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Entries in Trump (3)

Tuesday
Aug152017

Transcript of my Speech in Tokyo on global monetary policy, big banks & geo-politics in the Trump era

The following is the transcript from my speech: Shifting US-Japan Geo-Politics, Banking Landscape and Financial Regulations in the Trump Era. It was given on July 11, 2017 at the Canon Institute for Global Studies in Tokyo, Japan:

 

President Trump has talked a lot about America First. Over the last 6 months, we have seen that America First means that the United States could also be excluded from the rest of the world’s trade policy. For instance, Japan and the European Commission (EC) have recently agreed to an economic partnership agreement (EPA), which could be the largest trade agreement ever. This is an example of the United States being excluded from trade alliances. The new climate in the United States has created opportunities for other countries like Japan.

The shift toward America First and isolationism is not wholly because of President Trump. It is the result of a trend that started approximately 10 years ago. It has much to do with the lack of regulation in the US banking system.

Prior to 1999, the United States regulated banks under the Glass-Steagall Act. This Act required that banks separate their commercial banking operations from their trading, speculation, and securities businesses. That act was repealed in 1999, and the repeal has had a number of consequences.

For one thing, the repeal led to a series of corporate scandals in the United States just a few years later. It also led to the creation of the “Too Big to Fail” concept. It allowed Citigroup, JPMorgan Chase, and Bank of America to become conglomerate banks. It led each bank to increase the risks they hold, and it increased the interdependency of banks throughout the world.

That increased risk and interdependency eventually resulted in the global financial crisis. And yet banks still hold many of the same risky investments they had prior to the crisis, and are still interdependent.

Many in the United States have been talking about reintroducing the Glass-Steagall Act in order to mitigate that risk and interdependency. When President Trump ran for office, he discussed this. It was in the Republican platform as well. 

However, since the election, two interesting things have happened. President Trump gave an interview in which he said he still needed to think about Glass-Steagall. Since then, he has not talked much about it. Meanwhile, Secretary of the Treasury Steven Mnuchin has said that President Trump does not intend to bring back the old Glass-Steagall Act, but is rather considering a “21st century Glass-Steagall” that would merely require banks to set aside money for emergencies related to risky investments rather than actually restructure. 

I would like to talk more in detail about some of the risks that banks now face in order to highlight why the discussion about regulations like Glass-Steagall is so important.

One emerging risk today is corporate defaults. Thanks to quantitative easing, there is a lot of cheap money available in the market right now. According to S&P Global Ratings, as a result of all the cheap money, corporate debt is expected to climb from $51 trillion today to $75 trillion by 2020. At the same time, the global speculative-grade default rate is now 4.2 percent. This is the highest level since 2009, which was the worst year of the financial crisis. A total of 162 companies defaulted in 2016. This is the second time we have seen annual defaults above 100 since 2009. This has a large impact. When companies default, jobs suffer, research and development suffers, and the market suffers. It reduces confidence, which can catalyze a crisis.

Even with the level of risk we are seeing around corporate defaults today, central banks continue to buy assets, to the tune of $200 billion per month. Will this pace slow in the future? Many are now talking about whether the central banks will change their policies on quantitative easing. The Federal Reserve has been slowly raising interest rates. On the other hand, the Bank of Japan has announced that it will begin an ‘unlimited’ Japanese Government bond buying program.  

One issue surrounding quantitative easing is that it is honestly very difficult to tell what the true effect of this policy is. There is no guarantee that when a central bank purchases bonds that it will result in more long-term hires or higher wages, for example. We cannot look at inflation or deflation to see how quantitative easing has impacted the market, because the money from quantitative easing doesn’t go to consumers. It goes to banks and financial speculators. We cannot be certain that any of the money has gone toward jobs or infrastructure. No regulatory requirement even attempted to guarantee that. 

That said, there are some who feel that quantitative easing has been successful in revitalizing our economies. In June, Fed Chair Janet Yellen said in a speech, “Would I say there will never, ever be another financial crisis? You know probably that would be going too far, but I do think we are much safer, and I hope that it will not be in our lifetimes and I don’t believe it will be.”

This remark echoes a similar comment made by former Fed Chair Ben Bernanke in 2007 just before the financial crisis. Partly because of that, it is really difficult to accept what she is saying. For instance, the Federal Reserve subjected a number of banks to stress tests this year, and 34 banks passed. However, those tests don’t look at massive corporate defaults. They don’t look at interdependency. There are risks they don’t consider.

The risks faced by banks in the United States today are greater than even before the financial crisis. The amount of assets that the big six banks hold is about 70% to 80% larger than it was prior to 2008. The amount of deposits they hold is about 40% higher. For these reasons, I think we need to be really careful about the rate at which defaults are increasing, how stocks are supported by share buybacks, and other risks fed by artificial, or conjured money.

Central banks around the world are now pursuing a coordinated zero percent money policy and increasing their assets. The big three central banks in the United States, Europe and Japan now hold assets equivalent to about 17% of global GDP. If this money was liquidated into the real economy instead, it would have a huge positive impact. 

In recent years, central banks have used quantitative easing to inject more liquidity ostensibly into the economy. However, as I mentioned, that liquidity hasn’t necessarily reached the real economy. Quantitative easing has failed to produce real sustainable growth. There have been very low increases in wages throughout the world. For many people, even though their country’s economy may be considered stable by generic measures mostly touted by central banks and governments, their personal economies are instable.

One outcome of that is that people are starting to question the ability of their governments to understand the economy. When that happens, people tend to vote out whoever is in power. This is one of the things that I think contributed to Trump’s victory in the United States. In turn, the economic situation globally has affected political decisions domestically, and those decisions are affecting our international alliances.

The shift in our policies toward international alliances might again have an impact on the global economy. It’s a circle. President Trump seems to be shying away from multilateral agreements and toward more isolationist ideas. The last time the United States did that was in the 1920s. In fact, isolationist policies were one of the reasons there was such a speculative mood in the United States in the 1920s, and that speculation led to the financial crash of 1929.

It looks like, for the time being, the United States will continue to act in a more isolationist manner. That is good and bad. It is bad from the standpoint of general global connectedness. It is good for other countries, including Japan. It gives other countries the opportunity to take on a stronger role in the international community. Japan is already moving to do that, as we can see with the Japan-EU EPA.

Ever since President Trump came into office, alliances excluding the United States have been completed much more rapidly. These alliances were already being planned and executed before he came into office, mostly since the financial crisis to be sure and apprehension about the current dollar-based monetary system, but he seems to have accelerated them. This is happening all over the world. China is getting involved in more alliances. Japan is as well.

I was in Mexico a couple of weeks ago and I spoke with people there about the North American Free Trade Agreement (NAFTA) and trade alliances. Since President Trump has come into power, he has been talking about how to get Mexico to pay for the wall he wants to build between the United States and Mexico. He has also made a number of negative comments about Mexico and about NAFTA. Furthermore, President Trump has also pulled out of the Trans-Pacific Partnership (TPP). Prime Minister Abe seems to be trying to save the TPP. He will not be able to move forward with the United States, but with all that has happened, we now have countries like Mexico that are looking at the situation with the United States and actively wanting the TPP to continue without the United States. Japan could thus, take a larger leadership role regarding the TPP.. 

With President Trump continuing to push his wall idea, US-Mexico relations are deteriorating. This presents a very good opportunity for China to develop its alliance with Mexico. When I spoke in Mexico, a trade delegation from China was there at the same time. These sorts of things are already happening more frequently. There has been movement on the part of other countries to create alliances outside of the partnerships with the United States ever since the financial crisis. With the election of President Trump, these movements are only accelerating. 

The Japan-EU EPA is a major agreement that has impacted that movement. Japan is a part of the shift that we are seeing as power in the international community moves slightly away from the United States. To a large extent, Japan can greatly influence how this shift plays out. Japan is already also involved in a number of other large trade deals, such as the TPP or the Regional Comprehensive Economic Partnership (RCEP). These deals could create a large amount of trade, and Japan is playing a leadership role in their negotiations. These deals are being worked out in opposition to US policies. Unless US policies change soon, they will move forward.

And as the rest of the world moves forward with its own deals, the situation in the United States today is one in which the financial crisis and the concept of “Too Big to Fail” has led many to question whether we don’t need more regulation in the banking sector to avoid another crisis.  However, many of the senior people in the Trump administration seem to be not very interested in bringing back something like the Glass-Steagall Act, so not enough is happening. There is action taking place around military spending. Although the new budget hasn’t passed yet, the draft does include a large boost for the military. We have a lot of people now working in Congress to figure out how the new budget will work, whether they can cut corporate taxes, or cut social spending, and so on.

The latest draft budget will increase defense spending by approximately $53 billion. It earmarks an extra $2.8 billion for spending on homeland security. To make that budget balanced, President Trump is cutting from social insurance programs and institutions related to international alliances. President Trump’s isolationist tendencies are not supported just by the things he says; if the budget is passed, that isolationism will be carried out through budget cuts.   

Meanwhile, he is doing no meaningful work on his campaign promise to bring back the Glass-Steagall Act. In fact, there is movement in his ranks toward further deregulation. A recent bill passed in the House of Representatives, dubbed “The Financial Choice Act”  called for the loosening of banking regulations. If this new legislation is passed, it will likely just require that banks hold onto more money for emergencies, in reserves, rather than actually separate deposits and lending activities from speculative ones. 

I think the lesson here is that there is a lot of inconsistency in what President Trump has said and what his administration is doing, and I think that people around the world understand this and that it is catalyzing the shifts in power and new economic alliances that we are seeing globally. The Trump presidency is accelerating the movement of world currencies away from the United States dollar.

Alongside all of that is the problem of whether or not the markets are sustainable at their current levels. They are not. There is a lot of risk in markets and in the economy right now. There exists a large disconnect between how the financial sector feels about the economy and how normal people outside of the financial sector feel about it. There remains a disconnect between how politicians view the economy and markets and the banking and monetary system and how it's viewed by populations on the ground. This dichotomy fueled by ongoing money conjuring policies can't end well, it can only result in another crisis. The question isn't if, but when. 

 

Tuesday
Jan032017

My Political-Financial Road Map for 2017

Happy New Year! May yours be peaceful, safe and impactful!

As tumultuous as last year was from a global political perspective on the back of a rocky start market-wise, 2017 will be much more so. The central bank subsidization of the financial system (especially in the US and Europe) that began with the Fed invoking zero interest rate policy in 2008, gave way to international distrust of the enabling status quo that unfolded in different ways across the planet. My prognosis is for more destabilization, financially and politically.  In other words, the world's a mess.

Over 2016, I circled the earth to gain insight and share my thoughts on this path from financial crisis to central bank market manipulation to geo-political fall out, while researching my new book, Artisans of Money. (I’m pressing to hand in my manuscript by February 28th – the book should emerge in the Fall.)

I traveled through countries including Mexico, Brazil, China, Japan, England and Germany, nations epitomizing various elements of the artisanal money effect. I spoke with farmers, teachers and truck-drivers as well as politicians, private and central bankers. I explored that chasm between news and reality to investigate the ways in which elite power endlessly permeates the existence of regular people.

In last year’s roadmap, I wrote we were in a “transitional phase of geo-political-monetary power struggles, capital flow decisions, and fundamental economic choices. This remains a period of artisanal (central bank fabricated) money, high volatility, low growth, excessive wealth inequality, extreme speculation, and policies that preserve the appearance of big bank liquidity and concentration at the expense of long-term stability.”    

That happened. Going forward, as always, there’s an endless amount of information to process. The state of economies, citizens and governments remains more precarious than ever. Major areas on the upcoming docket include – central bank desperation, corporate defaults and related job losses, economic impact of political isolationism, conservatism and deregulation, South America’s woes, Europe’s EU voter rejections, and the ongoing power shift from the West to the East.

For now, I’d like to share with you some specific items - which are by no means exhaustive, that I’ll be analyzing in 2017.

1) Watching the Artisans of Money (Central Banks)

On December 16th, 2015, after equivocating for seven years, the Fed raised rates by 25 basis points. To hedge itself against its own decision, the Fed claimed that despite this move (that the financial press considered indicative of an actual policy shift) its "stance of monetary policy remains accommodative after this increase.” Sure enough, the Dow opened January, 2016 with a 10% drop. The US stock market exuded its worst 10-day start to a year since 1897. Other global markets fared worse.

Four hikes were initially predicted for 2016. We got just one. Another 25 basis points followed – nearly to the day, on December 14, 2016. The Fed has now forecast another three hikes, for 2017. If you do the math, consider the reasons behind the Fed’s wishy-washy language, and ignore economic rhetoric, that translates to one hike this year.

Last year, I noted that the Fed’s December 2015 rate move was “tepid, and it’s possible the Fed moves rates up another 25 or 50 basis points over 2016, but less likely more than that.” This happened. Given the tempestuous state of the world and over-optimism surrounding Trump’s ability or desire to follow through on certain campaign vows, I see no reason for a different rate pattern in 2017.  

2) Volatility for Stock Markets

Following a volatile start to 2016, markets rebounded. Not because fundamental economic conditions of the world’s major countries improved instantly or geo-political tension declined. But as other major central banks took over the cheap money mantle.

 

The cavalry appeared. The Bank of Japan hit negative rate territory in January, 2016. The European Central Bank adopted negative rates in March, 2016.  As a result of these major central banks equalizing the cost of global money back to zero, the stock market bubble marched on.  And if that wasn’t enough to show that liquidity and crisis concerns still exist, both central banks introduced additional manifestations of quantitative easing during the year with the ECB extension in time and BOJ extension up their yield curve.

In November, Donald Trump’s victory further elevated stock markets, especially sectors most likely to be deregulated by the incoming billionaire club administration, like banks.   

Yet, the idea that any President can control the economy with a tweet and a set of disparaging or aggrandizing comments is foolish.  Once the hype of a reality TV show president subsides into prevailing political and economic uncertainty, stock and bond markets will end the year crumbling in the dust of broken promises.

3) Rising Corporate Defaults and Oil Prices

Extending a disturbing trend, the number of large global corporations that defaulted in 2016 outpaced those in 2015 by 40 percent. The figure for 2016 hit 150, making 2016 the worst year for corporate defaults since the financial crisis.

If Trump wants to make America great again, he should start by examining the leverage in corporate America, where 2/3s of global corporate defaults occurred. Of those, 50 out of 63 globally, were in the oil and gas sector.  (Emerging markets accounted for 28 defaults and Europe for 12).  S&P expects the default rate to rise in 2017. And if Trump’s nominee for Secretary of State, Rex Tillerson, has anything to do with it, oil prices won’t move up much for 2017. This will mean more defaults in that sector. Based on his recent statements, his policies are cushioned in the ideology of pumping more oil, not less. 

4) Turmoil in South America

Last year, given how scandal-plagued Brazil was, I thought no matter what happened regarding now-former Dilma Rousseff’s government, its markets would slip along with its economy. Yet, against all logic, interim President Michel Temer, even more plagued by scandal than his ejected predecessor, got a Hail Mary from the international investor community. Much of that had to do with Wall Street’s old friend Henrique Mereilles nabbing the minister of finance spot (having run Brazil’s Central Bank under President Luiz Inácio Lula da Silva (a.k.a. “Lula”) from 2003 to 2010.)

I also said that Argentina wouldn’t be having a “walk in the park.” The new centrist government removed currency capital controls in order to attract foreign money, which had the side effect of crushing the Argentinean peso.  Unemployment and general angst increased. A group of protestors recently stoned the car of President Macri amidst growing resentment of his austerity measures.

Venezuela, a nation dependent on oil for 96% of its exports has erupted into total chaos. As perhaps the desperation move “currency controls” or restrictions were introduced in early December President Maduro announced  plans to withdraw the 100 bolivar note which makes up 77 percent of all currency in circulation and closed the borders to stop people holding Venezuelan currency outside of the country.  That caused mass panic and Depression like bank lines, looting and violence. The government chose to keep the 100-note in circulation until January 20. That’s a temporary measure.  So is a large year-end bond issue from the government forced on the state banks. Things will get uglier. Restricting currency circulation is a harbinger of the war on cash everywhere.  Contagion in South America is more likely to be acute this year.  

5) First Half: Rising Dollar/ Sideways Gold, Second Half: Reverse and Cash

Last year, I said that despite other countries (and the IMF) seeking to battle the almighty Greenback, global malaise would “keep the dollar higher than it deserves to be.”

Then, I expected gold “to rise during the summer as a safe haven choice” which it did and to “end the year lower in US dollar terms” which it also did.   This year, it’s likely that the dollar will remain strong in the beginning given the recent Fed hike, expectations of more, and initial enthusiasm for Trump’s promises. This will keep a lid on gold.  

Yet once it becomes clear that US economic conditions remain lackluster and inequality rampant, the dollar will weaken and gold will appreciate.  In the backdrop, though the US remains the world’s biggest gold holder, nations like China, India and Russia will continue to stockpile gold in a bid to diversify against the dollar.

In addition to watching the yellow metal, as I’ve urged over the past few years, routinely extracting cash from bank accounts remains a smart defensive play for 2017.  People have asked me where to keep it. The answers depend on individual financial situations, but paying down debt, buying necessary hard assets and staying liquid with the rest in physical reach (there’s a reason for the term, keeping it ‘under the mattress’ is practical.

6) Power Shift from West to East through China and Japan

As it has done since cheap money became US economic and financial policy in the wake of the financial crisis, China continues to forge a US-independent path. It did so through inclusion of the Renminbi in the IMF’s SDR basket in October 2016. It also established a stronger relationship and side agreements with Russia, the BRICS community and increasingly with Europe and the United Kingdom post the Brexit vote. That was no accident, but part of a strategy to be distanced from the risk the US and its central and private banking system poses.  The New Development Bank (formerly referred to as the BRICS bank) headquartered in Shanghai, China, offers alternatives to old institutions like the IMF, and allows for a rise of eastern and emerging nations to succeed in a collective format.

The trajectory of this power shift from the US dollar and US policies will escalate. If Trump and his team go the isolationist, or bilateral trade agreement routes, it will only push China to increases its economic, military and diplomatic presence globally. While Trump (and the outgoing Obama administration) accuse China of currency devaluation, the People’s Bank of China (PBOC) has actually been selling US treasuries to bolster its currency - hit by capital outflows, not manipulation.  China sold $22 billion of US treasuries in July. Its US government debt holdings are at their lowest level in more than three years, and these sales, especially in the face of Trump’s scorn, will continue.

These accusations and geo-bullying will also push former adversaries, China and Japan closer together. The two nations are already negotiating some historic agreements.  We could be approaching a new era in which Sino-Japanese relations allow for diplomatic normalization and more economic partnerships, which would be mutually beneficial.

Over 2016, Japan entered greater cooperation with India and Russia.  The agreements it arranged will bolster Japan’s potential for 2017. The Yen should appreciate as a result. Even in the case of further economic turmoil in the US and around the world, the Yen will benefit, as it did during the financial crisis, from being a safe haven currency.

7) More Anti-EU sentiment and economic hardship in Europe

In 2015, Mario Draghi, European Central Bank (ECB) head decided to extend Euro-QE into March 2017. At the start of last year, I said that, “The euro will continue to drop in value against the dollar” and “negative interest rates will prevail.” That happened. And despite no evidence of any economic benefit (and purely to help ailing banks) Draghi extended Euro-QE to December 2017, with a promise to do more if necessary.

Meanwhile, mega banks in Europe continue to buckle, economies continue to stagger and the uprising of populations increasingly apprehensive of the entire EU apparatus will be felt in votes this year. Already, much of Eastern Europe (with notable exceptions of Austria and Romania) has elected anti-EU politicians. With major elections approaching - in the Netherlands in March,  France in May and Germany likely in October, the only way for the sitting elite to retain power is to make the markets seem frothy. That means more QE manifestations from Draghi, a weaker euro, more bubbles in major European stock markets and greater presence from conservative, protectionist politicians.

In Europe, weaker countries are struggling more than ever. In Greece, more than one out of every three people now lives in poverty and 25% of Greeks are unemployed and receive no benefits. Even stronger countries like Norway and Switzerland will be at economic risk as they begin to negotiate trade agreements with the central EU.

8) Upside for Russia

Any way you look at it, Russia will be a key economic beneficiary for 2017. The ruble appreciated about 21% vs. the dollar in 2016, outperforming all other emerging market currencies for the year. This trend will continue. Russia’s MICEX stock market index rallied 24% for 2016. Russian bonds will maintain that path amid high interest rates (around 10%) and a positive geo-political outlook relative to the US.

Russia will enjoy warmer relationships with the US under the Trump administration and find and ally in Rex Tillerson as Secretary of State. It has strategically engaged in trade agreements with China to diversity against US ones.  Simultaneously it has furthered relations with many Eastern European countries that have been disillusioned with the EU.  As more pro-Russia officials are being voted into power, the positive impact on Russia’s economy will carry on.

These alignments could provide Russia more impetus militarily. Having stepped in to assuage the situation in Syria while the US remained relatively silent, it can also capitalize on its Middle East relationships.  Russia supplies nearly one-third of the EU’s natural gas, but it has also begun clean energy initiatives through the BRICS development bank and other platforms, a strategic diversification. That’s why the ruble will outperform the euro and the pound sterling.

9) Angst in the United Kingdom

Before being picked as Trump’s Commerce Secretary, billionaire, Wilbur Ross called Brexit a “God-given opportunity" for UK rivals.  As commerce secretary, he can act upon that characterization - through negotiations of new US-UK trade agreements that favor the US. That would increase UK reliance on more optimal EU negotiations, by no means a given. The UK can also hope that China and the BRICS will offer better opportunities, which increases the West to East power shift.

The sterling fell 14% in 2016, due to Brexit and anxiety over what form it will eventually take.  Despite a year-end dead-cat bounce, uncertainty can only mount once negotiations truly begin.  As the Financial Times noted, the number of times the words “uncertain” and “uncertainty” appeared in the Bank of England’s Monetary Policy Committee meeting minutes in 2016 rose 78 per cent vs. 2015.  That doesn’t bode well for the sterling. But in the event of a Bank of England rate cut (to compensate for the Fed hike), there would be another temporary boost to the UK stock and bond market.

10) The Trump Effect Will Accentuate Unrest

Trump is assembling the richest cabinet in the world to conduct the business of the United States, from a political position.  The problem with that is several fold.

First, there is a woeful lack of public office experience amongst his administration. His supporters may think that means the Washington swamp has been drained to make room for less bureaucratic decisions.  But, the swamp has only been clogged. Instead of political elite, it continues business elite, equally ill-suited to put the needs of the everyday American before the needs of their private colleagues and portfolios. 

Second, running the US is not like running a business. Other countries are free to do their business apart from the US.  If Trump’s doctrine slaps tariffs on imports for instance, it burdens US companies that would need to pay more for required products or materials, putting a strain on the US economy. Playing hard ball with other nations spurs them to engage more closely with each other. That would make the dollar less attractive. This will likely happen during the second half of the year, once it becomes clear the Fed isn’t on a rate hike rampage and Trump isn’t as adept at the economy as he is prevalent on Twitter.

Third, an overly aggressive Trump administration, combined with its ample conflicts of interest could render Trump’s and his cohorts’ businesses the target of more terrorism, and could unleash more violence and chaos globally.

Fourth, his doctrine is deregulatory, particularly for the banking sector. Consider that the biggest US banks remain bigger than before the financial crisis. Deregulating them by striking elements of the already tepid Dodd-Frank Act could fall hard on everyone.

When the system crashes, it doesn’t care about Republican or Democrat politics. The last time deregulation and protectionist businessmen filled the US presidential cabinet was in the 1920s. That led to the Crash of 1929 and Great Depression. 

Today, the only thing keeping a lid on financial calamity is epic amounts of artisanal money. Deregulating an inherently corrupt and coddled banking industry, already floating on said capital assistance, would inevitably cause another crisis during Trump’s first term.

 

In closing, I share with you my yoga instructor’s New Year’s motto:

Don’t half-ass anything.

That means whatever you do - imbue it with passion, courage, attention and conviction.

 

 

 

 

 

 

Thursday
Feb042016

Election 2016: A Battle of Billionaires (Except for Bernie Sanders)

This Piece Originally Appeared in TomDispatch.

Speaking of the need for citizen participation in our national politics in his final State of the Union address, President Obama said, “Our brand of democracy is hard.” A more accurate characterization might have been: “Our brand of democracy is cold hard cash.”

Cash, mountains of it, is increasingly the necessary tool for presidential candidates. Several Powerball jackpots could already be fueled from the billions of dollars in contributions in play in election 2016. When considering the present donation season, however, the devil lies in the details, which is why the details follow.

With three 2016 debates down and six more scheduled, the two fundraisers with the most surprising amount in common are Bernie Sanders and Donald Trump. Neither has billionaire-infused super PACs, but for vastly different reasons. Bernie has made it clear billionaires won’t ever hold sway in his court. While Trump... well, you know, he’s not only a billionaire but has the knack for getting the sort of attention that even billions can’t buy.

Regarding the rest of the field, each candidate is counting on the reliability of his or her own arsenal of billionaire sponsors and corporate nabobs when the you-know-what hits the fan. And at this point, believe it or not, thanks to the Supreme Court’s Citizens United decision of 2010 and the super PACs that arose from it, all the billionaires aren’t even nailed down or faintly tapped out yet.  In fact, some of them are already preparing to jump ship on their initial candidate of choice or reserving the really big bucks for closer to game time, when only two nominees will be duking it out for the White House.

Capturing this drama of the billionaires in new ways are TV networks eager to profit from the latest eyeball-gluing version of election politicking and the billions of dollars in ads that will flood onto screens nationwide between now and November 8th. As super PACs, billionaires, and behemoth companies press their influence on what used to be called “our democracy,” the modern debate system, now a 16-month food fight, has become the political equivalent of the NFL playoffs. In turn, soaring ratings numbers, scads of ads, and the party infighting that helps generate them now translate into billions of new dollars for media moguls.

For your amusement and mine, this being an all-fun-all-the-time election campaign, let’s examine the relationships between our twenty-first-century plutocrats and the contenders who have raised $5 million or more in individual contributions or through super PACs and are at 5% or more in composite national polls. I’ll refrain from using the politically correct phrases that feed into the illusion of distance between super PACs that allegedly support candidates’ causes and the candidates themselves, because in practice there is no distinction.

On the Republican Side:

1. Ted Cruz: Most “God-Fearing” Billionaires

Yes, it’s true the Texas senator “goofed” in neglecting to disclose to the Federal Election Commission (FEC) a tiny six-figure loan from Goldman Sachs for his successful 2012 Senate campaign. (After all, what’s half-a-million dollars between friends, especially when the investment bank that offered it also employed your wife as well as your finance chairman?) As The Donald recently told a crowd in Iowa, when it comes to Ted Cruz, “Goldman Sachs owns him. Remember that, folks. They own him.”

That aside, with a slew of wealthy Christians in his camp, Cruz has raised the second largest pile of money among the GOP candidates. His total of individual and PAC contributions so far disclosed is a striking $65.2 million. Of that, $14.28 million has already been spent. Individual contributors kicked in about a third of that total, or $26.57 million, as of the end of November 2015 -- $11 million from small donors and $15.2 million from larger ones. His five top donor groups are retirees, lawyers and law firms, health professionals, miscellaneous businesses, and securities and investment firms (including, of course, Goldman Sachs to the tune of $43,575).

Cruz’s Keep the Promise super PAC continues to grow like an action movie franchise. It includes his original Keep the Promise PAC augmented by Keep the Promise I, II, and III. Collectively, the Keep the Promise super PACs amassed $37.83 million. In terms of deploying funds against his adversaries, they have spent more than 10 times as much fighting Marco Rubio as battling Hillary Clinton.

His super PAC money divides along family factions reminiscent of Game of Thrones.  A $15 million chunk comes from the billionaire Texas evangelical fracking moguls, the Wilks Brothers, and $10 million comes from Toby Neugebauer, who is also listed as the principal officer of the public charity, Matthew 6:20 Foundation; its motto is “Support the purposes of the Christian Community.”

Cruz’s super PACs also received  $11 million from billionaire Robert Mercer, co-CEO of the New York-based hedge fund Renaissance Technologies. His contribution is, however, peanuts compared to the $6.8 billion a Senate subcommittee accused Renaissance of shielding from the Internal Revenue Service (an allegation Mercer is still fighting). How’s that for “New York values”?  No wonder Cruz wants to abolish the IRS.

Another of Cruz’s contributors is Bob McNair, the real estate mogul, billionaire owner of the National Football League’s Houston Texans, and self-described “Christian steward.”

2. Marco Rubio: Most Diverse Billionaires

Senator Marco Rubio of Florida has raised $32.8 million from individual and PAC contributions and spent about $9 million. Despite the personal economic struggles he’s experienced and loves to talk about, he’s not exactly resonating with the nation’s downtrodden, hence his weak polling figures among the little people. Billionaires of all sorts, however, seem to love him.

The bulk of his money comes from super PACs and large contributors. Small individual contributors donated only $3.3 million to his coffers; larger individual contributions provided $11.3 million. Goldman Sachs leads his pack of corporate donors with $79,600.

His main super PAC, Conservative Solutions, has raised $16.6 million, making it the third largest cash cow behind those of Jeb Bush and Ted Cruz. It holds $5 million from Braman Motorcars, $3 million from the Oracle Corporation, and $2.5 million from Benjamin Leon, Jr., of Besilu Stables. (Those horses are evidently betting on Rubio.)

He has also amassed a healthy roster of billionaires including the hedge-fund “vulture of Argentina” Paul Singer who was the third-ranked conservative donor for the 2014 election cycle. Last October, in a mass email to supporters about a pre-Iowa caucus event, Singer promised, “Anyone who raises $10,800 in new, primary money will receive 5 VIP tickets to a rally and 5 tickets to a private reception with Marco.”

Another of Rubio's Billionaire Boys is Norman Braman, the Florida auto dealer and his mentor. These days he’s been forking over the real money, but back in 2008, he gave Florida International University $100,000 to fund a Rubio post-Florida statehouse teaching job. What makes Braman’s relationship particularly intriguing is his “intense distaste for Jeb Bush,” Rubio’s former political mentor and now political punching bag. Hatred, in other words, is paying dividends for Rubio.

Rounding out his top three billionaires is Oracle CEO Larry Ellison, who ranks third on Forbes’s billionaire list.  Last summer, he threw a $2,700 per person fundraiser in his Woodside, California, compound for the candidate, complete with a special dinner for couples that raised $27,000. If Rubio somehow pulls it out, you can bet he will be the Republican poster boy for Silicon Valley.

3. Jeb Bush: Most Disappointed Billionaires

Although the one-time Republican front-runner’s star now looks more like a black hole, the coffers of “Jeb!” are still the ones to beat. He had raised a total of $128 million by late November and spent just $19.9 million of it.  Essentially none of Jeb’s money came from the little people (that is, us). Barely 4% of his contributions were from donations of $200 or less.

In terms of corporate donors, eight of his top 10 contributors are banks or from the financial industry (including all of the Big Six banks). Goldman Sachs (which is nothing if not generous to just about every candidate in sight -- except of course, Bernie) tops his corporate donor chart with $192,500. His super PACs still kick ass compared to those of the other GOP contenders. His Right to Rise super PAC raised a hefty $103.2 million and, despite his disappearing act in the polls, it remains by far the largest in the field.

Corporate donors to Jeb’s Right to Rise PAC include MBF Healthcare Partners founder and chairman Mike Fernandez, who has financed a slew of anti-Trump ads, with $3.02 million, and Rooney Holdings with $2.2 million. Its CEO, L. Francis Rooney III, was the man George W. Bush appointed ambassador to the Vatican. Former AIG CEO Hank Greenberg’s current company, CV Starr (and not, as he has made pains to clarify, he himself), gave $10 million to Jeb’s super PAC. In the same Fox Business interviewwhere he stressed that distinction, he also noted, “I’m sorry he is not living up to expectations, but that’s the reality of it.” AIG, by the way, received $182 billion in bailout money under Jeb’s brother, W.

4. Ben Carson: No Love For Billionaires

Ben Carson is running a pretty expensive campaign, which doesn’t reflect well on his possible future handling of the economy (though, as he sinks toward irrelevance in the polls, it seems as if his moment to handle anything may have passed). Having raised $38.7 million, he’s spent $26.4 million of it. His campaign received 63% of its contributions from small donors, which leaves it third behind Bernie and Trump on that score, according to FEC filings from October 2015.

His main super PACs, grouped under the title “the 2016 Committee,” raised just $3.8 million, with rich retired people providing the bulk of it.  Another PAC, Our Children’s Future, didn’t collect anything, despite its pledge to turn "Carson’s outside militia into an organized army."

But billionaires aren’t Carson’s cup of tea. As he said last October, “I have not gone out licking the boots of billionaires and special-interest groups. I’m not getting into bed with them.”

Carson recently dropped into fourth place in the RealClearPolitics composite poll for election 2016 with his team in chaos. His campaign manager, Barry Bennett, quit. His finance chairman, Dean Parke, resignedamid escalating criticism over his spending practices and his $20,000 a month salary. As the rising outsider candidate, Carson once had an opportunity to offer a fresh voice on campaign finance reform. Instead, his campaign learned the hard way that being in the Republican hot seat without a Rolodex of billionaires can be hell on Earth.

5. Chris Christie: Most Sketchy Billionaires

For someone polling so low, New Jersey Governor Chris Christie has amassed startling amounts of dosh. His campaign contributions stand at $18.6 million, of which he has spent $5.7 million. Real people don’t care for him. Christie has received the least number of small contributions in either party, a bargain basement 3% of his total.

On the other hand, his super PAC, America Leads, raised $11 million, including $4.3 million from the securities and investment industry. His top corporate donors at $1 million each include Point 72 Asset Management, the Steven and Alexandra Cohen Foundation, and Winnecup Gamble Ranch, run by billionaire Paul Fireman, chairman of Fireman Capital Partners and founder and former chairman of Reebok International Ltd.

Steven Cohen, worth about $12 billion and on the Christie campaign's national finance team, founded Point 72 Asset Management after being forced to shut down SAC Capital, his former hedge-fund company, due to insider-trading charges. SAC had to pay $1.2 billion to settle.

Christie’s other helpful billionaire is Ken Langone, co-founder of Home Depot. But Langone, as he told the National Journal, is not writing a $10 million check. Instead, he says, his preferred method of subsidizing politicians is getting “a lot of people to write checks, and get them to get people to write checks, and hopefully result in a helluva lot more than $10 million.” In other words, Langone offers his ultra-wealthy network, not himself.

6. Donald Trump: I Am A Billionaire

Trump’s campaign has received approximately $5.8 million in individual contributions and spent about the same amount. Though not much compared to the other Republican contenders, it’s noteworthy that 70% of Trump’s contributions come from small individual donors (the highest percentage among GOP candidates). It’s a figure that suggests it might not pay to underestimate Trump’s grassroots support, especially since he’s getting significant amounts of money from people who know he doesn’t need it.

Last July, a Make America Great Again super PAC emerged, but it shut downin October to honor Trump’s no super PAC claim.  For Trump, dealing with super PAC agendas would be a hassle unworthy of his time and ego. (He is, after all, the best billionaire: trust him.) Besides, with endorsements from luminaries like former Alaska Governor Sarah Palin and a command of TV ratings that’s beyond compare, who needs a super PAC or even his own money, of which he’s so far spent remarkably little?

On The Democratic Side:

1. Hillary Clinton: A Dynasty of Billionaires 

Hillary and Bill Clinton earned a phenomenal $139 million for themselves between 2007 and 2014, chiefly from writing books and speaking to various high-paying Wall Street and international corporations.  Between 2013 and 2015, Hillary Clinton gave 12 speeches to Wall Street banks, private equity firms, and other financial corporations, pocketing a whopping $2,935,000. And she’s used that obvious money-raising skill to turn her campaign into a fundraising machine.

As of October 16, 2015, she had pocketed $97.87 million from individual and PAC contributions.  And she sure knows how to spend it, too. Nearly half of that sum, or $49.8 million -- more than triple the amount of any other candidate -- has already gone to campaign expenses.

Small individual contributions made up only 17% of Hillary’s total; 81% came from large individual contributions. Much like her forced folksiness in the early days of her campaign when she was snapped eating a burrito bowl at a Chipotle in her first major meet-the-folks venture in Ohio, those figures reveal a certain lack of savoir faire when it comes to the struggling classes.

Still, despite her speaking tour up and down Wall Street and the fact that fourof the top six Wall Street banks feature among her top 10 career contributors, they’ve been holding back so far in this election cycle (or perhaps donating to the GOP instead).  After all, campaign 2008 was a bust for her and nobody likes to be on the losing side twice.

Her largest super PAC, Priorities USA Action, nonetheless raised $15.7 million, including $4.6 million from the entertainment industry and $3.1 million from securities and investment. The Saban Capital Group and DreamWorks kicked in $2 million each.

Hillary has recently tried to distance herself from a well-deserved reputation for being close to Wall Street, despite the mega-speaking fees she’s garnered from Goldman Sachs among others, not to speak of the fact that five of the Big Six banks gave money to the Clinton Foundation. She now claims that her “Wall Street plan” is stricter than Bernie Sanders’s. (It isn’t. He’s advocating to break up the big banks via a twenty-first-century version of the Glass-Steagall Act that Bill Clinton buried in his presidency.) To top it off, she scheduled an elite fundraiser at the $17 billion “alternative investment” firm Franklin Square Capital Partners four days before the Iowa Caucus. So much for leopards changing spots.

You won’t be surprised to learn that Hillary has billionaires galore in her corner, all of whom backed her hubby through the years.  Chief among them is media magnate Haim Saban who gave her super PAC $2 million. George Soros, the hedge-fund mogul, contributed $2.02 million. DreamWorks Animation chief executive Jeffrey Katzenberg gave $1 million. And the list goes on.

2. Bernie Sanders: No Billionaires Allowed

Bernie Sanders has stuck to his word, running a campaign sans billionaires. As of October 2015, he had raised an impressive $41.5 million and spent about $14.5 million of it.

None of his top corporate donors are Wall Street banks. What’s more, a record 77% of his contributions came from small individual donors, a number that seems only destined to grow as his legions of enthusiasts vote with their personal checkbooks.

According to a Sanders campaign press release as the year began, another $33 million came in during the last three months of 2015: “The tally for the year-end quarter pushed his total raised last year to $73 million from more than 1 million individuals who made a record 2.5 million donations.” That number broke the 2011 record set by President Obama’s reelection committee by 300,000 donations, and evidence suggests Sanders’s individual contributors aren’t faintly tapped out. After recent attacks on his single-payer healthcare plan by the Clinton camp, he raised $1.4 million in a single day.

It would, of course, be an irony of ironies if what has been a billionaire’s playground since the Citizens United decision became, in November, a billionaire’s graveyard with literally billions of plutocratic dollars interred in a grave marked: here lies campaign 2016.

The Media and Debates

And talking about billions, in some sense the true political and financial playground of this era has clearly become the television set with a record $6 billion in political ads slated to flood America’s screen lives before next November 8th. Add to that the staggering rates that media companies have been getting for ad slots on TV’s latest reality extravaganza -- those “debates” that began in mid-2015 and look as if they’ll never end. They have sometimes pulled in National Football League-sized audiences and represent an entertainment and profit spectacle of the highest order.

So here’s a little rundown on those debates thus far, winners and losers (and I’m not even thinking of the candidates, though Donald Trump would obviously lead the list of winners so far -- just ask him).  In those ratings extravaganzas, especially the Republican ones, the lack of media questions on campaign finance reform and on the influence of billionaires is striking -- and little wonder, under the money-making circumstances.

The GOP Show

The kick-off August 6th GOP debate in Cleveland, Ohio, was a Fox News triumph. Bringing in 24 million viewers, it was the highest-rated primary debate in TV history. The follow-up at the Reagan Library in Simi Valley, California, on September 16th, hosted by CNN and Salem Radio, grabbed another 23.1 million viewers, making it the most-watched program in CNN's history.  (Trump naturally took credit for that.)  CNN charged up to $200,000for a 30-second spot.  (An average prime-time spot on CNN usually goes for $5,000.) The third debate, hosted by CNBC, attracted 14 million viewers, a record for CNBC, which was by then charging advertisers $250,000 or more for 30-second spots.

Fox Business News and the Wall Street Journal hosted the next round on November 10th: 13.5 million viewers and (ho-hum) a Fox Business News record. For that one, $175,000 bought you a 30-second commercial slot.

The fifth and final debate of 2015 on December 15th in Las Vegas, again hosted by CNN and Salem Radio, lassoed 18 million viewers. As 2016 started, debate fatigue finally seemed to be setting in. The first debate on January 14th in North Charleston, South Carolina, scored a mere 11 million viewers for Fox Business News. When it came to the second debate (and the last before the Iowa caucuses) on January 28th, The Donald decided not to grace it with his presence because he didn't think Fox News had treated him nicely enough and because he loathes its host Megyn Kelly.

The Democratic Debates

Relative to the GOP debate ad-money mania, CNN charged a bargain half-off, or $100,000, for a 30-second ad during one of the Democratic debates. Let’s face it, lacking a reality TV star at center stage, the Democrats and associated advertisers generally fared less well. Their first debate on October 13th in Las Vegas, hosted by CNN and Facebook, averaged a respectable 15.3 million viewers, but the next one in Des Moines, Iowa, overseen by CBS and the Des Moines Register, sank to just 8.6 million viewers. Debate number three in Manchester, New Hampshire, hosted by ABC and WMUR, was rumored to have been buried by the Democratic National Committee (evidently trying to do Hillary a favor) on the Saturday night before Christmas. Not surprisingly, it brought in only 7.85 million viewers.

The fourth Democratic debate on NBC on January 17th (streamed live on YouTube) featured the intensifying battle between an energized Bernie and a spooked Hillary.  It garnered 10.2 million TV viewers and another 2.3 million YouTube viewers, even though it, too, had been buried -- on the Sunday night before Martin Luther King, Jr. Day. In comparison, 60 Minutes on rival network CBS nabbed 20.3 million viewers.

The Upshot

So what gives? In this election season, it’s clear that these skirmishes involving the ultra-wealthy and their piles of cash are transforming modern American politics into a form of theater. And the correlation between big money and big drama seems destined only to rise.  The media needs to fill its coffers between now and election day and the competition among billionaires has something of a horse-betting quality to it.  Once upon a time, candidates drummed up interest in their policies; now, their policies, such as they are, have been condensed into so many buzzwords and phrases, while money and glitz are the main currencies attracting attention.

That said, it could all go awry for the money-class and wouldn’t that just be satisfying to witness -- the irony of an election won not by, but despite, all those billionaires and corporate patrons.

Will Bernie’s citizens beat Hillary’s billionaires? Will Trump go billion to billion with fellow New York billionaire Michael Bloomberg? Will Cruz’s prayers be answered? Will Rubio score a 12th round knockout of Cruz and Trump? Does Jeb Bush even exist? And to bring up a question few are likely to ask: What do the American people and our former democratic republic stand to lose (or gain) from this spectacle? All this and more (and more and more money) will be revealed later this year.