Commentary on Political Economy

Tuesday 14 September 2021


 We know that sport is dead as sport. It probably died a long time ago. It survives as spectacle. But even as spectacle it threatens to commit hara-kiri. One of two things: there are only so many global resources to support these "mangia pane a tradimento". Hence, either the number of these parasites is reduced, raising inequality, or else the suckers who follow the circus hand over more of their shrinking resources to the fewer parasites - raising inequality. 

Either way, the best path to raising inequality without social upheaval is to reduce the "masses" to just that status - to a "mass" of helpless idiotic fanatic slaves. In any event, "se tutto và bene... siamo fregati..."

Here is the FIFA vs. UEFA article in the FT:

The Big Read

The battle to control football: Fifa versus Uefa

The plan to hold the World Cup every two years is part of a struggle over whether the big clubs or national teams will be pre-eminent


September 11, 2021 4:00 pm by Murad Ahmed and Samuel Agini in London

Almost a year before the men’s football World Cup takes place in Qatar, Arsène Wenger travelled to Doha this week to meet a group of sporting legends. They gathered not to reminisce about past exploits, but to plot a new future for the game.

Wenger, the venerable former manager of English Premier League club Arsenal, pitched a bold proposition to ex-stars including Brazilian striker Ronaldo and Danish goalkeeper Peter Schmeichel: staging the World Cup every two years, instead of four.

“Times are changing,” says Wenger, 71, who became chief of global football development at Fifa, the sport’s international governing body, in 2018. “The new generation is used to quick responses to what they want.”

The idea is to give fans more of a product they already desire. The 2018 World Cup final between France and Croatia was watched by 1.1bn people worldwide, according to Fifa. But the body also hopes to double its cash. That World Cup, held in Russia, generated an estimated $6bn in revenues from broadcasting, sponsorship and ticketing. Only the Olympic Games captures similar attention and income.

At its heart, the push for a biennial World Cup is a battle over money and power. Fifa is challenging clubs and leagues for greater proceeds from the sport’s expected growth. But its main opponent is Uefa, the European football’s governing body, which runs the Champions League, the world’s most popular club competition. The two sides are fighting for pre-eminence over the world’s favourite game.

Wenger was first asked to investigate the possibility of increasing the World Cup’s frequency by Fifa president Gianni Infantino, a Swiss-Italian bureaucrat who was elected in 2016, rising from obscurity to lead the organisation out of a corruption scandal to become the most powerful person in the game.

FIFA President Gianni Infantino

Fifa’s president Gianni Infantino, centre, and above Arsène Wenger, chief of global football development. Infantino has signalled he may force a ballot by December © Karim Jaafar/AFP via Getty Images

Infantino has already secured an enlargement of the World Cup, which from 2026 will include 48 teams, up from 32. Yet, his latest expansion plan is seen by many as a power grab too far.

Staging the World Cup more often will swallow time allocated for other big football contests, including the annual Champions League in Europe, the Copa América, South America’s national team competition, and even Fifa’s own Women’s World Cup.

It would also steal attention — and potentially, broadcasting cash — away from other events, such as rival world cups for cricket and rugby union, while also colliding with summer Olympics.

Infantino faces stiff resistance. Aleksander Ceferin, the president of Uefa, has said Fifa’s move would “kill football” and that Europe and South America could join forces to boycott the biennial World Cup.

Ceferin’s statement came during a series of meetings this week among the continent’s top football executives held across Switzerland. Those gatherings were supposed to be a celebration of a recent victory against plans to launch the so-called European Super League, a breakaway competition outside the sport’s traditional structures and launched by a dozen of the richest clubs.

How the football calendar could change with a biennial World Cup. World Cup to be played two weeks earlier

Unveiled in May, the project quickly collapsed in the face of protests from fans, media and politicians. Only Italy’s Juventus and Spain’s Real Madrid and FC Barcelona remain committed to reviving the concept. Some involved in the Super League believed they had the tacit support of Infantino, who ultimately came out against.

Having beaten back the Super League rebels, European football’s bosses appear blindsided by the World Cup proposals, which were first floated in May, although the details and intense lobbying only came into the open over recent days.

“Let’s talk,” Nasser al-Khelaifi, president of France’s Paris Saint-Germain and the new chair of the European Club Association, the trade body that represents more than 200 leading club sides, said last week. “We haven’t been approached on this yet.”

Instead, Fifa executives have briefed star footballers and international media on its plans, seeking to drum up popular support. A final decision rests not with fans, players, commentators, clubs or domestic leagues: each one of Fifa’s 211 member nations will need to vote on the proposal.

People close to the lobbying say there is strong support in Africa and Asia, where many countries want more chances to participate in the showpiece tournament. Europe and South America, where opposition is strongest, only have 65 votes between them — not nearly enough to form a veto block. Infantino has signalled he may force a ballot by December.

“This is more materially threatening to football than the Super League,” says a senior European football industry figure. “The Super League was a fairytale. But for this, Fifa have the votes.”

People react as they watch the Russia 2018 World Cup final football match between France and Croatia

Billions of people, from Argentina to Japan, South Africa to India, eagerly follow the World Cup, even if their nations do not qualify © Geoffery Van Der Hasselt/AFP/Getty Images

Outdated schedule?

The first World Cup was the result of a schism over the sport’s future. In 1927, the International Olympic Committee dropped football from the upcoming 1932 Los Angeles Games, due to the sport’s lack of popularity in the US and a disagreement over which players counted as amateurs.

Fifa’s then president, Jules Rimet, decided to launch an international football contest in 1930 in Uruguay, but retained the Olympics’ quadrennial pattern. Over the decades, football grew in popularity, boosted by the advent of television. Billions of people, from Argentina to Japan, South Africa to India, eagerly follow the World Cup, even if their nations do not qualify. Footballers consider lifting the trophy as the sport’s pinnacle.

Seeking the World Cup’s spotlight, countries engage in bitterly-contested bids to stage the event. Governments pay billions of dollars to build stadiums and the privilege of hosting the jamboree. That includes the US, a co-host of the 2026 tournament alongside Mexico and Canada.

Wenger suggests that the World Cup schedule has become “outdated,” given fans’ apparent desire for ever-more football and the relative ease of international travel.

Liverpool’s English defender Trent Alexander-Arnold (L) vies with Real Madrid’s Brazilian forward Vinicius Junior during the UEFA Champions League quarter final

From left, Liverpool’s Trent Alexander-Arnold and Real Madrid’s Vinicius Junior. The main opponent against the push for a biennial World Cup is Uefa, the European football’s governing body © Paul Ellis/AFP via Getty Images

And Fifa has a rare opening to implement its vision with the expiry in 2024 of the “international match calendar”, a 10-year agreement that dictates the timing of club and national team competitions.

Under the current calendar, in most countries, the football season takes place between August and June. At elite level, players take frequent breaks from playing in domestic club leagues to participate in their national teams’ qualifying matches for major tournaments, which are staged in the northern hemisphere’s summer months. In an unprecedented switch, Fifa moved the 2022 World Cup to November. This was because, having already awarded the event to Qatar, officials decided it was not feasible to play in the Gulf state in July, when temperatures can reach over 40C.

How a World Cup every two years would fit with other tournaments Africa Cup of Nations; Concacaf Gold Cup; UEFA European Championship; AFC Asian Cup; Oceania Nations Cup; Conmebol Copa América will be held in 2025 and 2027, World Cup in 2026 and 2028

Wenger’s proposal is to alter football’s annual schedule from 2024 onwards. All national team “qualifiers” would take place in a six-week block between October and November — or over two windows in October and March. “Friendly” matches between countries would be eliminated. The rest of the season would be given over to club games.

The changes would create space for a month-long window for national team tournaments in June. Most of July would be reserved as a rest period for players each year.

All this would allow the World Cup to be staged every two years from 2028 onwards. In alternate years, regional contests such as the European Championships, Copa América and African Cup of Nations could take place. Every summer would become a festival of football.

Uefa has attacked the revised calendar, partly because it will probably result in less time for club matches. That would conflict with its plans to expand the Champions League by at least four additional fixtures per team a season. That is another money-spinning move, designed to attract more TV income and increase the €2bn shared between participating European clubs.

Fifpro, the global players’ union, warns that players risk burnout from additional matches. But Brazil’s Ronaldo reckons the world’s best players will welcome more possibilities to capture football’s biggest prize. He says: “if you ask [Lionel] Messi or Cristiano Ronaldo if they love to have more opportunities to win the World Cup, I’m sure they will say yes.”

From the Epic vs Apple judgement:

“More troublingly for Apple, the judge found that the company lacks justification for its 30 per- cent App Store fee, which “has apparently allowed it to reap supracompetitive profits” — meaning more profit than would be expected in a competitive mar- ket. Specifically, she concluded that Apple’s operating marginson the App Store are likely in excess of 70 percent, even as it invests relatively little of its own resources in developing innova- tive features to continue improv- ing the marketplace. Those “ex- tremely high” margins “strongly show market power,” Gonzalez Rogers wrote.”

Two workers are needed to gather fruit: one to climb up the ladder, the other to hold it. The problem in “the division of SOCIAL labour” - never to be mistaken as “the division of labour”, as if “labour” could ever be ONE HOMOGENEOUS QUANTIFIABLE ENTITY - is how to distribute rewards and resources. When this distribution is so violent and exploitative as to tear apart the social fabric, the nefarious outcomes will not wait long to manifest themselves…

More evidence - is it needed? - of the latitude Big Tech has received to rip off and rip up the entire planet with its rubbish and waste.

In Silicon Valley, Criminal Prosecutors See No Evil

The Elizabeth Holmes fraud trial is set to be a major spectacle, but tech executives generally get a pass when it comes to wrongdoing.

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The trial of Elizabeth Holmes, the founder of the now-defunct blood testing company Theranos, is set to begin on Wednesday in San Jose, Calif.

The trial of Elizabeth Holmes, the founder of the now-defunct blood testing company Theranos, is set to begin on Wednesday in San Jose, Calif.Credit...Jim Wilson/The New York Times

By David Streitfeld

Published Sept. 7, 2021

Updated Sept. 8, 2021

SAN FRANCISCO — The coronavirus pandemic has helped Silicon Valley companies in many ways, from bringing them hordes of new customers to weakening the competition to juicing the bottom line.

Here’s a less obvious benefit: the threat of criminal prosecution has nearly disappeared.

That fact is obscured by the case against Elizabeth Holmes, the founder of the defunct blood-testing company Theranos and the most prominent executive to face criminal fraud charges in the history of Silicon Valley. Her trial, with opening statements set to begin on Wednesday, raises issues of deception, gender, transparency, out-of-control hype and the sartorial influence of the Apple co-founder Steve Jobs, whose style Ms. Holmes mimicked.

But behind the spectacle is the reality that criminal prosecutions in Silicon Valley are a rarity. Even a guilty verdict against Ms. Holmes is unlikely to change that.

Federal prosecutors in Northern California took on only 57 white-collar crime cases in the 2020 fiscal year, down from 94 in 2019, according to researchers. Although 2021 is likely to show a rebound, the total will still be far below the heyday of prosecutorial action in 1995, when 350 cases were brought.


As Silicon Valley has mushroomed from an obscure specialty industry to the wealthiest and most influential collection of companies in history, prosecutors have occasionally promised more attention to it. And there have been brief spikes in cases. They never last.

Nationally, there has been a long-term trend away from white-collar prosecutions. The shift was accelerated by the Sept. 11 attacks, which reallocated investigative resources to the fight against terrorism. But the drop in Northern California was nearly twice as steep from 1995 to 2019 as it was in the Southern District of New York, which has jurisdiction over Wall Street, according to data from the Transactional Records Access Clearinghouse at Syracuse University.

A spokesman for Stephanie Hinds, the acting U.S. attorney for the Northern District of California, the office that is prosecuting Ms. Holmes’s case, declined to comment.

One possible explanation for the decline is that there is simply less crime in Silicon Valley these days. Even before the pandemic, tech was booming. Money flooded into new ventures, some of which quickly achieved $1 billion valuations. People were getting seriously rich. Why bother to do it illegally?


“Silicon Valley is a lot cleaner today than when I started, during the 1990s dot-com bubble,” said Reed Kathrein, a San Francisco lawyer who successfully sued Ms. Holmes and Theranos in 2016 on behalf of investors. “Everyone is throwing money at these start-ups. Everyone thinks they’re going to win the lottery. It’s easier to be honest.”

Reforms prompted by the collapse of WorldCom, a long-distance telephone company, and Enron, an energy company, in the early 2000s have also had an impact.

“Some of the changes in laws, like the Sarbanes-Oxley Act, put the screws on the accountants,” Mr. Kathrein said. “They have to do their jobs now.”


Thirty years ago, the tech industry was known as much for physical products as for software. Indeed, software used to be a physical product. If sales were not going well, that offered possibilities for subterfuge.

MiniScribe, a Colorado disk storage company that had fallen on hard times, was taken over in 1984 by Hambrecht & Quist, prominent Silicon Valley financiers. The investment firm pumped in money and installed its own management. In 1988, to keep its numbers up, MiniScribe managers packed 26,000 bricks into MiniScribe boxes and shipped them to Singapore. When the scheme was revealed, the company went bankrupt and the chief executive went to jail.

In this sense, Mr. Kathrein noted, Ms. Holmes’s case was a throwback. She was charged with making false and misleading statements to investors that Theranos’s proprietary analyzer, named Edison, was a medical marvel that could perform a full range of clinical tests. It could not.

“She was shipping bricks,” he said. A lawyer for Ms. Holmes declined to comment.

Mr. Kathrein’s conclusions are not widely accepted. Asked if tech people had become more honest over the decades, Margaret O’Mara, a historian of Silicon Valley, burst into laughter.


“The hubris and bluster and sometimes unethical (and occasionally criminal) behavior hasn’t gone away, but has increased in volume as the scale, speed, wealth and hype of the tech world — and those companies that identify as tech companies — has gotten greater,” she said. “A decline in prosecutions should not be interpreted as less crime, but harder-to-prosecute cases.”

Another significant factor: the special status of tech.

“The Valley wasn’t Big Oil or Wall Street,” Ms. O’Mara said. “It wasn’t a target. It was innovators and entrepreneurs. Politicians were friendly.”

So was everyone else, including reporters. Even now, the media has largely focused on the impact that the companies have on society rather than any crimes that have been committed. When eBay employees were accused last year by Massachusetts prosecutors of having terrorized the proprietors of a mildly critical website, the story barely lasted through one news cycle.

If Ms. Holmes had been an older man instead of an attractive young woman, her case would most likely not be front-page fodder. Proof of that can be seen in the case against Prithviraj Bhikha, who is known as Roger, a former senior director with Cisco Systems, a maker of networking products.


Mr. Bhikha, now 52, was convicted of setting up a dummy vendor, called Lucena, that sold $10 million of services to Cisco from 2014 to 2017. At one point, Mr. Bhikha brought in an impostor to Cisco to pose as Lucena’s chief executive during a meeting. He was sentenced to three years in prison on Aug. 25, a development that yielded minimal news coverage. Cisco said in a statement that it was grateful to law enforcement.

The closest parallel to Ms. Holmes’s case in recent years was that of Anthony Levandowski, a self-driving car engineer who worked at Google and later at Uber. He pleaded guilty in 2020 to trade secret theft of Google’s autonomous driving technology. Like Ms. Holmes, Mr. Levandowski was originally celebrated as a genius for whom ordinary rules did not apply. Sentenced to 18 months in prison, the engineer was pardoned by President Donald J. Trump in January.


“Silicon Valley is not the Wild West,” said David L. Anderson, a former U.S. attorney. “We expect good corporate citizenship.”

“Silicon Valley is not the Wild West,” said David L. Anderson, a former U.S. attorney. “We expect good corporate citizenship.”Credit...Pool photo by Karl Mondon

A year ago, David L. Anderson, then the U.S. attorney for the Northern District of California, revealed a case against the chief security officer of Uber, charging him with concealing a breach and secretly paying off the hackers.


“Silicon Valley is not the Wild West,” Mr. Anderson said at the time. “We expect good corporate citizenship. We expect prompt reporting of criminal conduct. We expect cooperation with our investigations. We will not tolerate corporate cover-ups. We will not tolerate illegal hush money payments.”

The Northern District of California stretches from Monterey to the Oregon border. Prosecutors have cases that have nothing to do with tech, including child pornography, firearms trafficking and the theft of an endangered lemur from the San Francisco Zoo. When Mr. Anderson stepped down last winter, he gave a 27-minute radio interview. He did not mention the words “Silicon Valley” or “tech.” Neither did anyone who called in.

Now in private practice, Mr. Anderson declined to be interviewed.

Other former U.S. attorneys who had charge of Silicon Valley also declined to be interviewed, including Robert Mueller, who served two years that had a brief jump in prosecutions before he became director of the F.B.I. in 2001. The prosecutor who oversaw Mr. Mueller’s cases in Silicon Valley, Leslie Caldwell, was selected by the Department of Justice to lead its Enron task force in the same year. It was a rare shining moment for Northern California prosecutors.

David Alan Sklansky, faculty co-director of the Stanford Criminal Justice Center, sees little likelihood of a return to those glory days, whatever Ms. Holmes’s fate.


“To prove someone guilty of a crime, in tech or out, it’s not enough to prove claims were made that were false,” he said. “You have to prove intent to deceive. That typically requires a large investment of resources — time, experienced prosecutors and investigators. That is an investment the Department of Justice hasn’t been making for two decades.”

But there are likely to be cases if prosecutors look, he said.

“I don’t know any reason to believe Silicon Valley is unusually honest,” Mr. Sklansky said.

US adviser warns ‘lives at stake’ in European gas crunch

Kyiv visit highlights American fears over Europe’s reliance on Russia for energy flows

A man walks past a gas pipe

Critics say the Kremlin will use the Nord Stream 2 pipeline to undermine Ukraine and increase its leverage over EU energy supplies © REUTERS


September 12, 2021 11:46 am by Roman Olearchyk in Kyiv and David Sheppard in London

A senior US energy adviser has warned that “lives are at stake” in Europe this winter as the continent heads into the season with low gas stockpiles and the threat of reduced supply.

Amos Hochstein, senior adviser for energy security at President Joe Biden’s state department, said Russia had “under supplied the market compared to its traditional supplies” and contributed to the highest prices on record.

“If you get a real cold winter by January and February, you could run out of supplies. And that’s where I get concerned,” he told the Financial Times on Saturday during a visit to Kyiv, highlighting US fears over Europe’s reliance on Russia for energy flows. “This is not just about some geopolitical games. People’s lives are at stake.”

A veteran of the state department in President Barack Obama’s administration and former adviser to then vice-president Biden, Hochstein was appointed last month with his immediate focus on mitigating risks posed by Russia’s Nord Stream 2 gas pipeline. Critics say the Kremlin will use the pipeline to undermine Ukraine — by bypassing it and depriving it of transit fees — and increase its leverage over EU energy supplies.

The $11bn pipeline, which will ship 55bn cubic metres of gas to Europe annually, is due to be launched before the end of the year. Ukrainian officials have accused Moscow of deliberately choking supply to speed up NS2’s certification with European regulators. This process is still under way.

Russia’s energy giant Gazprom has consistently said it has met all of its long-term contracts to European buyers, but has faced criticism for not making additional gas available at a time of tight supplies.

Russian president Vladimir Putin said last week that high gas prices in Europe were partly a consequence of “smart alecs” in the European Commission who had pushed for “market-based” pricing, an apparent dig at EU efforts to increase competition in gas markets where Russia dominates supplies. 

Other factors have also tightened the market, including a steep drop in domestic European production this year because of the coronavirus pandemic, higher demand for gas over highly polluting coal and Asian demand for liquefied natural gas cargoes.

Energy executives have warned that prices could remain elevated over the winter, to the point where some energy-intensive industries may need to restrict output and household bills could rise.

The US has long opposed NS2, but the Biden administration reached a truce in July with Germany that obliges Berlin to impose sanctions on Russia should it “weaponise” the pipeline against Ukraine or other allies. Biden’s administration had earlier lifted sanctions on Nord Stream 2 AG, the Gazprom-owned pipeline operator.

Officials in Kyiv and neighbouring Poland have staunchly criticised the US-German agreement on grounds that it provides no concrete guarantees on security or future Russian gas flow via Ukraine and other eastern European countries.

Hochstein spoke during a visit to Kyiv where he held talks with Ukrainian officials on implementing the US-German agreement in a way to address such concerns, in part by convincing Gazprom to prolong the gas transit agreement through Ukraine beyond 2024. “My expectation is that the Russians will agree” to prolong gas transit through Ukraine, Hochstein said. Kyiv claims Russia has dragged its feet in prolonging a transit agreement.

Hochstein said that while the US believed Russia had “been weaponising natural gas for many, many years” he stopped short of saying Moscow had deliberately curtailed gas supplies in recent months — an action that could trigger additional sanctions against Moscow under the US-German agreement.

The Market Fails a Breathalyzer

Beyond Meat, with pea protein, is worth more than the global market for peas.

By Andy Kessler

Sept. 12, 2021 4:21 pm ET





A Joby Aviation aircraft outside the New York Stock Exchange during the company's initial public offering in New York, Aug. 11.


Joby Aviation, which plans to begin an electric air taxi service in 2024, is worth more than Lufthansa, EasyJet or JetBlue. Does that seem right? In this market, why not? Heck, earlier this year, Tesla was worth more than the next nine car manufacturers combined, though now only the next six. Beyond Meat, made with pea protein, is worth more than the entire market for peas eaten globally—like the bumper sticker says: Imagine whirled peas. Do fundamentals even matter?

I can go on. Used-car sales platform Carvana is worth more than Volvo, Honda, Ford or Hyundai. Airbnb is worth more than Marriott and Hilton combined. Crypto-exchange Coinbase is worth more than the Nasdaq. I live at the intersection of innovation and disruption, but when companies are worth more than any possible reality, watch out.

How about those meme stocks still getting hyped on Reddit’s WallStreetBets? Those who bid GameStop shares into the stratosphere waved at Virgin Galactic Holdings as they soared by. A year ago, the stock was $6 and it is now $190—some dupes paid $483, game over. Short sellers Melvin Capital, Point 72 and D1 Capital focused on fundamentals and got their assets handed to them. Shorts lost more than $9 billion between January and June.

New Chairman Ryan Cohen, who is driving change at GameStop, may be a retail genius for turning around Chewy, but Redditors may want to put in a call to hedge-fund manager Eddie Lampert, who bought Kmart and merged it with Sears in 2005, as a highly touted “integrated retail” play, combining stores and online sales, eerily similar to the argument for investing in GameStop today. The stock peaked at $135 in 2007. It is now at $0.30 as the company languishes in bankruptcy. A 1970s Sears Johnny Miller leisure suit is worth more.


Opinion: Morning Editorial Report

All the day's Opinion headlines.



AMC Entertainment’s stock was scraping $2 at the end of 2020. It is now $50 thanks in part to Robinhood speculators, and the company has smartly raised cash. But what about fundamentals? Theaters are still sparse, and Disney and others are willingly putting blockbusters directly onto their streaming services—ask Scarlett Johansson about Black Widow’s ticket sales. Theaters are the new roller rinks.


A Lesson From a Howler Monkey August 29, 2021

Those Punching-Bag Elites August 22, 2021

A Chinese Warning for U.S. Tech August 15, 2021

To Lie Is Human August 8, 2021

August Is Full of Surprises August 1, 2021

Venture capital is cuckoo. After investing $120 billion in the 2000 dot-com frenzy, and just $16 billion in 2002, U.S. venture capital invested $130 billion in 2020 and then $140 billion in the first half of 2021. Startups these days raise money as “the Uber of gardening” or “Space as a Service.” Oh wait, the latter was WeWork’s pitch, whose founder Adam Neumann declared in 2017, “our valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.” Is “spirituality” the S in SPAC?

And check this out: In June, an Italian artist auctioned an invisible statue for $18,000—in reality it was an empty box the artist claimed was a “space full of energy.” WeWork energy? Yeah, maybe fundamentals are a quaint relic of a bygone era.

The Federal Reserve deserves most of the blame. Near-zero interest rates means the market has no true north to help compare stock valuations with reality. We are navigating turbulent seas with a spinning compass. Former Fed Chairman William McChesney Martin once explained that the Fed’s job was “to take away the punch bowl just as the party gets going.” From the looks of it, the entire market would blow about a 0.35 (as in Dow 35000) on a breathalyzer test.

So no, fundamentals don’t matter—well, until they do. In 1989 Tokyo real estate sold for as much as $139,000 a square foot—350 times the value in Manhattan. At that price, Tokyo’s Imperial Palace was worth more than all the real estate in California. Not anymore after Japan’s triptych of lost decades.

Yahoo was once worth $125 billion and AOL $200 billion during the dot-com bubble. Both are worth 99% less today. Tesla CEO Elon Musk recently tweeted, “I thought 1999 was peak insanity, but 2021 is 1000% more insane!” Remember, when the selling starts, fear of missing out turns into fear of losing everything as speculators jump like rats off a sinking ship.

Today’s negative real yields don’t reflect reality. The Fed has warned it plans on tapering bond and mortgage purchases later this year. Someone is at least reaching for the punch bowl. The compass may stop spinning soon. Until then and always, stick with fundamentals.

This TRULY defies belief. The colossal DERELICTION OF DUTY on the part of the "liberal" (absentee) State is tantamount to nothing less than TREASON! It is a blatant betrayal of the national interest that in times of war would meet the requirements for capital punishment for its political and bureaucratic perpetrators. There is no denying where all this is leading: - to the utter ruin of nation-states like Australia and their helpless ignorant populations.

Why the payments system is a national security concern

Because foreign tech giants now control an ever-increasing share of the country’s $650-billion-a-day sector, the Treasurer had no choice but to get involved.

Karen Maley


Sep 14, 2021 – 5.00am



One of the most arresting statistics in the final report of Scott Farrell’s excellent payments system review is that the Chinese mobile payment app, WeChat Pay, boasts some 690,000 users in Australia.

Of course, WeChat Pay is a minnow compared with the market penetration that tech giants – such as Apple Pay and Google Pay – have with their digital wallets and apps that allow people to use smartphones to make tap-and-go payments, instead of plastic cards.

With foreign tech giants controlling an ever-increasing share of the country’s $650 billion a day payments system, Treasurer Josh Frydenberg had no choice but to get involved. Alex Ellinghausen

As Commonwealth Bank chief executive Matt Comyn pointed out to a parliamentary inquiry back in July, Apple controls an 80 per cent market share of the tap-and-go payments made by its customers using their smartphones – earning the US tech giant lucrative fees.

(Apple was quick to counter, pointing out that its market share of all debit and payment cards in Australia – which is much larger than the digital wallet segment – was less than 10 per cent.)

Still, it’s not difficult to understand the unease that the country’s four big banks have felt as they’ve watched the popularity of digital wallets surge during the pandemic. Indeed, the Commonwealth Bank now expects that digital wallets will become the most popular form of contactless payments by the end of this year.


CBACommonwealth Bank




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But the banks aren’t just worried about the threat that foreign tech poses to their dominance of the payment sector.

They’re also miffed that these foreign tech giants operate outside the country’s financial regulatory framework – Apple maintains it is not a payment service, but that its app provides the “technical” architecture that allows customers to make payments with their bank cards – which means local regulators have very little visibility on the payments going through their systems.

What’s more, there’s no requirement for the foreign tech giants to make any financial contribution towards maintaining the payment infrastructure. In contrast, the banks have invested $2 billion upgrading the payment system over the past five years.

Huge troves of data

But the big banks aren’t the only ones feeling uneasy. Canberra is also alarmed at the prospect that Australia’s payments system – which is crucial to the proper functioning of the entire economy, processing 55 million payments, worth about $650 billion, each day – will increasingly be dominated by foreign tech giants unshackled by any local regulation or supervision.

In essence, it leaves Canberra contemplating a situation where large swaths of the country’s payments system are controlled by tech titans, which operate in another country, and could, theoretically, turn off parts of the system remotely.

Of course, as a result of processing billions of dollars of transactions each day, these tech giants accumulate huge troves of valuable data on the spending habits and payments history of Australian consumers. But because these tech firms operate outside the regulatory net, this country’s regulators have absolutely no say on how this information is collected or used.

There’s a financial element as well because many of these foreign tech giants – which frequently use highly elaborate corporate structures to minimise their tax bills – pay very little corporate tax in Australia.

And it’s likely that Treasurer Josh Frydenberg has reflected somewhat ruefully that in a national emergency – a worldwide pandemic, for instance, or a global financial crisis – he’d have very little chance of yoking the global tech giants to work in the national interest.

At a summons from the Treasurer, the bosses of the big four banks dutifully traipse down to Canberra to work out a plan for working through the crisis.

But Frydenberg knows that he’d be lucky to score a phone call with senior executives of, say, Apple, or Tencent (China’s second-most-valuable tech company, which owns WeChat).

Which helps to explain Frydenberg’s enthusiasm for the sweeping changes recommended by Scott Farrell in his landmark review of Australian payments regulation.

The review recommended that the federal Treasurer should be given new powers to intervene in the payments system – based on the national interest considerations such as cyber security or consumer protection.

The Treasurer would be able to classify participants – such as the digital wallets offered by Apple or Google – as designated payments systems and impose binding directions on them.

Legislative challenge

Frydenberg warmly endorsed the report’s recommendations.

“Ultimately, if we do nothing to reform the current framework, it will be Silicon Valley alone that determines the future of our payments system, a critical piece of our economic infrastructure”, he wrote in The Australian Financial Review.

Of course, Australia is far from alone in recognising the difficulty in curbing the power that tech giants wield over the payments system.

In July, the Bank for International Settlements – an umbrella group for central banks – published a report on the digital transformation of financial services, which highlighted the difficulties of regulating the tech titans.

“The growing diversity of financial services providers and business models often requires expanding the regulatory perimeter. Payments, loans and deposit -taking services may be provided by specialised payment service providers (fintechs), e-commerce platforms (big techs) and other non-banks,” the report said.

“It is therefore important that regulators develop approaches to ensure a level playing field and provide clear requirements for licensing. Similar activities and similar risks should in principle be treated similarly, regardless of the market participant, underlying technology, or method by which the service is provided.”

However, the report conceded that “expanding the regulatory perimeter may be challenging in practice.

“Bringing new entities into the fold of financial regulation may require legislative changes, which could be considered controversial and may be resisted by powerful interests with deep pockets, such as big techs.

“There may be resistance to granting more discretionary powers to supervisors, even though such powers may be needed to continually adapt policy approaches to a changing sector.”

It’s a salutary warning to Frydenberg as he moves to impose new rules on the tech giants and the digital wallets they provide.

Flybuys and Woolworths Everyday Rewards are two of about 350 loyalty cards available in the Stocard digital wallet.   


A payment system fit for digital purposes

Meanwhile, The Australian Financial Review has reported that the competition regulator has decided to up the pressure on Apple by launching a formal investigation into the controls the tech giant imposes on bank access to the antennas on its iPhones that communicate with payment terminals.

The ACCC is taking a close look at the design of iPhones, which restricts payment cards from making “tap and go” payments unless they are stored in Apple’s digital wallet.

Cards held in a third-party iPhone wallet, such as a bank app, can be used to pay in a store only if they are routed through Apple Pay, on which Apple charges banks a few cents for every $100 of transactions.

Further confirmation of my thesis: as the absentee State slumbers on, manufacturing declines and our workers serve coffees at work... and play Fortnite in their spare time!

Today’s Job Market Is​ Hot, Flat and Upside-Down

It has​ long been an article of faith in America that the best way for the Average Jane or Joe to get a decent wage is to work in manufacturing, which is why politicians are always banging on about good-paying factory jobs.​ But this​ belief is outdated, writes Conor Sen: Service-sector wages have been growing faster than factory wages for a while now:

Now some big retailers and restaurants, including Amazon, McDonald’s and Walmart, offer starting pay to compete with, or even beat, that​ of manufacturing jobs. The result is that a lot of the latter are going unfilled, forcing factory owners to decide whether to offer humans more or simply replace the humans with robots.​ ​ ​

Some young Americans are apparently fine with handing​ the keys to the factory over to the machines, along with the keys to the bank, juice bar, NPR podcast and wherever else young Americans are employed. They’re​ joining the “lie flat” movement, which started in China as a protest against the crushing career pressures young people suffer there. Allison Schrager suggests kids in the West have less to lie down about and more​ risk of permanently damaging their earning and life potential​ when they check out of the labor force. Then again, these days they may be better off going full career circle and returning to their first job at Hot Topic.​

Biden vs. FDR

There is still some value in work, after all. At the very least, it breaks up the monotony of playing Fortnite all the time. President Joe Biden has been compared to FDR more than once, in that both are government-expanding Democrats at a time of crisis. But Frank Barry argues Biden’s policies lack one key element of FDR’s: a sense of the importance of putting people to work in decent jobs, whether that be building a bridge or building a T-shirt wall at​ Hot Topic.​ ​

It is possible Biden does understand this, even if it hasn’t been as central to his proposals as it was to FDR’s. There may have been a hint of this when Biden let extra pandemic unemployment benefits lapse recently. Progressives complained. But Matt Yglesias suggests those benefits had outlived their utility​ and were hurting the economy by giving people extra incentive to just keep playing Fortnite.

There's only one step down from here: it's called "Lebanon"...

Very important piece from El-Erian.

 Supply chain issues add to stagflationary winds

Waves of disruptions suggest that longer-term forces are in play



Disrupted supply chains and labour shortages have resulted in empty shelves in some supermarkets in the UK © Bloomberg

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Mohamed El-Erian YESTERDAY


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Supply chains updates

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The writer is president of Queens’ College, Cambridge and an adviser to Allianz and Gramercy

Hearing that I was flying to the UK, a friend of mine sent me a picture of a partially empty supermarket shelf with a simple message: “You’ll be coming back to Soviet-era shelves.”

Unlike that era, however, this is not happening in a closed economy with inefficient state-run production protected by high tariff and quota walls. Nor is it UK specific.

It is due to supply disruptions faced by many countries. They will be with us for a while, complicating corporate and policy plans, and could undermine investments based on the ample liquidity injections from central banks that have pushed many markets ever higher.

The phenomenon in play is evident in macroeconomic data and corporate signals. Producer price inflation is soaring around the world.

Sizeable gaps have emerged between factory orders and output. Transportation costs from China to Europe and the US have risen seven to 10 times in the past year. More companies in more sectors are supply-constrained.

The culprit is some mix of disrupted supply chains, high transportation costs, container scarcity and congested ports. Labour shortages are also an issue, forcing companies in manufacturing and services to operate below capacity and with constant wage pressures. In the UK, the CBI has warned labour shortages may last up to two years.

Fewer chief executives have confidence that such disruptions are temporary and quickly reversible. This will restrain growth plans despite robust demand, and increase pressure to raise prices to offset higher costs.

Rather than a one-off dynamic, the global economy is experiencing waves of supply disruptions suggesting that longer-term forces are also in play. Yet some policymakers and market participants continue to assert that supply-demand imbalances are transitory, soon to be resolved by market forces. For support, they point to how lumber has reversed its big price rise.

Some reversible factors are indeed in play. Already, time has helped overcome some of the initial Covid-19 shock to the economy — a “sudden stop” more generalised than under the 2008 financial crisis. It is also not to deny that the latest Covid wave fuelled by the Delta coronavirus variant has temporary and reversible elements, such as the shutdown of ports in China and Vietnam. The same is true for destination ports, such as California’s Long Beach, where one chief executive characterised the bottleneck to me as being worse than last March’s Suez Canal blockage.

The key point is that such reversible factors are accompanied by supply side troubles that could last for one to two years, if not more. Already, their persistence is leading more companies to revise their supply chain management with a view to enhancing resilience, even at the cost of efficiency. But the beneficial longer-term mitigation effects of vendor/country diversification have short-term disruptions.

Labour market rigidities are also unlikely to pass anytime soon. Recent indicators suggest that the reopening of schools and, in the US, the termination of supplementary unemployment support are unlikely to lead to an immediate jump in labour force participation. This is despite record job openings. The longer this continues, the more companies adapt.

Added to inflation already in the pipeline, all this translates into stagflationary winds for the global economy that are unfamiliar to those that did not live through the 1970s. It is a scenario that more companies are putting front and centre in their planning. Yet too many policymakers and, therefore, market participants lag behind realities on the ground.

Having missed the window at the start of summer to taper the massive asset purchases implemented at the height of last year’s Covid shock, the Federal Reserve now risks a particularly difficult policy dilemma: having to lessen stimulus because of inflation consistently well above its target but hesitant to do so because of lower growth.

This could become an issue for many asset classes where valuations embody a considerable bet on the predictability and effectiveness of central bank support, including a monetary policy soft-landing in a Goldilocks economy that is not too hot or too cold.

The dominant structural theme post the financial crisis — that of deficient aggregate demand — has given way to frustrating supply rigidities. They are not going away any time soon. It is so much better for companies and policymakers to adjust now. Containing further disruptions is cheaper and easier than having to clean up the damage.


Bartholomewsz has come round to my view that Big Tech now has assumed such proportions that it threatens the viability of government policies and the very foundations of the nation-state. Of course, the collapse of government policy control over the economy would bring down Big Tech long before the State ended up like Lebanon. Big Tech is inconceivable WITHOUT the “absence” of the State, just as a “parasite” or a virus is inconceivable without a “host”. Yet, unlike pathology, although the parasites and viruses are killing the host, it remains true that they will die long before the host itself is destroyed.


Bartholomewsz has come round to my view that Big Tech now has assumed such proportions that it threatens the viability of government policies and the very foundations of the nation-state. Of course, the collapse of government policy control over the economy would bring down Big Tech long before the State ended up like Lebanon. Big Tech is inconceivable WITHOUT the “absence” of the State, just as a “parasite” or a virus is inconceivable without a “host”. Yet, unlike pathology, although the parasites and viruses are killing the host, it remains true that they will die long before the host itself is destroyed.

The most important paragraph is… THE LAST!

“China is responding to the perceived threat to control of its own financial system posed by Alibaba, Tencent and other fintechs. Elsewhere, it is Facebook, Apple, Google, Amazon and bitcoin and other fintechs and crypto assets that are invoking similar concerns, if not yet decisive responses.”

Europe’s Climate Lesson for America

As wind power flags, energy prices are soaring amid fuel shortages.

By The Editorial Board

Sept. 14, 2021 6:32 pm ET





A sunset view of a wind turbine farm in Villeveyrac, France


Energy prices are soaring in Europe, and the effects are rippling across the Atlantic. Blame anti-carbon policies of the kind that the Biden Administration wants to impose in the U.S.


WSJ Opinion Potomac Watch

Gavin Newsom, Larry Elder and California's Recall


Electricity prices in the U.K. this week jumped to a record £354 ($490) per megawatt hour, a 700% increase from the 2010 to 2020 average. Germany’s electricity benchmark has doubled this year. Last month’s 12.3% increase was the largest since 1974 and contributed to the highest inflation reading since 1993. Other economies are experiencing similar spikes.

Europe’s anti-carbon policies have created a fossil-fuel shortage. Governments have heavily subsidized renewables like wind and solar and shut down coal plants to meet their commitments under the Paris climate accord. But wind power this summer has flagged, so countries are scrambling to import more fossil fuels to power their grids.

European natural-gas spot prices have increased five-fold in the last year. Some energy providers are burning cheaper coal, but its prices have tripled. Rising fossil-fuel consumption has caused demand and prices for carbon permits under the Continent’s cap-and-trade scheme to surge, which has pushed electricity prices even higher.


Opinion: Morning Editorial Report

All the day's Opinion headlines.



Russia has exploited the chaos by slowing gas deliveries, ostensibly to increase pressure on Germany to finish the Nord Stream 2 pipeline certification. Vladimir Putin last week took a swipe at the “smart alecs” in the European Commission for “market-based” pricing that increased competition in gas, including from U.S. liquefied natural gas imports.

Mr. Putin can throw his weight around in Europe because the rest of the world also needs his gas. Drought has reduced hydropower in Asia, and manufacturers are using more energy to supply the West with more goods. Due to a gas and coal shortage, China has rationed power to its aluminum smelters and aluminum prices this week hit a 13-year high.

The U.S. is the world’s largest gas producer, but it isn’t immune from turmoil in energy markets. Natural gas spot prices in the U.S. have doubled over the past year in part because producers have increased exports to Europe and Asia. Exports are up more than 40% during the first six months this year over last.

This underscores how fossil fuels are a U.S. economic and strategic asset. The Biden Administration’s plan to curtail oil, gas and coal production by regulation would empower adversaries. especially Russia, Iran and China, which are the world’s three largest gas producers after the U.S.

Americans are already feeling the pain of rising energy prices. Electricity and utility gas prices were up 5.2% and 21.1%, respectively, over the last 12 months in August. Higher energy costs are bleeding into inflation. Some analysts predict that gas prices could double this winter if U.S. production doesn’t increase and global demand remains high.

Europe is showing the folly of trying to purge CO2 from the economy. No matter how heavily subsidized, renewables can’t replace fossil fuels in a modern economy. Households and businesses get stuck with higher energy bills even as CO2 emissions increase. Europe’s problems are a warning to the U.S., if only Democrats would heed it.

From the WSJ:

"Inflation is eroding the real wages of workers. On Tuesday the government reported that inflation-adjusted weekly earnings rose 0.3% in August for the first time all year. But real weekly earnings still fell 0.9% from August 2020 to August 2021. The Fed’s easy monetary policy lifts asset prices of the wealthy but erodes the purchasing power of average workers. Then the politicians tax and spend more in the name of reducing inequality."

This beauty from Corriere today. The entire piece is linked below.

“Con nostra sorpresa, lo ascoltiamo con interesse. Non è la solita sfilza di promesse elettorali. Sta parlando di cose che ci riguardano da vicino e sembra avere le idee chiare su dove voglia portare il Paese. Facciamo persino fatica a controllare un certo entusiasmo quando quella voce profonda parla del benessere dei bambini e degli adolescenti, che vanno protetti dal gaming online, attività che gonfia i portafogli delle aziende produttrici ma inaridisce i cuori e i cervelli delle nuove generazioni. E l’entusiasmo aumenta quando viene denunciata forse la peggiore delle iniquità, quella della formazione, dove un sistema di accessi alle scuole sempre più rigido obbliga le famiglie a spese folli per le tutorship private e gli studenti a carichi di lavoro intollerabili. La voce a questo punto sale di tono. Lo Stato dice basta a tutto questo. È il momento di agire, ora, subito, con leggi e regolamentazioni che non guardino in faccia nessuno. Perché quello che ci deve stare a cuore è la sostenibilità della crescita e il benessere del popolo nel lungo termine. Per questo, conclude, interverremo con mano ferma e senza curarci degli effetti di breve, men che meno delle reazioni dei mercati finanziari. Il tempo ci darà ragione.”

But I missed THE MOST IMPORTANT PARAGRAPH, which repeats word for word what I’ve been preaching for years!

“Proviamo ora a utilizzare la stessa tecnica nel caso in questione. Immaginiamo di essere seduti davanti a un televisore con gli occhi chiusi. Siamo in attesa di ascoltare il discorso di un autorevole leader politico che non conosciamo. La trasmissione ha inizio. La voce che proviene dallo schermo è quella di una persona forte, autorevole, a tratti autoritaria. Inizia con l’analisi di un sistema economico nel quale la velocità di cambiamento generata dall’innovazione tecnologica ha di fatto reso obsolete le attuali leggi dello Stato. Denuncia l’eccesso di potere nelle mani di pochi gruppi, i cui azionisti non solo si sono arricchiti oltre ogni legittima meritocrazia ma influenzano anche la vita sociale e politica di tutti i giorni avendo accesso a tutti i nostri dati, anche quelli più personali. Analizza le conseguenze di una politica monetaria eccessivamente espansiva che ha generato spaventosi effetti collaterali, dal rialzo delle materie prime sempre più introvabili a quello del prezzo delle case e degli affitti che impedisce ai giovani e ai meno abbienti di potere almeno immaginare una famiglia.”

Here is the link:

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