Tag: news

Authored by John  Mauldin, originally posted at MauldinEconomics.com,

Psychologists from Sigmund Freud forward have generally agreed: our core attitudes about life are largely locked in by age five or so. Changing those attitudes requires intense effort.

Neil Howe and William Strauss took this obvious truth and drew an obvious conclusion: if our attitudes form in early childhood, then the point in history at which we live our childhood must play a large part in shaping our attitudes.

It’s not only early childhood, however, that forms us. Howe and Strauss think we go through a second formative period in early adulthood. The challenges we face as we become independent adults determine our approach to life.

These insights mean we can divide the population into generational cohorts, each spanning roughly 20 years. Each generation consists of people who were born and came of age at the same point in history.

These generations had similar experiences and thus gravitated toward similar attitudes.

At this year’s Strategic Investment Conference, Howe illustrated the point with this cartoon. (I think we should now add an illustration of a couple texting on their phones, saying “Let’s tell our friends online first.”)

Amusing, yes, but true. Young love, a universal experience, took different forms for Americans who grew up in the 1950s vs. the 1970s vs. the 1990s. Ditto for many other aspects of life.

Four generational archetypes: Heroes, Artists, Prophets, & Nomads

In their book The Fourth Turning, Howe and Strauss identified four generational archetypes: Hero, Artist, Prophet, and Nomad. Each consists of people born in a roughly 20-year period. As each archetypal generation reaches the end of its 80-year lifespan, the cycle repeats.

Each archetypal generation goes through the normal phases of life: childhood, young adulthood, mature adulthood, and old age. Each tends to dominate society during middle age (40–60 years old) then begins dying off as the next generation takes the helm.

This change of control from one generation to the next is called a “turning” in the Strauss/Howe scheme. The cycle repeats on a “fourth turning” as a new hero generation comes of age and replaces the nomads. Each fourth turning, however, is a great crisis.

(The turnings have their own characteristics, which I describe in detail in this article. Today’s economic and political landscape, unfortunately, makes it clear we are about halfway through the fourth turning.)

Now, let’s get back to the archetypes and see how they match the generations alive today.

The characteristics of each archetype aren’t neatly divided by the calendar; they are better seen as evolving along a continuum. (This is a very important point. It’s why we get trends and changes, not abrupt turnarounds. Thankfully.) People born toward the beginning or end of a generation share some aspects of the previous or following one.

Hero generations are usually raised by protective parents. Heroes come of age during a time of great crisis. Howe calls them heroes because they resolve that crisis, an accomplishment that then defines the rest of their lives.

 

Following the crisis, heroes become institutionally powerful in midlife and remain focused on meeting great challenges. In old age, they tend to have a spiritual awakening as they watch younger generations work through cultural upheaval.

 

The G.I. Generation that fought World War II is the most recent example of the hero archetype. They built the US into an economic powerhouse in the postwar years and then confronted youthful rebellion in the 1960s.

 

Further back, the generation of Thomas Jefferson and James Madison, heroes of the American Revolution, experienced the religious “Great Awakening” in their twilight years.

 

Artists are the children of heroes, born before and during the crisis. They are, however, not old enough to be an active part of the solution. Highly protected during childhood, Artists are risk-averse young adults in the post-crisis years.

 

They see conformity as the best path to success. They develop and refine the innovations forged in the crisis. Artists experience the same cultural awakening as heroes but from the perspective of mid-adulthood.

 

Today’s older retirees are mostly artists, part of the “Silent Generation” that may remember World War II but were too young to participate. They married early and moved into gleaming new 1950s suburbs.

 

The Silent Generation went through its own midlife crisis in the 1970s and 1980s before entering a historically affluent, active, gated-community retirement.

 

Prophet generations experience childhood in a period of post-crisis affluence. Having not seen a real crisis, they often create cultural upheaval during their young adult years. In midlife, they become moralistic, values-obsessed leaders and parents. As they enter old age, prophets lay the groundwork for the next crisis.

 

The postwar Baby Boomers are the latest prophet generation. They grew up in generally comfortable times with the US at the height of its global power. They expanded their consciousness when they came of age in the “Awakening” period of the 1960s. They defined the 1970s/1980s “yuppie” lifestyle and are now entering old age, having shaped the culture by virtue of sheer numbers.

 

Nomads are the fourth and final archetype. They are children during the “Awakening” periods of cultural chaos. Unlike the overly indulged and protected prophets, nomads go through childhood with minimal supervision and guidance. They learn early in life not to trust society’s basic institutions. They come of age as individualistic pragmatists.

 

The most recent nomads are Generation X, born in the 1960s and 1970s. Their earliest memories are of faraway war, urban protests, no-fault divorce, and broken homes.

 

Now entering midlife, Generation X is trying to give its own children a better experience. They find success elusive because they distrust large institutions and have no strong connections to public life. They prefer to stay out of the spotlight and trust only themselves. Their story is still unfolding today.

Millennials are a new hero generation

After the nomad archetype, the cycle repeats with another hero generation: the Millennials (born from 1982 through about 2004) are beginning to take root in American culture.

They are a large generation numerically, filling schools and colleges and propelling new technology into the mainstream. If the pattern holds, they will face a great crisis. It will influence the rest of their lives… just as World War II shaped the G.I. Generation heroes.

It’s not going to be a short period of difficulty. It will be an existential crisis, one in which society’s strongest institutions collapse (or are severely challenged and stressed) and national survival is in serious doubt. The Crisis can be economic, cultural, religious, military, or all the above.

Using Neil Howe’s timeline, we are currently about halfway through the fourth turning. We may have another decade to go. Maybe not. We’ll figure this out soon.

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Eight years ago, a simple, catchy, popular refrain emerged for a weary population which was about to suffer through the biggest financial crisis in generations. It was “Hope and Change” and it defined the presidential candidacy of an inexperienced, largely unknown senator from Illinois. Barbara Conley was one of the millions of Americans swept up in Barack Obama’s promises of hope and change when he accepted the Democratic nomination at a packed football stadium a few miles from her home in the Denver suburbs.

But, as the AP reports, those optimistic days are almost unrecognizable to Conley now. And, making matters worse, the options now may be even worse.

With Donald Trump and Hillary Clinton preparing for their own nominating conventions, the 68-year-old independent is filled with so much frustration at the candidates and the political system that propelled them to victory that she can’t even imagine voting in November.

 

“I’m so mad about both of the candidates,” said Conley, who finds Clinton too dishonest and Trump too unproven to be president. She paused while loading groceries into her car and declared, “It’s depressing.”

To be honest, Obama was just as unproven then but we’ll let that fly.  Because less than four months before Election Day, that same sense of anger and anxiety runs deep with voters across the country. Trump and Clinton will each try to paint a rosy picture of life under their leadership during their back-to-back conventions, but it seems unlikely either can quickly shake Americans out of their bad mood.

In fact, the prevailing sentiment among Americans is that it’s never been worse.  According to an AP-GfK poll, a stunning 79 percent of Americans now believe the country is heading in the wrong direction, a 15-point spike in the past year, according to an Associated Press-GfK poll. Voters are strikingly unhappy with the candidates who will be on the ballot this fall, with only 22 percent saying they would be proud to see Trump win and 27 percent to see Clinton.

And yet that is the best America has to offer.

It is so bad for Kristie Boltz, a registered Republican from Black Lake, Ohio, that she said a choice between Clinton and Trump is so unappealing that she would rather Obama stay in office for a third term. “And I didn’t even vote for Obama. How crazy is that?” said Boltz, a 39-year-old who works in marketing.

Another irony: popular sentiment and the recovery narrative have never been more at odds with each other. According to AP, “the economy is growing, jobs are being created and unemployment is low.”

Of course, the reality is that every single ounce of “growth”, both in the economy but mostly in the stock market, has come as a result of an unprecedented global injection of liquidity by central banks, which in turn has launched a historic debt spree across the entire world unlike anything seen every before. And perhaps even common people realize that it is bound to end in a dreadful failure, which is why almost nobody harbors much optimism about the “long run”

Another point: the improving economy is a changing one, leaving some Americans without the skills they need for the jobs available. It is also one where nearly 100 million Americans have decided to exit the labor force entirely, for one reason or another, suggesting that even a cursory peak beneath the surface reveals an economy that is certainly not firing on all fours.

Adding to the sense of persistent dread, terrorism fears have been heightened in the U.S. after a string of deadly incidents in the West. As documented here every day, this summer in particular has seemed to bring a steady stream of gruesome news.

To be sure, the ever more dire newsflow certainly does not correlate to the supposed recovery in the economy, and certainly not to the all time highs in the S&P.

But back to the popular resentment to the upcoming presidential figure.

Emilie Passow, a 68-year-old Democrat from Bala Cynwyd, Pennsylvania, said her disgust extends beyond the presidential candidates to Congress as well. “There’s so little attempt at conciliation and consensus,” she said.

And you want to know why that is? Because why attempt conciliation and consensus when the Fed will do everything to prop up the S&P and give the impression that all is well.

But nothing is well, and people are dreading not only the present but also the future. More than any other candidate in this election, Trump has latched onto the public’s fears. He promises to “Make America Great Again,” pledging to bring back manufacturing and mining jobs from areas where they’ve disappeared. With coded — and sometimes not so coded — language, he’s cast aspersions on immigrants seeking to come to the United States and on Muslims already here.

“We’re trying to be so nice, we’re trying to be so civil. We’re so weak,” Trump said hours after the Nice attack. “The world has got to strengthen up, and we have to be very tight with our borders. It’s now a different world.” While Trump supporters cheer those lines, they leave other voters on edge.

Melissa Andreas, 42, said of the prospect of a Trump presidency: “I’m scared that our country is going to be in utter turmoil with him as our leader.” Mike Ryan shares many of those sentiments about Trump.

But his view of Clinton isn’t much better. “I’ve always been a Democrat and always will be,” Ryan, 76, said. “But it’s going to be a toughy.”

Like his fellow Coloradan Barbara Conley, some of Ryan’s feelings stem in part from his frustrations with Obama’s eight years in office. Though Ryan supports Obama, he’s been irritated by the years of battle between the Democratic president and Republican lawmakers that have often ended in stalemate.

Asked whether he believes Clinton — or Trump — could do any better, Ryan said simply, “I’m disappointed with what we’re left with.”

* * *

And here is the truth: what we’re left with is the Federal Reserve which is at the heart of the problem, because as we have said all along, the president is just a token figurehead who has zero real impact on the economy. It also explains why the real state of the economy is far more dire than anyone is willing to admit.

However, whether the next president is Hillary or Donald, the truth is that nothing will change as long as those who are truly in control, remain there: the banks and the corporations, who purchase influence for pennies on the dollar and who tell the privately-owned Fed how to plunder even more wealth from the middle class in the form of trillions and trillions of debt that will never be repaid and which will necessitate – with 100% certainty – more directly and indirectly funded taxpayer funded bailouts.

So enjoy the song and dance of the conventions, and enjoy the presidential spectacle. The reality is that both are for nothing more than show as long as the ivory tower economists, quietly advised what to do by Wall Street and by America’s mega-corporations, who occupy the Marriner Eccles building are the ones who remain in charge. Everything else is smoke and mirrors.

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Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

Opponents of a central bank should take advantage of the post-Brexit vote revival of secessionist sentiments to promote a secession from central banking, or “Fed-exit.” Ending the Federal Reserve's monopoly on money is the key to restoring and maintaining our liberty and prosperity.

By manipulating the money supply to fix interest rates, the Federal Reserve engages in price fixing. After all, interest rates are nothing more than the price of money. Like all prices, they communicate information about economic conditions to market actors. Federal Reserve attempts to override the market rate of interest with a Fed-favored rate distort the price signals sent to businesses, investors, and consumers. The result of this distortion is a Fed-created boom, followed by a Fed-created bust.

The Fed’s action affects the entire economy and impacts the lives of all Americans, as well as of people around the world. Therefore, it is no exaggeration to say that the attempt to fix interest rates is the most harmful example of price fixing.

Many who normally oppose government intervention in the marketplace claim that central banking could work if only the Fed adhered to a monetary rule. Supporters of a “rules-based” monetary policy claim that a rules-based approach will bring stability and predictability to monetary policy, and thus put the economy on a path to permanent prosperity. But under a rules-based monetary policy, the Federal Reserve retains the power to manipulate interest rates. So under a rules-based approach, investors and entrepreneurs would still receive distorted price signals, which would still result in a boom-bust cycle. No rule can fix the flaws inherent in our system of monetary central planning.

In recent years, many progressives have joined libertarians and conservatives in criticizing the Federal Reserve. Progressive Fed critics often focus on the ways the Fed’s policies benefit big banks, Wall Street, and other special interests, and how the policies harm average Americans. Unfortunately, but not surprisingly, many progressives do not want a free market in money. Instead they want a more “democratic” Fed. Thus, progressives favor, for example, requiring that more members of the Fed’s board be confirmed by the US Senate. They also favor putting representatives of “public interest” groups on the Fed’s board.

The Fed’s progressive critics are correct that big banks together with powerful financial institutions have too much influence on monetary policy. While implementing progressive reforms may reduce Wall Street’s influence on monetary policy, it will likely also strengthen the influence of the deep state — that network of crony capitalists, lobbyists, congressional staffers, and others who work behind the scenes to control our economic and foreign policies.

Many progressives believe that middle- and working-class Americans would benefit from a more “stimulative” (meaning inflationary) monetary policy. Saying that inflation would help the average American turns reality on its head. Middle- and working-class Americans are the main victims of the Fed’s inflation tax. Average Americans also suffer the most when the bubble created by the Fed’s inflationary “stimulus” inevitably bursts. The true beneficiaries of inflation are crony capitalists and big-spending politicians.

Instead of fruitless efforts aimed at “reform” of the Fed, those concerned with restoring a true free market, reducing economic inequality, and promoting peace and prosperity for all should work for a “Fed-exit.” The first step, of course, is to pass Audit the Fed.

Once Congress and the people learn the full truth about the Fed, they can begin to consider the best ways to Fed-exit. There are a number of steps that can and should be taken toward that goal that I will outline in a future column.

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Some interesting observations from Citi’s Tin Fordham on “The Tempest” and What to Make of Turkey’s Failed Coup, Nice Attacks, and the Emerging Politics of Fear and Anxiety. It appears that “nobody could have possibly predicted” what we said back in 2010 when the Fed launched QE2, namely that monetary policy will lead to global violence, conflict and war, and as a result is making it up as they go along.

Here is Citi’s turn, courtesy of Tina Fordham.

In this note we provide an overview of our thoughts on the extraordinary political backdrop that is evolving, with more detailed explanation of the economic and strategy implications from our Turkey economists and EM strategist.

Friday night’s failed military coup attempt in Turkey was a flashback to the kind of events most thought would be relegated to the “dustbin of history”, albeit one featuring a prominent role for social media, with Turkish President Erdogan commanding citizens to take to the streets to protest against the emerging coup via an appeal broadcast on Facetime. Once plagued by coups and coup attempts, the apparent plot to remove Turkey’s elected government was a reminder that, historically, it is in countries where coups and revolutions have occurred previously that they are most likely to return.

Friday night’s failed military coup attempt in Turkey was a flashback to the kind of events most thought would be relegated to the “dustbin of history”, albeit one featuring a prominent role for social media, with Turkish President Erdogan commanding citizens to take to the streets to protest against the emerging coup via an appeal broadcast on Facetime. Once plagued by coups and coup attempts, the apparent plot to remove Turkey’s elected government was a reminder that, historically, it is in countries where coups and revolutions have occurred previously that they are most likely to return.

Details remain hazy amid accusations the attempted takeover was prompted by opposition “Gulenist” forces based in the US, leading to demands for the extradition of Pennsylvania-based Fetullah Gulen, an allegation that could further strain relations between Washington and Ankara, as well as potentially complicating efforts to fight IS in the Middle East and the EU’s deal to limit refugee flows.

The coup attempt in Turkey comes fast on the heels of a series of events that have rattled nerves. Days before, the Bastille Day attack in Nice killed 84 people, amid intelligence warnings that France likely faces more attacks against difficult to protect soft targets, and just hours after President Hollande had lifted the state of emergency called following the Paris attacks in January. Less than 3 weeks before, the UK’s vote to leave the European Union – the first country ever to do so – marked a watershed for developed market political risk and raises the spectre of an existential challenge for the European Union. At the same time, polling gains in key US swing states have prompted us to raise the probability of a Trump presidency to 35%, with the potential to go higher as Hillary Clinton’s campaign remains lacklustre.

Taken together, these developments point to a marked increase in political risks in systemically-significant countries. At the start of the year, we flagged many of these in Citi GPS: GLOBAL POLITICAL RISK, as  well as introducing our thesis that rising Geopolitical Risks, accompanied by rising “Vox Populi” risks such as Brexit and changing US politics, were at risk of converging in new and powerful ways. Even so, we did not anticipate quite how many would transpire, let alone within such a compressed timeframe.

What to Make of Turkey’s Failed Coup, Nice Attacks, and the Emerging Politics of Fear and Anxiety

Among the key risks we identified was how the refugee crisis risked creating a new channel for regional risks to hit developed markets, particularly in Europe. Although the risk of a coup in Turkey may be averted for now, domestic pressures may make implementation of this deal more difficult, raising the risk that flows of refugees again impact the EU political process, with elections due in France, Germany and the Netherlands in 2017, and referendums in Italy and Hungary in the coming months.

Across the advanced democracies, the wave of resentment against political and business elites shows no sign of slowing down, let alone reversing. Although the developments in the UK, France and Turkey do not share a causal link, there is a risk that they interact in ways that test weak government capacity, inflame anti-immigrant, anti-establishment sentiment, further encouraging the rise of nonmainstream policy ideas and, at a minimum, exacerbating polarisation and political fragmentation. One common feature evident across the populations of these countries is the rise in sentiment that the country is “on the wrong track” and dissatisfaction. Terrorist attacks, scandals and rising opposition to immigration boost the grass-roots backlash to globalisation. The sense that leaders lack the political capital, will and tools to maintain stability and order in the face of these headwinds will almost certainly weigh negatively upon sentiment as well as the growth outlook.

Such fears may well subside, and markets typically have short memories. In the near term, recent developments will likely prompt FX shocks and a return to risk-off sentiment until the dust settles. For Turkey and France, the coup attempt and the recent spike in terrorist attacks in both countries will almost certainly hurt tourism receipts during the lucrative summer season.

After the “Facetime” Coup Attempt: Economic and Strategy Implications for Turkey

Regarding the potential economic ramifications of the coup attempt, which represents a major confidence shock, we believe that Turkey’s already challenging macroeconomic backdrop has become even more complicated. Given the country’s large external financing needs (US$ about 190 bn per annum), the possibility of a shift in investor sentiment towards Turkish assets can have significant implications for real economic activity – particularly if one considers the large open FX position of the corporate sector (US$ 192bn).

The likely slowdown in economic activity may lead policymakers to pursue more expansionary monetary and fiscal policies. On the monetary policy front, the CBT has already issued an action plan aimed at easing liquidity conditions which include, among other things, removing bank specific limits for liquidity provision purposes, increasing the size of (and easing the conditions for) the Central Bank’s FX lending facility to banks if needed, and, if necessary, unlimited TRY liquidity provision backed by FX. In the fiscal sphere in which there is more scope for easing, there are already signs of a more expansionary stance, as was evidenced in June during which primary spending rose by 44%YoY. In our view, a ratings downgrade could further undermine macroeconomic and financial stability. In this respect, while we believe that the likelihood of a downgrade has increased, the rating agencies are likely to observe the policy response before taking any actions.

We believe it is an exaggeration to believe the political noise in Turkey may affect the general price dynamics in other major EMs, especially the high-yielding ones. But there will be obvious consequences of the local political developments over the past 48 hours. Most importantly, it damages international investment towards TRY assets. TRY risk may be seen through another lens by international investors. Sentiment behaved well throughout the Davutoglu episode a few months ago (i.e. Davutoglu’s resignation, most likely due to internal disputes with the President’s office), with good international flows into TRY-denominated assets in the aftermath of the event, capping the move on the markets. It is difficult to foresee such an optimistic move now, especially given the recent rally in TRY rates, FX and external debt risk (with CDS not very far from cyclical lows). The next couple of trading sessions will be key to assess ‘investment sentiment damage’, but there is an underlying bias for some sovereign risk repricing in back-end local bond yields, and some repricing in CDS levels. In terms of front-end dynamics, we believe the CBT may try to hold rates unchanged for the time being. Of course, the chance of emergency hikes will depend on the magnitude of the selloff pressure in the following days. There is now a flattening bias in the cross-currency curve (1v5s, 2v5s – higher 1s and 2s).

The perception of monetary policy convergence in DM (rather than policy divergence, seen in 2014 and 2015) continues to engineer a soft USD, and an underlying cap in DM rates. We believe these forces may continue to help highyielding curves and currencies such as the TURKGB curve and Turkish lira. The next trading sessions will define how strongly these DM forces can keep supporting Turkish local assets. But we, at this point, warn against premature extensions of risk in the Turkish curve ahead of the first innings of this story.

We can think of few silver linings that can emerge from such a sobering series of developments, save optimism that crises can focus minds and overcome divisions, as appears to have been the case in Turkey, where even opponents of the regime apparently came together to resist its removal by force. However, we expect the most likely response will be crackdowns on opposition forces, further curtailing of civil liberties and more limitations on freedom of movement, with limited appetite to pursue the kind of policy reforms that could see a return to growth and competitiveness that might curtail the reversal in middle class living standards that has fed into the rise of what we first identified as Vox Populi Risk 4 years ago.

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Submitted by Mike Krieger via Liberty Blitzkrieg blog,

When it comes to terror attacks, we now know that #CelebrityLivesMatter. A lot.

Specifically, some Nice residents expressed concern that U2 frontman Bono and other celebrities dining a half mile away from the scene of the recent terror attack received special treatment. According to the Telegraph:

But on Thursday, Bono, fellow musician Elton John, and the chef Alain Ducasse were among a number of celebrities caught up in the Bastille Day massacre in Nice.

 

The lead singer of U2, 56, and Ducasse, 59, were dining on the terrace of La Petite Maison restaurant near the seafront when the mass murderer Mohamed Lahouaiej Bouhlel drove a lorry into crowds who had just watched a fireworks display, killing 84 – including 10 children.

 

Bono and Ducasse were rescued by armed counter-terrorism police along with other prominent French figures including the former mayor of Nice, Christian Estrosi, who was also at the restaurant.

 

However, local  residents have questioned the decision to launch special rescue missions of celebrities who were nearly half a mile away from the Nice attack, saying it was a “ridiculous” use of resources at a time when the city was plunged into chaos. 

Paulo Mendes, 46, the manager of a souvenir shop next door to the restaurant, said: “It is ridiculous that Bono was rescued by police.”

 

He told The Telegraph that police were needed half a mile away at the scene of the attack where thousands of people were rushing to safety.

 

“There was panic everywhere in the town,” he said. “I don’t care if it’s Michael Jackson, Bono or Barack Obama. The police should not help one person just because he is a celebrity. Everyone is equal.”

Silly peasant, don’t be ridiculous.

Another shopkeeper said the restaurant, which charges 450 euros for 25 grams of caviar, was a popular celebrity haunt and Bono was regularly seen there. 

Meanwhile, the French people are royally pissed off at the moment. So pissed off that according to Reuters…

Crowds jeered France’s leaders at a tribute on Monday to victims of last week’s truck attack in Nice and an opinion poll showed a sharp drop in confidence in the ability of President Francois Hollande’s government to combat terrorism.

 

Before and after a minute of silence held to pay respects to the 84 dead, many of the thousands gathered in the south-coast resort city of Nice chanted “resign, resign” at Manuel Valls, the Socialist prime minister. Others yelled “Hollande, resign”.

 

The poll published in Le Figaro newspaper showed 33 percent of respondents were confident in the current leaders’ ability to fight terrorism, down sharply from confidence levels of at least 50 percent in the wake of two major attacks last year.

If you think the National Front can’t win in next year’s election, think again.

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While we know better than to trust politician promises, we were surprised to read that today the GOP joined the Democrats in calling for a repeal of Gramm-Leach-Bliley, the Financial Services Modernization Act of 1999 pushed through by none other than Bill Clinton, and will seek a return to Glass-Steagall, the banking law launched in 1933 in the aftermath of the Great Depression meant to prohibit commercial banks from engaging in the investment business, and which according to many was one of the catalysts that led to the Global Financial Crisis.

According to The Hill, Paul Manafort, Donald Trump’s campaign manager, told reporters gathered in Cleveland Monday that the GOP platform would include language advocating for a return of that law, which was repealed under President Bill Clinton, husband of, well you know…

“We also call for a reintroduction of Glass-Steagall, which created barriers between what big banks can do,” he said.

Including that language in the GOP platform comes shortly after Democrats agreed to similar language in their own, calling for an “updated and modernized version” of the law.

However before anyone gets their hopes up, recall that a party platform is not binding but is thought to reflect the values of the party…. until the values change as a result of Wall Street “incentives” because if there is one thing US “commercial banks” can not afford it is a separation of their depository and investment activities.

The GOP platform has not yet been officially released, although the convention is expected to approve it later Monday. Nonetheless, the embrace of Glass-Steagall by both parties is a telling indication of how unpopular Wall Street remains with the public, years after the financial crisis.

Manafort mentioned the return of Glass-Steagall specifically as a counterpoint against Hillary Clinton, arguing it was Democrats that were the ones actually beholden to big banks. “We believe the Obama-Clinton years have passed legislation that has been favorable to the big banks, which is why you see all the Wall Street money going to her,” he said. “We are supporting the small banks and Main Street.”

Maybe: we’ll believe it when we see it. However, we are absolutely convinced that the first promise Hillary will reneg on, if she ever admits making it, is to return to Glass Steagall.  After all they didn’t spend all those millions of depositor funds on “speeches” just to allow Hillary to prevent them from accessing the very same funds.

Photo: Bill Clinton signs the Gramm–Leach–Bliley Act, which repealed Glass-Steagall

According to the Hill, the news that Republicans were embracing Glass-Steagall was met with surprised optimism from advocates for tougher rules on the financial industry and resigned sighs from the industry itself (actually what it probably meant is skeptical pessimism).

One bank lobbyist said backing the bill in the GOP platform was a naked attempt by Trump to win over disappointed backers of former Democratic presidential candidate Bernie Sanders, a vocal proponent of the law’s return. Trump has explicitly called on Sanders supporters to join his campaign, although Sanders himself has backed Clinton. We doubt the bank lobbyist had anything to add about Hillary’s own proposal to return to Glass-Steagall aside from laughter of course.

The lobbyist also questioned how thoroughly the campaign examined the policy. “I really am not sure if the Trump team has done any analysis of this,” the lobbyist said.

Dennis Kelleher, president and CEO of the financial reform advocacy group Better Markets, offered cautious optimism for the move. However, he noted that Republicans have a much longer record of pushing to ease rules for the financial sector, rather than tighten them. “It’s potentially great news for financial reform and protecting taxpayers, as long as it’s not another Republican Trojan Horse that looks good, but concealed underneath are killer loopholes and big bank giveaways,” he said.

Sadly, Dennis is right to be skeptical: it is another Trojan Horse, and one which will be promptly scrubbed from the collective memory if Trump were to win.

While not part of her financial regulation plan, Clinton’s campaign did support the Glass-Steagall language in the Democratic platform, as part of a number of compromises made with the Sanders campaign. Keep in mind, it was Hillary’s husband who back in 1999 signed into the law the act that repealed Glass-Steagall.

As The Hill concludes, the bipartisan embrace of the law’s return is particularly striking, given that legislative efforts to do just that have gained zero momentum in Congress. Legislation to reestablish Glass-Steagall has been introduced in both chambers in recent years, but such a bill has never even gotten a hearing, let alone serious consideration by legislators. In the Senate, a bill from Sen. Elizabeth Warren (D-Mass.) has just nine cosponsors, while a companion bill in the House has just eight backers.

The reason why? Simple. It is the banks, not the executive, not the legislative, that decides what happens in America, either directly or through the bank-owned Federal Reserve bank. How much privately-owned? We don’t know, but we remember what Bernanke’s former advisor said just three months ago: “People Would Be Stunned To Know The Extent To Which The Fed Is Privately Owned“.

As such one can’t help but be amused by the amount of energy and passion expended over the most theatrical – and certainly entertaining – presidential race in recent history.

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