Deport-o-Mania: But Who'll Rebuild Houston?

♠ Posted by Emmanuel in , at 8/29/2017 06:52:00 PM
Who'll rebuild Houston? With an immigration crackdown underway, it's a pretty big question.
First off, I wish to extend my sympathy to the residents of the great American city of Houston. While the United States' fourth-largest city is mostly imagined to be an oil town, the truth is that it's been busy diversifying away from energy. Hence, even if oil prices are depressed, the city hasn't just muddled through in wait for another oil boom. Instead, it's broadened its economic based to become less reliant on oil and gas.

When Hurricane Harvey runs its course--as it eventually will--the city will be in some need of rebuilding. As it's still ongoing, the ultimate amount of the damage cannot be known. That said, there will be a huge need for construction workers and others in the building trade. Unfortunately, this being the first year of the Trump administration, the storm is occurring amidst a large crackdown on immigrants. Immigrants making up a large stock of would-be construction workers Stateside, this situation poses a quandary: Who exactly will rebuild Houston?
Houston will require a surge of employment—tens of thousands of people. It will have to find places for them to live, since so much of the housing stock is damaged. And it will likely have to pay them above-market wages, because it will need to lure them away from existing jobs.

And given the Trump administration’s hostility to Latinos and desire to ramp up deportations, it’s unlikely that what worked in previous disasters will work again. Back in 2007, the Washington Post reported on a Tulane and University of California, Berkeley, study that found some 100,000 Hispanic workers thronged into the Gulf Coast region in the wake of Katrina, many of them undocumented. Houston will need a similar migration for it to recover. In 2017, from where will those workers come?
Houston, we've got a problem of not having enough folks willing and able to help rebuild the city (i.e., immigrants). To make matters worse, the state of Texas has just implemented legislation making cities like Houston more responsible for deporting undocumented workers:
But the Texas labor market is tight, and incentives will be needed -- usually in the form of higher wages -- to pull in engineers, tradesman and laborers from around the region. The Federal Reserve district banks in Dallas, Atlanta and St. Louis already have reported hiring difficulties.

Gathering manpower could be further complicated by a newly passed Texas law requiring cities to be more aggressive in helping deport undocumented people. “If Houston is going to be rebuilt in a reasonable amount of time, it will be rebuilt with the contributions of undocumented immigrant workers,” said Mark Jones, a political-science professor at Rice University in Houston. “If undocumented immigrants are afraid or unwilling to come to Houston because of fears of deportation, that’s going to delay the recovery, as well as make it far more expensive.”
Let's just say the Republican-dominated state government and Trump--eager to show how he's supporting the effort to get Houston back on its feet--will have facing a dilemma in fairly short order. Will they continue to "act tough" on immigrants, or will they come up with some sort of kludge to allow undocumented workers to help in the city's repairs?  Ever a pragmatist, I'd expect to see more of the latter than you'd expect from the political rhetoric. 

Canada's Plan to Keep NAFTA Alive and Kicking

♠ Posted by Emmanuel in , at 8/24/2017 02:54:00 PM
The Yanqui villain is on the left. The Canadian [C] and Mexican [R] protagonists seek to defuse his worst tendencies.
The commencement of the NAFTA renegotiation has been, if nothing else, an opportunity for the Trump administration to engage in grandstanding about how the protectionist president is fed up with Canada and Mexico not competing on a level playing field. Aside from running trade surpluses with the United States (which reveals the extent America is being "taken advantage" of), both stand accused of stealing American jobs (i.e., whenever US multinationals hire workers anywhere except the US). Hence US Trade Representative Robert Lighthizer's tale of woe at the beginning of negotiations:
We cannot ignore the huge trade deficits, the lost manufacturing jobs, the businesses that have closed or moved because of incentives -- intended or not -- in the current agreement.

The numbers are clear. The U.S. Government has certified that at least 700,000 Americans have lost their jobs due to changing trade flows resulting from NAFTA. Many people believe that number is much, much bigger than that. In 1993, when NAFTA was approved, the United States and Mexico experienced relatively balanced trade. However since then, we have had persistent trade deficits – in the last year totaling nearly $57 billion. In the auto sector alone, the U.S. has a $68 billion deficit with Mexico.  Thousands of American factory workers have lost their jobs because of these provisions. In recent years, we have seen some improvement in our trade balance with Canada.  But over the last ten years, our deficit in goods has exceeded $365 billion.
[Sniff] the vile things these foreigners are doing! To no one's real surprise, though, it appears that the US grandstanders do not really have a game plan:
In this case, however, the entire NAFTA renegotiation process is happening only because Donald Trump campaigned on doing it and insisted on formally triggering the treaty’s renegotiation provision back in mid-May. But with the [Trump] administration in a state of semi-permanent chaos, top officials not focused on the issue, and the White House’s leading trade protectionist unceremoniously fired [Steve Bannon], Trump does not appear to be well-positioned to secure any kind of meaningful concessions from Canada.
The Canadians, on the other hand, are not fooling around since their mission is rather more serious than catering to the ego of an economic populist and his minions. They do have a game plan to preserve the benefits which have come through this agreement. In stark contrast to US ineptitude, they've designated a veteran team to respond rapidly to the mental disturbances of Trump and company. One of the ways to accomplish Canadian objectives is to appeal to Americans who have a stake in maintaining the current deal:
According to Alexander Panetta of the Canadian Press, Prime Minister Justin Trudeau “has created an election-style nerve center to handle White House-related challenges” during the NAFTA renegotiation process. The team features eight staffers, including “two former trade officials, two senior PMO officials, an ambassador, a writer, a cabinet minister.”

The goal is to be able to push back on both a strategic and tactical level to presidential negotiating ploys, including social media threats to pull out of NAFTA altogether in order to gain leverage. One of the goals of the team in the prime minister’s office is to coordinate follow-up, if necessary, with the broad and deep range of American stakeholders beyond Trump whom Trudeau has spent months cultivating.

As Max Fisher reported in June, “Canadian officials have fanned out across the United States, meeting with mayors, governors, members of Congress and business leaders on matters from trade to the environment.” At meetings with local officials, Canadian ministers “travel armed with data on the precise dollar amount and number of jobs supported by Canadian firms and trade in that area,” cultivating current and potential allies to push back against Trump’s demands. 

Canada also has a clear list of negotiating objectives, including both key NAFTA provisions that Trudeau’s government is committed to keeping and aspirations to win more access for Canadian companies to state and local government contracts and more access for Canadian professionals like computer programmers to jobs in the United States. The US negotiating posture, by contrast, heavily emphasizes a couple of demands that appear to be symbolic, meaningless, or unworkable.
Actually, the barbs from Trump have already begun as negotiations are underway. Trump told a Phoenix, Arizona rally that the US will probably withdraw from NAFTA. However, Canadians and Mexicans are taking him less seriously by the day, as they should. Remember, the US president does not have sole discretion whether to withdraw from a trade deal like NAFTA. Instead, congress does. As long as the Canadians strategically appeal to American benefiting from the arrangement--and congresspersons who represent them--it does not make sense to count NAFTA out.

The weight of evidence suggests the Canadians understand their predicament and how to get a favorable result by appealing to US constituencies who've benefited from regional trade. Alas, the same cannot be said for Trump and company.The good guys here, the Canadians, stand a good chance of winning since they are much better prepared.

How Trump the Vulgar Boosted the Hallmark Channel

♠ Posted by Emmanuel in at 8/23/2017 03:06:00 PM
The Hallmark Channel is everything Trump's America is not: civil, polite, and uplifting.
Despite his improbable appeal to certain segments of the American electorate--you'll have to point them out to me since I can't find any sensible reason why--I'll bet they would agree that Donald Trump is a walking obscenity. Insulting anyone and everyone--people of color, people of other faiths, foreigners, white people who don't agree with him and so on--he arguably sets new lows for public discourse. His exceedingly crass manner has dragged American public discourse and the rest of the world's views of the United States into the gutter.

However, there is a bright side. Sort of. Given the putrid state of American life, wouldn't it be nice to go to a place of civility, kindness, and people lifting each other up instead of tearing them down? Well, there is such a place. It's called "The Hallmark Channel." Personally, I do not watch it because the story lines are exactly the opposite of what Trump sees. Instead of American Carnage, it's American Fluff. Neither is quite an accurate portrayal of North American reality, but hey, when you have too much of the former, I guess people pine for the latter. That is, a bygone era that's largely conjured suits more and more people:
It’s been called feel-good fluff by both critics and viewers alike, but the fact of the matter is Hallmark Channel, with its sugary sweet TV movies and shows, is currently one of the highest-rated TV channels in the United States.  Shows like Chesapeake Shores (starring Jesse Metcalfe) and saccharinely titled movies like A Dash of Love and Love at First Bark provide the mindless, wholesome entertainment people are turning to in Donald Trump’s America[...]
So what’s the deal here? Why are people flocking so heavily to Hallmark?

“It makes sense that in an era of war and political conflict, people turn to their TVs for feel-good escapism,” said Amber Dowling, TV critic and former president of the Television Critics Association. “Historically that’s been true over the years, and has usually led to an increase in production on family comedies and stories. Hallmark churns this type of programming out, so they’re able to easily fit that current appetite.”

Indeed, it’s true: Hallmark shows and movies, for the most part, are squeaky clean. No swears, no sex, closed-mouth kisses, and enforced “family values” can go a long way when the rest of TV is a melange of excessive violence and sex. Many contemporary TV shows try to go the other way, towards whatever forbidden button needs pushing. Hallmark and channels like it are salves, oases away from the chaos of network and cable TV. It’s no surprise its tagline is “The heart of TV.”

Trump's America is not a happy place, and people need to escape somewhere:

“The environment is undeniably contentious,” said Bill Abbott, chief executive of Crown Media, which owns Hallmark. “We are a place you can go and feel good. We intentionally branded ourselves as the happy place.” While Hallmark’s ratings have been going up consistently over the last few years, it’s gotten a noticeable bump since late 2015, when the latest presidential election cycle started. 
 I'll bet you the owners of this channel are secretly wishing for the continued reign of Trump. Just as cable news channels keep blasting him but wish he remains in office to get more viewers, so do the owners of the feelgood, happy ending channel wish for the endless torrent of misery that is the Trump administration. 

Heaven help us all.

Leave Banking, Hawk Cryptocurrencies for a Living

♠ Posted by Emmanuel in at 8/03/2017 04:56:00 PM
There's plenty of these already--with boatloads more to come.
Manias in the business world are nothing new. In the technology realm, we've had any number of these already like the dot-com boom followed by the dot-com bust earlier in this century. In the realm of finance, the latest and greatest gold rush concerns the issuance of cryptocurrencies. Instead of initial public offerings of shares of stock, the marquee events here are initial coin offerings (ICOs). As no shortage of issuers and investors buy the gospel (or Kool-Aid for skeptics) that cryptocurrencies represent the future widely-used form of money, there is a lot to be made (or lost).

A surefire sign of optimism about opportunities is when folks leave otherwise well-paying if predictable jobs for the Wild West of trading these largely unregulated instruments. Bloomberg says that's already happening with many ex-bankers setting their sights on the larger promised returns of virtual monies:
From Hong Kong and Beijing to London, accomplished financiers are abandoning lucrative careers to plunge into the murky world of ICOs, a way to amass quick money by selling digital tokens to investors sans banks or regulators. Cut out of the action, a growing cohort of banking professionals are instead applying their talents toward buying or hawking cryptocurrency.

They’re going in with eyes wide open. For [ex-banker Richard] Liu, who put together some of China’s biggest tech deals in his old job, the chance to shape the nascent arena outweighs the dangers of a market crash or crackdown. Loosely akin to IPOs, ICOs have raised millions from investors hoping to get in early on the next bitcoin or ether, and their unchecked growth over the past year is such that they’ve drawn comparisons to the first ill-fated dot-com boom. Yet with stratospheric bonuses largely a thing of the past, the allure of an incandescent new arena far from financial red-tape has proven irresistible to some.

“Traditional investment banks and VCs need to monitor this space closely, it could become very big,” said the 30-year-old partner at $50 million hedge fund FBG Capital, which has backed about 20 ICOs. He’s off to a quick start, getting in on this year’s largest sale: Tezos, a smart contracts platform that raised $200 million to outstrip the average Hong Kong IPO size this year of around $31 million.
That said, the potential for huge gains trading these monies comes with correspondingly huge risks as their critics point out:
Critics say many ICOs are built on little more than hyperactive imaginations. A cross between crowdfunding and an initial public offering, they involve the sale of virtual coins mostly based on the ethereum blockchain, similar to the technology that underpins bitcoin. But unlike a traditional IPO in which buyers get shares, getting behind a startup’s ICO nets you virtual tokens -- like mini-cryptocurrencies -- unique to the issuing company or its network. That means they grow in value only if the startup’s business or network proves viable, attracting more people and boosting liquidity.

That’s a big if, and the sheer profusion of untested concepts has spurred talk of a bubble. The U.S. Securities and Exchange Commission signaled greater scrutiny of the red-hot sector when it warned on Tuesday that ICOs may be considered securities, though it stopped short of suggesting a broader clampdown. The regulator however did reaffirm its focus on protecting investors: part of the appeal of ICOs lies in the fact that -- for now -- anyone with a bold idea can raise money from anybody.
Actually, the dot-com boom may illustrate the future of these virtual monies. Most startups of course went bust. However, those that survived for the longer run eventually did well enough and have introduced widely-adopted consumer standards. The survivors are exceedingly well-known including the likes of Amazon, EBay, Google, and so on. Like before, these newfangled entities cannot survive on novelty alone but must offer some sort of unique selling proposition to customers.

It will take some time to sort the Amazons from the Pets.coms of the cryptocurrency world. Meanwhile, there apparently be many gamblers drawn to this realm--even from the relatively stolid world of banking.

Blockaded Qatar Takes Saudi, UAE to WTO

♠ Posted by Emmanuel in , at 8/01/2017 04:57:00 PM
Of course Qatar knows the WTO. The current [?] WTO negotiations were initiated in the capital of Doha.
I am fascinated with the blockade on Qatar by fellow Gulf Cooperation Council (GCC) countries Saudi Arabia, the United Arab Emirates, and Bahrain, supposedly for supporting "terror." For the country where most 9/11 attackers came from and which has funded fundamentalist education throughout the world, Saudi Arabia is particularly noteworthy. My belief is closer in line with those who believe Qatar acts more as a neutral ground for those wary of Middle East authoritarianism--even if these folks may include Hamas and Hezbollah who have representative offices in Qatar.

There is also the not-so-small issue of broadcast network al-Jazeera, which is widely viewed not just in the region but throughout the world. Its continuous criticism of other GCC countries rankles the others, and I must also point out that Qatar is not entirely faultless in its media coverage. After all, Qatar is just like the rest of them: As yet another absolute monarchy, Qatar is hardly a bastion of democracy. As al-Jazeera viewers would note, Qatar's leaders--who set up the network in the first place--are never criticized.

Having failed so far diplomatically in resolving this dispute--the United States which has bases in Qatar but nonetheless was bashed by Trump as a state sponsor of terror has been of little use--Qatar now turns to international organizations to help its cause:
Qatar has lodged a formal complaint with the World Trade Organisation against the “illegal siege” imposed by four Arab neighbours that have accused the Gulf state of sponsoring terrorism. The complaint, lodged with the WTO’s dispute-settlement body, described the embargo as “unprecedented”, accusing Saudi Arabia, the United Arab Emirates, Egypt and Bahrain of “violating the WTO’s core laws and conventions on trade of goods and services, and trade-related aspects of intellectual property,” the ministry of economy and commerce said in a statement on Monday.

On June 5, the quartet of Arab allies cut off air, sea and land links to their gas-rich neighbour, closing off airspace to Qatar-bound flights, refusing to handle goods bound for the gas-rich state and cutting diplomatic ties. While Qatar has shifted supply chains, bringing in food from Turkey and Iran and using Omani ports, its imports nonetheless slumped 40 per cent in June as the embargo hit home. “The arbitrary measures taken by the siege countries are a clear violation of the provisions and conventions of international trade law,” said Sheikh Ahmed bin Jassem bin Mohammed Al Thani, the minister of economy and commerce. “Furthermore, the illegal siege is unprecedented in the framework of economic blocs.”
The complaint at the ICAO will also mirror the WTO complaints since Qatar has had a very hard time sending and receiving Qatar Airlines and other flights with the likes of UAE closing their airspace to Qatar. While I have little doubt that Qatar's case is a fairly good one against such a wide range of sanctions without apparent cause--especially trade-related ones--you have to wonder: Given that WTO cases are usually resolved over a year's time, will there still be much of a commercial center left of Qatar if things take that long to resolve?

Ultimately, I believe that a diplomatic solution, whoever may broker it, will need to be found. Litigation will only get you so far and may leave a bad aftertaste besides.