Anyone watching the emerging markets?

[jk]

Re: Anyone watching the emerging markets?

It's related. It's the current status of the number of state legislatures that have passed resolutions calling for an Article V constitutional convention. The balanced budget amendment people are responsible for the effort. But if they do call a constitutional convention, there are very few written rules and almost no precedent. Imagine a 100% partisan constitutional convention where everything is up for grabs. They can go in talking about balanced budgets and come out re-writing literally anything in the constitution they don't like. They could bring back noble titles, take away congress' power to regulate commerce, abolish the income tax, prohibit alcohol again, even legalize slavery again. There are literally no limits.

whatever they write, doesn't it require some kind of ratification before it would go into effect?

just looked it up: as far as i can tell based on not much reading is that such a convention can propose anything in the form of amendment[s] to the constitution. normal ratification requirements would then apply. so the only part bypassed is the need for the amendments to get supermajority passage in both houses of congress.

[dcarrigg]

Re: Anyone watching the emerging markets?

whatever they write, doesn't it require some kind of ratification before it would go into effect?

just looked it up: as far as i can tell based on not much reading is that such a convention can propose anything in the form of amendment[s] to the constitution. normal ratification requirements would then apply. so the only part bypassed is the need for the amendments to get supermajority passage in both houses of congress.

Yeah, but ratification is presumably done by the same state legislatures that called the convention. The threshold is a bit higher (3/4 rather than 2/3). But presumably the convention could design the amendments without deadlines, so all they have to do is win a couple more states at any point in the future (like how the 27th amendment was ratified in 1992, but proposed way back in 1789). It is a very powerful move. And right now there are few state legislatures that could be relied upon not to ratify whatever a partisan convention cooked up...

[jk]

Re: Anyone watching the emerging markets?

it IS remarkable how well the republicans have taken over state governments, especially as we approach redistricting after the 2020 census. the democrats are missing in action. or out of action.

[GRG55]

Re: Anyone watching the emerging markets?

it IS remarkable how well the republicans have taken over state governments, especially as we approach redistricting after the 2020 census. the democrats are missing in action. or out of action.

The behavior of some prominent Democrats has made them quite a spectacle recently. Is Maxine Waters for real? Almost like they are trying to out-Trump the President for who can issue the most bizarre proclamations. An outsider looking in, such as me, might get the impression the Democrats are the party of wealthy west coast or NY entertainers and wealthy east coast financiers, and not much in between.

A couple of weeks ago I was in Boulder, Colorado for two days. Now Boulder has to be the closest thing to liberal and green California there is in the middle of the country. Chatting with the hotel staff and the restaurant staff (both mostly Hispanic) I was truly surprised by the support for President Trump. In Boulder of all places! The illegal immigrant issue seems to be playing surprisingly well, and the tariffs to "bring back American jobs" and the anti-NAFTA stuff even more so. One sentiment I heard several times was "this is the first President that is doing something for working people".

Going to be an interesting run-up to the mid-terms.

[touchring]

Re: Anyone watching the emerging markets?

Well, the US$ has strengthened a lot since we posted, especially against the Chinese Yuan. Incidentally, the dollar has strengthened against Gold currency at almost the same rate as the Yuan.

It's almost as though the Chinese government is shorting gold to prevent an RMB bank run by their own citizens. I wonder how Putin will feel about this.

You have it backwards. A strengthening US$ reduces its trade deficit. The US$ strengthens due to capital flows, not trade flows (which are minuscule in comparison).

Really? In a world where the most manipulated commodity on the face of the planet is Central Bank issued currencies, there is no zero sum game. Neither the money supply, relative exchange rates nor the circulation velocity are static on a global basis. Not by a long shot.

It would be nice if you went beyond these confident projections and provided a cogent case for why they should be.

Here is why I think this may not transpire quite as you describe.

If all trade with China was to abruptly stop the immediate effect would be a rise in goods inflation in the USA, and a drop in incomes for those, relatively small in number, economic sectors dependent on exports to China - agriculture being the most prominent. Once again, the USA is the least dependent of all the world's large, developed economies on exports. And the American exporters are juggernauts. They can take market share away from anybody. Look what they just did to OPEC, and that was BEFORE they again became a crude oil exporter. So substituting for the Chinese market will be shared by many unwilling global participants trying to compete with some of the most efficient, innovative, large-scale producers in the world. Who just had their taxes cut, which reduced their cost structure further.

I seriously doubt it will take the USA much time to substitute for most of the truly critical finished goods it imports from China. And I seriously doubt China currently plays any role whatsoever in providing most Americans with their cherished SUVs. Let's remember, China has built capacity well beyond anything the world needs (and with its ghost cities, well beyond some of the things it needs internally too). And therein lies the vulnerability. Large swaths of China production capacity could be shuttered immediately and, although the world might have to pay a few more bits of printed paper, it will not be short of most of the things it currently buys from China. The ZTE affair is but a foretaste of where this might go.

And from a global perspective this might be the inflationary shot in the ass the global economy needs to achieve what Central Bankers have been unable to achieve after a decade of NIRP/ZIRP and QE.

And please spare us the nonsense about China abruptly selling off US Treasuries. Every time this comes up I keep asking and never get the answer to the question "Who is going to buy them?".

Going to war against the United States, trade or otherwise, is still really, really lousy odds.

Lousy politicians can only win elections by buying votes. You need money to buy votes. When the electorates are "groomed" to expect money in return for voting you, the only politicians that win are corrupted politicians, so it becomes a vicious cycle. This affects all countries in South East Asia that have got elections. For now, Malaysia appears to have broken the vicious cycle. It remains to be seen if it will be permanent.

The link was something about trials for crocs. Seems nothing more than the same actions Mahathir Mohamed, Vladimir Putin and numerous others have taken against actual and potential political rivals. Jailing opposition leaders and oligarchs is nothing new. Corruption in these societies is stamped into the DNA. There's no getting rid of it. What we have here is the corrupt prosecuting the corrupt. Age old story, non?

Will the CCP will print their way out instead? So it becomes inflationary, like Turkey and Argentina.

To your edit regarding the (national GDP?) growth differential, with the possible exception of Brazil, China's first derivative of growth has fallen faster than anywhere else in the world in the past two years. With so much mis-allocated and wasted capital, I truly wonder if China can avoid a deflationary bust analogous to the 1930s Depression when the USA was the up-and-coming global economy.

[dcarrigg]

Re: Anyone watching the emerging markets?

it IS remarkable how well the republicans have taken over state governments, especially as we approach redistricting after the 2020 census. the democrats are missing in action. or out of action.

The Democrats control neither the House nor the Senate nor the White House nor the Supreme Court and only maybe 20% of state legislatures and governorships. They are not a major political party by many measures. The fact Obama was in the Whitehouse papered over the fact they've been losing at every other level, and badly, for just about the entirety of this decade. And they are so focused on national races and never trump that they're not even playing the local game. After SCOTUS' Gil decision, they can go as hog wild with blatantly partisan gerrymandering as they want. And after 2020, GOP will have so many states that even if Democrats win the national House vote by 10 points, they'll still not have a majority of seats. Plus they get to gerrymander the state legislative districts even further too. That plus the use of the nuclear option and denial of hearings to stack the Supreme Court along with SCOTUS paring back the voting rights act means the Democrats do not and will not have a shot at anything except maybe the Senate and the White House until at least 2030. Maybe longer. The party has failed. Even if it takes the House for a couple of years, it will lose it for the next 10. The GOP is good at tactics. Democrats ignored them and now they will pay the price.

[dcarrigg]

Re: Anyone watching the emerging markets?

The behavior of some prominent Democrats has made them quite a spectacle recently. Is Maxine Waters for real? Almost like they are trying to out-Trump the President for who can issue the most bizarre proclamations. An outsider looking in, such as me, might get the impression the Democrats are the party of wealthy west coast or NY entertainers and wealthy east coast financiers, and not much in between.

A couple of weeks ago I was in Boulder, Colorado for two days. Now Boulder has to be the closest thing to liberal and green California there is in the middle of the country. Chatting with the hotel staff and the restaurant staff (both mostly Hispanic) I was truly surprised by the support for President Trump. In Boulder of all places! The illegal immigrant issue seems to be playing surprisingly well, and the tariffs to "bring back American jobs" and the anti-NAFTA stuff even more so. One sentiment I heard several times was "this is the first President that is doing something for working people".

Going to be an interesting run-up to the mid-terms.

The Democrats are in real trouble. The last time a major political party was this close to dead, the Whigs split into the Republicans and the Know-Nothings.

[GRG55]

Re: Anyone watching the emerging markets?

The Democrats are in real trouble. The last time a major political party was this close to dead, the Whigs split into the Republicans and the Know-Nothings.

A one Party state?
Yeesh...

[dcarrigg]

Re: Anyone watching the emerging markets?

A one Party state?
Yeesh...

Well maybe in the short run. It almost is now. What do Democrats control besides 3 states in New England, California and Maryland? Almost nothing. Duverger's Law always wins out in the long term. One of the existing parties will undergo a massive re-aligning earthquake, or another party will arise. But it's clear the 21st century political coalition the Democrats are aiming for isn't materializing in reality, and only really did in 2008 on the heels of a terribly unpopular president in the midst of the biggest recession since the 1930s. If the 2008 election was a fluke, and they lost ground everywhere in just about every election across the board since, there's a deeper problem than the pundits and party bosses realize.

[GRG55]

Re: Anyone watching the emerging markets?

Well maybe in the short run. It almost is now. What do Democrats control besides 3 states in New England, California and Maryland? Almost nothing. Duverger's Law always wins out in the long term. One of the existing parties will undergo a massive re-aligning earthquake, or another party will arise. But it's clear the 21st century political coalition the Democrats are aiming for isn't materializing in reality, and only really did in 2008 on the heels of a terribly unpopular president in the midst of the biggest recession since the 1930s. If the 2008 election was a fluke, and they lost ground everywhere in just about every election across the board since, there's a deeper problem than the pundits and party bosses realize.

I recall EJ making the observation (this was long before Trump) that the Republicans were a machine and could get a monkey elected to the White House. The Democrats, on the other hand, could never win the White House unless they were running a credible policy wonk like Bill Clinton or Barack Obama.

I also clearly remember watching on television, during the 1984 campaign, Geraldine Ferraro make the comment to the crowd at yet another "low energy" Democratic rally with Mondale "We aren't connecting with you, are we".

[touchring]

Re: Anyone watching the emerging markets?

"Authoritarian capitalism" as I call it, has been on a rapid rise in the last 20 years. "Authoritarian capitalism" is basically a dictatorship (could be a person or a party) that runs the country like a private business. It is a powerful and dangerous force, as the state welds significant financial power, and given that it is also a government, significant political and military power.

Over time, power corrupts and the government starts to behave like a dangerous mafia, posing a danger even to their own citizens, as we are seeing happening in recent times. The real danger comes when authoritarian capitalism starts to behave like fascism.

[dcarrigg]

Re: Anyone watching the emerging markets?

I recall EJ making the observation (this was long before Trump) that the Republicans were a machine and could get a monkey elected to the White House. The Democrats, on the other hand, could never win the White House unless they were running a credible policy wonk like Bill Clinton or Barack Obama.

I also clearly remember watching on television, during the 1984 campaign, Geraldine Ferraro make the comment to the crowd at yet another "low energy" Democratic rally with Mondale "We aren't connecting with you, are we".

I think there's really a few things going on.

First, Republicans excel at tactics. Democrats suck. This is how you get 2000 and 2016 popular vote wins and Dems still lose the white house. It's also how you get 2012 etc. popular House vote wins and Dems still lose the House. It's how you get a Supreme Court vacancy under a Dem president and they hold it up for 2 years until the next Republican president can put one of their own in. It's why Dems are out-gerrymandered. It's why Dems are outfoxed in every court decision. It's why Dems lose every local election rule tactic that puts them at a disadvantage. To put it in baseball terms, they simply don't play small-ball. And while they're busy trying to swing for the fences, Republicans are systematically running up the score.

So even if they can get the votes, they suck at playing the rules and tactics game so badly that they often lose despite it.

And where they can't get the votes, there's obvious reasons too.

Voters can roughly be broken down into quintiles in the US. 1) 20% care about policy. 2) 20% vote party line no matter what (Dems actually still have an advantage in this). 3) 20% vote based on identity. 4) 20% vote based on the personal characteristics of the candidate (or two) at the top of the ticket. And 5) 20% are totally irrational and probably can't actually tell you accurately who they voted for in the last election they voted in.

There's not much you can do about #2 and #5. Maybe a popular song or slogan might help a bit at the margin, if it's linked well to the name on the ballot.

So you really only get to play with #1, #3, and #4.

Since the 80s, #1 for Republicans is easy. They're the party of business, tax cuts, and military strength. Other things can change, but that's basically the core ideological center. For Democrats since the 80s, it's not so clear. Sometimes they're pro union, sometimes they throw unions under the bus. Sometimes they're very pro-business and anti-regulation, sometimes not. Sometimes they're the austerity party, sometimes not. They don't want to be for tax increases, and usually they're not, but they're not so much for tax cuts either. They don't want a weak military, but they're not as comfortable with military action. They want to expand healthcare to an extent, but not make it public or universal. They usually don't want to expand welfare benefits, but often they want to tweak tax incentives to accomplish the same ends direct benefits would. For Republicans, #1 is an easy, clear thing to grasp: business, tax cuts, defense. For Democrats, it's much harder. I honestly can't think of a three word equivalent. You could say health, education, and welfare or something. But even in education, Democrats like Obama were against Teachers unions and public school systems and in favor of privatization and charter schools. So every step of the way, they send mixed messages. I think they try to package the mixed messages and sell that as a good thing: they'll call it "big tent" or "nuanced policymaking." But really, it's fundamentally incoherent and lacking a central vision. This, more than any other reason, is why I agree with your EJ line above: They need a credible policy wonk, because somebody has to make the core ideological inconsistencies sound like credible nuanced wonky policies rather than inconsistencies to win over this 20% voting bloc.

#3 is also easy for the Republicans. Start with the solid south, which the Democrats held at least until Truman and got a piece of at least until after Johnson. White protestants are still the largest identity group in the US, though. It does not hurt to start with the biggest group if winning's what you're after. And business owners and military folks are with you in general too to align with the ideology. Democrats, on the other hand, try to cobble together a coalition of smaller minority groups of various identities. This means pandering to each and every one of them even if some of them don't like each other. Again, this is a harder trick to pull off.

#4 is where from time to time Democrats really shine, especially when running presidential candidates. They need to be super popular and larger than life. But Democrats from time to time can put up a candidate with exceptional charisma who can whip up a crowd. Republicans can do this too, but they seem to be a bit worse at it. The cultural and personal-likability games are the only ones Democrats seem to have some advantage in. But again, they focus everything on that image and lose track of the nitty-gritty and the tactics games Republicans are so good at.

[dcarrigg]

Re: Anyone watching the emerging markets?

Summer has saved some and lost others. Argentina looks lost, as does Uruguay. Brazil is fighting back, but based on little. Perhaps the center can hold. When all was lost Tommy Cochrane won the day. A bitter pill for wardens of civility. Lord knows the maps change slowly today. Not even O'Higgins himself would claim to change the foil.

That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle...

[shiny!]

Re: Anyone watching the emerging markets?

Summer has saved some and lost others. Argentina looks lost, as does Uruguay. Brazil is fighting back, but based on little. Perhaps the center can hold. When all was lost Tommy Cochrane won the day. A bitter pill for wardens of civility. Lord knows the maps change slowly today. Not even O'Higgins himself would claim to change the foil.

That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle...

Wait. What's happening in Uruguay? I thought their economy was sort of a mixed-bag of good and bad, but overall OK:
https://www.economist.com/the-americ...-growth-streak

[dcarrigg]

Re: Anyone watching the emerging markets?

Wait. What's happening in Uruguay? I thought their economy was sort of a mixed-bag of good and bad, but overall OK:
https://www.economist.com/the-americ...-growth-streak

Capital markets don't care about fundamentals. Only trends. Imagine 14% inflation in a matter of days...