Chris Lehmann at The Baffler writes—Junk Merchants:
WITH AMERICA’S POLITICAL ORDER settling into a seemingly permanent state of crisis-on-autopilot, it is just a matter of time before the paper economy follows suit. Last week’s dramatic Wall Street selloffs saw the Dow Jones roster shed around 4 percent of its collective value. Tech stocks, always at the frothiest tip of investment bubbles, took an especially pronounced beating. Jeff Bezos, the Amazon impresario, lost (as of last Wednesday) a cool $9.1 billion in net worth, more than triple Mark Zuckerberg’s bracing $2.5 billion market bath.
But just as reliably as investors clamor to a stampede of wealth destruction, market savants and the shills of the business press adjourn to their Bloomberg terminals and CNBC podiums to issue reassuring directives about the soundness of the market’s overall direction, bumpy selloffs and localized panics notwithstanding. When a similar downturn wracked Wall Street in February, Bloomberg editor Robert Burgess insisted that all was well, so far as underlying fundamentals and such were concerned: corporate profits were outperforming expectations, the WTO had revised its global growth forecasts upward, and traditional shelters against panic such as Treasury bonds were not seeing appreciable gains.
All of which proved true enough—until it didn’t. The October market swoon has, in fact, already seen boosts in Treasuries and gold prices, suggesting that this bout of jitters might have some basis in broader economic conditions. More worrying still is the massive over-leveraging of the corporate economy, which according to a recent report by Burgess’s employer, has seen more than $1 trillion in investment money careening toward junk-bond status. Indeed, the main reason all this merger-driven debt hasn’t received a forthright junk rating is due to the reliably corrupt practices of the industry-captive debt-rating racket. In their survey of the fifty largest mergers-and-acquisition deals of the past year, Bloomberg’s Molly Smith and Christopher Cannon noted that “by one key measure, more than half of the acquiring companies pushed their leverage to levels typical of junk-rated peers. But those companies . . . have been allowed to maintain investment-grade ratings by Moody’s Investors Service and S&P Global Ratings.”
But of course, few economic commentators are talking about the sink hole of shitty debt opening up beneath the Dow Jones trading floor—any more than they were inclined, circa 2007, to wonder whether housing prices would succumb to the laws of gravity. No, the flight of investment capital merely marks the onset of a fresh round of inflation jitters among our titans of finance, as the Fed prepares to further nudge up interest rates. After operating with a virtually unlimited supply of free money over the past decade, the masters of our financial universe are adapting to a reconfigured investment environment the best way they know how—by hoovering up all available cash and going home to count their T-bills. Market watchers also claim that investment headwinds are stirring up from political quarters, with President Trump’s trade war with China and the likelihood of a Democratic takeover of the House heading up this impressionistic list of possible culprits. […]
“In a democracy, someone who fails to get elected to office can always console himself with the thought that there was something not quite fair about it.”
~~Thucydides, History of the Peloponnesian War, 399 BCE
On this date at Daily Kos in 2017—Two-man company that got $300 million Puerto Rico contract tied to Trump officials, GOP donors:
This is how the local news media describes Whitefish Energy.
The company was established in 2015. It doesn’t have an office and only lists two employees.
Whitefish Energy is little more than a post office box. They grab temporary employees and toss them at small construction jobs—with an emphasis on small. The largest electrical line constructed by Whitefish coming into 2017 was less than five miles long. And yet, Whitefish has acquired the contract to repair the 2,400 miles of electrical lines in Puerto Rico over not just other private companies, but instead of calling in other power companies under an existing series of mutual aid agreements.
Why not exercise those agreements—which brought more than 30,000 utility workers to Florida to repair utilities after Hurricane Irma—rather than count on a tiny company which has brought in 280 temporary workers and is slowly hiring more? No one seems to know.
On today’s Kagro in the Morning show: Trump’s lies are record-breaking and huge, triggering everyday racism and now, bomb attacks. SCOTUS already protecting the Trump gang. Rachel and Travis, the @IrreverentDuo, disrupt and dissect the Kumbaya jam over CO’s Amendments X & Y.