caused so much confusion in the ideological location of fascism, Nazism, and also Peronism. Having opposed the traditional internationalist Marxist left, these were attributed to the current of ultra-right movements, when the truth is that, as has been demonstrated, their centralized economic policies obeyed collectivist and socialist principles, openly opposing capitalism and the free market, favoring nationalism and autarchy.

In that sense, as established by the philosopher creator of fascist ideology, Giovanni Gentile, fascism is another form of socialism, ergo, it was not a battle of left against right, but a struggle between different left-wing ideologies, an internationalist and a nationalist one.

In fact, in 1943, Benito Mussolini promoted the “socialization of the economy,” also known as fascist socialization; for this process Mussolini sought the advice of the founder of the Italian Communist Party, Nicola Bombacci; the communist was the main intellectual author of the “Verona Manifesto,” the historical declaration with which fascism promoted this process of economic “socialization” to deepen anti-capitalism and autarchism, and in which Italy became known as the “Italian Social Republic.”

On April 22, 1945 in Milan, the Fascist leader would declare the following:

“Our programs are definitely equal to our revolutionary ideas and they belong to what in democratic regime is called “left”; our institutions are a direct result of our programs and our ideal is the Labor State. In this case there can be no doubt: we are the working class in struggle for life and death, against capitalism. We are the revolutionaries in search of a new order. If this is so, to invoke help from the bourgeoisie by waving the red peril is an absurdity. The real scarecrow, the real danger, the threat against which we fight relentlessly, comes from the right. It is not at all in our interest to have the capitalist bourgeoisie as an ally against the threat of the red peril, even at best it would be an unfaithful ally, which is trying to make us serve its ends, as it has done more than once with some success. I will spare words as it is totally superfluous. In fact, it is harmful, because it makes us confuse the types of genuine revolutionaries of whatever hue, with the man of reaction who sometimes uses our very language.”

Six days after these statements, Benito Mussolini would be captured and shot.

This article was republished with permission from El American.

COLUMN BY

Emmanuel Rincon

Emmanuel Rincón is a lawyer, writer, novelist and essayist. He has won several international literary awards. He is Editor-at-large at El American

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

Will Evergrande Go Bankrupt? thumbnail

Will Evergrande Go Bankrupt?

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By Daniel Fenandez

The largest real estate developer in China—and one of the largest in the world—is on the brink of bankruptcy. The problems this could create in the Chinese financial sector, and in turn in other parts of the world, are convulsing capital markets around the globe. The news is not encouraging. Evergrande has already defaulted on several interest coupons on its dollar debt, and recently the listing of its shares was suspended on the Hong Kong Stock Exchange.

What Is Evergrande?

Evergrande became the largest Chinese real estate developer through turnover. It is currently engaged in about eight hundred active real estate developments, mostly in 230 secondary and tertiary Chinese cities. While it is a giant company that has been extending its business model to other economic activities, more than 97 percent of its income derives from real estate development.

Evergrande reached its peak valuation at the end of 2017. At the time, it was worth almost $51 billion, ranking it among the 350 largest companies in the world and among the 40 largest companies in China. Since then, its value has been sinking, and today it is worth just $5 billion. At today’s valuation, it is only the 2,650th-largest company in the world.

Why has Evergrande’s value dropped so much? Is this a sign of an inevitable bankruptcy?  And what is the state of Evergrande’s finances? Let us begin with an analysis of its income and profitability.

The Business Model: Is Evergrande Making Money?

Evergrande was already the largest Chinese real estate developer in 2011. Since then, the company’s sales have soared, particularly since 2016.

Evergrande’s earnings statements show that profits have dropped significantly since 2018. However, its earnings remain positive even in 2021 (January–June). Earnings are currently close to those seen in 2016, and while the share value is lower today than it was in 2016, the difference is small.

The problem with this approach is that all of Evergrande’s profit figures are contaminated by non-recurring events (such as accounting profit realized from the sale of subsidiaries to increase liquidity). Considering only Evergrande’s main business, real estate sales, and excluding the non-recurring events, we arrive at a much bleaker picture of the Asian real estate giant’s finances.

Evergrande’s profits are below those recorded in 2010 when its turnover was one-tenth of what it is today. To make matters worse, the construction of new housing is practically paralyzed because of a lack of supplies, due in no small part to Evergrande’s defaults on payments to suppliers. Evergrande’s earnings are thus not what the company claims; it likely incurred losses in the second half of 2021.

Evergrande’s margins have plummeted since 2018 and currently are not even enough to pay the interest on its debt.

The Elephant in the Room: Evergrande’s Debt

Most of the discussion surrounding Evergrande is about its debt problems, which is logical, as the market is waiting for the company to default. The company’s problems with assets are as serious as those associated with its debt.

Evergrande’s debt/asset ratio reached 41.6 percent in 2017. In 2021, it dropped to 24 percent. This makes it seem as though Evergrande has significantly reduced its debt, but nothing could be further from the truth. All the company has done is exchange formal debt for debt to its suppliers. In other words, to meet debt-reduction commitments, Evergrande has accumulated unpaid bills to its suppliers.

Once debt to suppliers is introduced, it becomes clear that the company’s real debt-to-asset ratio has remained almost constant. The official ratio is nothing more than accounting smoke and mirrors.

The accumulation of debt to suppliers has caused serious problems for Evergrande. Most vendors have decided to stop supplying the company, so many real estate projects are completely paralyzed for lack of supplies. Evergrande’s ability to deliver new housing projects (crucial for the company’s survival) has been seriously compromised, as the company itself acknowledges in its latest quarterly financial report.

Perhaps as (or even more) important as the accumulation of debt is the company’s temporary profile. Evergrande did not know how to plan for its enormous growth. Since 2014, half of Evergrande’s debt has been constantly renegotiated and renewed, making the company vulnerable when faced with any event that would prevent or hinder the renewal, and 78 percent of Evergrande’s debt needs to be renewed every year.

An unexpected change came at the beginning of 2021 when the Chinese government decided to burst the country’s real estate bubble. It required the country’s real estate developers to comply with relatively demanding financial ratios and prevented companies that didn’t comply from increasing their debt. This decision was the spark; the financial irresponsibility of Evergrande’s directors was the dynamite.

The Last Piece of the Puzzle: The Assets Evergrande Could Sell

There is no doubt that Evergrande is a disaster on the debt side, but what about its assets? Although it’s not ideal, every company has the option of selling assets in order to pay off debts. This is precisely what Evergrande has been doing in recent months. They have jettisoned the assets that are not central to their business, such as holdings in banks and other companies. But most of the company’s assets are housing developments.

The company has two problems here. The first is that the company’s sales price (by square meter) has begun to plummet. The second is that the bulk of Evergrande’s real estate assets are unbuilt houses. Approximately 90 percent of Evergrande’s real estate developments are homes that are under construction (the other 10 percent is finished housing). According to Evergrande, the houses under development will be finished within a year, but housing sales are far below the number of properties in the company’s inventory.

There are two possible explanations:

  1. It takes much more than a year to construct the houses. In this case, selling the houses to pay the company’s debts will be impossible.
  2. Houses under construction are actually unsold houses. In this case, they will have to be sold at significantly reduced prices (which will tend to create a huge loss on the asset side and could lead to the company going bankrupt).

In both cases, Evergrande will not be able to use its assets to pay its debts and avoid bankruptcy.

Conclusion: Evergrande’s Inevitable Bankruptcy

If Evergrande’s liabilities are a disaster and its assets are too, and the latter are in a bursting market bubble, the company’s chances of survival are low.

Perhaps the clearest indicator that Evergrande cannot survive on its own is the interest-coverage ratio. This measures a company’s ability to pay its debt and is calculated by dividing earnings before interest and taxes by interest expenses on debt. A ratio higher than one indicates that profits are greater than interest expenses. A ratio lower than one indicates that profits are insufficient to pay the interest on the debt (and the company must sell assets or increase debt just to pay interest on previous debt). Evergrande’s interest-coverage ratio dropped below one in 2020.

The chances of Evergrande’s survival without public aid or without the massive injection of cash from some unsuspecting investor are therefore nil.

*****

This article was published on November 23, 2021, and is reproduced with permission from AIER,  American Institute for Economic Research.

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Medicare Ads And Other Inane Policies

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By Thomas C. Patterson

We’ve all seen them, the Medicare TV ads exhorting seniors to apply for enhanced benefits. The government appears to be coaxing often reluctant retirees into greater dependence.

But this is a colossally bad idea, even for those of us who support helping citizens in their sunset years. It stimulates greed (it’s freeeee!) and entitlement in the demographic which government programs have already made into the most wealthy. It expands the reach of government into our lives.

But it’s worse than that. The ads are pitching benefits in a program already teetering on bankruptcy.  Americans were told that their mandatory payroll contributions were put in a fund to finance payouts in retirement, but that was a lie. Politicians raided the trust long ago and today’s retirees are dependent on the (inadequate) contributions of today’s payers – yes, like any other welfare program.

The rational response would be reforms that include reducing expenses where possible. Instead, we spend untold millions to pump up program outlays. Not smart. Consequences to follow.

But screeching Medicare ads aren’t the only government initiative which, partisan disagreements aside, simply don’t make sense. Take electric cars. They’re touted as a big key to a carbon-free future. We’re pouring public funds into subsidies, charging stations and other enticements for owners.

We may disagree over the feasibility of carbon reduction strategies to ultimately reduce climate change, but it doesn’t matter. Electric cars aren’t the answer. They still require energy that must be produced somehow.

The pollutants may come from an electricity generating plant instead of a car’s exhaust, but the damage done isn’t greatly different. The environmental costs of battery production and disposal as well as the extra power sources needed to service a national fleet of autos make EVs an environmental loser.

But politicians use them anyway to bolster green credentials. Buyers like the subsidies, the perks, and driving a cool car. Manufacturers are joining the ranks of the uber-rich. So the beat goes on.

EVs could have some environmental benefit if nuclear generation sourced their electricity. Once again, stupidity intervenes.

The environmental Left decreed long ago that nuclear was off-limits. Nuclear power plants would henceforth be discouraged by excessive regulation and harassment. The strategy has basically worked, but it’s a shame.

It’s still true that nuclear is by far the most environmentally friendly, non-emitting energy source available. Nuclear-producing France pays 50% less for energy with 10% the amount of pollution experienced by Germany, which sanctimoniously exited the nuclear market years ago.

Here’s more lunacy. A year ago, America had finally achieved energy independence, after decades of kowtowing to Arab sheiks and oil-rich autocrats. Within days, the Biden administration returned us to supplicant status. Pipeline permits were canceled, offshore drilling cut back and even the remote ANWR oil deposits were shut down.

Meanwhile, with our consent, Russia’s Nord Stream pipeline was approved, which will dominate Western Europe’s natural gas supplies. Biden unsuccessfully begged OPEC to increase oil production, so US gas prices have predictably skyrocketed and a cold winter looms.

Again, the environmental benefits of our foolishness are nil. Pipelines are the most environmentally safe way of transporting natural gas. The fuels from Russia and the Middle East are no cleaner than ours.

We have more inane policies. Children too young to vote, drink, smoke, or drive are now permitted to change their socially constructed gender by irreversibly altering their bodies-without parental consent.

$450,000 payouts are seriously proposed for illegal immigrants who were separated from their children in a humane effort to avoid mixing children with adults during detention. In spite of causing no known harm, GMO bans limit the amount of food available to starving Africans.

The driving force for these nutty, harmful policies is the relentless pursuit of electoral success by pandering to special interest groups. We’ve come a long way from Thomas Jefferson’s vision of a “wise and frugal government, which shall restrain men from injuring one another…“.

Listen to political analysts uncritically predicting the fate of multi-trillion-dollar spending bills based solely on how the vote would affect legislators’ prospects for remaining in office another term.

It’s disgraceful, but we expect no more, so that’s what we get.

****

Thomas C. Patterson, MD is a retired Emergency Medicine physician, Arizona state Senator and Arizona Senate Majority Leader in the ’90s. He is a former Chairman, Goldwater Institute

Comrade Down: Senate Forces Biden to Dump OCC Nominee, Lenin Scholar thumbnail

Comrade Down: Senate Forces Biden to Dump OCC Nominee, Lenin Scholar

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By Chuck Ross

Five Senate Democrats tell Biden they won’t back Lenin scholarship winner Saule Omarova

Five Senate Democrats told the White House late Wednesday they will not support Lenin scholarship recipient Saule Omarova to serve as Comptroller of the Currency, nuking her chances to serve as the country’s bank regulator.

The Democrats—Sens. Jon Tester (D., Mont.), Kyrsten Sinema (D., Ariz.), Mark Kelly (D., Ariz.), Mark Warner (D., Va.), and John Hickenlooper (D., Colo.)—join all Senate Republicans in opposition to Omarova, who came under scrutiny over her proposals to use the banking system to “bankrupt” the oil and gas industry and her education in the Soviet Union. Axios reported Wednesday that the Democrats informed the White House they will not support Biden’s nominee.

The failed nomination marks a major setback for progressives, who championed Omarova over her criticism of big banks and fossil fuel companies. Sen. Elizabeth Warren (D., Mass.) hailed Omarova’s nomination as “tremendous news.” The left-wing Sierra Club touted Omarova as a bulwark against “climate chaos” and hoped she would set up “guardrails against Wall Street’s risky fossil fuel investments.”

*****

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Company Contrast: Parler vs. Facebook

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By 2ndvote .com

Each week 2ndVote takes a look at popular companies that either score well or score poorly  and then try to provide alternatives that either better align with the 2ndVote values or should be avoided to the best of your ability. This series is called The Company Contrast, and the company we will be focusing on this week is Parler, which gets a 2ndVote score of 3.08.

Parler is an American social networking service that believes in the basic right of free speech. Here users have the freedom to say what’s on their mind; be it supporting their chosen political candidate or criticizing the extreme liberal left and they can do so without their content being taken down or censored. In their company policy they state that their “mission is to create a social platform in the spirit of the First Amendment to the United States Constitution.” – Parler

When looking to connect with your community over social media, look to Parler or other alternatives to the mainstream tech giants such as Facebook (1.00).

Facebook, which receives a 2ndVote score of 1.00, clearly has no respect for the basic freedoms of Americans. On numerous occasions, Facebook has supported organizations such as the Center for American Progress which has worked to strip down our first amendment right by opposing religious liberties and RFRA laws. The company itself has even directly stopped free speech by censoring and banning users it doesn’t like, such as the former President, Donald Trump. We urge you to stop using Facebook’s platform and, if you feel compelled, send them a letter through our website demanding that they change these un-American policies.

EDITORS NOTE: This 2ndVote column is republished with permission. ©All rights reserved.

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GOP Rep. Cammack: Omarova ‘Not Fit to Be Our Banking Nominee’

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By Discover The Networks

Friday on Fox Business Network’s Varney & Company, Rep. Kat Cammack (R-FL) reacted to five Democrat senators reportedly opposing President Joe Biden’s nomination of radical Saule Omarova as the Comptroller of the Currency, saying the Marxist philosophy of the banking nominee makes her “not fit” for the job.

“The thing about this administration that baffles me — I truly do not know where their heads are at. They are so far removed from reality. It’s concerning,” Cammack stated. “You know when you have someone, and I think about Senator Kennedy’s remarks when he addressed her, ‘is it professor or comrade?’ Her philosophies are rooted in Marxism. She is not fit to be our banking nominee.”

“But, again, it’s just like the typical Biden administration that we’ve seen over the last 11 months,” she continued. “They are willing to put everything on the line, consequences be damned, because they believe that they are somehow virtuous in pursuing this ultra-progressive, leftist ideology. But we see that their policies are hurting America. We know that this banking nominee will only exacerbate these problems.

“It’s pretty simple,” she concluded. “I know I have a minor in economics, not a major and certainly not a master’s or a Ph.D., but I can tell you this — when government spends more, people like you and me and everyone around the country, we have less in our pockets. It’s really that simple.”

Saule Omarova

3 Known Connections

In a March 2021 interview which was part of the Jain Family Institute’s Social Wealth Seminar series, Omarova, while discussing “troubled industries and firms that are in transitioning,” bluntly declared that the destruction of the oil, gas, and coal industries would be essential for the protection of the natural environment. “And here what I’m thinking about is primarily coal industry and oil and gas industry,” she said. “A lot of the smaller players in that industry are, uh, going to probably, uh, go bankrupt in, in, in short order, at least we want them to go bankrupt if we want to tackle climate change, right?” On another occasion, Omarova put it this way: “In order to prevent climate change, we have to bankrupt all the coal, oil, and gas companies.”

In May 2021, Omarova was named a Senior Berggruen Fellow at the Berggruen Institute, a Los Angeles-based think tank which believes that both capitalism and democracy are “faltering” institutions in need of “great transformations.”

To learn more about Saule Omarova, click here.

EDITORS NOTE: This Discover the Networks column is republished with permission. ©All rights reserved.

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Oil Reserves Released By Biden Expected to Primarily Go To China, India

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By Dr. Rich Swier

Gas prices for Americans are at an all time high. There are no words.

Oil reserves released by Biden expected to primarily go to China, India

U.S. taps 50 million barrels of oil from reserves in an attempt to tamper spiking costs at the gas pump

By Caitlin McFall FOX Business, November 24, 2021:

President Biden’s move to tap the U.S. Strategic Petroleum Reserve is expected to supply Chinese and Indian oil needs as gas demands have led to global shortages, reports said Tuesday.

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The White House said the Department of Energy will release 50 million barrels of oil held in U.S. reserves — 18 million of which have already been congressionally approved for sale.

TOP REPUBLICAN ON ENERGY COMMITTEE SAYS TOO LITTLE TOO LATE AFTER BIDEN TAPS OIL RESERVE

U.S. President Joe Biden speaks on the economy during an event at the South Court Auditorium at Eisenhower Executive Office Building on November 23, 2021 in Washington, DC. President Biden announced the release of 50 million barrels of oil from the S (Photo by Alex Wong/Getty Images / Getty Images)

China and India have been actively purchasing U.S. sour crude oil produced in the Gulf of Mexico, first reported Bloomberg.

Sour crude oil contains high levels of sulfur, which reportedly makes it more expensive to process and traditionally turns buyers away.

But U.S.-produced sour crude oil appeals to foreign buyers because of its relatively affordable price tag, the publication said.

The White House’s Tuesday announcement means the U.S. will seek to accelerate sales abroad in an attempt to counter spiking prices at the gas pump.

U.S. President Joe Biden speaks on the economy during an event at the South Court Auditorium at Eisenhower Executive Office Building on November 23, 2021 in Washington, DC. President Biden announced the release of 50 million barrels of oil from the S (Photo by Alex Wong/Getty Images / Getty Images)

The additional 32 million barrels will be intended for U.S. consumers to alleviate increased demand.

Earlier this month OPEC+, led by nations like Saudi Arabia and Russia, refused to increase production to meet rising demands.

Gas shortages have led to rising inflation and gas prices at the pump not seen in seven years.

“The President has been working with countries across the world to address the lack of supply as the world exits the pandemic,” the White House said in a statement.

In a globally coordinated effort China, India, Japan, South Korea and the United Kingdom will also tap their reserves to try and bring down gas prices.

“The president stands ready to take additional action, if needed, and is prepared to use his full authorities working in coordination with the rest of the world to maintain adequate supply as we exit the pandemic,” the administration added.

RELATED ARTICLE: Florida Governor Ron DeSantis blasts Biden, calls inflation a ‘huge problem,’ pledges gas tax relief

EDITORS NOTE: This Geller Report column is republished with permission. All rights reserved.

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Biden Celebrates Thanksgiving At Billionaire’s Compound As Normal Americans Struggle Through Inflation thumbnail

Biden Celebrates Thanksgiving At Billionaire’s Compound As Normal Americans Struggle Through Inflation

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By The Daily Caller

President Joe Biden will spend his Thanksgiving holiday at a private billionaire’s compound as inflated costs continue to surge for lower and middle class Americans.

The president landed in Nantucket, Massachusetts, on Tuesday where he is expected to celebrate Thanksgiving with Carlyle Group co-founder David Rubenstein, according to Fox News. The Biden family has spent the holiday on the island for several decades, but canceled their plans in 2020 due to the COVID-19 pandemic.

Meanwhile, the price of the average Thanksgiving dinner has risen more than 14% from the previous year, according to the American Farm Bureau Federation’s annual Thanksgiving dinner cost survey. The report further shows that the average Thanksgiving dinner for six people will cost an approximate $53.31, with the cost of turkey alone skyrocketing by 24% in comparison to the previous year.

A recent Trafalgar poll revealed that 52% of Americans say inflation forced them to change their holiday plans in accordance to the rise in food prices and shortages.

House Minority Leader Kevin McCarthy criticized the president’s Nantucket holiday Wednesday by pointing to the average American’s struggle with inflation during the Thanksgiving holiday.

“Dear President Biden, while you are in Nantucket, enjoying your meals at a billionaire’s compound, here are the prices that Americans are paying for their Thanksgiving dinner-the most expensive one in history,” he wrote.

Dear President Biden,

While you are in Nantucket, enjoying your meals at a billionaire’s compound, here are the prices that Americans are paying for their Thanksgiving dinner—the most expensive one in history. pic.twitter.com/M2Lr7g9Qyl

— Kevin McCarthy (@GOPLeader) November 24, 2021

The country has witnessed its highest inflation levels in the past three decades, with the Consumer Price Index reaching 6.2% on a year-over-year measure. Food companies’ quarterly profits have fallen significantly as a result of inflation, labor shortages and supply chain issues, forcing them to increase the price of their meat, grain and steel can products.

The U.S. has suffered a shortage of oil production that caused gas prices to stand at an average of $3.40 per gallon, hitting its highest Thanksgiving week level since 2012, according to new data from the Energy Information Administration (EIA).

To resolve the current rise of inflated gas prices, Biden ordered the Department of Energy Tuesday to release 50 millions barrels of oil from the U.S. Strategic Petroleum Reserve, which will reportedly provide 2-3 days worth of U.S. oil supply.

White House press secretary Jen Psaki told White House Fox News correspondent Peter Doocy that a “20 pound turkey” is not significantly pricier than in the past during Tuesday press conference.

“There are an abundance of turkeys available, they’re about $1 more for a 20 lb. bird, which is a huge bird if you’re feeding a very big family,” Paski said. “And that’s something that again, we’ve been working to make sure people have more money in their pockets to address it as the economy is turning back on.”

COLUMN BY

NICOLE SILVERIO

Contributor.

RELATED VIDEO: Rep. Crenshaw: This Administration Has Become a Joke and Inflation Isn’t Going Away Anytime Soon

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EDITORS NOTE: This Daily Caller column is republished with permission. ©All rights reserved.

‘Will Not Fix The Problem’: Biden Releasing Oil Reserves Due To Politics, Critics Say thumbnail

‘Will Not Fix The Problem’: Biden Releasing Oil Reserves Due To Politics, Critics Say

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By The Daily Caller

  • President Joe Biden’s decision to tap the U.S. Strategic Petroleum Reserve (SPR) was derided by top GOP lawmakers and experts who said the move was political and won’t move the needle on gasoline prices.
  • “Even if the economic reality of five or maybe 10 cents a gallon of short term impact isn’t that big of a deal, doing nothing might look like a really big political problem,” Kevin Book, a National Petroleum Council member and managing director of ClearView Energy Partners, told the Daily Caller News Foundation.
  • The federal government will release 32 million barrels of oil from the SPR and accelerate the release of 18 million barrels that had already been congressionally mandated, the White House announced Tuesday.
  • “This very temporary measure is not going to solve the supply issue at the pump nor is it a solution to gas prices that have doubled in the last year,” Rep. Fred Upton, the top Republican on a House energy subcommittee, told the DCNF.

President Joe Biden’s decision to tap the U.S. Strategic Petroleum Reserve (SPR) was derided by top GOP lawmakers and experts who said the move was political and won’t move the needle on gasoline prices.

The federal government will release 32 million barrels of oil from the SPR and accelerate the release of 18 million barrels that had already been congressionally mandated, the White House announced Tuesday. Biden’s move to release crude oil from the nation’s emergency reserves was made alongside China, India, Japan, South Korea and the U.K., marking the first internationally coordinated release of emergency oil reserves.

However, experts suggested that the action was likely a political reaction to ever-rising prices at the pump and said it wouldn’t have a significant long term effect.

“It’s possible to say, ‘okay, this is something that politically, if not economically, requires intervention.’ The problem might be that, actually they started talking about doing something back in August,” Kevin Book, a National Petroleum Council member and managing director of ClearView Energy Partners, told the Daily Caller News Foundation.

“The White House was aware of these rising prices and concerned about them, and started taking steps towards intervention and created an expectation for intervention,” he continued. “So, even if the economic reality of five or maybe 10 cents a gallon of short term impact isn’t that big of a deal, doing nothing might look like a really big political problem.”

Book added that the release would have a minimal effect on oil prices, which had already declined over the last several weeks as reports of such a move became public. The price of oil is expected to decrease in the next couple of months due to normal seasonal market fluctuations, according to Book.

A Goldman Sachs report published last week echoed Book’s comments, arguing that tapping the SPR is a “short-term fix to a structural deficit” and was already priced-in to the market. Oil prices may even increase more than expected due to the move, the report concluded.

Biden even acknowledged that he doesn’t have a near-term fix for higher prices and that tapping reserves would barely have an effect during a CNN town hall in October. His administration has mulled an SPR release for months.

But, like Book, Chamber of Commerce Global Energy Institute Senior Vice President Christopher Guith said Tuesday that the White House should focus on long term policies rather than “ineffectual band aids.”

‘A cynical move’

Biden, meanwhile, has faced heavy criticism for his administration’s anti-fossil fuel actions, which include revoking the Keystone XL pipeline permit and banning new oil and gas leases on federal lands. While the president has set ambitious clean energy goals, gasoline prices have risen to their highest level in nearly a decade, government data showed.

Gas prices are tightly tied to the price of crude oil.

“This very temporary measure is not going to solve the supply issue at the pump nor is it a solution to gas prices that have doubled in the last year,” Michigan Rep. Fred Upton, the top Republican on a House energy subcommittee, told the DCNF.

The SPR was established in the 1970s as a tool to help the U.S. survive future energy crises where the global supply of oil dried up. The total inventory is estimated at around 604 million barrels of oil which is kept in deep underground storage caverns in Texas and Louisiana.

The last time the U.S. tapped the SPR was in 2011 when former President Barack Obama ordered a strategic release amid the Libyan civil war, a move that disrupted the Middle Eastern nation’s oil exports.

“President Biden’s policies are hiking inflation and energy prices for the American people,” Senate Energy and Natural Resources Committee Ranking Member John Barrasso said in a statement. “Tapping the Strategic Petroleum Reserve will not fix the problem.”

“We are experiencing higher prices because the administration and Democrats in Congress are waging a war on American energy,” he continued.

Dan Kish, a senior fellow at the Institute for Energy Research, said the move was like someone eating everything from the pantry then “shooting the farmers.”

“This is a cynical move by a guy who’s done everything in his power to restrict production here at home and in North America,” Kish told the DCNF. “All the while watching Russia become our number two supplier of foreign oil.”

Kish noted that oil prices have increased since Biden announced the release, a sign that it would have little effect on gasoline prices.

Republican Whip Steve Scalise said the SPR is strictly for emergency purposes in response to a question from the DCNF during an October roundtable. If Biden wanted to lower prices, he would make it easier for firms to drill and construct domestic pipelines, the Louisiana Republican added.

“The SPR is not to be used as a piggy bank just to bail you out when your failed policies create higher gas prices,” Scalise said.

“The answer is very straightforward and it’s right under our feet,” he continued. “Instead of trying to drain what’s left of our reserves, we ought to be producing more energy and creating more jobs here in America to take leverage away from OPEC countries and to take leverage away from Russia.”

COLUMN BY

THOMAS CATENACCI

Energy and environment reporter. Follow Thomas on Twitter

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EDITORS NOTE: This Daily Caller column is republished with permission. ©All rights reserved. Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.

The Bush Family Affair With China thumbnail

The Bush Family Affair With China

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By John Meroney

From H.W. sitting down with Mao in 1975 to Neil Bush shipping off millions of masks to China last year.

This decision has not come easily. Those were the foreboding words of Mayor Sylvester Turner of Houston, Texas, as he gathered with other city officials before TV cameras on March 11, 2020. Local stations broke into daytime programming with the news everyone was dreading.

Turner coughed and announced that he was signing a public health emergency declaration. “In the best interest of the health and safety of the people, the Houston Livestock Show and Rodeo, which we all deeply love, is canceled.” The annual event had come to symbolize Texas culture as much as Mardi Gras defines New Orleans. The reason for closing it was the outbreak of Covid-19, Turner said.

News accounts said the virus that originated in China had arrived in the Lone Star State. A few hours after Turner’s declaration, the Houston metro area of more than seven million people ground to a halt, along with the rest of the country.

Watching the shutdown was 65-year-old Houstonian Neil M. Bush, scion of a family with deep roots in Texas. Son and brother to two U.S. presidents, Neil chairs the George H.W. Bush Foundation for U.S.-China Relations, a 501c3 organization named for his late father, the 41st president, who was, in Neil’s words, “a huge believer in the importance of the bilateral relationship between China and the U.S.”

The purpose of the foundation, Neil said, was “to get Americans to change their negative views” of China and recognize the country’s “natural kindness and gift giving.”

As the group’s leader, Neil had inside information on what was happening in China. During the last four decades, he had traveled to the country more than 150 times. Before most Americans ever heard the words “Covid-19,” Neil received reports that people in China were dying from a mysterious virus. To try to control it, the Chinese government ordered its citizens to wear medical face masks when they went outside.

There were few places in the U.S. that still made masks and other protective gear. China produced 20 million masks each day.

In early February 2020, the Bush Foundation found two million masks close to home, in Mexico. They persuaded Chubb and Walmart to pay for the masks, and FedEx flew them without charge to China, even though the bulk of the world’s masks were already made there.

As Houston and the rest of the country locked down in mid-March, Neil was acutely aware of something that made him, and the Bush family, unique: a decades-long devotion to work in China.

Following Turner’s address, doctors interviewed on TV said the virus would kill millions across the planet.

Spindly and resembling his father in his awkward mannerisms, Neil Bush introduces himself in speeches, “I’m Neil Bush, the favorite son of George and Barbara Bush,” a quip that usually generates uncomfortable laughter. Both his parents died seven months apart in 2018 and their deaths left him raw. When talking about them, he often tears up.

For three years before their deaths, Neil and the rest of the Bushes anguished over the family legacy. After President George H.W. Bush’s reelection loss in 1992 and President George W. Bush’s disastrous decision to go to war in Iraq, the family’s political reputation was shattered. Even Barbara Bush seemed eager to call it quits. “There are other people out there that are very qualified,” she said on Today in 2013. “We’ve had enough Bushes.”

Neil’s brother, the former governor Jeb Bush of Florida, tried to resurrect the family business by launching a campaign for the GOP presidential nomination in 2015. His placards read “JEB!” but any enthusiasm that may have existed died on June 15 of that year with a buzzsaw aimed right at the Bushes and the policies they championed.

Donald Trump lambasted military interventionism and “free trade” with China in his campaign for president. He also did something unthinkable to other Republican candidates: held former President George W. Bush to account for the terrorist attacks of September 11, 2001.

“When you talk about George Bush, I mean, say what you want, the World Trade Center came down during his time,” Trump said in an interview he gave to Bloomberg TV in 2015.

He also assailed decades of rotten trade deals, culminating with China’s entry into the World Trade Organization in 2001, a watershed move that was encouraged by Bush 43. The result was that thousands of factories in the U.S. closed. Many of them moved to China.

On a campaign stop in New Hampshire, Jeb said his father grew so angry watching Trump’s critiques that he threw his shoes at the TV set.

Maureen Dowd always said the Bushes suffered from daddy issues. Maybe what made them so angry about Trump was that he sounded a lot like their patriarch, Prescott Sheldon Bush, the Republican U.S. senator from Connecticut from 1952 until 1963. “I was never a free trader,” the old man said in an oral history in 1966. “I never felt that we could abolish tariffs and do away with all protective devices, because we would have been flooded with imports which would have hurt our economy, hurt our defense posture, and I felt that these things had to be done gradually, selectively.”

The most important theme in Trump’s campaign and later presidency was China, how it was set on dominating and controlling the United States. For years, Trump had called China “our biggest long-term challenge.” He charged that Democrats and Republicans, and especially the Bushes, had disregarded China’s bad behavior so they could gain access to Chinese markets.

Trump also said, “Obama bowed to China and allowed them to steal our future.” He emphasized China’s currency manipulation and its theft of intellectual property. “Those who pretend China is our friend are either naïve, incompetent or both. The Chinese can be reined in easily—we are their biggest customer. All we need is a president willing to stand up, not bow down to China.”

In June 2020, William P. Barr, who had served as attorney general for H.W. from 1991 to 1993 and was now Trump’s attorney general, delivered a speech where he declared that the U.S.’s response to the global ambitions of the Chinese Communist Party was “the most important issue for our nation and the world in the 21st century.” Barr also accused China of engaging in industrial espionage, cyberattacks, and extortion.

“As the pandemic spread around the world, the PRC hoarded the masks for itself, blocking producers, including American companies, from exporting them to other countries that needed them,” Barr said. “It then attempted to exploit the shortage for propaganda purposes, shipping limited quantities of often defective equipment and requiring foreign leaders to publicly thank Beijing for these shipments.”

It was a remarkable address coming from someone who had been an integral part of an administration that made trade and cooperation with China a centerpiece. The attorney general’s warnings were echoed in major speeches by Secretary of State Mike Pompeo, National Security Advisor Robert O’Brien, and even FBI Director Christopher Wray.

Maybe the biggest thing Trump did as president was apply tariffs on imported goods from China, measures President Joe Biden has kept in place. Because these transformations were such a departure from Bush family policies, they made a future for them in national politics difficult.

In December 2019, Neil’s 33-year-old son, Pierce Mallon Bush, announced a surprise run for U.S. Congress from Texas’s 22nd District. He decided to eschew his family’s policies and instead campaign on Trump’s, including tightening the border.

Pierce Bush lost the GOP primary. Republicans chose Sheriff Troy Nehls of Fort Bend County, who also campaigned on Trump’s issues—“Standing with President Trump” read a banner on his website. Two days after winning, the sheriff removed the pro-Trump banner. He still went on to beat the Democrat in the general by almost 29,000 votes.

* * *

Neil Bush struggled for decades to find his footing. The media took note of him when he was just 26, but only because he happened to be friends with Scott Hinckley, brother of the man who tried to assassinate President Ronald Reagan. Neil and Scott had planned to have dinner together in Denver on March 31, 1981, the day John Hinckley shot Reagan and three others in Washington. During ABC TV’s live coverage of the assassination attempt, correspondent Steven Greer reported glibly, “Their plans have been canceled.”

By the early 1990s, Neil’s image had grown even more dubious. Democrats and the media made him the face of the savings and loan meltdown. His story was featured on the cover of Playboy in June 1991: “HOW NEIL BUSH WENT ASTRAY.” The tagline: “Running with the biggest rats of the S&L mess, the president’s son became the poster boy of bunko banking.”

“I was never accused of anything illegal, and yet I would be confronted by people, ‘You should be thrown in jail.’ I remember going to Washington and there were ‘Jail Neil Bush’ signs pasted on the telephone poles. It hurt me business-wise for a long time,” he said.

Neil found his destiny with China, a country integral to the Bush family since President Richard M. Nixon appointed ex-congressman George H.W. Bush as ambassador to the United Nations in 1971. (Nixon told his aide Bob Haldeman, “Bush will do anything for the cause.”)

On October 25, 1971, the U.N. voted to admit the People’s Republic of China and expel Taiwan. U.N. Secretary General U Thant asked all members to “endorse the tremendous step forward” and “set aside suspicion and bitterness.” Neil, then 16, was in New York visiting his parents.

“The first thing [dad] did when the Chinese delegation arrived was invite them to a lunch at my grandmother’s home in Connecticut to show kind of American hospitality, to welcome them with open arms,” Neil said, choking up. “From that point on, his first real contact with Chinese leaders, my dad has had an affection for the Chinese people and has high aspirations for how our two great countries should be working together.”

After Watergate, President Gerald Ford huddled with Secretary of State Henry Kissinger about prospects for H.W. They thought he would make a good ambassador because he was easy to control. Ford offered the embassy in London or Paris. Bush didn’t want to pay what it would cost a diplomat to entertain in those cities, so he counteroffered with China instead, where the U.S. didn’t have an embassy but needed an “envoy.” Ford accepted and appointed Bush as head of the United States Liaison Office in Peking (now Beijing). Bush concluded that the experts on China knew just about as much as he did, so he did little to prepare for the job.

The post made H.W. into Washington’s chief representative in China. He held the job for 15 months, and the tenure appears to have had the largest role in forming his view of diplomacy.

Bush pedaled around Peking on a bicycle. He also kept a diary on a tape recorder. Much of it is about his dog, C. Fred; eating Chinese food (“They must have put something stimulating in the food, I couldn’t sleep all night”); and trying to “win over” the Chinese people and officials. Kissinger told him that goal was pointless. Still, Bush tried to organize cocktails, dinners, sightseeing. “My hyper-adrenaline, political instincts tell me that the fun of this job is going to be to try to do more, make more contacts… it will be fun trying,” he recorded.

When Kissinger visited in 1975, he took Bush and another diplomat, Winston Lord, with him to pay their respects to 81-year-old Mao Zedong. Mao seemed ancient and was surrounded by medical devices. He grunted a few formalities. When they tried to broach an issue of Sino-American relations, the old commie waved it away. “Fang go pi,” he muttered. Translation: “dog fart.” Toward the end of the meeting, Mao managed to get out a few words. “God blesses you, not us,” he said. “God does not like us because I am a militant warlord, also a communist. No, he doesn’t like me… He likes you three.”

Bush still didn’t get the communist machinations swirling around him, nor did he understand the general upheaval under way in the country. “I wish I could tell what China’s real interest is,” he said into his recorder. He also never seemed to grasp that it was dangerous for the Chinese if they socialized with him, that the government would penalize them for befriending an American.

To keep control, Kissinger cut H.W. out of the foreign service loop, a strategy that became obvious to Bush. Rather than learning about the surrender of the Vietnamese countryside through the State Department, Bush overheard chatter at an embassy drinking party.

“I clearly feel we are not fully clued in by Washington,” Bush said into his tape recorder. “I am just not going to worry about Kissinger’s peculiar style of operation, where he holds all the cards up against his chest and refuses to clue people in on what is really happening.”

Most of the time, Bush just seemed bewildered. “It’s difficult to define our function here,” he said on the tape.

After relocating to Houston, Neil Bush found there were investments to be made, enterprises to start. China seemed a good fit. Government officials there also wanted prominent Americans, and they fêted this son and brother to presidents when he visited.

Neil immersed himself in Asian business enterprises. SingHaiyi Group Ltd., a property development and management company based in Singapore, made Neil chairman. Executives wanted to invest in the U.S., and through what Neil calls “a networking of mine,” they found projects.

One was the Tri-County Mall in Cincinnati, Ohio. Wives of Neil’s friends recommended he purchase and redevelop it. “I said, ‘It must be in a good neighborhood if my friends are coming here,’” he told WCPO-TV in 2013.

Neil did well. He moved into a house across from his parents in Tanglewood, a Houston neighborhood where they’d lived since the 1960s.

Neil described his approach to life when he appeared on All the Best, a podcast hosted by George H.W. Bush’s grandson, Sam LeBlond, who is also Neil’s nephew. In a November 2019 episode, “The Meaning of Service,” Sam asked, “Can you give me more insight into your professional roles? How do you find time to do it all?”

Neil said, “I’ve found that the busier that you are, the more fun you have and the more you get done.” Neil went on to say that his real passion is leading the “Bush legacy movements.”

This must be quite a job because there are more than half a dozen such organizations. The George W. Bush Presidential Center’s motto is “World changers shaped here.” The George W. Bush Institute goes by “Shaping global leadership for future generations.” Points of Light is about “creating a global culture of volunteering” with a “global network” in 38 countries. (At a rally in Montana in 2018, Trump mocked Peggy Noonan’s famous phrase. “Thousand points of light, I never quite got that one. What the hell is that? Has anyone ever figured that one out? And it was put out by a Republican, wasn’t it? I know one thing, ‘Make America Great Again’ we understand. ‘Putting America First’ we understand.”)

The boards of directors for the “Bush legacy movements” are peppered with executives from Google, Bank of America, Goldman Sachs, Starbucks, General Motors, Disney Parks, MoneyGram, and other major corporations.

As the initial strains of the novel coronavirus were swirling around Wuhan, unknown to the rest of the world, Neil said on Sam’s podcast: “I’m the chairman of the George H.W. Bush Foundation for China relations, which is kind of a controversial situation right now given the hostility that Americans have towards China. Dad believed strongly that China should be an ally, dealing with our world’s biggest global challenges.”

When I lived in Washington, columnist Bob Novak schooled me on where George H.W. Bush stood when he announced he was running for president in 1980. Bob covered the campaign and said Bush hadn’t been elected to anything except two terms as a congressman from Houston more than a decade earlier. Nor had he run for anything since losing his second Senate race nine years earlier. Bob said any future Bush had in politics depended on an appointment by a Republican president.

That appointment came at the GOP convention in Detroit. After Ronald Reagan’s nomination was assured, he considered selecting former President Ford as his running mate. But when Ford gave an interview to Walter Cronkite in the CBS convention booth and said that if Reagan chose him, they would go to Washington as co-presidents, Reagan went in a different direction and named Bush as his V.P.

When I worked as an intern in former President Reagan’s personal office in Century City in 1991, it was rare to hear a mention of Bush, including by Reagan himself. An exception came in an interview Reagan gave to a former assistant, Martin Anderson, who asked about his vice president. “Would it be fair to say, given the extraordinary number of meetings, private one-on-ones with the vice president, that looking back on it he was probably your main advisor?”

Reagan answered, “I think he recognized his position as such that he didn’t attempt to volunteer something and say, ‘You ought to be doing…’ No, he wouldn’t do that at all.”

“But if you asked for his advice, he certainly would have.”

“Yes. But I always noticed—did you ever notice?—that in the cabinet meetings, in there with everyone else there, he never, never spoke up? He’d answer a question directly if I asked him.”

I recall stories about the weekly lunches Bush had with Reagan in the White House. Reagan loved practical jokes, especially when the vice president was the butt. On one such occasion, Reagan announced to Bush, “We really must isolate the things that America makes in the world and what we do best.” Bush nodded agreement. Reagan said, “For instance, condoms. Condoms are the thing that America makes that are best.” Bush said, “I didn’t know that.” Reagan said, “Yeah, that’s why at the end of each condom it has this huge ‘MADE IN THE USA’ printed on it.” Bush said, “I didn’t know that.” Reagan replied, “Well, George, you have to unroll them all the way to see it.”

When Bush ran for president again in 1988, he listened to his longtime friend and advisor James A. Baker III, who realized that the path to victory was campaigning on the idea of a continuation of a successful two-term Reagan presidency. “We wanted it to be about the same issues that the Reagan-Bush administration had been pursuing,” Baker said in an oral history. “We wanted it to be about lower taxes. We wanted it to be about strong defense.”

But over the course of George H.W. Bush’s presidential term, he sent us to war in the Persian Gulf, raised taxes, and pushed for “free trade,” including with China. He said that “the more economic contact we have with China, the more they are going to see the fruits of market economies.” That philosophy didn’t seem to work very well when, after the massacre of students in Tiananmen Square, Bush called his “old friend” Deng Xiaoping to lodge a protest. Deng refused to take his call.

Still, in 1990, Bush said, “The whole fact that we’ve had economic involvement with China has moved China more toward reform than if we hadn’t had it.”

In July 1991, the National Victory Celebration Parade was held in Washington. Some 800,000 people turned out to cheer for the troops returning from Desert Storm. President Bush appeared to salute them and celebrate. According to polls, almost 89 percent of the American people approved of the job Bush was doing.

By the time he traveled to Los Angeles for the opening of the Reagan Library in November 1991, the country had grown weary. Factories were closing. There was a recession. A few weeks later, Pat Buchanan went to New Hampshire to challenge Bush for the Republican nomination.

“He is yesterday, and we are tomorrow,” Buchanan said. “He is a globalist, and we are nationalists. He believes in some Pax Universalis; we believe in the Old Republic. He would put Americans’ wealth and power at the service of some vague New World Order; we will put America first.”

In the presidential debate on October 11, 1992, Bill Clinton accused Bush of coddling tyrants. “I think it is a mistake for us to do what this [Bush] administration did when all those kids went out there carrying the Statue of Liberty in Tiananmen Square.” It was still fresh in the public’s mind.

Clinton continued: “Mr. Bush sent two people in secret to toast the Chinese leaders and basically tell them not to worry about it. They rewarded him by opening negotiations with Iran to transfer nuclear technology. That was their response to that sort of action… I would be firm. I would say, ‘If you want to continue Most Favored Nations status for your government-owned industries as well as your private ones, observe human rights in the future. Open your society. Recognize the legitimacy of those kids that were carrying the Statue of Liberty.’”

Bush gave a garbled reply, “Governor Clinton’s philosophy is to isolate China. He says don’t do it, but the policies he’s expounding of putting conditions on MFN and kind of humiliating them is now the way you make the kind of progress we are getting… We are the ones that have lowered the barrier to products with [U.S. Trade Representative] Carla Hill’s negotiation.”

You can see why Bush lost.

A decade later, H.W.’s national security advisor, Brent Scowcroft, who delivered that infamous toast to the Chinese, admitted, “I do have a regret about the trip to China in December of 1989, where I was, in effect, sandbagged by the Chinese. That’s a personal regret… It certainly didn’t help the view of the Bush administration and the way we were treating China.”

By the time of the election, just 37 percent of the country approved of Bush. A spectacular fall, the lowest number for an incumbent president since William Howard Taft in 1912.

About 20 years ago, I became friends with a man who helped run the Communist Party on the West Coast, a very successful screenwriter named Richard Collins. He lived in Brentwood, used Brooks Brothers diaries, and produced the TV series Remington Steele, but at one time he oversaw one of the most ambitious communist operations in the world. He showed me how the communist business model hasn’t changed for a century. The party uses whatever is the technology of the day, Collins said, but the basic plan for expansion is the same as it was in the time of Lenin, Stalin, and Mao.

In 2015, Chinese President Xi Jinping, who sees himself as Stalin’s successor, delivered a speech in which he talked about the importance of influencing and shaping the world. All the Chinese Communist functionaries were present for Xi’s address: the Central Commission for Discipline Inspection, the Propaganda Department, the Political-Legal Commission, the People’s Liberation Army, the Organization Department, and—essential to Xi’s overarching goal—the United Front Work Department, which is tasked with “managing relations with non-CCP elites and organizations with social, commercial, or academic influence inside and outside China.”

Collins told me how he and other party officials would establish a “front,” an organization whose membership is made up of non-communists (with a few exceptions) and their goal would be to pursue an objective which, on the surface, has no obvious relationship to communism itself.

The members become convinced they are serving U.S. interests by advocating “harmony” and “cooperation” between the U.S. and the communist country. In the case of the Chinese Communist Party, these apparent purposes help with its networking. They create “linkages” which can then be exploited by targeting individuals for grooming. Collins said the party leaders loved deploying psychological methods. They’d reassure the people in the front group that they were working for the “greater good,” praise their work as brilliant when it was hackery, and give them promotions and money. The front group would help advance the real communist objective, without the supporters aware they were spreading the communist party’s messages and extending its influence.

For the Chinese Communists, sympathizers are vital. These people are non-communists who are opposed to certain features of communism but believe it’s permissible to associate with them to advance “causes.” Collins said that the sympathizers are always naïve dreamers: If I’m tolerant and understanding, the communists will abandon their brutality, dictatorship, and deception. They think the Communist Party will become a benign, worthy movement. No more murdering Nobel Peace Prize laureates. They think involvement in a communist country’s markets will do magical things.

For decades, people at the Council on Foreign Relations, the U.S. Chamber of Commerce, the Club for Growth, Heritage Foundation, and Cato Institute believed this about China. In some ways, that belief was understandable, because their dreams came true in Korea and Taiwan. Both countries were run by dictators, then they “democratized” and became free and peaceful. But if you looked at China and understood its history, it was obvious it was going to be different.

“The FBI was all over the catastrophe. They busted in on a meeting. They were up the ass of the whole thing.” I’m listening to Joshua Eisenman, a professor of U.S.-China relations at Notre Dame who used to teach at the University of Texas at Austin. He’s telling me a fantastic story about the time the Chinese Communist Party tried to take over part of the LBJ School of Public Affairs. His first indication that something was up came when he and other scholars went to China for a conference in 2017.

The group’s host was a former U.S. foreign service employee, David J. Firestein. For several years beginning in the late 1990s, Firestein, who is fluent in Chinese and Russian, worked various positions in embassies in Beijing and Moscow. He also taught a course on political consulting at Moscow State University. Now Firestein was working for the EastWest Institute, a think tank, and promising to bring millions to UT to underwrite a new China Public Policy Center at the LBJ School.

During meetings in China, Eisenman says he detected a “lickspittle nature” to the events. Critiques of the Chinese government were always vague and never unpacked. He asked Firestein, “Why are we pulling punches? Why are we not engaging?”

“I was used to working at the American Foreign Policy Council, where exchanges were robust,” he recalls. “We were honest. We were bringing important people together and letting them speak forthrightly. The lack of this during the UT trip made me ask Firestein, what is going on?”

Firestein told him. His benefactor was something called the China-United States Exchange Foundation (CUSEF). Eisenman recognized it as a Chinese Communist Party front that operates in the U.S. It is led by Tung Chee-haw, vice chairman of the Chinese People’s Political Consultative Conference, a self-described United Front Organization. In fact, CUSEF is registered in the U.S. as an “agent of a foreign principal.”

The Chinese government didn’t want disagreements; in fact, the goal was to build more entities at UT focused on U.S.-China “cooperation.” Lectures about what China may be doing wrong aren’t on the agenda, Firestein said.

That’s when Eisenman realized that Firestein’s project at UT wouldn’t permit anyone to ever go off script because the Chinese communists were paying for it, as part of Xi’s influence operation. The center had to be in the interests of China.

“We have an obligation to the truth,” Eisenman said. “Things shouldn’t be sugarcoated. The goal should be to introduce China as it is, not China as China would like for us to see them. That’s our obligation. I was clear with Firestein that I wasn’t going to stand by and allow him to use these Communist Party funds at this public university. I have to teach my students in an objective fashion.”

Eisenman alerted then-dean Angela Evans and other senior faculty by email and then in person when he returned to campus in the fall. Soon Firestein attracted the attention of the Texas congressional delegation in Washington. FBI agents came to campus to question professors, Evans, and UT president Gregory L. Fenves.

Fenves canceled Firestein’s plan. “The University will not accept programmatic funding from CUSEF,” he wrote in January 2018. “Neither will we accept any funds for travel, student exchanges, or other initiatives from the organization… We must ensure that the receipt of outside funding does not create potential conflicts of interest or place limits on academic freedom and the robust exchange of ideas. I am concerned about this if we were to accept funding from CUSEF.”

It wasn’t a total loss for Firestein, though. He’d already hooked up with Neil Bush.

In the wake of President Trump’s meeting with Xi at the G20 summit in Japan in June 2019, Neil Bush appeared at what he called a “deeply urgent and important gathering” at the Auberge Discovery Bay Hotel in Hong Kong. It was a conference co-sponsored by CUSEF, the same group that tried to embed itself at UT, and another front operation, the China Center for International Economic Exchanges. Among the other Americans participating were chairman of the Asian Studies Center at the Heritage Foundation, Ed Feulner; former White House chief of staff in the Obama administration, William Daley; and president of the China Center at the U.S. Chamber, Jeremie Waterman.

The lectern wobbled as Neil stood behind it, and music continued over him as he started to deliver his keynote. Neil said that his foundation was “gearing up to do great work” and that it was “run so ably by a real China expert, David Firestein.” From the audience, Firestein nodded with approval.

For the most part, Neil’s speech was his usual patter—“Dad often stated that the U.S.-China relationship was the most important bilateral relationship in the world… China has benefited consumers with lower cost, high-quality goods”—but about five minutes in, Neil’s speech took a bizarre turn. He said he had just returned from a family trip to Croatia where he’d been “in full vacation mode.” One evening, his “quite astute” son-in-law asked about China. “Fueled by some wine,” Neil said, the discussion during the family trip turned heated.

Hard as it may be to believe, Neil then proceeded to describe the most damning criticisms of China, in the voice of his son-in-law. The treatment of ethnic minorities. Use of facial recognition techniques that keep tabs on citizens. The plan for big data to give individuals a social credit rating designed to control behavior. Use of intrusive Big Brother tactics, including monitoring social media to crack down on government critics.

Neil said his son-in-law called China “nefarious” and “aggressive” and said the country sought to dominate the world. “I still love the boy,” Neil remarked, “but he even compared authoritarian rule of China to that of Saddam Hussein in Iraq and Hitler in Nazi Germany. I almost flew out of my seat at this point.”

We don’t know what Neil said to his son-in-law that night on the family vacation. But his words about him at the communist-funded conference aren’t in doubt. He then proceeded to throw his son-in-law under the proverbial bus in front of the comrades.

“Clearly the wine was speaking,” Neil said. “My son-in-law has never been to China. His facts and assumptions are clearly flawed and based on half-truths or all-out fake news. His views show just how hysterical and challenging the times are. My son-in-law and many Americans only know what they hear.”

He closed his speech by imploring, “Those who believe the U.S. and China ought to work together need to find our voices… I advise my American friends not to meddle too much in the internal affairs of China.” He urged the U.S. and China to “collaborate.” He also said the U.S. and China “must set parameters to address the proliferation of fake news and to control other aspects of the cloud and internet and many others.”

In the most devastating time of the pandemic, when the U.S. and the rest of the world became desperate for medical face masks, Neil Bush realized that his sending two million masks to China in early February 2020 might be too much of a tell. In April, the Bush Foundation contacted Houston’s Mayor Turner with the news that it was going to donate 35,000 masks to the city. On April 27, 2020, Turner called a press conference for “a special, appreciative announcement.” From behind the same lectern where he announced the shutdown, Turner, who this time appeared masked, informed the public of the “generous donation from the Bush Foundation and our friends in China.”

Turner then introduced Neil Bush, who was also wearing a mask. “My father advocated for closer ties between China and the U.S. for years,” he said. “When China was going through the peak of the coronavirus, the Bush-China Foundation found sponsors and sent desperately needed supplies from Mexico to China. This is what Americans do.” Bush concluded, “China continues to be a reliable trading partner for our country during this time of need.”

For months, I asked Neil Bush if he would meet or talk on the phone. I wanted to ask him how he thought Covid-19 would impact U.S.-China relations. I was curious what he had to say about the role the Chinese Communist Party played in the way the virus was handled in China. About the Xinjiang internment camps where an estimated million Uyghurs are being “reeducated.” What can be done about the Chinese communists harvesting the organs of religious minorities? I wondered what blame he thinks the Communist Party deserves. When Neil refused to meet or talk, I even sent him my questions, hopeful I’d get written replies. His assistant said in the end he just didn’t have time.

I also tried to get Firestein on the phone, to no avail. He emailed: “Many thanks for reaching out; much appreciated. Alas, the timing is problematic for me; I’m in the midst of a heavy travel period and don’t really have any additional bandwidth over the next couple of weeks… this is probably the busiest time of year for us. I do greatly appreciate your contacting me; thank you again and all the best with this article.”

I tried former president George W. Bush to see what he has to say about the work of the Bush-China Foundation but he, too, was busy.

With all the flash and pizzazz one would expect of a high-school A.V. club circa 1995, the video begins with a woman speaking too closely into a microphone. She introduces the man who is sitting in the spartan studio, Dr. Wang Huiyao, president of the Center for China and Globalization. “Live from Beijing,” the program (now posted to YouTube) is part of the center’s “Global Dialogue Series.”

Appearing through videoconferencing are Neil Bush, “a very distinguished guest,” and David Firestein, “a very old friend of China and a senior China hand.” Their faces are often too close to the screen. It’s not unlike zooming with your grandparent. “You do such wonderful work bringing ideas and helping inform the public,” Dr. Huiyao says to them.

For close to two hours, with some 200,000 viewers watching live, according to Dr. Huiyao, Bush and Firestein hit all the usual talking points. Firestein attacks Trump for “racially charged and racist rhetoric.” He says, “The language matters, the communication matters, and boy, what I wouldn’t give to have a way of thinking about communication and thinking about bringing people together of the type we saw under the presidency of George H.W. Bush. To his credit, Joe Biden has banned [racist] language in the White House… I think we’re getting back to norms that were established under many presidents.”

Firestein also urges the U.S. to reopen the Chinese consulate in Houston, desist from efforts to shut down Confucius Institutes, and pursue trade and investment with China.

About an hour into the program, Neil launches into a monologue on the origin of Covid-19. “Who cares where it originated?” he says. “Whether it originated in a lab, or from a bat, or from the United States—wherever it originated, who cares?… Throw away the crazy conspiracy theories and just assume that there was an origin of some kind. It doesn’t matter where it originated. Let’s deal with it together.”

Still curious about the masks the Bush Foundation sent to China and where they fit in with the whole scheme, I called Peter Navarro, who at the time the masks were sent was assistant to the president and director of trade and manufacturing policy in the White House. He is also tough as nails on the China issue.

Do you know anything about Neil Bush sending two million masks to China when we needed them? I asked.

“No, I don’t,” Navarro said. “But what I do know is that the Bush family, and that person, should be registered foreign agents for the Chinese Communist Party. He’s the Republican equivalent of Hunter Biden who basically sold out the country and traded off their famous fathers’ names. This happened because it’s part of the Chinese Communist Party game plan, their strategy. It’s either money pots or honey pots. With honey pots, it’s like Eric Swalwell—he’s sleeping with a Chinese spy and she gets information from him. With Neil Bush and Hunter Biden, it’s the money pot. The Chinese Communist Party, that’s what they do. They co-opt our politicians.”

U.S. President George W. Bush and Chinese President Hu Jintao meet with the press after their bilateral meeting at the Great Hall of the People November 20, 2005 in Beijing, China. (Photo by Adrian Bradshaw-Pool/Getty Images)

Nobody wants to air the family laundry if they don’t have to. Given that, it’s easy to see why George W. Bush feels more comfortable talking about his hobby of painting portraits of immigrants, as he did last summer on C-SPAN when he was interviewed by his daughter Barbara. Or why, on the 20th anniversary of the 9/11 attacks, he stood up at Shanksville where one of the hijacked planes crashed and compared the terrorists who killed 2,977 Americans to Trump supporters. It’s important for the Bushes to change the subject.

Reflecting on the four decades of Bushes in China and what it has wrought, and the $5 million or so the Bush-China Foundation gets from a Chinese Communist Party front, I was reminded of the remark W. made after he listened to Donald Trump’s inaugural address in 2017. In the speech where Trump said, “Washington flourished but the people did not share its wealth. Politicians prospered but the jobs left and the factories closed. The establishment protected itself but not the citizens of our country.” In the words of W., “That was some weird shit.” 

*****

This article was published on November 1, 2021, and is reproduced with permission from The American Conservative.

Stock Market Leverage Spikes, Margin Debt Up 42% YoY. Fed Warns about High Leverage Ratio of “Younger Retail Investors” thumbnail

Stock Market Leverage Spikes, Margin Debt Up 42% YoY. Fed Warns about High Leverage Ratio of “Younger Retail Investors”

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By Wolf Richter

“Potentially Destabilizing Outcome could emerge if elevated risk appetite among retail investors retreats rapidly.” But what the heck.

Only part of the leverage in the stock market is tracked and disclosed on a monthly basis. Much of the leverage happens in the shadows, including Securities Based Lending (SBA) that banks may or may not disclose on a quarterly or annual basis; leverage at the institutional level such as with hedge funds, an $8.5 trillion industry; and leverage associated with options and other equities-based derivatives.

It’s only when something blows up that we can see tidbits of this leverage emerge in all its splendor, such as when Archegos imploded earlier this year.

The only leverage data we do get on a monthly basis is margin debt at brokers, reported by FINRA. And we got another doozie: Stock market margin debt spiked by $33 billion in October from September to another all-time high of $936 billion, up by $277 billion, or by 42%, from a year ago, and up by 67% from October 2019

The increase in margin debt has become a huge outlier, compared to prior years, with margin debt ballooning by 42% year-over-year and by 66% in two years, summarized by this chart of year-over-year changes, with the period since March 2020 in red:

This type of stock market leverage doesn’t predict when the market will crater. What it does predict is that when this market is going down hard enough, it will trigger massive bouts of forced selling as margin calls are going out, and leveraged investors have to sell stocks to pay down their margin debt, which then pushes down prices further, which then triggers more forced selling, and more fears of forced selling, as portfolios are being liquidated, thereby accelerating the swoon.

This is why leverage is a risk to financial stability. And why the Fed keeps talking about leverage in its Financial Stability Reports.

But apparently no one at the top of the Fed – least of all Powell and the other members of the FOMC – ever reads these Financial Stability Reports because the FOMC, out of the other side of its mouth keeps encouraging ever more leverage with its interest rate repression and money printing.

Margin debt is the big accelerator on the way up, as borrowed money enters the market and creates new buying pressure.

And margin debt is the big accelerator on the way down, as this borrowed money gets drawn out of the market and vanishes by paying off debts, thereby creating selling pressure.

High levels of stock market leverage are one of the preconditions for a massive sell-off. It’s hard to have a massive sell-off without a lot of leverage.

In its Financial Stability Report, released this month, the Fed is particularly warning about high leverage among young stock market investors.

“The median leverage ratios of younger retail investors are more than double those of all investors, leaving these investors potentially more vulnerable to large swings in stock prices, as they have a larger debt service burden,” the Fed said in the report.

“Moreover, this vulnerability is amplified, as investors are now increasingly using options, which can often boost leverage and amplify losses,” it said.

High leverage is a sign of high and growing “risk appetite,” as the Fed calls it. And concerning the risk appetite of these investors, and their reliance on social media, the report warns:

“A potentially destabilizing outcome could emerge if elevated risk appetite among retail investors retreats rapidly to more moderate levels,” the Fed said…..

*****

Continue reading this article, published November 18, 2021 at Wolf Street.

Western Companies Must Stop Helping China Become A Military Powerhouse thumbnail

Western Companies Must Stop Helping China Become A Military Powerhouse

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By Helen Raleigh

Since U.S. companies prioritize profit over national security, stopping their assistance to the Chinese military requires market-oriented solutions in addition to legislation. 

The U.S. Department of Defense recently released its annual report on China’s military power, which shows that China’s military has made astounding advancements to “modernize its capabilities and improve its proficiencies across all warfare domains” in a relatively short period. The report also made it clear that one of the main objectives of the Chinese military’s modernization is to fight and win wars “against a strong enemy,” a not-so-subtle reference to the United States.

The most significant advancement of the Chinese military is its navy, which was almost non-existent four decades ago and now is the largest in the world, “with an overall battle force of approximately 355 ships and submarines, including approximately more than 145 major surface combatants.” By contrast, the U.S. Navy has a battle force of 293 ships as of early 2020. The DOD report also highlights that the Chinese People’s Liberation Army (PLA) has heavily invested in advanced technologies such as artificial intelligence (AI).

The PLA’s goal is to “make weapons systems and military operations more networked and autonomous” and change “the future of warfare faster than expected.” Some military experts believe China is already surging ahead of the United States in the arms race for AI.

How did the PLA manage to modernize at such an astonishing speed? Besides heavy investment from the Chinese government, western companies have played a crucial role. Here are three examples.

German Engines Powered the Chinese Navy

German media recently disclosed that several types of Chinese navy warships are “powered by engines that were either developed or built by German manufacturers.” MTU, one of the German manufacturers, “was a regular supplier of engines for Luyang III class missile destroyers through a licensed production plant in China.” Luyang-class destroyers are equipped with state-of-art weapons systems and can launch land-attack cruise missiles, long-range surface-to-air missiles, and anti-submarine missiles.

Additionally, MTU supplied “engines that were used in China’s Song-class submarines.” A strong navy has enabled China to expand its territorial claim in the South China Sea, intimidate neighboring countries, disrupt standard commercial and exploration activities, and strengthen its ability to invade Taiwan.

MTU insists it didn’t directly supply the Chinese navy with its engines. It simply engaged in commercial transactions with Chinese companies that are supposedly purchasing its engines for civilian usage. However, MTU engines are so-called dual-use technologies that don’t require either export licenses or government scrutiny. Knowing these legal loopholes, the Chinese government has pursued a military-civil fusion development strategy, which “integrates and leverages science and technology innovations across military and civilian sectors” and “blends military and civilian expertise and knowledge.”

In practice, the Chinese military relies on Chinese civilian companies to acquire advanced dual-use equipment and technologies for military development, while evading both the European Union’s and U.S. exports controls. That approach has significantly helped the Chinese military’s development in AI and semiconductors, often with eager cooperation from western firms.

Americans Help Speed Up the Chinese Military’s AI

A team of researchers at the Center for Security and Emerging Technology at Georgetown University released a report last month that highlights the crucial role U.S. companies play in supplying China with data, software, and funding for the nation’s AI development. The report finds that western firms have provided various Chinese military PLA units with commercial, off-the-shelf autonomous drones and AI-enabled surveillance software — AI tools that are ready for use.

The report also reveals that most of the advanced computer chips at the heart of China’s military AI systems are designed by U.S. firms such as Intel, Nvidia, and Xilinx. Furthermore, U.S.-based venture capital companies are financing Chinese companies that supply the Chinese military with AI-based battle management and cybersecurity software.

The most troubling aspect is that since most Chinese military suppliers also sell equipment and technologies to civilian companies, many are not blacklisted by either the U.S. Treasury Department or the Defense Department. These companies have practically had free rein to acquire sensitive technologies and equipment with little to no restrictions.

U.S. Companies Help China Develop Chips

Like AI, the semiconductor industry is another area where western companies have lent China’s military a helping hand. Semiconductor chips are essential components of almost all electronic devices, from computing to health care to the military and more. According to the Chinese government’s Made in China 2025 initiative, the semiconductor sector is one of the top ten industries that the government has heavily subsidized, hoping to make China self-sufficient in chip manufacturing and dominant in global high-tech manufacturing.

Out of concern for national security, the Trump administration imposed strict restrictions on exporting American semiconductor chip technology to Chinese companies that supply the Chinese military. China’s Semiconductor Manufacturing International Corporation (SIMC) is one such Chinese company on the U.S. export control list.

SIMC is a national champion identified by Beijing to lead China’s semiconductor chip development. It has received large government subsidies and is backed by several Chinese state-owned enterprises that also are suppliers of the PLA. The Biden administration expanded the export control list, banning Americans from investing in 59 Chinese companies with alleged ties to defense or surveillance technology sectors.

U.S. Companies Invested Despite China’s Atrocities

Despite these restrictions, the Wall Street Journal reports that Silicon Valley venture-capital firms such as Sequoia and chipmakers such as Intel and their Chinese affiliates have been helping build China’s semiconductor industry by exporting sensitive technological know-how, investing in Chinese chip-making firms, and raising money from foreign investors to fund Chinese chip making start-ups.

Companies such as Intel have been very vocal in their home countries, taking a stand against what they claim is systemic racism and racial injustice. Yet, at the same time, they have shown little concern as they assist Beijing with its military development, even though Beijing has committed gross human rights violations against its own people, poses a threat to liberal democracy, and has the ambition to spread authoritarianism around the world.

Thanks to these American companies, Chinese firms have made significant progress in key technologies and are quickly narrowing the gap with western chip makers in technology and manufacturing. These technological advancements have helped make the Chinese military a powerhouse and give the Chinese Communist Party powerful tools to advance its geopolitical ambitions and disrupt the liberal world order.

Passing Laws May Come Too Late

In a statement, Sen. Bob Casey (D-Pa.) criticized these American companies for prioritizing “their bottom lines without regard to the broader American economy or our national security.” He and Sen. John Cornyn (R-Texas) are working on legislation that would “screen outbound U.S. investments and the offshoring of critical supply chains and tech-industry resources to adversaries like China and Russia.”

While such legislation is a welcome move, it may not be the most effective and timely solution because a bill takes months of deliberation. By the time it becomes a law and actually goes into effect, it may be too late because technological advancement takes place daily, and China may have already acquired all it needs to be technically self-sufficient before the bill becomes law.

Since western companies are more interested in fattening their bottom line than national security, stopping their continuing assistance to the Chinese military requires market-oriented solutions, in addition to legislation.

For example, Microsoft’s LinkedIn recently pulled out of China because it finally realized that it could not straddle between two opposing political and value systems and be successful. The increasing censorship Beijing demands has threatened the company’s reputation and subjected it to enormous legal risks back home, eventually hurting its profit worldwide. Patriotic shareholders of western companies should point to LinkedIn as an example to demand management to be accountable for subjecting their company to the risks of assisting the Chinese military’s modernization.

Another way to get the attention of western companies is for some of their most essential domestic customers, such as the Department of Defense, to put their foot down and demand companies pick a lane between liberal democracy and China’s authoritarian regime. A company that engages in helping the Chinese military at the expense of America’s national security doesn’t deserve to have millions or even billions of dollars worth of contracts with the U.S. government. Such a company shouldn’t be allowed to profit from U.S. taxpayers. Hopefully, western companies will finally change their behavior when management realizes they are hurting their bottom line if they continue business as usual.

*****

This article was published on November 17, 2021, and is reproduced with permission from The Federalist.

The Vampire Economy: Italy, Germany, and the US thumbnail

The Vampire Economy: Italy, Germany, and the US

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By Jeffrey M. Herbener

Editors’ Note: Socialists have a habit of making everything a war. A war on poverty, a war on Covid, or the “existential risk of climate change.” In each case, it is an excuse to command more and more elements of the economy. It is not socialism per se as the ownership of the means of production stays largely in private hands. However, owners of “the favored businesses” get cheap loans, direct investment, protection from competition, tax breaks, and in many cases, the investors in such companies are members of, or cronies of, the political power brokers. It technically is more like the fascist model described below in some detail. Both the Chinese and US economies are to a greater or lesser degree, showing these characteristics. Clearly, environmental policy and healthcare concerns are pushing the US increasingly towards this model. Readers need to know this essential history and its conclusion. It doesn’t end well.

What is the link between fascism and socialism? They are stages on a continuum of economic control, one that begins in intervention in the free market, moves toward regimentation and greater rigidity, marches toward socialism as failures increase, and ends in a dictatorship.

The fascist system wrote Mises, “clung first to the same principles of economic policies which all, not outright socialist governments have adopted in our day, interventionism. Then later it turned step by step toward the German system of socialism, i.e., all-round state control of economic activities.”(1)

What distinguished the fascist variety of interventionism was its reliance on the idea of stability to justify extending state power. Big business and labor eagerly allied with the state to obtain stability against what Murray Rothbard called business fluctuations, the ups, and downs of particular markets that result from shifting consumer demands. They naïvely thought that state power could supplant consumer sovereignty with their own producer sovereignty over their industries while maintaining the greater productivity of the division of labor.

At first, the fascists used state spending, mainly for war, to eliminate business fluctuations. Only after they became dependent on the state did the leaders of big business and labor realize that they had merely traded consumer sovereignty for state sovereignty. Soon after they learned which one was the more exacting taskmaster.

To extend their control, the fascists bolstered fiscal expenditures with debt and monetary inflation. Not only did they hope thereby to dominate more and more industries with their expenditures, but also to boost public support for their regimes by generating economic prosperity. Instead, their reckless spending and inflating set in motion the boom-bust cycle. They took the depression as an opportunity to extend their power further by socializing investment with regulations while claiming that such measures would stabilize the business cycle.

The fascists found a readymade theoretical justification for stabilization policies in the work of John Maynard Keynes.(2) Keynes claimed that the instability of capitalism emanated from the free play the system gave to the “animal spirits” of investors. Driven by bouts of over-optimism and over-pessimism, investors alternate between bullish spending and bearish hoarding sending the economy into fits of boom and bust.

Keynes proposed to eliminate this instability with state control over both sides of the capital markets. A central bank with the power to inflate the money supply through credit expansion would determine the supply of capital funding and fiscal and regulatory policy would socialize the investment of capital.

In an open letter to President Roosevelt published in the New York Times on December 31, 1933, Keynes counseled this plan:

In a field of domestic policy, I put in the forefront, a large volume of loan expenditure under government auspices. I put in the second place the maintenance of cheap and abundant credit. . . . With these . . . I should expect a successful outcome with great confidence. How much that would mean, not only to the material prosperity of the United States and the whole world, but in comfort to men’s minds through a restoration of their faith in the wisdom and the power of government.(3)

Keynes was even more enthusiastic about the spread of his faith in Germany. In the preface to the German edition of the General Theory, published in 1936, Keynes wrote:

The theory of aggregate production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire.(4)

State control of money, credit, banking, and investment became the blueprint for fascist stabilization policy. Thus, the expansion of state control under fascism followed a predictable pattern. Debt and monetary inflation paid for state spending. The resulting expansion of credit led to the boom-bust cycle. The financial collapse of the bust resulted in stricter regulation of banking and socialization of investment, which permitted more monetary inflation, credit expansion, debt, and spending. The consequent decline in the purchasing power of money justified price and wage controls, which became the focal point of all-around state control. In some cases more slowly and in other cases more rapidly, fascism followed this path toward central planning.

Italian Fascism

The Italian Fascists began spending and inflating to co-opt big business soon after the March on Rome in 1922. Industrial profits and production jumped during the consequent boom which lasted until 1926. Protectionist measures were also enacted during the boom to give an added benefit to steel, iron, automobiles, and shipbuilding. Under pressure on the lire to devalue in 1926, the Bank of Italy reversed course and the boom collapsed. By 1927, prices and wages were falling but not sufficiently to prevent widespread bankruptcy and depression. Businesses failed by the thousands in the 1930s.

From 1928–1932 production was cut by one-fourth and national income by one-third, and by the end of 1934 one-third of capital capacity sat idle and over one million workers were unemployed. The state progressively intervened to stave off the ill effects of its monetary inflation and extend its control. It bailed out big businesses and banks, fostered mergers and acquisitions, cartelized the remaining, now larger enterprises, and renewed spending, mainly for war.

Annual state expenditures in the early 1930s were double their levels of the early years of Fascism. As tax revenues failed to keep pace, deficits ballooned. Banks also combined and associated more closely with big industrial concerns under the supervision of the state. To rescue the big banks, which had accumulated significant holdings of industrial securities during the boom, the state nationalized their holdings in 1931 and issued new securities, backed by the state, to provide a source of new credit for the banks.

The state also created new and invigorated old credit institutions outside the banking system to provide added channels for credit. It appointed a majority of the boards of these new credit institutions and provided them with their funds by direct subsidies and by guaranteeing their industrial investments with state bonds. Private parties would invest in the state-guaranteed bonds of these new institutions that would then invest the funds in favored businesses.

Although the domestic purchasing power of the lire was rising in the early 1930s, the Italian state still overvalued it in foreign exchange. The resulting trade deficit and gold outflows led the state to limit imports and impose foreign exchange controls. When even the highest tariff rates in the world failed to close the trade deficit the Fascists adopted an import quota system enforced by licensing importers.

The burgeoning state control of business swelled the state bureaucracy and led to widespread centralization and corruption. Small businesses were left to fail and have their assets swallowed up by big businesses and big banks. Nearly 100,000 businesses failed from 1926–1935 in Italy, almost fourfold the number that failed in the previous ten years. By 1935, Mussolini boasted that fully three-fourths of Italian businesses rested on the shoulders of the state.(5)

The Ethiopian war in 1935 demonstrated the extent of Fascist control.(6) Annual war expenditures were fourteen times larger during the war years than previously. To meet these extraordinary expenditures, the Fascists resorted to monetary inflation and capital confiscation. Beginning in July, the gold reserve against the Bank of Italy’s notes was progressively relaxed. Even as the gold reserve sagged, from 5.25 billion lire in June of 1935 to 3.93 billion lire in October, the money stock rose to 15.27 billion lire. In the next few years, monetary inflation accelerated as the Fascists monetized the national debt which stood at 1.8 trillion lire by 1938. To curb the decline in the purchasing power of the lire, the Fascists resorted to price and wage controls which paved the way for all-around planning.

Confiscation of capital began in May of 1935, when banks, businesses, and individuals were required to turn all their foreign-issued stocks and bonds over to the Bank of Italy. By September, the state had compelled renters in cities and towns over a certain size to buy state bonds in amounts proportionate to their rents, all Italians to exchange their foreign credits for state bonds, businesses to invest all profits in excess of 6% in state securities, and investors holding heavily depreciated state bonds to exchange them plus liquid capital for a new issue of bonds at par value.

Carl Schmidt, in 1939, summarized Italian Fascism with these words:

Fascism rose to power as a preventive reaction, defending the pecuniary and sentimental interests of the propertied and quasi-propertied groups of towns and country from the spectre [sic] of revolution. . . . It not only sought to safeguard existing property rights, but also fostered further industrialization and concentration of business enterprise. . . . Yet, Fascism could not solve the basic difficulties of Italian capitalism. The deepening economic crisis in later years forced business enterprise to rest more and more on the support of the State. As the economic role of the State grew, a subtle shift of spirit and purposes took place. Governmental support of the going economic order called for an increasing army of intruding officials, for a bureaucratic formalization of business affairs. And the bureaucracy developed ends of its own, associated with holding and enlarging its security and power. . . . Thus, despite all formal pronouncements . . . Fascism seemed to be evolving into a tyranny over all but a very few of the Italian people.(7)

The Original Vampire Economy

Fascist Italy defined the fascist style of interventionism: state control of the economy by fiscal and monetary policy and regulation. Nazi Germany, in contrast, illustrates not so much the fascist style, but how the fascist episode culminates in all-around state control of the economy.

Concerning the socialization of investment under Nazi Germany, Günter Reimann wrote in 1939:

Backed by the General Staff of the army, Nazi bureaucrats have been able to embark upon schemes which compel the most powerful leaders of business and finance to undertake projects which they consider both risky and unprofitable. The building-up of the German war economy takes precedence over everything, including the opinions of private capitalists and their scientific research staffs. . . . The viewpoint of private investors and industrialists who think of the ultimate safety and soundness of investments has been disregarded.

This is particularly true of the big industrialists who earned huge profits from the armament boom and who have large amounts of capital to invest. Their liquid funds do not escape the attention of State commissars, who are searching for means to finance new State-sponsored plants.(8)

Lured by enormous profits in war production, big businessmen in one industry after another came under state control. Neither political connections nor social status protected industrialists from state predation. The Nazis coerced them into investing war profits to build factories for unprofitable projects such as synthetic rubber, low grade iron ore, and other ersatz production. State and Army commissars insisted on the rapid expansion of plant capacity, ancillary investments related to war production, and the use of obsolete, discarded machinery.(9)

Along with directing investment at the point of the bayonet, the Nazis confiscated the profits of industrialists and directed them to new construction. In addition to malinvesting capital, these policies retarded the maintenance of existing capital capacity. The state even forbade private investment to increase or replace existing profitable capital capacity. Prohibitions against new entry were enacted as well as closing down existing plants. And in the shrinking realm of private investment, the capriciousness of state bureaucrats could throw investment plans into disarray. The myopia of state planners led to the neglect of investment to maintain and improve what would become important wartime industries like the railroads.(10)

Reimann summarizes the situation with these words:

The flow of capital is no longer regulated by a capital market which directs it into industries that are particularly profitable. The State has supplanted the capital market. It compels private capitalists to make investments in a future wartime economy and creates economic conditions which cause old investments to decline in value.(11)

Faced with the dearth of profitable opportunities in the shrinking market economy, investors turned to what they thought would be safe-havens from state power such as real estate and precious metals and gems. Thus, even the capital not consumed by the state was directed away from the capital structure.(12)

As part of the drive to bring capital markets under their control, the Nazis made bankers mere functionaries. Like their counterparts in industry, big bankers eagerly entangled themselves in the web of state power by accepting bailouts to avoid bankruptcy during the banking crisis in 1931. By the time the Nazis came to power, the state-owned a majority of the shares of the big banks.

State power was extended to the entire economy in the form of price and wage controls. Wage controls were imposed in 1933 with the purpose of holding down labor costs to boost profits during the depression and comprehensive price controls were added in 1936 to hide the effects of monetary inflation.In 1933 the state declared its “control of all credit institutions” and began to license banks, collect information on debtors, and scrutinize banking operations. The state dictated to them what investments they were permitted to recommend to investors, namely government bonds and bonds of the enterprises subsidized by the state. Bankers were forbidden to express less than optimistic assessments of the state’s financial condition. For investors who refused such advice and withdrew their capital from banks to invest on their own initiative, bankers were obligated to report their activity to the state. A large bureaucracy was formed to oversee banking, centered in the Reichsbank. By 1935, state spending had ballooned to the point that private investment decisions had been supplanted and banking was under the full sway of the state.(13)

Hans Sennholz reports that by 1945, the Reichsbank’s note issue was sixteen times larger than it was in 1933. And bank credit increased nearly sevenfold from July of 1936 to September 1944. By 1939 state debt had risen to 16 billion marks and the deficit had come to exceed the entire funds available in the capital markets. By 1935, war expenditures were more than half the total budget and by 1939 they exceeded 75% of the total. The price and wage controls enacted in response to the decline in the purchasing power of the mark formed an integral part of the Nazi system of total command over the economy.(14)

When debt and monetary inflation proved insufficient to feed its spending, the state freed itself from financial limitations by decree. It refused to make payment on its debt, confiscated funds from individuals and groups, canceled private debts and reduced interest rates on private loans and transferred the resulting funds to the state.

As financial pressures from war expenditures mounted during 1938 and investors fled from banks to invest with other financial intermediaries, the state compelled all credit intermediaries, banks, insurance companies, and savings banks as well as municipalities to buy its debt. The stock market, too, was controlled by the state through the dominant position that banks came to hold in it after its collapse during the depression. Reimann estimated that by 1938, 80–90% of new capital was absorbed by the state. Thus, the Nazis built their war economy by consuming the capital stock constructed by preceding generations of German savers and investors.(15)

The New Vampire Economy

The fascist form of interventionism in America was built on the rump of state corporatism that emerged during the Progressive Era and the experience of state planning during the First World War.(16) The former culminated in the establishment of the Federal Reserve System to fully centralize state control of banks and monetary inflation and the latter set precedents for New Deal programs.

With the Fed in full swing, the Italian pattern during the Great Depression was seen in America, also.(17) Monetary inflation and credit expansion during the 1920s led to the bust which was used to justify greater state control of investment, through fiscal expenditures and regulation. Like Mussolini, Hoover used protectionism to favor certain producers, increased funding for public works programs, and bailed out key businesses. Federal spending more than doubled from 1929 through 1934 and nearly tripled for the decade between 1929 and 1939. From a modest surplus in 1930, the federal budget was in deficit in every one of the next fifteen years. In 1932 the deficit was 142% of tax revenue and in 1933 it was 130%. In four of the five years between 1932 and 1936, the budget deficit was more than 100% of tax revenues.(18)

After the stock market crash in October 1929, the Fed tried unsuccessfully to re-inflate and to bolster the credit markets. When its effort failed, Hoover strong-armed big banks into establishing the National Credit Corporation to bailout banks. Capitalized with $500 million from the banks and the power to borrow up to $1 billion with Fed assistance, the NCC operated as a stopgap measure until the rebirth of the War Finance Corporation from the First World War as the Reconstruction Finance Corporation.

Born in January of 1932, the RFC was chartered to issue $1.5 billion in debt and to lend to distressed businesses. The first $1 billion was dispensed by June and 80% of it went to banks and railroads. In July the RFC was authorized by the Emergency Relief and Construction Act to extend its credit to $3.8 billion and it dispensed $2.3 billion for the year, $300 million of which was lent to the states for their relief programs.

Hoover also induced insurance companies to put off foreclosing mortgages by subsidizing them through the Federal Farm Loan Banks. Authorized by the first Glass-Steagall Act in February of 1932, the Fed stepped up its purchases of Treasury securities in what proved to be another vain attempt to re-inflate the economy. Despite a 35% rise in bank reserves during 1932, the money stock fell by $3.5 billion. In July of 1932, Hoover added the Federal Home Loan Bank with $125 million of capital for mortgage loans.(19)

At least Hoover did not embrace the Swope Plan, which called for the forced cartelization of the economy under the direction of the federal government; that would have to wait for his successor.(20) While accelerating expansionary fiscal and monetary policy, Roosevelt conducted a regulatory blitz. The Emergency Banking Act of 1933 further cartelized banks, brought them under stricter federal regulation and provided bailouts. The state eliminated competition among banks and from non-bank institutions by reserving to banks a uniform set of practices. The Banking Act of 1935 insulated the banking cartel by closing entry to unapproved competitors.

The Federal Deposit Insurance Corporation slowed the liquidation process of the depression and froze malinvestments in banking and the capital structure. To pave the way for more monetary inflation, Roosevelt abandoned the gold standard, abrogated gold contracts, and confiscated gold holdings. The Civilian Conservation Corps, the Emergency Relief Act, and the Works Progress Administration subsidized unemployment and misallocation of labor and distorted private charitable efforts.

The Agricultural Adjustment Acts put crop planting decisions in the hands of the state and subsidized disinvestment and malinvestment in agricultural production. The Tennessee Valley Authority malinvested capital, destroyed natural resources, and distorted energy markets. The Federal Securities Act put stock markets, the pinnacle of capital allocation in the market, under the regulatory arm of the federal government.

The National Industrial Recovery Act cartelized and bureaucratized the economy under federal control. The Home Owners Loan Act, the National Housing Act, and the Rural Electrification Administration malinvested capital in housing and electricity. The National Labor Relations Act and the Fair Labor Standards Act distorted labor costs leading to malinvestments and fostered unemployment. The Social Security Act forced people to “invest” in federal trust-fund bonds. As the Fascists had done, Roosevelt built public support for state intervention as necessary for stability and made war preparation the main outlet for the state’s stabilizing expenditures.

The Office of Price Administration was charged with setting price and wage controls in the wake of the Fed’s massive monetary inflation. Its General Maximum Price Regulation, issued in April of 1942, resulted in widespread shortages and rationing. Not content with the unsystematic application of controls, Roosevelt pushed through the Economic Stabilization Act in October of 1942. The Office of Economic Stabilization was charged to develop a “comprehensive national economic policy relating to control of civilian purchasing power, prices, rents, wages, profits, rationing, subsidies, and all related matters.” While New Deal agencies owed much to First World War predecessors both in form and in personnel it took the Second World War to bring all-around state planning.(21) The Selective Training and Service Act of 1940 empowered Roosevelt to conscript labor and confiscate goods and factors for the war effort. In mid-1940, the Reconstruction Finance Corporation was authorized to issue debt and use it to purchase and operate production facilities, invest in equipment and machinery, and buy land for war production. The First and Second War Powers Acts in 1941 vested broad powers in the President to seize production facilities, regulate industries, purchase goods and factors, stipulate terms of contracts, allocate resources and expanded Fed inflationary potential by authorizing it to purchase debt directly from the Treasury.

From 1940 to 1945 federal expenditures increased nearly tenfold and tax revenue rose nearly sevenfold. By 1942, the budget deficit was more than double all federal expenditures in 1940. In 1943, the deficit was two and a half times the deficit in 1942 and double the amount of 1943 tax revenues. The federal debt rose fivefold during the war and the Fed nearly doubled the money stock.(22)

State power was rolled back after the war, federal expenditures were cut in half and many of the agencies were disbanded and some of their functions ceased while others were transferred to remaining agencies, but the state assumed the role of stabilizing the economy. The Employment Act of 1946 pledged the federal government to “use all practicable means . . . to promote maximum employment, production, and purchasing power” in other words, to prevent downturns.(23) To stabilize the economy, the state has been working to restore the power it exercised during the war.

Let’s recount how far down the fascist path we have traveled. The Fascists used state spending and regulation to direct investment into state-approved lines of production, war being chief among them. The federal government has 165 primary agencies, 141 of which have a significant affect on investment in the economy. Sixty-six impact investment by fiscal expenditures.

The departments of agriculture, commerce, defense, education, energy, health and human services, homeland security, housing and urban development, transportation, and interior are among the major sources of such federal control.

In 2005, the federal government spent approximately $1.3 trillion in these areas. And from 1945 to 2005, the federal government has spent $9.5 trillion on defense, $6.5 trillion on health care, $1.4 trillion on education, $1.2 trillion on transportation, $0.8 trillion on energy and natural resources, $0.6 trillion on agriculture, $0.5 trillion on science, space, and technology, $0.33 trillion on community and regional development, and $0.3 trillion on commerce and housing.(24) These expenditures have malinvested entire sections of the capital structure.

The other 75 federal agencies that affect investment do so by regulation. Examples here include the departments of labor, justice, and treasury, the environmental protection agency, the federal trade commission, the federal communication commission, the federal deposit insurance corporation, and the federal reserve system.

The cost of compliance with federal regulation has been estimated at $1 trillion a year without the Patriot Act and Sarbanes-Oxley.(25) The impact of the federal government’s fiscal and regulatory policies is $2.3 trillion this year. This is nearly 20% of Gross Domestic Product and over 40% of Private Product Remaining.

The Fascists used a central bank and cartelized the banking system under its regulation for the purpose of monetizing their debt and expanding the supply of credit. The Fed owns $736 billion of the federal debt and depository institutions own another $1.4 trillion. Together they hold 27% of the $7.9 trillion federal debt. Of the $4.6 trillion of the federal debt owned by the public, depository institutions hold 30%. The fiduciary component of checkable deposits issued by depository institutions is approximately $582 billion, which is 8% of the total credit of $7 trillion intermediated by depository institutions.(26) As Joe Salerno has pointed out, monetary inflation and credit expansion cloak the capital consumption of state intervention and thus quell public outcry against it.(27)

The Fascists closed the windows of opportunity for investors to escape state control. As restrictions on banking mounted in the 1960s and 1970s, investors sought alternatives and entrepreneurs provided them. From 1950 to 1980, the share of total assets of all financial intermediaries held by banks fell from 52% to 36%. And the share of the short-term credit market held by banks fell from 91% to 71%.(28) In response to the financial services revolution, the federal government moved to consolidate its control over financial intermediaries.

The Monetary Control Act of 1980 brought all financial institutions that offer checkable deposits under the regulatory authority of the Fed and imposed on them the uniform practices of all member banks. All depository institutions in America are regulated by three federal agencies, the Fed, the FDIC, and the Comptroller of the Currency. Combined they enforce more than 150 categories of regulations.

The Fascists used banks to collect information on clients’ financial activity. Since the Bank Secrecy Act of 1970, the federal government has enacted eight additional anti-money laundering laws expanding its power to collect financial information on Americans. Banks must now form financial profiles of their customers and file suspicious activities reports to the state when they deviate from these patterns.

The Fascists dictated acceptable lines of investment. The federal government compels banks to make certain types of loans, as with the Community Reinvestment Act, and businesses to make certain types of investments, as with the Americans with Disabilities Act, environmental laws, and Sarbanes-Oxley. In other cases, the federal government coercively changes incentives banks have to lend into certain lines of production, as with the Fannie Mae and Freddie Mac.

The Fascists confiscated capital when fiscal pressures mounted. The confiscatory power of the federal government has been directed at drug war and RICO cases. The Patriot Act increased asset confiscation to abate money laundering and made anti-money laundering measures uniform across financial institutions.

Faced with a fiscal crisis and price inflation from their fiscal and monetary policies, the Fascists stepped up dictatorial and confiscatory powers and resorted to price and wage controls. Extraordinary federal expenditures for the Vietnam War and Great Society programs coupled with monetary inflation led to our last imposition of price and wage controls in the early 1970s. Certainly, the federal government will resort to greater dictatorial and confiscatory powers and stricter price and wage controls in the wake of the next fiscal and monetary crisis.

A political class that is willing to throw $250 billion into rebuilding a single city in the face of massive federal deficits is oblivious to the looming fiscal danger. As always, however, war spending is the biggest threat to the fiscal integrity of the state. If these fascist trends in America are not checked, they will lead to net capital consumption and the end of economic progress in America not to mention curtailing what remains of our liberties.

*****

This article was published on November 13, 2021, and is reproduced with permission from the Ludwig von Mises Institute.

References ( ) follow the article linked directly above (This article).

With Oil Prices Up More than 60% in a Year Beijing Biden Sells U.S. Oil Reserves Overseas to Asia thumbnail

With Oil Prices Up More than 60% in a Year Beijing Biden Sells U.S. Oil Reserves Overseas to Asia

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By Pamela Geller

Joe Hoft over at Gateway is reporting that terrible Joe is selling America’s reserves of oil to Asia after shutting down oil production in the U.S. This is the act of an enemy. There is no pushback from quisling GOP ‘leadership.’

With Oil Prices Up More than 60% in a Year Biden Decides to Sell US Oil Reserves Overseas to Asia

By Joe Hoft  November 18, 2021 at 5:20pm

Education Views reports:

Practically overnight, America went from oil independence and being a net oil [exporter], to suffering shortages and, as noted, rising prices. When asked about the problem, Biden risibly blamed OPEC and Russia. Meanwhile, Jennifer Granholm, the energy secretary, simply cackled maniacally and claimed the administration was helpless

Biden is now under pressure to tap the SPR to relieve some of the pressure on fuel prices. (Again, remember that Biden birthed this problem by squashing American fuel production, thereby creating the shortage. There’s also the little matter of his administration working with Congress to print money like rolls of toilet paper—except that toilet paper is more useful than inflationary dollars.) Even Chuckie Schumer wants to lower prices by chipping away at our SPR emergency supply, despite our having vast, untapped resources beneath American land.

It turns out, though, that Biden is already tapping into the SPR; he’s just not doing it to help Americans. A report in investment circles is finally trickling down into the mainstream news: Biden is selling massive amounts of SPR oil…to Asia!

This is based on a Bloomberg report:

About 1.6 million barrels of crude from the U.S. Strategic Petroleum Reserve — a monthly record — was shipped out in October, according to data from market intelligence firm Kpler. Three cargoes were loaded onto a supertanker in the U.S. Gulf Coast and are headed to Asia.

“Given the ongoing pace of the current SPR release — 12 million barrels in the last two months and the biggest weekly release so far last week at 3.1 million barrels — it’s fair to assume more SPR barrels are going to leave U.S. shores in the weeks ahead,” said Matt Smith, an oil analyst at Kpler.

Biden gave Taliban terrorists $84 billion in arms and gear and planes and choppers.  Biden opened the Southern Border and more than a million illegal immigrants have crossed into the US.  Now Biden sells the US oil reserves to Asia after changing America from being an oil exporter to dependent on Russia and the Middle East.

Is it time to impeach and remove Biden yet?  If not when will it be enough?

EDITORS NOTE: This Geller Report column is republished with permission. ©All rights reserved.

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NYT Explores What Happens When Democrats Have All the Power. The Answer May Surprise You thumbnail

NYT Explores What Happens When Democrats Have All the Power. The Answer May Surprise You

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By Foundation for Economic Education (FEE)

It turns out voters and lawmakers in progressive states arrive at decisions like everyone else: on self-interest. But that’s not all.

Last week New York Times video journalist Johnny Harris asked a simple question.

“What do Democrats actually do when they have all the power?”

It turns out that 18 states in the US are effectively run by Democrats, who control both the executive and legislative branches. As Harris notes, Democratic leaders tend to blame Republicans for foiling their progressive plans, but that’s hardly the case in these 18 states where Republicans stand well away from the levers of power.

To answer his question—what do Democrats do when they have power?—Harris teamed up with Binyamin Appelbaum, the lead writer on business and economics on the Times editorial board and author of The Economists’ Hour.

What they found may surprise you.

First, Harris and Applebaum drilled into the 2020 Democratic Party Platform to see which values were most important to Democrats. They then focused on a particular state: California, the “quintessential liberal state” where Democrats rule with ironclad majorities and control the government in most major cities. Finally, the journalists decided to look at one specific policy: housing.

As Harris notes, housing policy is not exactly sexy stuff. But Applebaum stresses just how important housing is in battling inequality.

“Looking at California, you have to look at housing,” Applebaum says. “You cannot say you are against income inequality in America unless you are willing to have affordable housing built in your neighborhood….The neighborhood where you are born has a huge influence on the rest of your life.”

Moreover, Harris points out that Democrats overwhelmingly agree on its vital importance, noting that the word housing is mentioned more than 100 times in the Democrats’ platform. Indeed, Democrats are shown repeating a common mantra in the Times video.

“Housing is a human right.”

“Housing is a human right.”

“Housing is a human right.”

Democrats may say housing is a human right, but Applebaum notes their actions say something else, at least in California.

“You know those signs where you drive into a state and it says ‘Welcome to California’?” asks Applebaum. “You might as well replace them with signs that say KEEP OUT. Because in California the cost of housing is so high that for many people it’s simply unaffordable.”

As the Los Angeles Times noted in 2019, California has “an overregulation problem,” which is why nine of the 15 priciest metro areas in the US are in California and the median price of a house in San Diego is $830,000. In some cases, people have had to wait 20 years to build a pair of single family homes. (Applebaum, it’s worth noting, appears to misdiagnose the problem. He complains that “the state has simply for the most part stopped building housing.” Perhaps Applebaum simply misspoke, but it’s worth noting the state doesn’t need to build a single unit of housing; it simply needs to step back and allow the market to function.)

Regulations, however, aren’t the full story. As Harris notes, Californians themselves have fought tooth and nail to keep higher-density affordable housing out of their neighborhoods. Palo Alto is cited as an example, where voters in 2013 overturned a unanimous city council vote to rezone a 2.46-acre site to enable a housing development with 60 units for low-income seniors and 12 single-family homes.

“I think people aren’t living their values,” Applebaum says. “There’s an aspect of sort of greed here.”

Housing isn’t the only area the Times journalists find where progressives fail to “live their values.” Washington state having the most regressive tax rate in the US is cited as another example, as are the “gerrymandered” school districts in states like Illinois and Connecticut that consign low-income families to the least-funded schools because of their zip code.

The journalists are left with a gloomy conclusion.

“For some of these foundational Democratic values of housing equality, progressive taxation, and education equality, Democrats don’t actually embody their values very well,” Harris says.

Applebaum is even more blunt.

“Blue states are the problem,” the economics writer says. “Blue states are where the housing crisis is located. Blue states are where the disparities in education funding are the most dramatic. Blue states are the places where tens of thousands of homeless people are living on the streets. Blue states are the places where economic inequality is increasing most quickly in this country. This is not a problem of not doing well enough; it is a situation where blue states are the problem.”

Harris says affluent liberals “tend to be really good at showing up at the marches” and talking about their concerns over inequality. But when rubber meets the road, they tend to make decisions based on a different calculus: what benefits them personally.

For some, the findings and claims of the Times journalists could be jarring. But they are likely no surprise to FEE readers.

One of the pillars of public choice theory—a school of economics pioneered by Nobel Prize-winning economist James Buchanan—is that people make decisions based primarily on self-interest. (People act out of concern for others, too, but these interests tend to be secondary to self-interest.) Buchanan’s theory rests on the idea that all groups of people tend to reach decisions in this manner, including people acting in the political marketplace such as voters, politicians, and bureaucrats.

Many believe that self interest is part of the human condition, something as natural as hunger, love, and procreation. Harnessing the instinct of self-interest in a healthy way—through free exchange—has long been considered a cornerstone of capitalism and a key to a prosperous society.

“It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest,” Adam Smith famously observed in The Wealth of Nations. “We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.”

For many progressives, however, self-interest has become a kind of heresy. The idea that individuals should be motivated by such things as profit and self-interest is anathema; these are values to be found in Ayn Rand novels, not practiced in 21st century America.

But as Applebaum notes, progressives are in fact making decisions based on self-interest—he uses the word “greed”—not altruism. This should come as little surprise, and it would be perfectly fine if progressives were acting on self-interest in a market economy; but they are not. They are using the law in perverse ways to their own benefit—all while maintaining the belief that they’re acting out of altruism.

The Times article makes it clear that voters and politicians in progressive states still arrive at decisions like everyone else: on self-interest. The results are just far worse when those decisions are made in the political space, not the marketplace.

COLUMN BY

Jon Miltimore

Jonathan Miltimore is the Managing Editor of FEE.org. His writing/reporting has been the subject of articles in TIME magazine, The Wall Street Journal, CNN, Forbes, Fox News, and the Star Tribune. Bylines: Newsweek, The Washington Times, MSN.com, The Washington Examiner, The Daily Caller, The Federalist, the Epoch Times.

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

Here’s Everything That’s Wrong With the Build Back Better Spending Bill House Democrats Just Passed thumbnail

Here’s Everything That’s Wrong With the Build Back Better Spending Bill House Democrats Just Passed

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By Foundation for Economic Education (FEE)

House Democrats voted Friday to pass the so-called “Build Back Better” plan, a multi-trillion-dollar welfare and climate change spending bill. They’re heralding it as a major accomplishment that will uplift struggling Americans and revitalize the economy. So, let’s review all the reasons it’s an utterly terrible piece of legislation.

First, the cost is astronomical. The Biden administration and its allies in Congress have repeatedly made false claims about its price tag. They’ve time and time again parroted the claim that the legislation “costs zero” because it supposedly does not add to the national debt and is “paid for” with new tax increases. (It actually does add to the debt, but that’s not the point). Yet this is an absurd argument. As I previously explained:

While it may be more fiscally responsible to pair spending increases with tax hikes, it doesn’t make them cost less. That’s like saying that buying groceries with cash instead of a credit card means the price tag is zero—it’s nonsensical.  Every dollar the government spends has to come from somewhere. Whether it’s financed through additional debt or new taxes means that the consequences are different, yes, but there are still costs involved.

The true cost of the legislation, once one accounts for budget gimmicks and dishonest political rhetoric, is up to $4.9 trillion. That’s an astounding $32,000 per federal taxpayer.

And most of this money would go to wasteful government programs and counterproductive expansions of the welfare state.

For example, the bill funnels billions into electric vehicle subsidies that make almost zero difference on carbon emissions and pad the pockets of wealthy consumers. It similarly wastes billions funding a “Civilian Climate Corps” that would pay people to do environmental activism that even proponents admit won’t reduce emissions. It puts hundreds of billions toward subsidies for healthcare, childcare, and housing that will ultimately push the cost of these sectors even higher and prove counterproductive.

So, too, the Build Back Better agenda openly violates President Biden’s promises that he wouldn’t raise taxes on anyone earning less than $400,000. It raises billions in new taxes on nicotine products that millions of working-class Americans regularly consume and hikes corporate taxes that ultimately fall on workers’ shoulders via lower wages. It does all this while, rather hypocritically, giving the rich a net tax cut.

What do we get in exchange for this hodge-podge of wasteful spending and punitive tax hikes? Worse economic outcomes, not the revitalization that President Biden and his allies have promised.

Because the bill confiscates trillions from the private, productive sector and funnels it through the government’s political schemes, it will actually lead to lower wages, lower employment, and lower economic growth over the long-run. That’s the finding of analyses by the Wharton School of Business, the Tax Foundation, and too many other experts to count. (And no, the spending bill won’t reduce inflation as President Biden oddly claims).

In sum, the Build Back Better agenda is a government spending bill that’s uniquely terrible even by the abysmally low standards we expect from Congress. The good news is that it doesn’t look like it’s going anywhere once it gets to the Senate.

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

Build Back Better Makes U.S. Income Tax Rate Highest in Developed World thumbnail

Build Back Better Makes U.S. Income Tax Rate Highest in Developed World

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By Pamela Geller

Disaster! Millions of Americans made the worst mistake of their voting life, when they voted for Joe Biden thinking they would get a moderate. Now America is paying the price. Literally. How do President Trump’s tweets look now?

Build Back Better would make US income tax rate highest in developed world

By New York Post, November 17, 2021

President Biden’s Build Back Better agenda would hike the average top tax rate on personal income in the United States to the highest level in the developed world, according to an analysis by the Tax Foundation.

The $1.75 trillion proposal currently before the House of Representatives would end up raising the average top tax rate on personal income in the US to a whopping 57.4 percent, the highest in the 38-member Organisation for Economic Co-operation and Development, according to the analysis.

That’s up from the US’ current nationwide average top tax rate of 42.9 percent, which lands squarely in the middle when compared with the other OECD countries, according to the Tax Foundation, a Washington, DC-based think tank.

The new rate under Biden’s proposal would push the US top tax rate even higher than Japan’s notoriously cumbersome

CLICK HERE FOR CHARTE OF GLOBAL TAX RATES SHOWING THE U.S. WITH HIGHEST RATE OF 57.4%

Biden’s Build Back Better top tax rate would overtake Japan, Denmark, and France – currently the three countries with the highest tax rates in the OECD.

The top tax rate in a handful of blue states, including New York, California and New Jersey, would be even higher than the nationwide average at 66.2 percent, 64.7 percent and 63.2 percent, respectively, according to the analysis.

But under Biden’s plan, even residents of low-tax states like Wyoming, Washington and Texas will still face a top income tax rate of at least 51.4 percent due to the federal levy, the analysis shows.

A few different factors would drive the average top income tax higher, according to the analysts at the Tax Foundation.

First, under current law, the top marginal tax rate on ordinary income is scheduled to increase from 37 percent to 39.6 percent starting in 2026, according to the Tax Foundation.

The US has a marginal tax rate, meaning that tax rate only applies to earnings above the top threshold, which is above half a million dollars a year per household.

Analysis shows that low-tax states like Wyoming and Texas will still face a top income tax rate of at least 51.4 percent under President Biden’s plan.

On top of that, the wealthiest US households would face a 5 percent surcharge on modified adjusted gross income (MAGI) above $10 million, plus a 3 percent charge on MAGI above $25 million, according to the analysis.

The plan would also close provisions that allow some wealthy taxpayers to avoid the 3.8 percent Medicare surtax on their earnings by strengthening a net investment income tax for anyone earning more than $400,000 a year.

Overall, these factors would push the top marginal tax rate on personal income at the federal level to 51.4 percent, according to the Tax Foundation, and that’s before state income tax.

It’s still unclear if the contentious cap on state and local tax deductions will be lifted in the Build Back Better plan, but if it is, then the average top marginal income tax rate would fall slightly to 54 percent, according to the foundation.

CLICK HERE TO VIEW MAP OF TOP TAX RATES IN U.S. BY STATE.

Under Build Back Better, even low-tax states would face major rate hikes.

“As policymakers explore options to raise revenue, they should keep in mind how the US compares to other countries and what the economic effects might be,” the analysis said.

“Raising the top marginal tax rate on ordinary income to the highest in the OECD will damage US competitiveness. It will also reduce incentives to work, save, invest, and innovate, with broad implications for the U.S. economy.”

EDITORS NOTE: This Geller Report column is republished with permission. ©All rights reserved.

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VIDEO: President Donald J. Trump, ‘Joe Biden is Building Back Broke!’ thumbnail

VIDEO: President Donald J. Trump, ‘Joe Biden is Building Back Broke!’

/in , , , /by

By Dr. Rich Swier

We have labeled Biden’s Build Back Better agenda calling it Biden’s Build Back Worse agenda. It looks like we’ve been trumped on this, no pun intended.

President Donald J. Trump’s ‘Save America’ organization has released a new video touting the 45th President’s record on the economy while blasting Joe Biden’s ‘Build Back Broke’ agenda for America.

Joe Biden is Building Back Broke. pic.twitter.com/RjjlJSKCWO

— Trump War Room (@TrumpWarRoom) November 18, 2021

It seems that not a moment goes by before either Biden, one of his handlers, the White House, Democrats, liberals and the media, both legacy and social, come up with an idea that is patently absurd. Then they, using doublethink, twist it until it becomes a critically needed public policy.

It is now clear that Biden, his administration and Democrats, with the support of RINO Republicans, are doublethinkers par excellence.

The Biden administration has a malignant case of doublethink. For example, Biden says his Build Back Better agenda will cost $0 but in fact it has already cost $ trillions, e.g. Democrats infrastructure Bill. Watch as Joe Biden stands firm over debunked zero-cost, 3.5T BBB spending plan. Of course it takes a reporter from Communist Vietnam to explain it to us.

This is doublethink, coupled with circular reasoning, at its best. Biden begins with a fallacy that his agenda costs nothing, when logic says it must cost something. Biden’s Orwellian pragmatic defect.

Biden’s Build Back Worse Agenda

In the below tweet by Biden’s nominee for Comptroller of the Currency Saule Omarova states, “There will be no more private bank deposit accounts and all of the deposit accounts will be held directly at the fed.”

Proposal by Biden’s Treasury nominee Saule Omarova:

“There will be no more private bank deposit accounts and all of the deposit accounts will be held directly at the fed” pic.twitter.com/ojQviX74Bz

— Jewish Deplorable (@TrumpJew2) November 12, 2021

White House Press Secretary Psaki said, “Our view is that the rise in gas prices over the long term makes an even stronger case for doubling down our investment and our focus on clean energy options so we are not relying on the fluctuations and OPEC and their willingness to put more supply and meet the demand in the market.”

.@PressSec: “Our view is that the rise in gas prices over the long term makes an even stronger case for doubling down our investment and focus on clean energy options.” pic.twitter.com/rdDIm2spwY

— Townhall.com (@townhallcom) November 12, 2021

Finally back to Saule Omarova saying that in order to save the planet we must bankrupt the fossil fuels industries. Watch Omarova state, “We want them to go bankrupt if we want to tackle climate change.”

Biden nominee Saule Omarova saying the quiet part out loud. On the oil, coal and gas industries:

“We want them to go bankrupt if we want to tackle climate change.” pic.twitter.com/luMR2HEMK9

— BidenNoms, A Project of AAF (@bidennoms) November 9, 2021

Finally here is Al Gore wanting “big brother” to watch you if you oppose Biden’s climate change agenda. Watch Al Gore’s latest ‘solution’ to Climate Change is mass surveillance:

This is pure Democrat Doublethinking. It is reminiscent of George Orwell’s 1984 double think: “War is peace. Freedom is slavery. Ignorance is strength.”

©Dr. Rich Swier. All rights reserved.

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