Quote of the Weekend: The Senate Saves the Billionaires (Again)

From, Farhad Manjoo, “Private Equity Doesn’t Want You to Read This” — New York Times — Aug. 4, 2022

One of private equity’s main plays is the leveraged buyout, which involves borrowing huge sums of money to gobble up companies in the hopes of restructuring them and one day selling them for a gain.

 

But the acquired companies — which range across just about every economic sector, from retailing to food to health care and housing — are often overloaded with debt to the point of unsustainability. They frequently slash jobs and benefits for employees, cut services and hike prices for consumers, and sometimes even endanger lives and undermine the social fabric.

It is a dismal record: Private equity firms presided over many of the largest retailer bankruptcies in the last decade — among them Toys “R” Us, Sears, RadioShack and Payless ShoeSource — resulting in nearly 600,000 lost jobs, according to a 2019 study by several left-leaning economic policy advocates.

Other investigations have shown that when private equity firms buy houses and apartments, rents and evictions soar. When they buy hospitals and doctors’ practices, the cost of care shoots up. When they buy nursing homes, patient mortality rises. When they buy newspapers, reporting on local governments dries up and participation in local elections declines. Continue reading Quote of the Weekend: The Senate Saves the Billionaires (Again)

Pelosi & Taiwan: Curtain Raiser On A New Nuclear Suspense Drama?

Taiwan – Nancy Pelosi’s Last Hurrah

Gwynne Dyer — Aug 04 2022

People walk past a billboard welcoming U.S. House Speaker Nancy Pelosi, in Taipei, Taiwan, Tuesday, August 2, 2022. Pelosi . . . becomes the highest-ranking American official in 25 years to visit the self-ruled island claimed by China, which quickly announced that it would conduct military maneuvers in retaliation for her presence.
CHIANG YING-YING/AP

Gwynne Dyer is a UK-based Canadian journalist and seasoned commentator on international affairs.

OPINION: Nancy Pelosi’s brief visit to Taiwan this week caused
great if somewhat confected anger in Beijing, but the Chinese Communist regime was not her main target. Continue reading Pelosi & Taiwan: Curtain Raiser On A New Nuclear Suspense Drama?

Getting Beyond, “Beyond Meat”

NOTE: By the accidents of love, family & history, there are four generations of my kinfolk now living near enough to crowd occasionally into our compact living room.

Here are three of the four generations, experiencing cultural transmission.

Such assemblies always prompt reflections, from the cosmic to, well, the comestible. And one recent recurring internal query has been: how many of the younger tier will reach adulthood still eating meat, in particular, beef?

I’m no vegetarian, but hardly ever buy beef. My eldest, not shown above, eats a lot less than formerly. No high principle here; cost and calories loom larger. As the youngest sisters mature, the price of beef seems likely to increase, a lot, especially as water, its main input, becomes scarcer and more precious. Burgers may become the rare gourmet indulgence.

So can technology deliver them acceptable, affordable substitutes? It’s trying, and I’ve given it a chance.

But . . . . There’s a bag of Beyond Meat “burgers” in my freezer, opened but languishing. In our micro-mini home field test, the verdict on them was a resounding: “Meh”: not awful, but not memorable or appealing.

As one analyst in the report below more ponderously put it: “Recruiting your next phase of consumers requires more innovation and better tasting products.” Took the words (except “better tasting”) right out of my keyboard, on a prolix day.

It seems Wall Street is also ready to pass on these patties; back to the lab, all ye in the white coats.


Reuters – Beyond Meat sales under threat as plant-based boom withers

Praveen Paramasivam — Aug 3 2022
(Reuters) – Beyond Meat Inc BYND.O is headed for an unappetizing second quarter as the plant-based food craze withers in the face of several weak product tests at restaurants and mediocre reviews.
Analysts have slashed forecasts for Beyond Meat’s sales on supply-chain concerns and waning demand that pulled down shares of the plant-based meat maker and peer Oatly Group AB OTLY.O from their lofty market debut levels.

“Part of the issue with the adoption of the category for new consumers is that you’re not going to change cultural tastes overnight,” Mizuho analyst John Baumgartner said. “Recruiting your next phase of consumers requires more innovation and better tasting products.”

Estimates for Beyond Meat’s second-quarter revenue have fallen by 10% over the last three months, according to Refinitiv IBES data.

CONTEXT
McDonald’s Corp MCD.N last week became the latest chain to not go through with an immediate broader launch of Beyond Meat products, after concluding its U.S. test of a burger made with the plant-based meat without confirming future plans.

Tests at Panda Express and Yum Brands Inc’s YUM.N KFC, Pizza Hut and Taco Bell have also yet to lead to a permanent or U.S.-wide launch, while Dunkin, Hardee’s and A&W have discontinued products after launching, according to brokerage Piper Sandler.
Reviews for Beyond Meat’s plant-based jerky also indicate skepticism about the taste of the product, stoking concerns about the sustainability of its sales momentum, Piper Sandler analyst Michael Lavery wrote in a note on Friday.

The company has had to discount more to encourage inflation-hit consumers to pick up its products over those of competitors at grocers, leading analysts to say its expectation for average revenue growth of 27% for 2022 now appears steep.

FUNDAMENTALS
* Beyond Meat is expected to post a marginal increase in revenue for the second quarter, when it reports on Thursday, with loss per share widening to $1.18.

* Wall Street expects Beyond Meat to lose $4.48 per share for 2022, much bigger than the $2.88 it expected on April 27, when the company reported results for the first quarter.

Gwynne Dyer on James Lovelock, father of “Gaia”

GWYNNE DYER, August 2, 2022:

Gazing into the future of Gaia — Revolutionary thinker James Lovelock was truly Darwin’s heir.

‘Jim Lovelock’s blunt predictions of global climate disaster were once seen as exaggerated, but he understood what was really happening.’ He died on July 27, on his 103rd birthday. (Images via Reuters)

Scientist and inventor James Lovelock, 94, sits with one of his early inventions, a homemade Gas Chromatography device, used for measuring gas and molecules present in the atmosphere.

 

Jim Lovelock was a late bloomer.

His first book, Gaia: A New Look at Life on Earth, was published in 1979, when he was already 60 years old. By the time he died last week, on his 103rd birthday, he had written 10 more books on Gaia, the hypothesis that has evolved into the key academic discipline of Earth System Science.

That gives him a strong claim to be Charles Darwin’s legitimate heir. Just as Darwin’s 19th-century theory of evolution shaped our understanding of how life became so diverse, our understanding of the present is shaped by Lovelock’s idea that the millions of living species function as a self-regulating mechanism that keeps the planet cool enough for abundant life.

The puzzle that started Lovelock down that road was the fact that the sun’s radiation has increased by 30 per cent since life appeared on Earth 3.7 billion years ago, while the planet’s average temperature, despite occasional huge surges up or down, has consistently returned to the narrow range most suitable for life.

What was making that happen?

Gwynne Dyer

Collaborating with American biologist Lynn Margulis in the 1970s, he worked out a tentative description of the super-organism he named Gaia and wrote his first book. Most scientists treated it with disdain because he was not a biologist, but also because Gaia had New-Age connotations that he was unaware of. (Jim was not a hippy.) Continue reading Gwynne Dyer on James Lovelock, father of “Gaia”

Shining Light on the New Church of Rightwing Dark Money

ProPublica: A Right-Wing Think Tank Claimed to Be a Church. Now, Members of Congress Want to Investigate

Andrea Suizzo — August 2, 2022

Forty members of Congress on Monday asked the IRS and the Treasury to investigate what the lawmakers termed an “alarming pattern” of right-wing advocacy groups registering with the tax agency as churches, a move that allows the organizations to shield themselves from some financial reporting requirements and makes it easier to avoid audits.

Reps. Jared Huffman, D-Calif., and Suzan DelBene, D-Wash., raised transparency concerns in a letter to the heads of both agencies following a ProPublica story about the Family Research Council, a right-wing Christian think tank based in Washington, D.C., getting reclassified as a church. Thirty-eight other lawmakers, including Reps. Adam Schiff, D-Calif., Debbie Wasserman Schultz, D-Fla., Rashida Tlaib, D-Mich., and Jamie Raskin, D-Md., signed onto the letter.

“FRC is one example of an alarming pattern in the last decade — right-wing advocacy groups self-identifying as ‘churches’ and applying for and receiving church status,” the representatives wrote, noting the organization’s policy work supporting the overturning of Roe v. Wade and its advocacy for legislation seeking to ban gender-affirming surgery.

“Tax-exempt organizations should not be exploiting tax laws applicable to churches to avoid public accountability and the IRS’s examination of their activities,” they wrote.

The Family Research Council did not respond to requests for comment. The IRS told ProPublica that it does not comment on congressional correspondence.

The FRC’s website describes the organization as “a nonprofit research and educational organization dedicated to articulating and advancing a family-centered philosophy of public life,” noting that it provides “policy research and analysis for the legislative, executive, and judicial branches of the federal government.” Continue reading Shining Light on the New Church of Rightwing Dark Money

The Saudi Blood Money Golf Tour: No Tiger In Their Tank!

Tiger Woods spurned offer in $800m range to join LIV Golf, Greg Norman says

  • Norman says Woods turned down massive offer from LIV Golf
  • Woods has been against Saudi-financed tour since last year
Associated Press — Tue 2 Aug 2022 

Tiger Woods turned down an offer that Greg Norman says was in the region of $700m to $800m to take part in the Saudi-funded LIV Golf series.

During an appearance on Fox News with Tucker Carlson that aired Monday night, Norman confirmed what he told the Washington Post in a story two months ago. Norman told the Post in June the offer was “mind-blowingly enormous; we’re talking about high nine digits.”

Woods has been opposed to LIV Golf since late last year, and he delivered his strongest comments at the British Open when he said players who took the money funded by the Saudi Arabian sovereign wealth fund had “turned their back” on the PGA Tour that made them famous.

OMFG! Thank you, Tiger!

When an offer was made to Woods was not clear.

“That number was out there before I became CEO. So that number has been out there, yes,” Norman said in the Fox News interview, which took place Sunday at Trump National in Bedminster, New Jersey, where the third LIV Golf Invitational was held.

“And, look, Tiger is a needle-mover and of course you have to look at the best of the best,” Norman said. “So they had originally approached Tiger before I became CEO. So, yes, that number was somewhere in that neighborhood.”

Various reports out of the United Kingdom have said Phil Mickelson received a $200m signing bonus, while Dustin Johnson received $150m. The 48-man fields, which play 54 holes with no cut, offer $25m in prize money at each event. Norman announced a 14-tournament schedule for next year.

LIV Golf currently has only one player – Johnson at No 18 – from the top 20 in the world.

The source of the funding has led to sharp criticism of the series and the players who have enlisted because it is viewed as an attempt to distract attention from its human rights record and links to the September 11 terrorist attacks.

Asked why his rival tour has caused such an uproar among American golf fans, Norman responded plainly, “I don’t know.”

“I really don’t care,” Norman said. “I just love the game so much and I want to grow the game of golf and we at LIV see that opportunity not just for the men but for the women.”

The LIV Golf Invitational is off for a month during the FedEx Cup playoffs on the PGA Tour, returning over Labor Day weekend about an hour west of Boston, and then two weeks later plays in the Chicago suburbs.

Russia, Sanctions, The War, and Sifting for Truth

Given that I’m but a humble news aggregator-blogger, sifting for truth in the reams and sheafs of claims and counterclaims about the Ukraine War is a never-ending chore:

> Ukraine is winning! Nope-Russia is winning.

> Putin will use nukes any minute! Relax; he wouldn’t dare.

> The Ukraine war is really helping China. Fuggedit — the war is hurting  China.

Etc.

My apologies, but I have no answers for these. The questions don’t away, and  maybe some clarity will come in time. As telephone operators said when I was a kid looking for a phone number (YES, there were such persons, and they really did that), “Still checking. . . .”

Today’s query is maybe second-tier in the continuing parade of headlines, but it’s important enough: Are the sanctions on Russia really crippling its economy and strangling the invasion war effort?

It’s easy to find overblown rhetoric about them:

Forbes: “the worst-ever sanctions against the country. . . ”

Bloomberg: “Russia Sanctions Deal Economy Worst Hit Since Covid Pandemic”

CSMonitor: Russia may be the most sanctioned country ever.

And so on.

And so it also is with gauging the effect of sanctions, which were sold to the publics in the U.S. and Europe as a meaningful, potent alternative to an actual land war with Russia there. Is it so? Has it been?

The bad news first, from across the pond:

The Guardian — The rouble is soaring and Putin is stronger than ever – our sanctions have backfired

Energy prices are rocketing, inflation is soaring and millions are being starved of grain. . . .

Western sanctions against Russia are the most ill-conceived and counterproductive policy in recent international history.

Military aid to Ukraine is justified, but the economic war is ineffective against the regime in Moscow, and devastating for its unintended targets. World energy prices are rocketing, inflation is soaring, supply chains are chaotic and millions are being starved of gas, grain and fertiliser. Yet Vladimir Putin’s barbarity only escalates – as does his hold over his own people.

To criticise western sanctions is close to anathema. Defence analysts are dumb on the subject. Strategy thinktanks are silent. Britain’s putative leaders, Liz Truss and Rishi Sunak, compete in belligerent rhetoric, promising ever tougher sanctions without a word of purpose. Yet, hint at scepticism on the subject and you will be excoriated as “pro-Putin” and anti-Ukraine. Sanctions are the war cry of the west’s crusade.

The reality of sanctions on Russia is that they invite retaliation. Putin is free to freeze Europe this winter. He has slashed supply from major pipelines such as Nord Stream 1 by up to 80%. World oil prices have surged and eastern Europe’s flow of wheat and other foodstuffs to Africa and Asia has been all but suspended.

Britain’s domestic gas bills face tripling inside a year. The chief beneficiary is none other than Russia, whose energy exports to Asia have soared, driving its balance of payments into unprecedented surplus.

The rouble is one of the world’s strongest currencies this year, having strengthened since January by nearly 50%. Moscow’s overseas assets have been frozen and its oligarchs have relocated their yachts, but there is no sign that Putin cares. He has no electorate to worry him.

The interdependence of the world’s economies, so long seen as an instrument of peace, has been made a weapon of war. Politicians around the Nato table have been wisely cautious about escalating military aid to Ukraine. They understand military deterrence. Yet they appear total ingenues on economics. Here they all parrot Dr Strangelove. They want to bomb Russia’s economy “back to the stone age”.

I would be intrigued to know if any paper was ever submitted to Boris Johnson’s cabinet forecasting the likely outcome for Britain of Russian sanctions. The assumption seems to be that if trade embargos hurt they are working. As they do not directly kill people, they are somehow an acceptable form of aggression.

They are based on a neo-imperial assumption that western countries are entitled to order the world as they wish. They are enforced, if not through gunboats, then through capitalist muscle in a globalised economy. Since they are mostly imposed on small, weak states soon out of the headlines, their purpose has largely been of “feelgood” symbolism.

A rare student of this subject is the American economic historian Nicholas Mulder, who points out that more than 30 sanctions “wars” in the past 50 years have had minimal if not counterproductive impact. They are meant to “intimidate peoples into restraining their princes”. If anything they have had the opposite effect.

From Cuba to Korea, Myanmar to Iran, Venezuela to Russia, autocratic regimes have been entrenched, elites strengthened and freedoms crushed. Sanctions seem to instil stability and self-reliance on even their weakest victim. Almost all the world’s oldest dictatorships have benefited from western sanctions.

Moscow is neither small nor weak. Another observer, the Royal United Services Institute’s Russia expert Richard Connolly, has charted Putin’s response to the sanctions imposed on him since his 2014 seizure of Crimea and Donbas. Their objective was to change Russia’s course in those regions and deter further aggression. Their failure could hardly be more glaring.

Apologists excuse this as due to the embargos being too weak. The present ones, perhaps the toughest ever imposed on a major world power, may not be working yet, but will apparently work in time. They are said to be starving Russia of microchips and drone spares. They will soon have Putin begging for peace.

If Putin begs, it will be on the battlefield. At home, Connolly illustrates how Russia is “slowly adjusting to its new circumstances”. Sanctions have promoted trade with China, Iran and India. They have benefited “insiders connected to Putin and the ruling entourage, making huge profits from import substitution”.

McDonald’s locations across the country have been replaced by a Russian-owned chain called Vkusno & tochka (“Tasty and that’s it”). Of course the economy is weaker, but Putin is, if anything, stronger while sanctions are cohering a new economic realm across Asia, embracing an ever enhanced role for China. Was this forecast?

Meanwhile, the west and its peoples have been plunged into recession. Leadership has been shaken and insecurity spread in Britain, France, Italy and the US. Gas-starved Germany and Hungary are close to dancing to Putin’s tune. Living costs are escalating everywhere.

Yet still no one dares question sanctions. It is sacrilege to admit their failure or conceive retreat. The west has been enticed into the timeless irony of aggression. Eventually its most conspicuous victim is the aggressor. Perhaps, after all, we should stick to war.

  • Simon Jenkins is a Guardian columnist

Hmmm. Haven’t worked; never worked anyway?
We’ll leave the past sanctions in the past. But some heavyweights in Foreign Policy magazine say, “rubbish and fiddlesticks” to Jenkins and his ilk. Rather, i these excerpts they insist:

Actually, the Russian Economy Is Imploding: Nine myths about the effects of sanctions and business retreats, debunked:

By , the Lester Crown professor in management practice and a senior associate dean at the Yale School of Management, and , the director of research at the Yale Chief Executive Leadership Institute.

JULY 22, 2022
Five months into the Russian invasion of Ukraine, there remains a startling lack of understanding by many Western policymakers and commentators of the economic dimensions of President Vladimir Putin’s invasion and what it has meant for Russia’s economic positioning both domestically and globally.

Far from being ineffective or disappointing, as many have argued, international sanctions and voluntary business retreats have exerted a devastating effect over Russia’s economy. The deteriorating economy has served as a powerful if underappreciated complement to the deteriorating political landscape facing Putin.

That these misunderstandings persist is not entirely surprising given the lack of available economic data. In fact, many of the excessively sanguine Russian economic analyses, forecasts, and projections that have proliferated in recent months share a crucial methodological flaw: These analyses draw most, if not all, of their underlying evidence from periodic economic releases by the Russian government itself. Numbers released by the Kremlin have long been held to be largely if not always credible, but there are certain problems.

First, the Kremlin’s economic releases are becoming increasingly cherry-picked—partial and incomplete, selectively tossing out unfavorable metrics. The Russian government has progressively withheld an increasing number of key statistics that, prior to the war, were updated on a monthly basis, including all foreign trade data. . . particularly with Europe; oil and gas monthly output data; commodity export quantities; capital inflows and outflows . . .[and much more].

Since the Kremlin stopped releasing updated numbers, constraining the availability of economic data . . . , many excessively rosy economic forecasts have irrationally extrapolated economic releases from the early days of the invasion, when sanctions. . .  had not taken full effect. Even those favorable statistics that have been released are dubious, given the political pressure the Kremlin has exerted to corrupt statistical integrity.

Mindful of the dangers of accepting Kremlin statistics at face value, our team of experts, using private Russian-language and direct data sources. . . have released one of the first comprehensive economic analyses measuring Russian current economic activity five months into the invasion. . . .

From our analysis, it becomes clear: Business retreats and sanctions are crushing the Russian economy in the short term and the long term. Based on our research, we are able to challenge nine widely held but misleading myths about Russia’s supposed economic resilience.

Myth 1: Russia can redirect its gas exports and sell to Asia in lieu of Europe.

This is one of Putin’s favorite and most misleading talking points, doubling down on a much-hyped pivot to the east. But natural gas is not a fungible export for Russia. Less than 10 percent of Russia’s gas capacity is liquefied natural gas, so Russian gas exports remain reliant on a system of fixed pipelines carrying piped gas.

The vast majority of Russia’s pipelines flow toward Europe; those pipelines, which originate in western Russia, are not connectable to a separate nascent network of pipelines that link Eastern Siberia to Asia. . . . Indeed, the 16.5 billion cubic meters of gas exported by Russia to China last year represented less than 10 percent of the 170 billion cubic meters of natural gas sent by Russia to Europe.

Long-planned Asian pipeline projects currently under construction are still years away from becoming operational, much less hastily initiated new projects, and financing of these costly gas pipeline projects also now puts Russia at a significant disadvantage.

Overall, Russia needs world markets far more than the world needs Russian supplies. . . . Indeed, the Russian state energy company Gazprom’s published data shows production is already down more than 35 percent year-on-year this month. For all Putin’s energy blackmail of Europe, he is doing so at significant financial cost to his own coffers.

Myth 2: Since oil is more fungible than gas, Putin can just sell more to Asia.

Russian oil exports now also reflect Putin’s diminished economic and geopolitical clout. Recognizing that Russia has nowhere else to turn, and mindful that they have more purchasing options than Russia has buyers, China and India are driving an unprecedented approximately $35 discount on Russian Urals oil purchases, even though the historical spread has never ranged beyond $5. . . . Furthermore, it takes Russian oil tankers an average of 35 days to reach East Asia, versus two to seven days to reach Europe, which is why historically only 39 percent of Russian oil has gone to Asia . . . .

This margin pressure is felt keenly by Russia, as it remains a relatively high-cost producer . . . with some of the highest break-evens of any producing country. . . . There is no doubt that, as many energy experts predicted, Russia is losing its status as an energy superpower, with an irrevocable deterioration in its strategic economic positioning as an erstwhile reliable supplier of commodities.

Myth 3: Russia is making up for lost Western businesses and imports by replacing them with imports from Asia.

Imports play an important role within Russia’s domestic economy, consisting of about 20 percent of Russian GDP, and, despite Putin’s bellicose delusions of total self-sufficiency, the country needs crucial inputs, parts, and technology from hesitant trade partners. Despite some lingering supply chain leakiness, Russian imports have collapsed by over 50 percent in recent months.

China has not moved into the Russian market to the extent that many feared; in fact. . . Chinese exports to Russia plummeted by more than 50 percent from the start of the year to April, falling from over $8.1 billion monthly to $3.8 billion. Considering China exports seven times as much to the United States than Russia, it appears that even Chinese companies are more concerned about running afoul of U.S. sanctions . . . reflecting Russia’s weak economic hand with its global trade partners.

Myth 4: Russian domestic consumption and consumer health remain strong.

Some of the sectors most dependent on international supply chains have been hit with debilitating inflation around 40-60 percent—on extremely low sales volumes. For example, foreign car sales in Russia fell by an average of 95 percent across major car companies, with sales ground to a complete halt.

Amid supply shortages, soaring prices, and fading consumer sentiment, it is hardly surprising that Russian Purchasing Managers’ Index readings—which capture how purchasing managers are viewing the economy—have plunged, particularly for new orders, alongside plunges in consumer spending and retail sales data by around 20 percent year-over-year. Other readings of high-frequency data such as e-commerce sales within Yandex and same-store traffic at retail sites across Moscow reinforce steep declines in consumer spending and sales, no matter what the Kremlin says.

Myth 5: Global businesses have not really pulled out of Russia, and business, capital, and talent flight from Russia are overstated.

Global businesses represent around 12 percent of Russia’s workforce (5 million workers), and. . . over 1,000 companies representing around 40 percent of Russia’s GDP have curtailed operations in the country, reversing three decades’ worth of foreign investment and buttressing unprecedented simultaneous capital and talent flight in a mass exodus of 500,000 individuals, many of whom are exactly the highly educated, technically skilled workers Russia cannot afford to lose. . . .

Myth 6: Putin is running a budget surplus thanks to high energy prices.

Russia is actually on pace to run a budget deficit this year equivalent to 2 percent of GDP, according to its own finance minister. . .thanks to Putin’s unsustainable spending spree; on top of dramatic increases in military spending, Putin is resorting to patently unsustainable, dramatic fiscal and monetary intervention, including a laundry list of Kremlin pet projects, all of which have contributed to the money supply nearly doubling in Russia since the invasion began. Putin’s reckless spending is clearly putting Kremlin finances under strain.

Myth 7: Putin has hundreds of billions of dollars in rainy day funds, so the Kremlin’s finances are unlikely to be strained anytime soon.

The most obvious challenge facing Putin’s rainy day funds is the fact that of his around $600 billion in foreign exchange reserves. . .  $300 billion is frozen and out of reach with allied countries across the United States, Europe, and Japan restricting access. There have been some calls to seize this $300 billion to finance the reconstruction of Ukraine.

Putin’s remaining foreign exchange reserves are decreasing at an alarming rate, by around $75 billion since the start of the war. . . .

Furthermore, although the finance ministry had planned to reinstate a long-standing Russian budgetary rule that surplus revenue from oil and gas sales should be channeled into the sovereign wealth fund, Putin axed this proposal . . . as Finance Minister Anton Siluanov floated the idea of withdrawing funds from the National Wealth Fund equivalent to a third of the entire fund to pay for this deficit this year. If Russia is running a budget deficit requiring the drawdown of a third of its sovereign wealth fund when oil and gas revenues are still relatively strong, all signs indicate a Kremlin that may be running out of money much faster than conventionally appreciated.

Myth 8: The ruble is the world’s strongest-performing currency this year.

One of Putin’s favorite propaganda talking points, the appreciation of the ruble is an artificial reflection of unprecedented, draconian capital control—which rank among the most restrictive of any in the world. The restrictions make it effectively impossible for any Russian to legally purchase dollars or even access a majority of their dollar deposits, while artificially inflating demand through forced purchases by major exporters—all of which remain largely in place today.

The official exchange rate is misleading, anyhow, as the ruble is, unsurprisingly, trading at dramatically diminished volumes compared to before the invasion on low liquidity. By many reports, much of this erstwhile trading has migrated to unofficial ruble black markets. Even the Bank of Russia has admitted that the exchange rate is a reflection more of government policies and a blunt expression of the country’s trade balance rather than freely tradeable liquid foreign exchange markets.

Myth 9: The implementation of sanctions and business retreats are now largely done, and no more economic pressure is needed.

Russia’s economy has been severely damaged, but the business retreats and sanctions applied against Russia are incomplete. Even with the deterioration in Russia’s exports positioning, it continues to draw too much oil and gas revenue from the sanctions carveout, which sustains Putin’s extravagant domestic spending and obfuscates structural economic weaknesses.

The Kyiv School of Economics and Yermak-McFaul International Working Group have led the way in proposing additional sanctions measures across individual sanctions, energy sanctions . . . . Looking ahead, there is no path out of economic oblivion for Russia as long as the allied countries remain unified in maintaining and increasing sanctions pressure against Russia.

Defeatist headlines arguing that Russia’s economy has bounced back are simply not factual—the facts are that, by any metric and on any level, the Russian economy is reeling, and now is not the time to step on the brakes.

So — which is right? Sanctions are a boomerang failure, hurting the West and U.S. as much as or more than Putin’s Russia? Or behind a propaganda smokescreen, they’re taking him and “his” economy down rapidly?

I hope it’s the latter, but the work of following the war’s impact within Russia and in the rest of the world is up to those of us who are trying to make sense of this turbulent, dangerous scene.

And what should we look for from  our own policymakers?

Maybe the wisest summary was this offhand remark by a supposedly canny business journal:

Forbes: What comes next is anybody’s guess.

 

 

Take THAT, Inflation! (COSTCO Keeps Its Cheapo Hot Dogs. And Pizza.

My apologies in advance to those readers who are not COSTCO members, for whatever reason. Many folks I know live out of range of a store, and I comfort them when I can.

But I also wax enthusiastic about the place. I was first drawn to it because of reports that COSTCO paid store workers well above the other big box rates, yet still managed to have good prices and stay seriously profitable; almost a capitalist dream-come true. Wall St. likes it, and those reports seem to be accurate.

But a big box store, however well-paying, is still a big box store; which is not my favorite environment. Yet COSTCO knows that, and has psyched out ways to draw in folks like me. And the main way to my heart, these days (as of old, for that matter), is through my tummy.

Here, COSTCO’s slimmed-down version of a food court is a winner. And the company aims to keep it that way.

The heart of its menu is big hot dogs; the soul is pizza.  There are a couple other items, tho they move much more slowly. But the dogs are big, the pizza is bigger, and comes in any combo you want, as long as it’s cheese or pepperoni.  (You can get some frozen yogurt if you’re feeling flush; otherwise, a bottle of very cold water is a quarter.)

And the dog plus a soda is a buck-fifty flat. A whole large pizza, on which they’re not stingy with toppings, is $10; you’d pay $20 or more at the chains.

This is not cuisine for Whole Foods picky eaters (tho COSTCO  carries plenty of organic stuff too). Instead, it’s an inflation-fighter’s feast for less than two bucks, or two-three big gooey pieces each for a family of four, a budget banquet at barely a buck a slice.

I read a clip that said the hot dog price goes back to the 1980s, when COSTCO was just starting out. It figures; the dog is not only a cheap meal: it’s an icon, a sacred edible object.

Normally, icons are not to be messed with; but “Hello, COSTCO, meet your new neighbor. He’s in a hot new band:  N. Flation and the Supply Chain Stickups. You’ll be hearing a lot from him.”

True enough, lots of prices at COSTCO have gone up. But as of the end of July, their CEO is holding the line on lunch:

In a July 25 interview on CNBC’s “Squawk on the Street,” CEO Craig Jelinek had a one-word answer when asked whether he would raise the signature food court item’s price: “No.”

Costco has continued to put up strong sales, even as other retailers have spoken about consumers becoming more budget-conscious and spending more on services instead of goods. It’s also avoided another recent problem for many retailers: excess inventory that’s racked up in warehouses and stores, which must now be packed away or marked down.

Yet amid nearly four-decade high inflation, Costco has raised the prices of some food court staples. Earlier this month, its chicken bake jumped from $2.99 to $3.99 and its 20-ounce soda rose by 10 cents to 69 cents. That prompted speculation that its hot dog’s super low price could be due for a hike, too. The hot dog and soda combo . . . was the subject of a Mental Floss article from 2018 that recently began circulating again.

The article recounts a time when Jelinek approached Costco co-founder and former CEO Jim Sinegal. He told him the company was losing money over the iconic food item.

“I came to (Sinegal) once and I said, ‘Jim, we can’t sell this hot dog for a buck fifty,” Jelinek said, according to the Mental Floss article, which cites 425Business. “We are losing our rear ends.’ And he said, ‘If you raise (the price of the) effing hot dog, I will kill you. Figure it out.’ That’s all I really needed.”

Another aspect of Costco’s business has also been under scrutiny: When its membership fee might increase. Costco membership costs $60 a year or $120 a year for an executive membership, a higher-tier option that includes additional discounts and perks.

The vast majority of Costco’s profit comes from the annual fees rather than from selling items. It has historically raised it every 5½ years and the last increase was in June 2017, putting it on track for a rise soon, according to Corey Tarlowe, an analyst at Jefferies. Its membership fee typically increases by $10.

Jelinek told CNBC that a membership fee hike is “not on the table right at the moment.”

“I made it very clear,” he said. “I don’t think it’s the right time. Our sign-ups continue to be strong.”

Note that Jelinek didn’t mention pizza. But this weekend when I came in, it was the same price too, and still just as gooey greasy good.

Of course, their strategy is obvious: we come for the cheap dogs & pepperoni, and stay for less dramatic bargains on organic tofu bits, computers and couches.

Taking on inflation is a kind of trench warfare, and few emerge unscathed. Checking mine against the menu marquee, it seemed clear that while the dog was as big, the bun was an inch or maybe two shorter.  Plus, the chopped onions, which I used to heap on and call salad, are gone.

But war is hell. In a battle of inches, they’re fighting the good fight. Add in a well-paid and highly efficient staff, and COSTCO works for me.

PS. I did not get paid for this rave review.

Political “Miracles” of the Week

Some amazing things happened in public life the past few days. Here are a few of my picks:

Imagine that: Democrats came up with a brilliant political slogan.

I’m not sure that’s happened since “Yes We Can” burst on the scene with Barack Obama in 2008.

This one is the “rebrand” of the last year’s luckless “Build Back Better.” I was okay with BBB, but it sure went down, choked in  coal smoke from Manchin’s mines, then lost in Krysten Sinema’s deserts.

A caveat: I’m speaking here only of the title; what’s in it is another matter, as are its actual prospects for passage. But certainly it will be an asset in the Dems’ midterm electoral campaign.

Next, a spate of stunning campaign ads popped up. The best, which delivers a horror message worthy of Stephen King, with wickedly sardonic wit and wordplay, comes from Texas and a new PAC, Mothers Against [Texas governor] Greg Abbott “MAGA”:

In an instantly viral ad, a doctor tells a distraught couple that their fetus has suffered a catastrophic abnormality.
If she were to make it to full term, he continues, the baby girl would die just hours after birth. “She will suffer,” the doctor adds, before telling the tearful parents that a decision must be made on terminating the pregnancy — a choice that “only one person can make.”

“And that person is Greg,” the doctor says.
“Who the F—- is Greg?” The father asks. The doctor reveals a portrait of Abbott. With a direct phone line.
[Click here to watch the ad. ]

“Greg” turns thumbs down. Then . . . .

I think the ad is brilliant in every way: production, acting, targeting (Republican Abbott is up for re-election), its daggerlike wordplay, and packing its thrust into less than ninety seconds.

Speaking of a quick thrust . . .

 

PS. A real Grass-Roots snapshot, from In The Yard:

Welcome to your Weekend . . . .