Investors Are Thwarting The Bank Of England’s Latest QE Scheme

Submitted by George Pickering via The Mises Institute,

Last week it emerged that, for the second time in two weeks, the Bank of England has been unable to buy back enough government bonds to achieve its target. The attempted bond buyback was part of the Bank’s post-Brexit emergency strategy, in which it hoped to execute £60 billion of new quantitative easing (QE) by re-purchasing UK Treasury gilts from private businesses. However, two weeks ago the Bank was forced to reveal that, for the first time in its history, it would be unable to complete its bond buyback, as businesses were unwilling to part with their gilts at what the bank construed to be the market rate. While the Bank attempted to dismiss this problem by promising to make up for the £52 million shortfall in six months time, the fact that it has run into the same roadblock yet again, a mere two weeks later, will make this promise appear far more tenuous.

Why Aren't Firms Selling Their Government Bonds? 

This is certainly a moment of historical significance in the development of modern central banking. The BoE has been resorting to the “unorthodox” monetary policy of QE since 2009, but has never before found itself stymied by such a number of private firms unwilling to co-operate with it. The way in which the bank chooses to finally resolve this situation, whether by resigning itself to the fact that firms won’t sell at the prices it’s offering, or by employing some power to force them to do so, will likely give significant insights into how central banks’ techniques will develop in the future. While it might be tempting to see this lack of co-operation by private firms as a conscious act of rebellion against the Bank, it’s probably still a little early to begin packing for Galt’s Gulch. In fact, the actual reasons why firms clung to their gilts so tightly are far more interesting. This new phenomenon provides both an extremely clear illustration of the Austrian insight that artificially low interest rates can inflate unsustainable asset bubbles, as well as an unusually transparent window into the formation of the current government debt bubble, which will likely precipitate the next crash.

London’s Daily Telegraph, when reporting on the news, offered a particularly direct and stark summary of the Bank’s aims. The BoE’s new bond buyback, it explains, is part of a conscious effort “to push up the price of the government bonds,” in the hopes that this will lower interest rates and “force investors to take bigger risks” if they want to see any sort of return at all.

The Central Banks Wants Us to Take Bigger Risks 

The idea that the British government is actively pushing for investors to behave more riskily is a jarring thought indeed, particularly given the long-term causes of the Great Recession from which we are only just emerging. Efforts to increase home ownership rates, by the Clinton and Bush administrations, cajoled lenders into offering mortgages to ever more risky borrowers, and ultimately played a significant role in setting up the sub-prime mortgage crisis which kicked off the last recession. With the BoE now attempting to encourage similar risk-taking across the entire British economy, it’s hard to imagine that the consequences will somehow be entirely positive this time around.

However, quite apart from that worrying new aim, the fact that the bank is actively seeking to bid up the price of the government bonds provides a clear example of how easy money and low rates are inflating a government debt bubble. Not only has the Bank’s recent slashing of interest rates made government debt seem even more attractive, as one of the few “safe” investments still capable of offering a return, but their ability to effectively conjure money from thin air has allowed them to bid the price of the gilts still higher. Even as the Bank consciously aims to inflate the price of government bonds, this new development could be a sign that this bubble has begun to inflate beyond even their control, as they still couldn't attain their target even when bidding 5bps above what they considered to be the market rate. As governments and central banks around the world seem to be inflating similar bubbles in the prices of their government bonds, it looks increasingly likely that this boom in government debt may prove to be the cause of the next worldwide bust.

These recent failures by the Bank of England to complete its weekly gilt buybacks are representative of how the government debt bubble — which central banks have created — is now beginning to spiral out of their control. However, the eagerness of firms to hold onto their gilts as a consequence of this will still pose a real obstacle to the Bank going forwards. With the post-Brexit economy looking increasingly less like the kind of catastrophe the BoE’s policy had been designed to tackle, a few more such obstacles might be a useful nudge to policymakers, perhaps even prompting them to question the path down which they are now taking us.

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Open the Books Exposes the Sham That is the Illinois State Budget

Open the Books, the world’s largest private database of government spending, recently released its latest expose examining the Illinois state budget using data garnered from its annual FOIA request.

Here’s some of what it found (read the entire article at Forbes):

It’s been two years since Illinois state government had a full-year budget. Now, more than 70,000 vendors are owed $8.2 billion. Yet, despite the legislative deadlock and seemingly fiscal insolvency, more than $50 billion in state payments flowed to providers and other entities in FY2016. 

So, who actually got paid and for how much while others waited in the long line of unpaid bills?

continue reading

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Two New Sitcoms Launch at FX: New at Reason

'Atlanta'Stop brooding about the relationship between Rupert Murdoch and Donald Trump. What ought to worry you is what’s going on between Murdoch and Louis C.K. Despite generating minimal ratings and even fewer laughs, Louis C.K. is about to place his third sitcom on Murdoch’s FX cable network. We are steadily marching toward the extinction of mirth itself.

Now we have Better Things, co-created -produced by Louis C.K. and longtime collaborator Pamela Adlon, who played his romantic interest in both Lucky Louie and Louie. The new show, chronicling the travails of a single-mom actress named Sam raising three scurrilous, prevaricating daughters in Hollywood, is supposedly based on Adlon’s real life. Television Critic Gleen Garvin suggests better things than this sitcom, like Donald Glover’s Atlanta, also launching next week on FX.

View this article.

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Clinton Unveils “Bold” Plan For Pharma: Drug Price Controls

In yet another fit of populist rage, Hillary Clinton is set to unveil her 'fairness doctrine' for the drug industry. As Reuters reports, Clinton will create an "aggressive new set of enforcement tools," including the ability to levy fines and impose penalties on manufacturers when there has been an "unjustified, outlier price increase." In other words – government-imposed price controls – ask the Venezuelans how that ends…

 Hillary Clinton said on Friday that if elected to the White House, she would create an oversight panel to protect U.S. consumers from price hikes on life-saving drugs and import alternative treatments if necessary.

 

Clinton, the Democratic presidential nominee, will seek to give the panel an "aggressive new set of enforcement tools," including the ability to levy fines and impose penalties on manufacturers when there has been an "unjustified, outlier price increase" on a long-available drug, her campaign said.

 

"Over the past year, we've seen far too many examples of drug companies raising prices excessively for long-standing, life-saving treatments with little or no new innovation or R&D," Clinton said in a statement.

 

If Clinton defeats Republican Donald Trump in the Nov. 8 election, she will need the support of the U.S. Congress to implement key measures she has proposed, such as levying fines on manufacturers responsible for unjustified price hikes.

Lawmakers have in the past resisted efforts to introduce controls on pharmaceutical prices.

Drugmakers have insisted that lowering or limiting drug prices will hamper their ability to invest in research and lead to fewer new therapies.

But do not worry, government knows best…

"Our pharmaceutical and biotech industries are an incredible source of American innovation and revolutionary treatments for debilitating diseases," said Clinton. "But I’m ready to hold drug companies accountable when they try to put profits ahead of patients, instead of back into research and innovation.”

 

The oversight panel would be made up of representatives from existing public health and consumer protection agencies who convene to examine the scope of a drug increase, the manufacturer’s production cost and the treatment’s relative value to patients and public health, Clinton’s campaign said.

 

In cases where a determined unjustified price hike is accompanied by insufficient market competition, Clinton’s administration would intervene to purchase alternative drugs from comparably regulated markets or assist manufacturers in bringing the product to market in the United States.

 

Dr. Aaron Kesselheim, an associate professor at Harvard Medical School, called it a “bold idea” to get the federal government “involved in helping stabilizing some of these generic drug markets.”

So to sum up:

If a price hike was unjustified, it would have the power to intervene directly in the marketplace, by imposing penalties on the offending drug company or funding competitors’ efforts to create competing products in order to bring down prices.

 

Clinton’s plan would also allow Americans to import certain drugs from other countries, like Canada, which currently pay significantly less for the same pharmaceutical drugs.

 

Congressional Republicans, the Obama Administration and industry groups, however, oppose the plan, making it unlikely to pass anytime soon.

On the other side of the argument is The Manhattan Institute who argue that drug price controls hurt patients the most…

Proposals to control drug prices may have populist appeal, but they miss the mark by ignoring the root cause of high health care costs—poor health—and the relatively modest role that medicines play in U.S. health care spending. More important, the assumption that European-style price controls would have no effect on innovation is deeply misguided.

 

Because America is the world’s largest pharmaceutical market, its market-pricing structure for pharmaceuticals generates the lion’s share of the profits necessary to fund drug development. Cutting into these profits would dampen incentives for innovation, shorten lives, and impose higher costs on future patients. Price controls are a losing proposition—for industry and for patients who receive little, if any, benefit from currently available therapies.

Key Findings

U.S. drug spending is not out of control; reducing it will not substantially affect overall health care costs.

 

  • U.S. spending on drugs accounts for a smaller share of total health care spending—about 10 percent—than in Europe, where drug price controls are in place.
  • U.S. drug spending as a share of health care spending is expected to remain flat; the out-of-pocket share of drug spending is expected to decline.

 

Drug spending is cyclical. After a decade of low increases in drug spending, driven by generic competition (drug spending by private insurers actually declined by 0.5 percent in 2013), more new, powerful drugs are coming to market. Eventually, these drugs will lose patent protection and become cheap generics.

 

Drug companies do not earn excessive profits. Investors treat the pharmaceutical industry as 25 percent–37 percent riskier than other industries and therefore require a higher rate of return. The industry’s profit margins reflect the greater risk and long timeline required to develop successful U.S. Food and Drug Administration (FDA)–approved medicines.

 

Drug price controls cost more than they save by slowing innovation.

  • Modest price controls that reduce pharmaceutical industry revenue by 20 percent would shorten life expectancy for children today by nearly one year by 2060, imposing costs of $51,000 per capita.
  • Aggressive price controls that reduced prices by half would slash the number of products under development by 30 percent–60 percent.

 

From our perspective the intertwining of The FDA's process, lobbying dollars, and government-sponsored healthcare rights for all is bad enough, but now adding yet more government regulation on what is 'fair' pricing makes the whole thing a farce… one thing is for sure, it will not improve the situation for the majority and the money flow into DC will increase dramatically as winners (and losers) are selected.

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US Journalist Arrested In Turkey After Escaping Syrian Militants’ Prison

Submitted by MiddleEastEye via TheAntiMedia.org,

An American journalist has been arrested in Turkey and charged with “violating a military zone” after she returned from war-torn Syria, US officials said on Wednesday.

US State Department spokesman John Kirby said Lindsey Snell was detained on 6 August and that US consular officials had been able to visit her almost three weeks later on 26 August.

Snell’s Twitter biography identifies her as an Istanbul-based video journalist who has contributed to several western networks and news organisations including MSNBC, Vice News and ABC.

On Facebook, she describes herself as hailing from Daytona Beach, Florida, and to have graduated from the University of Florida in 2005. She is a Muslim and wears a headscarf in pictures.

Her last tweets were sent on 5 August, when she referred to having been imprisoned for 10 days by militants from al-Nusra Front before escaping with the aid of a “brave man on a motorcycle”.

 

 

On her Facebook page, again on 5 August, she said she had been able to document her time in Nusra’s captivity with her cellphone.

“It’s a crazy story,” she wrote.

“A cave prison (the previous tenant of my cell had marked his days in residence in blood on the walls), masked villains, motorcycle escapes and disguises. I can’t wait to share the details.”

There was no reference to her having arrived in Turkey, but the country would be the obvious first destination of anyone trying to flee the Aleppo region of Syria after escaping a kidnapping.

“She was detained in Turkey. As I understand it she journeyed to Turkey from Syria,” Kirby told reporters in Washington. “She is currently being held at a prison facility in Hatay province.

 

“What we understand is that she has been charged with violating a military zone, but I can’t speak to her reasons for being in Syria and travelling there,” he added.

Hatay Governor Ercan Topaca told national media outlet Anadolu Agency:

“A US journalist was captured while she was trying to cross the border illegally; she was taken to court and remanded. The trial phase is ongoing. For now, we do not know if she is a spy or not.”

Hatay is a far southern province of Turkey that borders on Syria’s Aleppo governorate, currently the scene of fierce fighting between Syrian government forces and a variety of rebel groups.

Turkish forces are deployed to the border area as part of efforts to control the flow of fighters and weapons to the civil war.

Snell’s arrest comes amid strained relations between the US and Turkey after Turkish forces targeted Kurdish fighters in Syria, the BBC said.

The US has criticised Ankara for attacking Kurdish forces, whom Turkey considers terrorists, along with the Islamic State (IS) group inside Syria, the BBC said. The US depends on Kurdish forces for support in the battle against IS in northern Syria.

The country is also reeling after a failed coup against President Recep Tayyip Erdogan on 15 July in which at least 246 people died and more than 2,000 others were injured.

Turkey’s government has accused US-based cleric Fetullah Gulen of backing the army-led attempted coup, which Gulen denies.

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‘Sources’ Comment On Hillary’s “Systemic And Intentional Violations Of The Federal Records Act”

Yesterday we noted how yet again a FOIA request had turned up work-related emails from Clinton's personal server that were not part of her original 55,000 page data dump on the State Department (see "New Hillary Emails Expose Bill Pushing Meetings With Foundation Donors, Requests For "Diplomatic Passports"").  As we pointed out, all of the new email discoveries continued to "contradict Hillary's claims to Congress that she turned over all of her government emails to the State Department" calling into question her compliance with federal record keeping laws.  Despite a decision not to press charges, FBI Director James Comey even admitted to the House Judiciary Committee back in July that Clinton likely had not complied with federal record keeping laws.  When pressed about her compliance Comey said simply, "I don't think so."

Today, Circa released a detailed investigation into Clinton's compliance with federal record keeping laws citing "government sources," presumably from within the FBI, with detailed knowledge of the FBI's investigation of Clinton and her team.   

According to Circa's sources, the FBI "collected significant evidence suggesting she [Hillary] and her team violated federal record-keeping laws."  The source pointed out that this evidence was compelling enough to cause Bryan Pagliano to "raise [his] Fifth Amendment right against self-incrimination during an investigative interview."  The source also noted that while the FBI publicly chose not to file criminal charges against Hillary that privately the decision was left to the State Department to make a decision on whether federal record keeping laws had been violated.

"There was plenty of evidence from our interviews, especially from technical and compliance staff, as to the intention of creating a private email system outside the State Department's record keeping. It was well known, and it persisted even after people raised legal and security concerns," one source told Circa.

 

In public, the FBI recommended not filing criminal charges against Clinton on national security grounds. But  in private, the Bureau chose to defer to the State Department on whether to recommend anyone to the Justice Department for criminal prosecution on records law violations

 

Each email transmission of a government document that was not preserved or turned over to the State Department from Mrs. Clinton's tenure could theoretically be considered a violation of the Federal Records Act, the main law governing preservation of government records and data.

 

Other federal laws make it a felony to intentionally conceal, remove or destroy federal records as defined under the Act, punishable with a fine and imprisonment of up to three years. A single conviction also carries a devastating impact for anyone looking to work again in government because the law declares that any violator "shall forfeit his office and be disqualified from holding any office under the United States."

 

The FBI "indirectly documented hundreds, and likely thousands, of violations of the Records Act," one source with direct knowledge of the FBI's investigation told Circa. Using forensics, the FBI recovered from computer drives and other witnesses about 15,000 emails from Mrs. Clinton's private account that dealt with government business, most that had not been turned over by her or her aides, the sources said.

 

Some of the emails recovered by agents were germane to Freedom of Information Act (FOIA) requests from the public and congressional investigations and had not yet been produced, the sources said.

In fact, sources told Circa that Clinton's efforts to conceal email communications from public records laws and congressional oversight  were "systemic and intentional" and began as soon as Mrs. Clinton took office in 2009.

For instance, the sources said agents secured testimony and documents suggesting that Mrs. Clinton's team:

  • Was informed in 2009 that she had an obligation under the records law to forward any government-related records contained in private email to a new record preservation system known as SMART but chose not to do so because her office wanted to keep control over "sensitive" messages.
  • Was specifically questioned by a technical worker who was involved with her private email server in the Clinton family home in New York whether the arrangement was appropriate for a government official under the federal records law. The worker was assured there were no problems.
  • Wanted to keep her private Blackerry email service because of fears a government email address would be subject to public scrutiny under the Freedom of Information Act.
  • Was aware that government officers complying with FOIA requests did not have access to search Mrs. Clinton's private email for responsive records.
  • Persisted in allowing her to use private email to conduct State Department business even after a cable was sent under her name in 2011 to all diplomats worldwide urging them to stop using private email because of foreign hacking fears.
  • Allowed Clinton to keep using the private email system after after she personally received a 2011 presentation warning of dangers of the private email for government business.
  • Failed to preserve private emails from Clinton that clearly involved significant government business, including discussions with Army Gen. David Petraues, the Benghazi tragedy, meeting requests with foreign leaders and the State Department's quadrennial policy and performance review.
  • Had prior reason from earlier legal cases involving their conduct to know that emails covering government business were legally required to be preserved and turned over to their agency and the National Archives.

Circa sources also noted that the FBI's investigation found that at least two IT employees at the State Department raised questions about Clinton's personal email and lack of compliance with the Federal Records Act.  Of course, those employees were promptly "scolded" for their honesty and told to "never to raise the issue of Secretary Clinton's personal email account again." 

Around the same time, two information management employees inside State began raising concerns that material in Clinton's personal email server likely contained government records that needed to be preserved under the Federal Records Act. One raised the concern to a supervisor at a staff meeting but was scolded and eventually told never to raise the issue of Secretary Clinton's personal email account again, according to the sources.

Speaking of FBI sources, we still haven't seen those notes we were promised earlier in the week from Hillary's "voluntary" interview with investigators.  Today just happens to be a summer Friday before a long holiday weekend…perfect time to bury the latest Hillary bombshell while no one's paying attention. 

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Et Tu Austria – 3rd European Nation Abandons TTIP Trade Deal

Via EuroIntelligence.com,

In our coverage on the slow death of TTIP we focused on Germany and France.

We are now hearing that the Austrian SPÖ, the majority partner in the governing grand coalition, is also opposed – and not only to TTIP but also to the CETA deal with Canada.

Der Standard quotes Chancellor Christian Kern as questioning CETA just after vice-chancellor Reinhold Mitterlehner from the ÖVP, the centre right coalition partner, questioned TTIP.

Kern is planning to consult his party base before taking a formal decision but this procedure is certain to lead to the rejection of the project. He said TTIP constitutes a massive shift in power towards multinational companies and against democratic rule – and this is a fundamental design flaw of both TTIP and CETA. Mitterlehner was more nuanced than Kern, saying that it was a shame that the otherwise decent CETA deal was discredited by TTIP. He said if Austria rejected CETA it would most likely be outvoted in the council, where decisions on these matters are taken with a qualified majority vote.

Eric Frey has a comment in Der Standard in which he notes that the failure of TTIP is due to the cowardice of politicians. Not one, except perhaps Angela Merkel, has openly campaigned for it. Even Austria's ÖVP has not.

The truth is that small export-driven economies would benefit enormously from this agreement, but the debate is entirely dominated by NGOs and critics of globalisation. The strongest argument against TTIP is the hostile public opinion. But this is the fault of politics.

We disagree with Frey fundamentally.

We are living at a time when people are considering voting for extreme policies like Brexit, and extremist politicians like Trump, Le Pen, or various Austrian characters on the right.

 

This is a response to the failures of the globalised economy since 2008.

 

An intelligent response cannot consist of doubling down on what was done before then: more free trade, lower taxes for multinational companies, and more loss of democratic control.

 

What we are seeing is not a flaw in democracy, but democracy in action: the system is rebelling.

It appears the establishment – as Nigel Farage confirmed – is befuddled and losing control. Fighting this anti-globalisation push on many fronts is becoming untenable for them… which means the final solution looms – because nothing galvanizes differing opinions and distracts an angry populous like war!

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University of Illinois Activists Want to Punish Students for ‘Non-Inclusive’ Behavior, Theme Parties

U of IThe student government at the University of Illinois discussed a bill earlier this week that would call on the administration to mandate “substantial consequences” for any student or group found guilty of “non-inclusive” behavior.

In defense of the bill, Student Senate Vice President Spencer Haydary said that free speech isn’t absolute, and that hate speech should result in “consequences, repercussions, whatever you want to call it,” according to The Daily Illini.

The bill asks the administration “to create more substantial consequences for communities, such as registered student organizations, registered organizations, related organizations, and Greek organizations, involved in behavior that is not culturally inclusive, engaged in acts of intolerance, or engaged in acts that violate community standards.”

Campus Reform reports that the bill came in a response to activist demands for formal sanctions against a fraternity and sorority that hosted a theme party at which some guests wore sombreros.

Illinois’s Student Senate has no actual power—thank goodness—and so the bill isn’t actually much of a threat to free speech on campus. Still, it’s illustrative of the stupidity of the kind of person who gets elected to the Student Senate. Contrary to popular belief, the Supreme Court has never recognized a “hate speech” exception to the First Amendment: public universities are unquestionably required to permit students to engage in kinds of expression that other people might subjectively describe as hateful.

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Smoking Gun? FBI Report Exposes Hillary Clinton Health Concerns

With much of the recent discussion focusing on Hillary Clinton’s general health condition, and mental acuity in particular, we wonder if the FBI just threw her under the bus with the following statement which links Hillary’s “inability” to remember her transition instructions with her 2012 concussion and blood clot:

CLINTON stated she received no instructions or direction regarding the preservation or production of records from State during the transition out of her role as Secretary of State in early 2013. However, in December of 2012, CLINTON suffered a concussion and then around the New Year had a blood clot. Based on her doctor’s advice, she could only work at State for a few hours a day and could not recall every briefing she received. CLINTON did not have any discussions with aides about turning over her email records, nor did anyone from State request them. She believed her work-related emails were captured by her practice of sending email to the state.gov email address of her staff. CLINTON was unaware of the requirement to turn over printed records at that time. Her physical records were boxed up and handled by aides.

The original, on page 9 of 11:

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Fewest Stocks Traded In 32 Years – The Market Is Disappearing In One Giant Leveraged Buyout

The number of common stocks traded on major U.S. exchanges are the fewest in three decades.

As CNBC reports, "Currently, there are just 3,267 stocks in the University of Chicago's CRSP data, and this is the lowest since 1984," wrote longtime Jefferies equity strategist Steven DeSanctis.

What's behind this phenomenon? DeSanctis explains:

"Between the lack of IPO activity, the pickup of M&A, and buybacks, the U.S. equity world is becoming smaller and smaller, and this could be one of many reasons why active managers are lagging behind their indexes. Companies may not want to come public due to the additional cost of Sarbanes-Oxley or the fact that the private market has become a bigger source of financing than it has been in the past."

So whether it's the total number of stocks or the amount of shares for each company outstanding, the stock market is shrinking.

Or as Dark Bid's Daniel Drew previously noted, The Stock Market Is Disappearing In One Giant Leveraged Buyout

It's easy to find critics and doomsayers who predict that the next stock market crash is just around the corner. They could be right, but another possibility is that the stock market itself will disappear entirely.

Anyone who is familiar with mergers and acquisitions knows what happens when a company is being slowly acquired. The price climbs higher, slowly yet relentlessly. Liquidity evaporates as offers are lifted. If the price moves up too quickly, buy programs are canceled. The buyer waits until the froth dies down a little before resuming purchases. Eventually, the bids reappear, and the process continues. Once the buyer acquires 5% of the company, a legal requirement is triggered: the SEC requires the buyer to file Schedule 13D, otherwise known as a "beneficial ownership report." Once this report is filed, everyone can see the buyer, and the stock price will usually jump.

This same process has been underway in the stock market over the last 6 years. The market is up well over 200%. Liquidity has evaporated in the S&P 500 futures market, and the central banks themselves are buying S&P 500 futures. Companies are spending nearly all of their profits on stock buybacks.

All of this activity harms employees. William Lazonick discussed the negative effects in a Harvard Business Review article called "Profits Without Prosperity." According to Lazonick, the American economy has transformed from a system of value creation to one of value extraction. He explained,

From the end of World War II until the late 1970s, a retain-and-reinvest approach to resource allocation prevailed at major U.S. corporations. They retained earnings and reinvested them in increasing their capabilities, first and foremost in the employees who helped make firms more competitive. They provided workers with higher incomes and greater job security, thus contributing to equitable, stable economic growth – what I call "sustainable prosperity."

 

This pattern began to break down in the late 1970s, giving way to a downsize-and-distribute regime of reducing costs and then distributing the freed-up cash to financial interests, particularly shareholders. By favoring value extraction over value creation, this approach has contributed to employment instability and income inequality.

The private takeover of the stock market is also apparent in the IPO market, or lack thereof.

This is the end game of unfettered capitalism. The signs are all here. When you cast aside reasonable restraints, the unscrupulous among us will rise to the top and exploit everyone else. What we have left is a new American feudalism where CEOs move around like a pack of ruthless Somalian warlords. Riding behind the banner of efficiency, they replace employees with robots, outsource their work to foreigners and tell their employees to train their own replacements, and collude with hedge fund managers to strip companies of their most valuable assets to temporarily boost the stock price.

As if all this weren't enough, now they are buying the entire stock market with money provided by the Federal Reserve's quantitative easing policies. This is essentially the largest leveraged buyout in history, and it's being paid for by every American. If the IPO market continues to dry up and companies maintain their buybacks, eventually, they will run out of stock to buy, and the market will disappear.

In a country without public markets, corporate fiefdoms will dominate the landscape. Instead of actual castles and moats, fiefdoms will have legal barriers to protect them, like low minimum wages, tax loopholes, and regulatory capture. Warren Buffett always said he likes businesses with "economic moats." Just imagine how much he would like the moats of the new American feudalism.

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