- MSNBC host’s “primal yell”…
- … as true today as one decade ago
- The U.S. empire’s “extraction” scheme
- Apple caves on privacy (brooks no argument)
- Small businesses feel the supply-chain squeeze
- Readers on a “Thomas Paine” moment… “Silencing dissenting voices”… Campaign “donation” shakedowns… And more!
Because no one else will, we pause today to mark the 10th anniversary of one man’s epic cri de coeur against the damage wrought by America’s power elite.
“We’ve got a real problem!” screamed MSNBC host Dylan Ratigan on Aug. 9, 2011. (OK, we’re a day behind — better late than never.)
“This is a mathematical fact! Tens of trillions of dollars are being extracted from the United States of America… An entire integrated system — financial system, trading system, taxing system — that was created by both parties over a period of two decades is at work on our entire country right now.”
It was akin to Peter Finch’s mad-as-hell-and-I’m-not-going-to-take-this-anymore rant in the 1976 movie Network. Only it was real life, and Ratigan’s meltdown was tailor-made for the frustrations of the moment embodied by both Occupy Wall Street and the tea party movement (who, we’ll say once again, had more in common than either faction cared to admit).
It’s still worth a watch — if for no other reason than to see the worried faces on the support staff in the background, heh…
Ratigan, by the way, walked away from the TV news racket less than a year after what he described as his “primal yell.” Since then, he’s done everything from helping down-and-out veterans take up hydroponic farming in San Diego to running for Congress in his native upstate New York.
Ten years later, we’re still not 100% sure what Ratigan meant by “extraction”… but he’s not the only public intellectual who’s used the term.
The economist Paul Craig Roberts, a top official in the Reagan-era Treasury Department, put it to good use in a 2012 essay: “Great empires, such as the Roman and British, were extractive. The empires succeeded, because the value of the resources and wealth extracted from conquered lands exceeded the value of conquest and governance.”
By comparison, “Washington’s empire extracts resources from the American people for the benefit of the few powerful interest groups that rule America.”
This. During a slide-deck presentation I prepared for a meeting with my fellow editors in 2014, I laid out the many facets of “extraction”…
- Health care — run by an extractive cartel that delivers service little better than in countries with socialized medicine, but at up to five times the cost of what you’d get with free-market health care
- The military-industrial complex — waging its forever wars, building costly weapons like the F-35 that fail at the most basic tasks, while delivering precious little in the way of actual “defense” of America’s home territory
- Higher education — living large off government-backed tuition money, packing on obscene administrative bloat, while students rack up untold quantities of debt
- Big Agra — which has bought out struggling family farmers at fire-sale prices with the help of ultralow interest rates. Huge quantities of farmland have fallen into the hands of outfits like TIAA-CREF and UBS… while by some estimates, Bill Gates now is the biggest owner of U.S. farmland
- Wall Street — which perfected the art of “privatized profits, socialized risk” with the bailouts of 2008.
To the extent that “extraction” can be captured in a single worth-a-thousand-words picture, we return to a chart we’ve shared many times before.
Wrote the estimable Marc Faber in 2013, “If I were to look at the average family income, excluding capital gains, adjusted for inflation between 2002–2012, it is clear that 90% of these families experienced a decline in real income and another 5% experienced hardly any gains.”
Yes, we’ve searched high and low for a more current version of the chart, with no luck. But do you honestly think matters have gotten any better?
Faber laid primary blame where it belongs — at the feet of Wall Street’s enabler, the Federal Reserve. “The Fed’s monetary policies have failed to boost the real incomes of most people but have had an enormously favorable impact on just 0.1%, or the ‘1%,’ as they are commonly referred to.
“In fact, I would argue that the Fed is fully responsible for the fact that 90% of U.S. families have had declining real incomes (inflation adjusted) over the last 10 years or so… and have experienced a decline in their net worth.”
Note in our laundry list of extractive actors we did not include Silicon Valley. — although it’s undeniable that the tech industry has been a prime beneficiary of the Fed’s EZ-money flood since 2008.
Instead, as we noted at great length yesterday, the problem with Silicon Valley is that it’s constructing an apparatus at the behest of the federal government that might one day muzzle those of us who — just as one example — might wish to speak up against the culture of extraction.
Which is a seamless segue into our next topic today…
After years of putting up resistance, Apple Inc. is about to start doing the deep state’s bidding and severely undermine your privacy.
As long ago as 2013, we chronicled how Apple’s powerful “end-to-end encryption” of digital messages was frustrating federal law enforcement. Even with a court order, the feds are frequently unable to crack messages between two Apple devices.
Everyone from James Comey (the FBI director Donald Trump fired) to William Barr (the attorney general Trump appointed) complained about it. They demanded Apple build “back doors” into their hardware and software so the feds can obtain easier access to sensitive data.
The problem, as we pointed out all along, is that there’s no such thing as a back door that only “good guys” can pass through. If the feds can get in, so can hackers, foreign governments and so on.
A few days ago, Apple decided to crack open the back door — using a sleazy and disingenuous rationalization.
Forthcoming versions of iOS will scan the photos on your device if you upload them to iCloud, to see if they match known images of child pornography.
“If the scan comes up positive,” writes Scott Shackford at Reason, “the image will be reviewed by a person, and if it contains child porn, the account will be disabled and the report will be sent to the National Center for Missing and Exploited Children. There is an appeal process if Apple is mistaken.”
In addition, “Apple will be adding tools to its messaging app to warn children when somebody is texting them sexually explicit photos. In order for that to work, Apple’s messages will use ‘machine learning to analyze image attachments and determine if a photo is sexually explicit.’”
See what’s happening here? If you question what Apple’s doing, you’re enabling kiddie porn. You wouldn’t want to do that, would you?
The good folks at the Electronic Frontier Foundation won’t take the bait: “All it would take to widen the narrow back door that Apple is building is an expansion of the machine learning parameters to look for additional types of content, or a tweak of the configuration flags to scan, not just children’s, but anyone’s accounts.
“That’s not a slippery slope; that’s a fully built system just waiting for external pressure to make the slightest change.”
For the moment, you can keep the back door closed by not uploading your photos to iCloud. And remember what you read here the next time you see one of Apple’s feel-good privacy commercials on TV.
To the markets, which are a mirror image of yesterday’s action: The Dow and the S&P 500 are up a bit, the Nasdaq down a bit.
As earnings season winds down, our trading-floor veteran Alan Knuckman delivers a scorecard: “With nearly 90% of S&P 500 companies reporting, the numbers have been epic: 87% of the companies reported positive earnings surprises and the blended growth rate for the quarter is 89%.” That’s the highest figure since the early days of the bull market that began in 2009.
And yet the market’s overall P/E ratio sits at a high-but-not-outrageous 21 — because earnings have popped bigger than stock prices. So there’s still upside room for stock prices, even with the major indexes hovering just below all-time highs.
Precious metals are stuck in the mud, gold at $1,730 and silver at $23.36. Crude is bouncing back to $68.40. Bitcoin is stout at $45,239 despite Senate passage of an infrastructure bill that includes new cryptocurrency regulations. No need to overreact, because there’s no telling what will happen once the bill goes to the House after Labor Day.
The supply-chain squeeze is putting a hurt on small-business sentiment.
The National Federation of Independent Business is out with its monthly optimism index. It took an unexpected tumble from 102.5 in June to 99.7 in July. Significantly, the July survey was taken before the media took up the Delta doom drumbeat and renewed business restrictions came into play.
Business owners are reporting “that supply chain disruptions are having an impact on their businesses,” says NFIB chief economist Bill Dunkelberg. “Ultimately, owners could sell more if they could acquire more supplies and inventories from their supply chains.”
Meanwhile, good help is still hard to find: “Quality of labor” is cited by 26% of survey respondents as the single-most important problem they face. Taxes are the only other thing that comes close, cited by 19%.
Speaking of burdens on small business, here’s what might be a preview of coming attractions: Yesterday was the first day that French citizens had to present a vaccine passport for entry into restaurants and cafes — as well as access to planes, trains and buses.
The tweet here is in French, but the 17-second video clip speaks a universal language…
“Thank you for exposing the all-out fascist silencing of dissenting voices by the media/oligarch complex and the specific assaults on freedom of speech,” a reader writes after yesterday’s 5.
“Much appreciated. It seems we’ve reached a Thomas Paine moment.”
Adds one of our longtimers: “Great letter. As usual! My thought (only one today) on social media is that it is a time waster as millions if not more are glued to reading mostly nonsense whereas they could be doing something useful at work or at home… like spending time with the spouse and kids or reading a good history book or even making models!
“Anything but Facebook, please.”
On the subject of government pressure brought to bear on social media, a reader writes…
“One can also imagine when they bring these tech execs back to Washington, there’s a shakedown for campaign ‘donations’ amongst the threats of regulation unless a certain arrangement can be made so that doesn’t have to happen.
“The new class of billionaires need to learn how the system works to stay in business.”
The 5: Exactly. As we noted earlier this year, Facebook tops the list of big-business spending on lobbying in D.C., according to Public Citizen. Three years earlier, when Mark Zuckerberg was still hoping he could stay out of the “content moderation” business, FB wasn’t even in the top eight.
Nor is this an entirely new phenomenon. For much of the 1990s, Microsoft spent squat on lobbying. Then the Justice Department hit MSFT with its antitrust suit. Bill Gates quickly got the message. Not only did Microsoft amp up its presence on K Street, but look at how Gates has ingratiated himself into the power elite over the last two decades.
Makes you cringe to think what Zuck will be up to in another 20 years, huh?
Best regards,
Dave Gonigam
The 5 Min. Forecast
