Dec 15

Today’s News 15th December 2017

  • Banks Demand 11th-hour Reprieve On Key Part Of MiFID II

    The clock is ticking down and there are only about three weeks to go before the dreaded MiFID II regulatory structure is implemented on 3 January 2018. While it’s been difficult to judge the industry’s preparedness for the change, several aspects of the new regulations have attracted the most debate and concern. These have included transaction reporting, unbudling of research costs and whether institutional investors will absorb the costs or pass them on to their clients and trade identifiers. As the deadline nears, one of these issues – Legal Entity Identifiers (LEI) – has assumed more significance than the others. 

    The enforcement of LEI’s to identify legal entities is targeting increased market transparency via audit trails. Each market participant will need its own 20-character “alphanumeric code” and the relevant codes for buyers, sellers and issuers of the security will be required to complete a trade.

    As we discussed yesterday in “UBS Is Using Ethereum Technology To Soften The Impact Of MiFID II”, a group of financial institutions, led by UBS, are building a compliance system based on the blockchain which manage LEI requirements. Briefly, reference data hashed to the Etheruem blockchain will mutualize the application of LEI’s for the buyer, seller and issuer in financial market transactions in real-time. While bankers are becoming increasingly upbeat on the capabilities of blockchain technology…

    In a presentation obtained by CoinDesk, Christian Nolting, also the bank’s (UBS) global head of wealth, and Marcus Muller, global head of the CIO office, explained digital currencies and blockchain to their fellow bankers. In the presentation, the bankers asserted that the “opportunities associated with blockchain technologies are huge,” and could be fully put into practice within the next few years. And in what's possibly one of most grandiose predictions about blockchain's impact on the global economy, the bankers predicted that roughly 10% of the global gross domestic product (GDP) would be tracked or otherwise "regulated" by a blockchain by 2027.

    …the new system is not going to rescue thousands of investors and corporate issuers who are unlikely to have their LEIs ready in time for the MiFID II deadline. For example, Thomson Reuters estimates that only about two thirds of the roughly 15,000 companies listed on European exchanges have an LEI.

    If the regulators don’t budge, a large number of entities will be shut out of the markets.  Something is going to have to give, quickly, as the Financial Times reports.

    Banks are pushing for an eleventh-hour reprieve for a key part of new European markets rules because about a fifth of their clients do not have the vital tag they will need to continue trading. They are worried that some investors could be shut out of deals from the start of January because thousands of counterparties or corporate issuers will not have their unique trade identifiers.

    In recent weeks the banks, which play a critical role in the market organising trades, have undertaken campaigns to raise awareness among customers before the arrival of the new Mifid II rules on January 3. At the same time they have been pressing for regulators to ease their hardline stance and are growing increasingly confident authorities are set to grant a grace period of several months.

    Speaking to a senior executive at a large investment bank, the FT reports that “15 to 20 per cent” of his clients do not yet have LEIs and that is not expected to change much in the next three weeks. Executives at three other banks told the FT they were is a similar, or worse, situation while a fourth remarked that it would be a “s*** show” if his bank was forced to refuse to do business with clients without LEIs from January 3. Neil Robson, a lawyer at Katten Muchin Rosenman in London, told the newspaper that “Asian applications for LEIs are lagging way behind those from European entities and US entities.” If the banks are to win their reprieve, it could happen today, as the FT explains.

    Market participants are hoping a meeting by the European Securities Markets Authority (Esma) on Thursday will give them breathing space, and a two-month grace period in which they can retrospectively report deals once the client has its LEI. Esma declined to comment. The UK’s Financial Conduct Authority (FCA), like Esma, has frequently told the industry it will take a tough “No LEI, no trade” stance for Mifid.


    However, three people who have discussed the issue with the FCA say they detect signs of its position softening. “They (the FCA) are effectively saying they’re not in a position to take differing views (to Esma),” one banker said, adding that he hoped Thursday’s Esma meeting would yield a “pragmatic solution”.

    MiFID II has been termed a “Big Bang” for financial markets. This author started working in financial markets, in equities, shortly after the last “Big Bang” in 1986. We remember a big-hitting salesman, who'd married into a family controlling a major retailing company, was sat next to another salesman who specialised in selling retailing equities to institutional investors (synergy). In turn, the specialist retail salesman sat next to the trader in retail equities whose wife was, coincidentally, a big trader in retail and other equities – we could monitor her trading account on the in-house system (transparency). Moving jobs to the pre-eminent investment bank in London some years later, the head of compliance would stand behind a market-maker and ask him why he had a particular position in a stock, while sucking in air through his teeth. That was the signal for the trader to flatten his book. It's sad that despite the tsunami of strangulating regulation ever since, abuses – e.g. rate rigging, money laundering, front running, etc, have only got bigger – while no senior management from the banks have been charged (except in Iceland). There is a link there, obviously, which the regulators choose to ignore. Consequently, MiFID or not, things aren't going to change.

  • South Korea Braces For Terrorism At The 2018 Winter Games

    It’s difficult not to empathize with South Korea right now: The country is preparing to host the Pyeongchang winter games in February – a moment of immense national pride – as the risks of a terrorist attack (not to mention nuclear annihilation) have intensified.

    To wit, Reuters reports that the South Korean government is taking precautions to assuage the international community’s fears. Police conducted a series of security drills on Tuesday to prepare against terror attacks ranging from a hostage situation, a vehicle ramming a stadium and a bomb-attached to a drone.

    South Korea Police and firemen were among around 420 personnel participating in the exercise, held in front of the Olympic Stadium at Pyeongchang, just 80 km (50 miles) from the heavily fortified border with North Korea as SWAT team members rehearsed a scenario where they shot down a drone with a bomb attached that was flying toward a bus carrying athletes.

    In another situation, a terrorist takes a bus full of tourists hostage and tries to ram the vehicle into the stadium before being gunned down by police. Officers in gas masks also practiced removing a chemical bomb.

    Anxiety on the Korean Peninsula has been rising in recent months due to a series of missile tests by North Korea as it continues its pursuit of nuclear weapons in defiance of UN sanctions and warnings from the US.

    “Please keep in mind that accidents always happen where no one has expected,” South Korean Prime Minister Lee Nak-yon said.


    “Please check until the last minute whether there are any security loopholes."

    Lee did not mention North Korea, but South Korea’s Defense Ministry on Friday flagged risks that North Korea could resort to terrorist or cyber attacks to spoil international events.

    Some 5,000 armed forces personnel will be deployed at the Winter Games, according to South Korean government officials and documents reviewed by Reuters.

    Hacking is also a risk that the South Korean government is preparing for.

    Pyeongchang’s organizing committee for the 2018 Games (POCOG) has also hired a private cyber security company to guard against a hacking attack from the North, tender documents show.

    To minimize the risk of provoking an aggressive North Korean reaction during the games, South Korea has asked Washington to delay regular joint military exercises until after the Olympics, the Financial Times reported. The latest headlines suggest this request has been accepted and joint drills have been delayed until April.

  • Australian Central Bank – Bitcoin Is Bad But You'd Love A Digital "e-AUD"

    Sweden’s Riksbank, the world’s oldest central bank, is exploring the possibility of a digital register-based e-krona; the Reserve Bank of New Zealand is researching whether its physical currency could be replaced by a digital alternative; the Bank of England is trialling blockchain-like systems; the Monetary Authority of Singapore is examining the use of distributed ledger technology for clearing and settlement of payments; and the PBoC said in October that it had completed tests on algorithms for a prototype of its own digital currency.

    Now the Reserve Bank of Australia (RBA) has entered the fray with an all too familiar refrain.

    We’re paraphrasing…Bitcoin is bad, the realm of criminals and little more than a speculative mania, but the technology underlying Bitcoin has great potential, which we can exploit in time with our own “superior” digital currency.

    This is what Philip Lowe, the RBA’s Governor, actually said about Bitcoin at the Australian Payment Summit, which took place today at the Hyatt Sydney Regency in Sydney Harbour.

    When thought of purely as a payment instrument, (Bitcoin) seems more likely to be attractive to those who want to make transactions in the black or illegal economy, rather than everyday transactions. So the current fascination with these currencies feels more like a speculative mania than it has to do with their use as an efficient and convenient form of electronic payment.

    No surprise there, just more of the same from banking Mafiosi like Lowe, the ECB’s Constancio (“tulip”) and most notably, JPM’s Dimon. The Financial Times article outlining the RBA’s thinking sets out the case for blockchain/distributed ledger technology.

    Central banks, commercial banks and other financial institutions are exploring how to use private distributed ledgers to make financial transactions cheaper, more transparent, and less vulnerable to fraud. Banks and settlement systems currently use central electronic ledgers to track money transfers. But these systems can be slow, often rely on manual input and are open to hacking. Distributed ledger records transactions through a network of computers rather than a single central party…The attractions of the technology include the ability to make fast digital money transfers that do not carry the cost of handling cash, tracked securely by the network.

    But…there’s just one thing missing, which is where we “need” our central banking friends.

    However, a potential drawback of bitcoin-style systems is the lack of a central entity standing behind the liability, Mr Lowe said.

    Philip Lowe’s and his RBA colleagues are examining the potential for an eAUD, which would be issued alongside physical banknotes – although the FT article neglects to add the word “initially” (if you’ll excuse our cynicism).

    Australia’s central bank is exploring creating electronic banknotes using the technology underpinning bitcoin, as major central banks around the world race to bring cash into the digital age. Philip Lowe, governor of the Reserve Bank of Australia, said in a speech on Wednesday that the bank was analysing the benefits and drawbacks of issuing an electronic form of the Australian dollar — the “eAUD” — alongside traditional banknotes.

    Speaking at the Australian Payment Summit, Mr Lowe said: “It is possible that the RBA might, in time, issue a new form of digital money…perhaps using distributed ledger technology.” He added that although the RBA has “no immediate plans” to issue digital dollars, the central bank is “continuing to look at the pros and cons”. The central bank also is exploring a new digital dollar settlement system based on the use of distributed ledger technology, or blockchain, the technology behind bitcoin. Digital dollars could take the form of a “token” that is issued and stored in consumers’ digital wallets, which can then be used for payments in a similar way to physical bank notes.

    Perhaps in a classic case of “problem, reaction, solution”, we’re speculating of course, the RBA will introduce an eAUD and phase out physical currency during the next financial crisis. In the case of Australia we may not have too long to wait as we discussed last month in “The Party’s Over For Australia’s $5.6 Trillion Housing Frenzy”. However, we noted the best analogy for the “Down Under” economy in “Why Australia’s Economy Is A House Of Cards” in which Matt Barrie and Craig Tindale argued that the three decades long expansion was mostly the result of “dumb-luck”.

    As a whole, the Australian economy has grown through a property bubble inflating on top of a mining bubble, built on top of a commodities bubble, driven by a China bubble.

    Browsing through the speaker biographies at the Australian Payment Summit, besides being RBA Governor, Philip Lowe is also (we can’t help but smile) a member of Australia’s Financial Stability Board and “spent two years at the Bank for International Settlements working on financial stability issues”. On a serious note, we know the direction which central banks want to lead us, as we argued a week ago with regard to the nomination of Marvin Goodfriend as Fed governor.

    It’s clear from reading between the lines that although central bankers are not engaging in a public discussion, the architects of the boom-bust cycles are considering their policy options for the next crisis…the one where their latest credit/asset bubble bursts in horrendous fashion. It’s also clear that the preferred solution is negative interest rates and either abolishing paper currency or taxing it in line with a depreciating digital currency standard.

    The RBA’s Philip Lowe is another minion seeking to control the narrative for the banking Mafiosi.

  • PCR: "In A Triumph For Feminism Police Say A Mistletoe Kiss Without Consent Is Rape"

    Authored by Paul Craig Roberts,

    Criminalizing a bit of Christmas fun has to make you wonder

    Is there any aspect of our life left into which the police state does not intrude?

    Parents are regulated as to how they discipline their children. Spankings that were the tool of choice in my day are now illegal. Spanking is considered child abuse and can result in state seizure of the child and prosecution of the parent.

    The state prescribes the terms on which children can be transported in cars. The cars themselves can only be designed within safety and fuel economy parameters determined by the state.

    The unsupervised children at play of my generation no longer exist outside of small towns. Not that long ago I reported on the arrest of a mother on the grounds that she permitted an underage kid to play unsupervised in the front yard of the home on a cul-de-sac. The arrest was made on the false report of a neighbor. The police seized the opportunity to arrest a mother on the basis of “failure to supervise an underage child.” The family was traumatized. The mother was put in jail, the child in Child Protective Custody, and the father rushed home from work to see if he could rescue his family from the intrusion of the American Police State. It has happened to many, and Americans sit there sucking their thumbs, hoping the lion will choose another antelope.

    The parents, grandparents, and aunts and uncles of my day would all have been locked up. My entire generation would have been raised in orphanages.

    When the state substitutes its judgment for that of parents, it takes the job away from them. Even within the same family children differ. Parents have to find the best approach for each child. Moreover, children who are always supervised never grow up. They learn neither responsibility nor street smarts. Children are even regulated how they can play. No pointing the finger and saying “bang, bang.” Even words are policed, some words no longer being permissible.

    Perhaps someone has studied the impact on culture of such intense state intrusion into private life. And there are other culture-changing factors. Consider Identity Politics. The other day I listened to a recording of Barbara Streisand singing “A Woman In Love” from 1980, and Celine Dion’s “The Power of Love” from years ago. Both of these performers are gifted with beautiful and powerful voices. I wondered if they have a counterpart today.

    I haven’t time to listen to much music, so I do not know. But the thought occurred to me that these are songs about love between a woman and a man. Moreover, in the official videos, the man is white.

    Identity Politics is gradually delegitimizing heterosexual relationships, especially if the male is white, as Identity Politics defines the white heterosexual male as the oppressor of all other races and genders.

    Having heard that in “advanced circles” women are subjected to peer pressure not to have relationships with “white, sexist, racist males,” I was wondering if today Streisand would have to have a black lover in her video and whether Dion would have to pitch her song to a lesbian lover.
    Otherwise, would they be the hits they were during their time? Indeed, could Dion survive using the politically incorrect word, “lady”?

    People are born into what exists. They have no experience of what previously existed. Therefore, they do not know what has been lost. This generational effect is the best ally of the police state.

    People born into a country, in which unaccountable police can brutalize and murder and steal, born into a country, the government of which declares itself above both domestic and international law and the US Constitution, a country that ignores constitutional protections such as habeas corpus and due process of law, a country that based on a false claim that the country is indispensable and exceptional claims the right to destroy entire countries whose governments refuse to follow Washington’s orders, a country that claims the right to control explanations and that brands those who tell the truth to be conspiracy theorists, Russian agents, anti-semites, and enemies of the people, know no different. What to my generation is totalitarian horror is normal to them.

    That country is the United States of America. It is the most shameful country on earth. The United States is a country whose rulers regard their hegemony as more important than the wellbeing of people and the life of the planet.

    If the world is to survive America and if America is to survive as a country in which citizens are permitted free thought, free speech, to make their own decisions, to raise their own children and otherwise to be a free people, Americans will have to get angry at those who are destroying them and reply to the everyday violence that they experience in many different forms with violence of their own.

    There are two forces in history. One is ideas. The other is violence. Karl Marx said that ideas, although sometimes effective, such as his own, can become the control mechanism of the ruling class. In contrast, Marx said that violence is the effective force in history.

    In Marx’s analysis violence serves the working class, but this is no more than Marx’s assumption. Violence serves those who use it most forcefully.

    Today Washington’s violence has brought America up against Russia, China, Iran, and North Korea. Washington has outmatched itself.

    US President Trump, by seeking protection from Israel against his own government, has re-ignited Arab hostility to Israel and to the US.

    Today Israel is alone, defended only by Washington whose own stupidity has created powerful enemies.

    Washington has proved itself incapable of leadership. Russia, China, and Iran have proven that they are capable of leadership, and they are also making it clearer by the day that they are fed up with Washington.

    It is past time for Americans to get fed up with Washington, its lies and its abuse of power.

  • Billionaire Chairman Of China's Giant Network Invested In OkCoin

    Giant Network Chairman Shi Yuzhu has invested tens of millions of dollars in cryptocurrency trading platform OkCoin, according to local media reports citing unidentified people familiar with the matter. According to local media sources, the investment was widely anticipated.

    According to Bloomberg, it’s unclear whether the investment took place before or after China halted domestic Bitcoin exchanges. OKCoin CEO Star Xu declined to comment to

    Xu Mingxing, founder and CEO of OKcoin, apparently confirmed Shi’s investment. Xu also confirmed that Lei Jun, another celebrity billionaire – though it’s unclear whether the two men made their investments before or after China introduced regulations banning active trading of ICO tokens and cryptocurrencies on local exchanges, forcing many customers to migrate to South Korean, Hong Kong or Japanese exchanges. Lei had previously denied his investment.

    Back in 2014, OKCoin raised around ten million dollars in Series A funding from investment institutions (Ceyuan Venture Capital, Mandra Capital, Ventures Lab) and venture capitalists (prominent angel investor Cai Wensheng, founder of e-commerce site Huang Jin, founder of developer community CSDN Jiang Tao, chairman of Chinese Yough Angel Investor Leader Association Yang Ning, founder of angel investor Pre-Angel Wang Lijie, founder of tech media Leiphone Lin Jun, etc.).

    In September, Chinese authorities shocked the bitcoin market when they abruptly banned exchanges from actively trading ICO tokens and digital currencies like bitcoin. Exchange-based trading volume in the country immediately plummeted as domestic investors turned to exchanges based in Japan, South Korea or Hong Kong to conduct business.

    But local exchanges are apparently surviving after tweaking their business model.

    They now facilitate peer to peer transactions, a business model pioneered by website LocalBitcoins.

    Since the exchanges shuttered active trading, peer-to-peer trading volume in the country has exploded…

  • America's Painful Self-Delusion

    Authored by Allen Marshall (Crimson Avenger) via Defiant Living blog,

    America is the only nation brought forth by a set of beliefs, and those beliefs, captured so eloquently in our founding documents, are some of the most powerful and inspiring ever conceived. We consider this to be the land of the free, where the individual is supreme and nothing prevents us from going as far as our talents can take us. That image of America – that “brand” – is incredibly strong.

    However, there’s a very large gap between that long-held image and the reality of America today.

    What was once a government built for the people is now a government run for the rich and powerful, one that throws the people under the bus whenever their interests differ from those of the corporate and political leaders who run the show.

    And living in one world (the corrupt) while stubbornly believing you live in another (the ideal), despite mounds of evidence, causes a distinct kind of stress, often called cognitive dissonance.

    Psychologists suggest that when people are in a state of cognitive dissonance, they’ll search for a way to resolve it, either by rejecting one view or the other as either wrong or unimportant. If you’re a smoker looking at the link between smoking and cancer, for example, you’ll either quit smoking or decide that the research is biased, wrong, or doesn’t apply (in other words, that you’re smart enough to quit before the long-term damage is done).

    But what happens if you can’t resolve the two?

    For most of us Americans, resolving our cognitive dissonance would mean either accepting that we’re impotent and living futile (and feudal) lives, or rejecting our lifestyles and actively fighting the rot in the system.

    If we’re not willing to do either of those, the dissonance stays – and eats at us.

    People carrying this kind of ongoing, underlying stress find ways of coping with it; in America we’re doing it with self-medication, compulsive behaviors and distractions. Consider the following examples of the way we cope with the ever-present stress in our lives:

    • Drugs – Our country is awash in drugs, both legal and illegal, that keep us numb. In 2014, there were 245 million prescriptions filled for opioid pain relievers. The number of deaths from drug overdoses has risen from around 30,000 in 2005 to 64,000 in 2016. And communities across the country are being devastated by the opioid epidemic, as explained in this in-depth reporting by
    • Drinking – People don’t only use drugs to self-medicate; drinking does the trick as well, and we’re doing a lot more of it than we used to. According to a new study in JAMA Psychiatry, overall drinking in the US increased by 11% between 2002-13, while high-risk and problem drinking rose even higher: high-risk drinking rose by 29.9%, while problem drinking rose by 50%.
    • Mental Illness In 2015, 17.9% of adults held a diagnosis for a mental disorder, while a 2010 study found that 46.3% of children ages 13-18 had a mental disorder at some point in their young lives, and the majority of those adults and children are given prescriptions. This includes a dramatic increase in ADHD diagnoses for children: According to SharpBrains, “Among children aged 5 to 18, between 1991-92 and 2008-09, rates of ADHD diagnosis increased nearly 4-fold among boys – from 39.5 to 144.6 per 1000 – and nearly 6-fold for girls – from 12.3 and 68.5 per 1000 visits.”
    • Obesity – If drinking and drugs aren’t your thing – or even if they are – more of us are coping with stress by overeating, and it’s showing up on our waistlines. From 1990 to 2016, the average percentage of obese adults increased from 11.1% to 29.8%; when you add in the number of people who are overweight but not obese, it rises to more than two in three adults.
    • Sleeping problems – Sleep has a significant impact on our physical and mental health, and in America we’re not getting enough of it: The CDC states that 50-70 million American adults have a sleep or wakefulness disorder.
    • Media Usage – Is there any better distraction from life’s problems than media? We certainly spend a lot of our time being passively entertained: In 2016, Americans consumed an average of 10 hours of media per day, compared with 7.5 hours per day globally. Nielson reports that lower income adults spend much more time with media than do affluent adults, with adults in households with include under $25,000 watching 211 hours/month of television, versus 113 hours/month for adults in households earning $75,000 or more. (The trend is similar across other media as well.)
    • The Disease of DebtAccording to the New York Fed, household debt reached a new peak in the third quarter of 2017, at $12.8 trillion. Part of our debt problem comes from the compulsive shopping we do as a distraction; the other results from denying the reality that our wages aren’t keeping up with the increase in the cost of living, meaning that we use debt to plug the gap rather than reducing our living standards to align with our reality.

    We’re collectively doing so much damage to ourselves, solely to protect our psyches from the reality that the America that used to be is no longer the America we have. And who does that help? As you can see from the points above, it doesn’t help us: Instead, it helps the rich and powerful who are subverting the system. They’re corrupting everything this country once was, and by willfully refusing to acknowledge that reality, we’re inadvertently helping them to do it.

    The best thing we can do – for our mental and physical health, as well as for our country – is to open our eyes to what America has become, not what we wish it still was. It’s time to face reality and take action.

  • One Bank Believes It Found The Identity Of Who Is "Propping Up The Bitcoin Market"

    Back in May when the Chinese domination over Bitcoin was ending, we predicted that it would shift over to Japan, specifically, we said that “just as the Chinese bubble frenzy in bitcoin is fading, it may be replaced with a new one, in which thousands of Mrs. Watanabe traders shift their attention away from the FX market and toward digital currencies” and added that “If the transition is seamless, there is no telling just how far this particular bubble can grow.”

    Judging by the exponential price surge in bitcoin in the subsequent period, we were clearly right on the latter, and now, according to a new analysis, we were also right on the former, because as Deutsche Bank reveals in a new report by Masao Muraki, “Japanese men in their 30s and 40s who are engaged in leveraged FX trading (or who used to trade but have stopped) are driving the cryptocurrency market” and who according to DB, happen to be more or less idiots, arguably because for the time being they are outperforming every other asset class… in history, to wit: “Japanese retail investors are less financially literate than their US peers across all age groups. Compared to the US, financial literacy is particularly poor among people 35-54 years of age. The poor literacy of Japanese retail investors also stands out beside UK and German investors.”

    Ah yes, by contrast the financial literacy of the world’s central-planners is off the charts. Look where that got us…

    In any case, and without further ado, please meet the (rather boring) people who are propping up the Bitcoin market, at least according to Deutsche Bank.

    Here are the details:

    The identity of who is propping up the Bitcoin market

    1. 40% of cryptocurrency trading is Japanese yen-denominated

    An 11 December Nikkei report stated that 40% of cryptocurrency trading in Oct-Nov was yen-denominated. Japanese traders have reportedly come to account for nearly half of cryptocurrency trading since China started to shut down cryptocurrency exchanges, and this is said to be widely known among industry insiders (various estimates exist). This report shows that Japanese men in their 30s and 40s who are engaged in leveraged FX trading (or who used to trade but have stopped) are driving the cryptocurrency market.

    2. The true face of investors engaged in leveraged FX trading

    “Mrs. Watanabe” is a buzzword often used by US/European media and market participants to symbolize the typical Japanese retail investor who trades in FX. Following Abe and Kuroda, Watanabe may be the most famous Japanese name among market participants (although the purported creator of Bitcoin, Satoshi Nakamoto, is also famous). Japan accounts for a high 54% of global foreign exchange margin trading (leveraged FX trading) (source: Forex Magnate, 1Q2017), so Japanese retail investors are major players in FX markets. Data from GMO Click Securities which is the top company in its industry indicates that men hold 79% of FX trading accounts, and 63% of these men are aged 30-49 (as of end-September 2017; Figures 3-4). The typical Japanese leveraged FX trader is thus a man in his 30s or 40s and really ought to be called “Mr. Watanabe”.

    As the speculative frenzy over cryptocurrency heightens, the spotlight is falling on the unique characteristics of Japanese retail investors. The Nikkei report mentioned above cited an example of a 38-year-old business man who invested ¥8m ($70,000) in Bitcoin, including his bonus. The average household income of a 38-year-old is about ¥6.1m, the average savings are ¥5m, and the average borrowings are ¥8.8m. This report was also a topic of conversation among the managers of Japanese financial institutions that I visited this week.

    3. Financial literacy

    How much financial literacy do retail investors engaged in leveraged FX/cryptocurrency trading possess? According to a survey by the Central Council for Financial Services Information (the Bank of Japan), Japanese retail investors are less financially literate than their US peers across all age groups (Figure 6). Compared to the US, financial literacy is particularly poor among people 35-54 years of age. The poor literacy of Japanese retail investors also stands out beside UK and German investors (Figure 7).

    Before the FSA started applying pressure, the core investment products sold by banks and brokers were investment trusts with distribution yields above 10% (products with yields above 20% were particularly popular) that took compound risks and drew down principal (the typical purchase commission was above 3% and annual management fees were over 2%).

    Figure 8 shows the top 3 reasons that Japanese retail investors engage in leveraged FX trading: 1) expectations of high returns, 2) they can easily invest in foreign currencies, and 3) many investors are earning profits. However Figure 9 shows that most investors say they quit leveraged FX trading because they did not do well (only 7.5% said they realized their profit goals).

    More than a few Japanese investors positively value volatility. We have believed that “Japan is the Galapagos of asset management markets, pursuing its own path amid the long period of deflation. Japan’s investment style is typified by a combination of low-risk, low-return deposits and high-risk, high-return investments” (see our 11 December 2014 report, “Initiation: Securities firms confront changing “Galapagos market””).

    4. Investors’ winning percentage and turnover

    New investors continuously enter the leveraged FX trading market and repeat the metabolism of being forced out by a margin call due to sharp market changes. This results in a market with a tumultuous annual participant turnover.

    Leveraged FX trading is essentially a zero-sum game. Japanese retail investors are playing this zero-sum game with institutional investors engaged in algorithmic trading. It would be very difficult for business men trading on their smartphones during lunch or after work to sustain their trade wins. In Figure 5, we equate increases in FX trading account margins with wins, and decreases with losses. Over the past 10 quarters, we estimate that wins to losses were basically even in six quarters, while significant losses dominated in four quarters.

    5. From leveraged FX trading to leveraged cryptocurrency trading

    We think that retail investors are shifting from leveraged FX trading to leveraged cryptocurrency trading. Firms such as the GMO Group and SBI Group are embracing the sense of urgency and starting to offer cryptocurrency trading services. Factor breakdown is difficult due to market variables, but leveraged FX trading has been sluggish since February 2017 (Figure 1).

    Cryptocurrency has been trending up, so retail investors’ unrealized gains are also rising. With few investors leaving and a steady inflow of new investors, the investor pool has been expanding. We believe that investors participating in leveraged cryptocurrency trading are typically Japanese men in their 30s and 40s who are engaged in leveraged FX trading (or who used to trade but have stopped). We think that the pool of cryptocurrency investors not using leverage is even larger.

    6. Margin call risk and fail risk

    Leveraged cryptocurrency trading services are available in Japan. Some major FX brokers are using the same 25x leverage limit that applies to FX trading, but there are no direct rules in leveraged trading of cryptocurrency. During the Swiss franc shock in January 2015, many retail investors not only received margin calls but also incurred losses greater than their margin balances, because forced settlements couldn’t be implemented in a timely manner. This shows that investors can suffer losses which brokers end up booking as credit losses even with leveraged FX trading of developed nation currencies. Authentication of Bitcoin settlements takes at least 10 minutes. The risk of incurring losses greater than margin is higher than in normal FX trading, due to high intraday volatility. As a result, we believe that brokers also face a higher risk of failure.

    7. Unrealized gains are also virtual

    The National Tax Agency recently indicated that profits generated by the sale or use of cryptocurrency are classified as miscellaneous income in principle and are required to be filed in income tax returns. We think that many investors are hesitant to realize profits because, combined with other sources of income, these profits would be subject to income tax (up to 45% tax rate) and residence tax (around 10%).

    The progressive taxation system means that the tax rate rises in keeping with income for a single fiscal year (on a calendar year basis). For investors thinking of taking profit in the near term, a rational tax trade would be to sell some holdings this year and the rest next year. In contrast, investors hoping that profits will be taxed as capital gains in future (20% tax rate; but we cannot see any movement towards this) may put off realizing profit.

    8. Fair value of cryptocurrency

    Cryptocurrency such as Bitcoin that have pure distributed systems do not have an underlying value like precious metals. Value is not guaranteed by an issuer because there is no issuer. The value of cryptocurrency is thus entirely based on the belief that it can be exchanged for goods or sovereign currencies (BoJ review of December 2015). While valuation of exchange rates between legal tender and cryptocurrency should be the vital factor, it is retail investors (including “Mr. Watanabe”) who are currently carrying out price discovery.

    With a broader range of investors set to enter the market in 2018 and an increase in the ways to hedge (short selling), we expect to see the market’s price discovery function being utilized. The CBOE Futures Exchange began offering Bitcoin futures trading on 10 December and the CME plans to start on the 18th (the US Futures Industry Association sent a critical letter to the Commodity Futures Trading Commission who self-certified new contracts for bitcoin futures products. The letter said that there has not been enough discussion on topics such as margin levels, transaction limits, stress tests, and settlement).

    Rather than the cryptocurrency used for speculation, our focus is on the impact that distributed ledger technology (broadly defined as blockchain technology) can have on financial transactions and the business models of financial institutions. Furthermore, as speculation in cryptocurrency is growing to a scale that cannot be ignored, we plan to look more deeply into the potential impact on the market if the bubble should burst and the effect of concerns over this on regulations and monetary policy.

  • Some Ex-Cons Are Finally Finding Jobs: But Does The Fed Care?

    While CNN doesn’t dedicate much time to covering the subject, we’ve repeatedly pointed out that, contrary to what conventional wisdom might lead one to believe, incarceration rates among white Americans have risen since 2000 while incarceration rates for minorities have fallen.

    The US prison population is finally shrinking after swelling to more than 2 million people, placing the US among the countries with the largest prison populations. Nearly one in five inmates are incarcerated on nonviolent drug charges.

    And in 2000, there were 449 white inmates per 100,000 citizens while in 2014, the rate increased slightly with 465 inmates per 100,000.

    In recent years, opioids have devastated many predominantly white rural communities, sending many young men to prison, while also causing a surge in drug-overdose deaths. Whether you believe this downward mobility among white men is the cause – or a symptom – of the endemic ills associated with it, data appear to show that the recent uptick in the employment participation rate is a signal that the labor market truly is beginning to tighten.

    That means millions of working-age men are sidelined. Opioid abuse and high incarceration rates could be drivers. Some 10 percent of adult men not in prison had a felony conviction in 2010, up from less than 5 percent in 1980, research shows. And criminal histories are a hiring barrier — as Zito’s story illustrates.

    Many working-class whites struggle to find the types of manufacturing jobs that their parents held, which once provided a home and a better life for many. But manufacturing jobs have been declining for more than 30 years. Over the past two decades, robots are increasingly taking over more of the manufacturing jobs that are left.

    Beginning about four or five years ago, the participation rate ticked slightly higher. The marginal gains may not ultimately mean much when measured against the yearslong decline that began long before the baby boomers began leaving the workforce in droves. Still, trying to nurture better conditions for the workforce’s most marginal members should be a priority for incoming Fed Chairman Jerome Powell, Bloomberg reports.

    Setting aside the notion that the Fed’s policies seem to consistently and implicitly favor the wealthy, raising the participation rate – and reducing the ranks of the 20 million working men who have inexplicably left the workforce – would be a major political coup for the incoming Fed chair. It might even help restore of the central bank’s credibility.

    While Janet Yellen delivered another 25 basis point rate hike, as was widely expected, today's meeting was her last as the leader of the FOMC. Bloomberg claims one reason her successor should "tread lightly" when it comes to raising interest rates would be to preserve this hard-fought progress along the labor market's most marginalized edges.

    Michael Zito got a job in July, and that game-changing development likely owes a lot to a tight U.S. labor market.


    The 57-year-old New Yorker spent 27 years in prison after killing an acquaintance who he says broke into his Brooklyn apartment and beat his wife. When he was released on Dec. 12, 2016, he had never used a mobile phone.


    He had no home, no living relatives, and no computer skills. Yet eight months later, he landed work in building maintenance.


    “I have a low-paying job, but I have a paycheck, which I’m happy for,” said Zito, who makes $11 an hour keeping antique elevators running at a 1920s building in Queens. With the money, he hopes to move out of a shelter soon. Plus, he says, “it gives me a little bit of extra job experience.”



    Stanley Richards has witnessed the healing properties of low unemployment. As executive vice president of the Fortune Society, the nonprofit that helped Zito get a job, he’s seen companies become more willing to hire his clients as the shadow of the 2007-2009 recession fades.


    Construction had been a really hard sector to place people, Richards said, but “because there are so many opportunities in that industry now, we have been able to partner with companies who are hiring our people."


    To be sure, the Fed isn’t playing a zero-sum game. Cautious tightening shouldn’t trigger a hiring or growth slump — it will just slow progress. Economists reckon that rates are still low enough to boost growth, despite recent increases.

    Bloomberg also references the worsening economic inequality in the US and implores the central bank – to our eternal amusement – to do more to combat this troublesome trend.

    Goldman Sachs Group Inc. economists say America’s labor market is operating at two speeds. On one hand, employed workers who change jobs do so quickly – at 4.1 percent last month, headline unemployment is tight. On the other, people sidelined by the recession for structural reasons – from felony raps to outdated skills – are only slowly trickling back in.


    Job-finding prospects for the non-employed have gotten better and “could improve further in a labor market as tight as in 1999-2000,” they wrote in a research note this fall. That may boost the labor-force participation rate by a few more tenths of a percentage point.


    “For the Fed, the implications of this divided labor market are double-edged,” the Goldman economists wrote. If the low short-term unemployment rate matters more for inflation, as they suspect, letting the job market run creates the risk of overheating. “The FOMC seems to find this trade-off unappealing and is likely to continue to tighten steadily as a result.”

    Ultimately, whether Powell’s policies benefit men like Michael Zito – the ex-con who spent nearly 3 decades behind bars – is incidental. The central bank has repeatedly demonstrated that a stable equity market is its enduring aim.

    Michael Zito

    And although lawmakers and the media made a fuss about Powell’s only marginally more permissive views about financial industry regulation, his approach to monetary policy will be familiar.

    After all, there’s a reason Trump didn’t choose Taylor.

  • Bitcoin Surges To New Record High, Ethereum Slides

    Despite record bubble heights, hoards of futures shorts ready to pounce, funding ISIS, and being a "highly speculative asset," it appears the world's citizens are willing to place some assets in the safety of a decentralized, non-fiat asset.  

    Bitcoin is surging once again as Asia opens, to new record highs at $17,661.

    The catalysts for the most recent surge is unclear though today saw a Senior VP at eBay suggest they are "seriously considering" Bitcoin integration and Israeli PM Netanyahu suggest Bitcoin could replace banks

    “Is the fate of banks that they will eventually disappear? Yes. The answer is yes. Does it need to happen tomorrow? And do we need to do it through Bitcoin? That’s a question mark.”

    Ethereum appears to be taking the brunt of the rotation.


    Interestingly it appears the relative price level of 22 ETH per BTC is some kind of support/resistance for now…

Digest powered by RSS Digest

Dec 14

Today’s News 14th December 2017

  • Mapping World War In Syria & Iraq

    Via GEFIRA,

    For some time now Syria and Iraq have been a place where interests of many players are clashing. The region is being devastated by civil war or a war by proxy, fought by a number of participants, where the borderline between friend and foe is sharp or vague as the case may be.

    The military sorties, airstrikes and other activities are taking place on a day-to-day basis. Conflicting pieces of information that can be gleaned from a variety of sources may reflect both the factual status or the propaganda of the powers that be, hidden behind the media outlets. It is not easy to see the forest for the trees, to filter valuable data in this informational noise. Still, our readers deserve to be informed. With all this in mind, the Gefira team has made an effort to present the current situation in Syria and Iraq in an accessible graphic and textual way according to the best of our ability.

    The Australian Defence Forces have an estimated 780 personnel in Iraq. At Camp Taji and other bases they have trained more than 20 000 of the Iraqi Security Forces and 3 000 federal policemen. Australia has 3 kinds of Task Groups in Iraq:

    1) Task Group Taji – which is a training mission – 300 personnel;
    2) Australian Air Task Group (ATG), operating within a US-led international coalition assembled to disrupt and destroy ISIL. The ATG consists of six Royal Australian Air Force F/A-18F Super Hornets, an E-7A Wedgetail Airborne Early Warning and Control (AEW&C) aircraft and a KC-30A Multi Role Tanker Transport (MRTT);
    3) Special Operations Task Group (SOTG) – about 80 personnel.

    The Belgian mission in Iraq and Syria to fight the Islamic State was planned to end in June 2017, but Belgian Prime Minister Charles Michel decided to extend it, and sent four F-16 fighter jets along with 100 troops to a base in Jordan to take part in the war against IS in Iraq and Syria.

    Great Britain
    The Royal Air Force (RAF Typhoon and Tornado jets and Reaper drones) has flown more than 3000 missions and launched over 1 600 airstrikes across Iraq and Syria. The British Army has already trained almost 60 000 Iraqi and Kurdish troops in bases at Besmaya, Taji and al-Asad.The UK has about 600 troops in Iraq, almost all involved in training Iraqi forces, and 80 soldiers in Camp Taji.

    Denmark currently has around 120 troops stationed at the Al-Asad air base. Danish contribution in Iraq primarily consists of training Iraqi and Kurdish military units. At the end of 2016 it launched airstrikes against ISIS.

    Operation Chammal, the French contribution to US-led military operations against Islamic State (IS), has been under way for 3 years. French aircraft have performed a total of 7 349 flights in Iraq and Syria with 1 413 strikes on Daesh and destroyed 2 197 objectives. France has supplied weapons and training to local forces in Syria and Iraq, has special forces operating in the region and has been one of the main countries bombing militants. In total, it has some 1 200 troops in its Levant operation.

    The German contribution includes: a type 122 Augsburg frigate, six Tornado aircraft for surveillance operations in Syria, an Airbus 310 MRTT aircraft for aerial refuelling and participation of staff officers. The German government declared sending 1 200 soldiers to take part in the military operations. In fact the Bundeswehr sent between 500 and 700 soldiers.German troops have been helping train security forces in the area around Erbil in northern Iraq.

    Iran currently has 70 000 combatants in Syria (counting both regular Iranian troops and militias under Iranian control: around 7 000 Hezbollah fighters, thousands of Afghan recruits in the Al Fatemiyoun militia, and volunteers from Iraq and Pakistan).

    The Iraqi army numbers 168 000 active military personnel and 150 000 reserve personnel.

    Israel has carried out dozens of airstrikes on alleged weapons convoys bound for Hezbollah in Lebanon.Israel’s real security interests in Syria lie in countering Hezbollah and monitoring the rise of Iranian influence.

    The Italian contingent in Iraq is made up of approximately 1 400 military from all services of which 400 are currently engaged in Erbil, including 120 instructors. 70 military are deployed in Mosul to protect the dam and its personnel. The Carabinieri Task Force has been operating there since June 2015. The 90 members of the Task Force have been training Iraqi federal Police Forces tasked with operations to be conducted in areas conquered back from Daesh.

    After the downed Jordanian pilot was executed by ISIL by being burned to death, King Abdullah II vowed revenge and temporarily took the lead in the bombing raids on ISIL. Current activities include airstrikes and protection of the Jordanian border.

    The Netherlands
    The Dutch military personnel are training Iraqi and Kurdish forces to fight the ISIS terrorist organization on the ground (150 trainers, advisers and security and logistic personnel, 35-man force protection for Belgian F-16).

    Russia has deployed an S-400 air defense system, and stations Su-24 bombers at the Russian military base in Latakia.24)Russians have three bases in Syria: Latakia (also listening station), Tartus naval base and Khemeimim air base. Due to Russian military activities, Syrian government forces have an advantage.25)The Russian military intervention started on 30.09.2015 with 4 000 military personnel.26) Moscow has used the Russian Navy a few times like the Admiral Grigorovich. 27)According to the Russian Defense Ministry, the Russian fighters carried out 672 sorties and bombed over 1 450 targets to support the “offensive by the militias of eastern Euphrates tribes and Kurdish militias”.28)Independent experts said up to 10,000 Russian troops and private contractors could have been deployed to Syria. He suggested that Russia had between 4,000 and 5,000 Russian military servicemen in Syria including personnel at Russia’s airbase in Khmeimim, a stronghold of President Bashar al-Assad in northwest Syria, and the Tartus naval facility. On top of that, independent Russian military expert Pavel Felgenhauer said, some 2 000 to 3 000 military advisors helped the Syrian army gain an upper hand over rebels and jihadists on the ground. 29)Vladimir Putin announced 11.12.2017 that his forces will start withdrawing from Syria after a two-year military campaign against ISIS.

    The Gran Capitán military base in Bismayah, which is under Spanish command and where some 450 soldiers and members of Spain’s Civil Guard are stationed, along with US, British and Portuguese personnel have helped train 6 000 Iraqi troops.31)The continued presence of the Spanish Patriot missile battery on the border between Turkey and Syria was a decision taken at the request of the Turkish Government, within the framework of the NATO.

    Al Assad’s army is made up of 154 000 active and 150 000 reserved military personnel.

    Turkey has a military base in Iraq: in Bashiqa near Mosul, Northern Iraq and in the Shaqlawa region (near Erbil). Roughly 2 000 Turkish troops are currently in northern Iraq.34)35)In northern Syria after conducting Operation Euphrates Shield against ISIS and Kurdish militias, Turkey controls the region stretching from the city of Jarabulus on the Syria-Turkey border to Manbij, Al-Bab and northern Aleppo. Turkey is strengthening its position in the Middle East, also prevents the Kurdish state from coming into being.36)The Turkish military contingent in Syria was reduced from 8,000 to 1,500 people (also commandos, like 180 commandos in Syrian city Al-Bab).

    The United States has about 5 200 troops in Iraq (primarily in an advisory capacity) and about 2 000 in Syria. Unofficial military sources announced that there are also 4 000 American troops in Syria.

  • The Deep State's Christmas Present To America: Surveillance That Never Ends

    Authored by John Whitehead via The Rutherford Institute,

    Just in time for Christmas, the Deep State wants to give America the gift that keeps on giving: never-ending mass surveillance.

    I’m not referring to the kind of surveillance carried out by that all-knowing and all-seeing Jolly Old St. Nick and his informant the Elf on the Shelf (although, to be fair, they have helped to acclimate us to a world in which we’re always being watched and judged by higher authorities).

    No, this particular bit of Yuletide gift-giving comes courtesy of the Deep State (a.k.a. the Surveillance State, Police State, Shadow Government and black-ops spy agencies).

    If this power-hungry cabal gets its way, the government’s power to spy on its citizens will soon be all-encompassing and permanent.

    As it now stands, Section 702 of the Foreign Intelligence Surveillance Actthe legal basis for two of the National Security Agency’s largest mass surveillance programs, “PRISM” and “Upstream”—is set to expire at the end of 2017.

    “PRISM” lets the NSA access emails, video chats, instant messages, and other content sent via Facebook, Google, Apple and others. “Upstream” lets the NSA worm its way into the internet backbone—the cables and switches owned by private corporations like AT&T that make the internet into a global network—and scan traffic for the communications of tens of thousands of individuals labeled “targets.”

    Section 702 has been used as an end-run around the Constitution to allow the government to collect the actual content of Americans’ emails, phone calls, text messages and other electronic communication without a warrant.

    Under Section 702, the government collects and analyzes over 250 million internet communications every year. There are estimates that at least half of these contain information about U.S. residents, many of whom have done nothing wrong. This information is then shared with law enforcement and “routinely used for purposes unrelated to national security.”

    Mind you, Section 702 gives the government access to the very content of your conversations (phone calls, text messages, video chats), your photographs, your emails.

    So beware of what you say, what you read, what you write, where you go, and with whom you communicate, because it will all be recorded, stored and used against you eventually, at a time and place of the government’s choosing. Privacy, as we have known it, is dead.

    For all intents and purposes, we now have a fourth branch of government.

    This fourth branch came into being without any electoral mandate or constitutional referendum, and yet it possesses superpowers, above and beyond those of any other government agency save the military. It is all-knowing, all-seeing and all-powerful. It operates beyond the reach of the president, Congress and the courts, and it marches in lockstep with the corporate elite who really call the shots in Washington, DC.

    The government’s “technotyranny” surveillance apparatus has become so entrenched and entangled with its police state apparatus that it’s hard to know anymore where law enforcement ends and surveillance begins.

    The short answer: they have become one and the same entity.

    The police state has passed the baton to the surveillance state.

    This hasn’t fazed President Trump who, much like his predecessors, has thus far marched in lockstep with the dictates of the police state.

    For months, the Trump Administration has been actively lobbying Congress to reauthorize Section 702 in its entirety. Now, according to The Intercept, Trump is actively considering a proposal to establish his own global, private spy network that would circumvent official U.S. intelligence agencies and answer directly to the White House.

    If approved, this would be yet another secret government agency carrying out secret surveillance and counterintelligence, funded by a secret black ops budget that by its very nature does away with transparency, bypasses accountability and completely eludes any form of constitutionality.

    As if we weren’t being spied on enough already.

    On any given day, the average American is now monitored, surveilled, spied on and tracked in more than 20 different ways by both government and corporate eyes and ears.

    Every second of every day, the American people are being spied on by the U.S. government’s vast network of digital Peeping Toms, electronic eavesdroppers and robotic snoops.

    Talk about a system rife for abuse.

    Ask the government why it’s carrying out this warrantless surveillance on American citizens, and you’ll get the same Orwellian answer the government has been trotting out since 9/11 to justify its assaults on our civil liberties: to keep America safe.

    Yet warrantless mass surveillance by the government and its corporate cohorts hasn’t made America any safer. And it certainly isn’t helping to preserve our freedoms. Frankly, America will never be safe as long as the U.S. government is allowed to shred the Constitution.

    Now the government wants us to believe that we have nothing to fear from its mass spying program because they’re only looking to get the “bad” guys who are overseas.

    Don’t believe it.

    Warrantless mass surveillance of American citizens is wrong, un-American, and unconstitutional.

    Clearly, the outlook for reforming the government’s unconstitutional surveillance programs does not look good.

    As I make clear in my book Battlefield America: The War on the American People, whenever the rights of the American people are pitted against the interests of the military/corporate/security complex, “we the people” lose. Unless Congress develops a conscience—or suddenly remembers that they owe their allegiance to the citizenry and not the corporate state—we’re about to lose big.

    It’s time to let Section 702 expire or reform the law to ensure that millions and millions of Americans are not being victimized by a government that no longer respects its constitutional limits.

    Mark my words: if Congress votes to make the NSA’s vast spying powers permanent, it will be yet another brick in the wall imprisoning us within an electronic concentration camp from which there is no escape.

  • Almost A Third Of Americans Are Working Beyond Age 65

    There is a huge disparity in employment rates among over 65s across different countries…

    Infographic: Where People Are Working Beyond 65  | Statista

    You will find more statistics at Statista

    As Statista's Niall McCarthy notes, a recent OECD report found that the highest rates of people working beyond 65 are in Asia with Indonesia particularly notable as having a 50.6 percent employment among those in the 65-69 age group. That figure is high elsewhere in Asia, standing at 45 percent in South Korea and 42.8 percent in Japan.

    In contrast to Europe where there were widespread protests when the retirement age was raised even slightly, much of Asia has actually been supportive of increases in the mandatory retirement age. Reasons for support include everything from a desire to maintaing a fit and active life to more obvious concerns about finances.

    New Zealand has no compulsory retirement age and it is another country with a high employment rate among older people with 42.6 percent of those aged 65 to 69 still working. The rate is far less in Australia at 25.9 percent while it's 31 percent in the United States.

    In Europe where all those protests happened, the rate is lower still. In the United Kingdom, the employment rate for 65-69 year olds stands at 21 percent while in France and Spain, it is only 6.3 and 5.3 percent respectively.

  • Brandon Smith Warns 'The Virtual Economy' Is The End Of Freedom

    Authored by Brandon Smith via,

    There is one simple rule to follow when understanding the tragic history of economies: Never put blind faith in a system built on an establishment-created foundation. You would think this would not be a difficult concept to grasp being that we have so many examples of controlled economies and collapse to reference over the centuries, but in our era more than ever the allure of a virtual world with promises of endless wealth and ease is overwhelming.

    Yes, I am referring primarily to cyptocurrency "tulip-mania" (sorry bitcoiners, the description is too fitting, it isn't going away), but not this issue alone. I am also referring to a far-reaching problem of which cryptocurrencies are a mere reflection.

    Namely, the fact that humanity is swiftly losing sight of what a true economy is and what it is supposed to accomplish. It is because of this reality that crypto is thriving.

    First, let's be clear, fiat currencies are one of the first machinations of the virtual economy. Once paper currencies printed from thin air by central bankers were separated from tangible backing and accepted by the masses as "valuable" and worth trading labor for, the seed of financial cancer was planted. Today, there is one final step needed for the establishment to accomplish complete tyranny in global trade and that is to disconnect the masses fully from private transactions. In other words, we must be tricked into going digital, where privacy is an absurd memory.

    Virtual economics is appealing for several reasons, most of them bad.

    Americans and much of the west in particular are increasingly uncomfortable with the idea of real production. The latest generation coming into political and social influence, the millenials, is a perfect example. Surveys show American millenials more than any other generation lack basic workplace competency skills, including scoring low on arithmetic and reading comprehension. Often portrayed as "tech savvy" in popular culture and the media, millenials are quite inept when it comes to core skills that fuel strong business and trade, which is part of the reason why the U.S. is falling into the shadow of foreign workforces.

    Millenials in the West also exhibit abysmal technical skills in international testing and lag far behind foreign peers. This has come as a surprise to many mainstream economists and social analysts, primarily because millenials are also considered the "most educated" generation ever. But, of course, we have not only been given a virtual economy in recent decades, but also a virtual educational system. A majority of millenials are lacking when it comes to key production skills and entrepreneurship methods because they have been trained to dismiss such skills as negligible. In other words, millenials have been conditioned to be academic idiots.

    Why go through the struggle and hardship required to become an effective producer of tangible necessities when it is far easier to join a collectivist drive for socialism and a structure in which little to no work is required to obtain such necessities? Why not steal from a productive minority and spread it thinly enough to keep the unskilled majority fed? It is only within this kind of culture that virtual production, a virtual society and virtual "money" is seen as an ideal solution.

    The notion is becoming more and more prevalent in our popular media, and I believe this is rather symbolic (or ironic) of our conundrum.

    For example, consider the book Ready Player One, a pop-culture craze and archetypal zeitgeist for millenials soon to be released as an intended Hollywood blockbuster directed by Steven Spielberg. The novel depicts the world of 2045, a world in which fossil fuel depletion and "global warming" have triggered economic and social decline (Remember in the 1980s when they used to tell us that global warming was going to melt the polar icecaps and we would be under water by the year 2000?). A totalitarian governing body controlled by corporate behemoths rules over the dystopian sprawl.

    In response to an ever painful existence in the real world, the masses have sought to escape to a virtual world called "the Oasis," created by a programming genius. The Oasis becomes a nexus for the global economy and a virtual society.

    This sounds like a rousing background for a story of rebellion, and it is about that… sort of. Unfortunately, here is where the disturbing ties between our world and the fictional world of Ready Player One meet. The "rebellion" is for all intents and purposes also virtual, and for millenial audiences in particular, this is supposed to be inspiring.

    Perhaps this is why cryptocurrencies are so appealing to the millenial crowd in particular. Think about it — the dismal economic doldrums of Ready Player One exist NOW; we don't have to wait until 2045. Millenials are already feeling disaffected, indebted and disenfranchised, and most of them are also skill-less. Self reliance to them is an idea so alien it rarely if ever crosses their minds. So, how do they fight back? Or, how are they tricked into thinking they can fight back against a virtual system that has left them in the gutter? Why, with a virtual community and a virtual currency, of course.

    Millenials and others think that they are going to rebel and "take down the banking oligarchs" with nothing more than digital markers representing "coins" tracked on a digital ledger created by an anonymous genius programmer/programmers. Delusional? Yes. But like I said earlier, it is an appealing notion.

    Here is the issue, though; true money requires intrinsic value. Cryptocurrencies have no intrinsic value. They are conjured from nothing by programmers, they are "mined" in a virtual mine created from nothing, and they have no unique aspects that make them rare or tangibly useful. They are an easily replicated digital product. Anyone can create a cryptocurrency. And for those that argue that "math gives crypto intrinsic value," I'm sorry to break it to them, but the math is free.

    In fact, for those that are not already aware, Bitcoin uses the SHA-256 hash function, created by none other than the National Security Agency (NSA) and published by the National Institute for Standards and Technology (NIST).

    Yes, that's right, Bitcoin would not exist without the foundation built by the NSA. Not only this, but the entire concept for a system remarkably similar to bitcoin was published by the NSA way back in 1996 in a paper called "How To Make A Mint: The Cryptography Of Anonymous Electronic Cash."

    The origins of bitcoin and thus the origins of crytpocurrencies and the blockchain ledger suggest anything other than a legitimate rebellion against the establishment framework and international financiers. I often cite this same problem when people come to me with arguments that the internet has set the stage for the collapse of the globalist information filter and the mainstream media. The truth is, the internet is also an establishment creation developed by DARPA, and as Edward Snowden exposed in his data dumps, the NSA has total information awareness and backdoor control over every aspect of web data.

    Many people believe the free flow of information on the internet is a weapon in favor of the liberty movement, but it is also a weapon in favor of the establishment. With a macro overview of data flows, entities like Google can even predict future social trends and instabilities, not to mention peek into every personal detail of an individual's life and past.

    To summarize, cryptocurrencies are built upon an establishment designed framework, and they are entirely dependent on an establishment created and controlled vehicle (the internet) in order to function and perpetuate trade.  How exactly is this "decentralization", again?

    TOTAL information awareness is the goal here; and blockchain technology helps the powers-that-be remove one of the last obstacles: private personal trade transactions. Years ago, a common argument presented in favor of bitcoin was that it was "completely anonymous."  Today, this is being proven more and more a lie. Even now, in the wake of open admissions by major bitcoin proponents that the system is NOT anonymous, people still claim anonymity is possible through various measures, but this has not proven to sway the FBI or IRS which have for years now been using resources such as Chainanalysis to track bitcoin users when they feel like doing so, including those users that have taken stringent measures to hide themselves.

    Bitcoin proponents will argue that "new developments" and even new cryptocurrencies are solving this problem. Yet, this was the mantra back when bitcoin was first hitting the alternative media. It wasn't a trustworthy assumption back then, so why would it be a trustworthy assumption now? The only proper assumption to make is that nothing digital is anonymous. Period.

    With the ludicrous spike in bitcoin prices, champions of the virtual economy are unlikely to listen to any questions or criticisms. I have never argued one way or the other in terms of bitcoin's potential "market value," because it does not really matter. I have only ever argued that cryptocurrencies like bitcoin are in no way a solution to combating the international and central banks.  In fact, cyrptocurrencies only seem to be expediting their plan for full spectrum digitization and the issuance of a global currency system.

    Bitcoin could easily hit $100,000, but its "value" is truly irrelevant and consistently hyped as if it makes bitcoin self evident as a solution to globalism. The higher the bitcoin price goes, the more the bitcoin cult claims victory, yet the lack of intrinsic value never seems to cross their minds. They have Scrooge McDuck-like visions of swimming in a vault of virtual millions. They'll only accuse you of being an "old fogey" that "does not understanding what the blockchain is."

    The fact is, they are the one's that do not really understand what the blockchain is — a framework for a completely cashless society in which trade anonymity is dead and economic freedom is destroyed.

    Ask yourself this: Why is it that central banks around the world (including the BIS and IMF) are investing in Bitcoin and other crytpocurrencies while developing their own crypto systems based on a similar framework? Could it be that THIS infusion of capital and infrastructure from major banks is the most likely explanation for the incredible spike in the bitcoin market?  Why is it that globalist banking conglomerates like Goldman Sachs lavish blockchain technology with praise in their white papers? And, why are central bankers like Ben Bernanke speaking in favor of crypto at major cryptocurrency conferences if crypto is such a threat to central bank control?

    Answer — because it is not a threat. 

    They benefit from a cashless system, and liberty champions are helping to give it to them.

    Above all else, the virtual economy breeds weakness in society. It encourages a lack of tangible production. Instead of true producers, entrepreneurs and inventors, we have people scrambling to sell real world property in order to buy computing rigs capable of "mining" coins that do not really exist. That is to say, we may one day soon be faced with millions of citizens expending their labor and energy in order to obtain digital nothings programmed into existence and given artificial scarcity (for now).

    It also encourages false rebellion. Real change requires actions in the real world. Removing banking elitists and their structures by force if necessary (and this will probably be necessary). Instead, freedom activists are being convinced that they will never have to lift a finger to beat the bankers. All they have to do is buy and mine crypto. The day will come in the near future when the folks that embrace this nonsense will wake up and realize they have wasted their energies chasing a unicorn and are ill prepared to weather the economic reset that continues to evolve.

    To maintain a real economy in which people are self reliant and safe from fiscal shock, you need three things: tangible localized and decentralized production, independent and decentralized trade networks that are not structured around an establishment controlled system (like the internet is controlled), and the will to apply force to protect and preserve that production and those networks. If you cannot manufacture a useful thing, repair a useful thing or teach a useful skill, then you are essentially useless in a real economy. If you do not have localized trade, you have nothing.  If you do not have the mindset and the community of independent people required to protect your local production, then you will not be able to keep the economy you have built.

    This is the cold hard truth that crypto proponents do not want to discuss, and will dismiss outright as "archaic" or "not obtainable." The virtual economy is so much easier, so much more enticing, so much more comfortable. Why risk anything or everything in a real world effort to build a concrete trade network in your own neighborhood or town? Why risk everything by promoting true decentralization through localized commodity-backed money and barter systems? Why risk everything by defending those systems when the establishment seeks to crush them? Why do this, when you can pretend you are a virtual hero wielding virtual weapons in a no risk rebellion in a world of electronic ones and zeros?

    In truth, the virtual economy is not legitimate decentralization, it is a weapon of mass distraction engineered to kill legitimate decentralization.

  • "What The Hell Is Going On?": Trey Gowdy Absolutely Destroys Farcical Mueller Probe In Epic Monologue

    If there is any remaining doubt in your mind that Special Counsel Mueller’s probe is anything but a farcical, politically-motivated witch hunt, then you’ll be summarily relieved of those doubts after watching the following exchange from earlier this morning between Trey Gowdy (R-SC) and Deputy Attorney General Rod Rosenstein.  

    Presented with no further comment for your viewing pleasure…

  • Is Jihad Festering In America?

    Authored by A Z Mohamed via The Gatestone Institute,

    • Saudi influence on American administrations, and relationships between senior officials in both countries, is behind Washington's ignoring Riyadh's "well-established… involvement in supporting terrorism and terrorist groups." – Report by the Institute for Gulf Affairs (IGA), released on June 1.
    • The IGA report, covering the three-year period since then and including extremely serious charges against both Saudi Arabia and previous U.S. administration and security officials, indicates the urgency with which the current administration needs to treat the issue and act upon it.

    A new investigative report reveals that hundreds of Saudi and Kuwaiti nationals residing in the United States — some with dual citizenship, and most students subsisting on government scholarships — have joined ISIS and other terrorist groups in Syria and Iraq during the past three years.

    Titled "From American Campuses to ISIS Camps: How Hundreds of Saudis Joined ISIS in the U.S.," the report — released June 1 by the Washington-D.C.-based think tank, The Institute for Gulf Affairs (IGA) — provides details of the flow of students leaving American institutions of higher learning to fight in the Middle East.

    According to a 2016 working paper produced by the National Bureau of Economic Research, Saudi Arabia is the second-largest source of ISIS fighters from Muslim-majority countries, with an estimated 2,500. If the IGA report is accurate, a whopping 16% of these fighters were in the U.S. when they joined ISIS.

    An equally disturbing finding of the report is that the Saudi government, which has been monitoring its nationals in the U.S., is fully aware that many of their own citizens are joining ISIS and not only has done little to stop them, but has kept information about the subject from American authorities.

    This finding completely contradicts the 2014 State Department assertion that "Saudi Arabia has continued to cooperate with the United States to prevent acts of terrorism … through information exchange agreements with the United States."

    Meanwhile, according to the report's authors — IGA director Ali al-Ahmed, a Saudi Shiite expatriate critical of the Sunni regime in Riyadh, and researcher Mohamed Dhamen — the FBI failed to notice the steady stream of would-be jihadis exiting the U.S. and heading for Iraq and Syria. This failure should not come as a surprise, given the fact that one of the FBI's own employees — Daniela Greene, a translator with top security clearance – absconded to Syria in June 2014 and married the ISIS recruiter she had been assigned to investigate. The rogue agent lied to the FBI about where she was going, alerted the terrorist that he was the subject of an FBI probe and shared classified information with him.

    In a May 10 letter to Deputy Attorney General Rod Rosenstein and Acting FBI Director Andrew McCabe, Senate Judiciary Committee Chairman Chuck Grassley requested additional information on how Greene — who eventually turned herself in, and reached a lenient plea deal — was able to slip through the system undetected. Two days later, Grassley released a statement. "I'm troubled that a relationship between an FBI employee and a prominent ISIS recruiter went unnoticed, and more troubled that there wasn't a safeguard to successfully catch this incident," he said.

    "It's important for the public to understand how this happened and how similar problems will be prevented in the future. We also need to know how prosecutors settled on the charges in this case. A sentence of two years seems unusually light for such a potential threat to national security."

    Greene's case sheds light on the findings of the IGA report and its claim that Saudi influence on American administrations, and relationships between senior officials in both countries, is behind Washington's ignoring Riyadh's "well-established… involvement in supporting terrorism and terrorist groups."

    The number of Saudi students in the United States in 2016 reached 125,000, the "most in the world," according to a June 14 Arab News report. Those who leave to join a terrorist group and subsequently return — enabled by their U.S. citizenship, combined with lax monitoring of and leniency with them — present a clear and present danger to America's home front.

    As then-FBI director James B. Comey said during a House Homeland Security Committee hearing in September 2014:

    "Foreign fighters traveling to Syria or Iraq could… gain battlefield experience and increased exposure to violent extremist elements… they may use these skills and exposure to radical ideology to return to their countries of origin, including the United States, to conduct attacks on the Homeland."

    The IGA report, covering the three-year period since then and including extremely serious charges against both Saudi Arabia and previous U.S. administration and security officials, indicates the urgency with which the current administration needs to treat the issue and act upon it. American blood is at stake.

  • Seller Of Luxury Miami Condo Demands To Be Paid Exclusively In Bitcoin

    And they said bitcoin would never work as a currency.

    While that might be true for small transactions – for now – real-estate markets across the US are increasingly demonstrating that bitcoin is a viable medium of exchange. Case in point: the seller of a luxury Miami condo will only accept payment in bitcoin. The asking price – according to real-estate listings site Redfin – 33 bitcoins, or about $550,000 at bitcoin’s present valuation.

    According to Redfin, this is the first time a seller is exclusively accepting payment in bitcoin. The seller’s identity wasn’t immediately clear.

    But while this might be the first time that Redfin has noticed the phenomenon, homesellers have been asking to be paid in bitcoin since at least 2013, when an anonymous seller of a luxury condo in the Trump Soho of all places listed the price as 24,700 bitcoin, according to the Daily News. While this sale was t\he first that was documented in the media, it’s also notable that it occurred before the first bitcoin bubble burst.

    Also over the summer, a realtor in Texas revealed that one of her clients had accepted payment for their home in bitcoin. The number of coins – and the identity of the seller and buyer – weren’t disclosed.

    And as we recently reported, more realtors in hot markets like New York City and Miami are demanding to be paid in cryptocurrency, sometimes exclusively.

    This trend in broader crypto acceptance – contrary to mainstream media reports – is undoubtedly a factor behind the unprecedented price appreciation whch has seen bitcoin soar from $1,000 to $19,000 in 2017.

    Meanwhile, any buyer who has accepted bitcoin as payment and kept it, has so far managed to generate a staggering profit, given the digital currency’s aggressive appreciation. The real test will come after the digital currency inevitably tanks again.

  • Gundlach Reveals His Favorite Trade For 2018

    One day after Stanley Druckenmiller confessional to CNBC that as a result of central planning and markets that make no sense, the legendary hedge fund manager had a “terrible” year, and his “first down year in currencies ever” (he also said many not very nice things about bitcoin), it was Jeffrey Gundlach’s turn to confess some of his more controversial views. And so, the man who two years ago correctly predicted the Trump presidency, first discussed his best investment idea for the new year. To those who listened to his latest DoubleLine investor presentation last week, the answer will hardly be a surprise: namely commodities, because they’re “historically, exactly where you want it to be a buy.”

    “I think investors should add commodities to their portfolios,” Gundlach says on CNBC’s Halftime Report.

    Gundlach said commodities are just as cheap relative to stocks as they were at historical turning points, while the macroeconomic backdrop also supports the case for commodities; he was referring to the following chart which he highlighted last week.

    Echoing his presentation from last week, Gundlach said that once “you go into these massive cycles… the repetition is almost eerie. And so if you look at that chart the value in commodities is, historically, exactly where you want it to be a buy.”

    Investors should add commodities to their portfolios. There is a really remarkable relationship between a market cap or the total return of the s&p 500 and the total return something like the Goldman Sachs commodities index. The cyclicality is really repettiive.

    Gundlach also noted that commodities are just as cheap relative to stocks as they were at turning points in previous cycles that began in the 1970s and 1990s. The S&P Goldman Sachs Commodity Index is up 5% this year, versus the S&P 500’s 19% gain.

    There is also a fundamental case for investing in commodities, Gundlach said. He pointed out that global economic activity is increasing, a tax cut could boost growth and the European Central Bank is implementing “absurd” stimulus policies in the euro zone.

    Jeffrey Gundlach: Investors should add commodities to their portfolios from CNBC.

    In addition to his favorite trade, Gundlach touched upon several other topics including:

    What drives the dollar:

    “Short-term fed moves are not what drives the dollar. It correlates much more to what the bond market thinks vis-à-vis the fed say 18 months forward. So if you actually rook at the bond market pricing for 2019 now, there’s a pretty big discrepancy between the bond market and the fed, so that’s going to be really interesting in driving the dollar, and this time i think the bond market is going to be right.”

    Why the markets are so calm:

    “I think it’s because of central bank pegging of rates and quantitative easing going on full bore in  europe and in japan. One of the charts that i love to reference is the nearly linear rise in central bank balance sheet holdings ever since 2011, where the Fed stopped quantitative easing back three years ago, and japan and the ecb just took over the slack, and it’s just a linear rise.”


    Jeffrey Gundlach: This has been a great year for investors from CNBC.

    On ECB president Mario Draghi:

    “That’s going to slow things down a little bit, but the real worry from the central bank activity would be forward about a year. Because Mr. Draghi has said astonishingly that they’re going to continue 30 billion euros per month of quantitative easing at least until September and then he threw  in, just to put a cherry on top of the cake of stimulus, he said, and negative rates well past the end of quantitative easing. Which means – sounds to me you’ll have negative rates as long has Mr. Draghi is around which is a little under two years.”

    On tax cuts and bonds:

    “If there is a net tax cut, it has to be bond unfriendly. we already have growing bond supply. we’ve been liiving in a world for the last three years thanks to quantitative easing of negative net bond supply, really, from sovereign bonds in the developing world. and that’s gonna flip because the fed is now letting bonds roll off, the budget deficit is increasing, a tax cut would increase the deficit further, and to the extent that a tax cut might be stimulative to the economy, that’s bond unfriendly, because bonds don’t like economic growth and also it’s more bonds, expanding the deficit, so even more supply.”

    On tax hikes and risk:

    “If i’m correct and i’m going to receive a seven-point bump in my tax rate, which is actually about a 15% tax increase, i have a feeling that i’m probably going to be less able and willing to buy risky assets or buy all the other things that are bubbling up these days, and maybe that side of the narrative will start showing up.”

    Jeffrey Gundlach: Tax plan could have unintended consequences from CNBC.

    On stimulating the economy:

    “While we’re not probably going to get 3% real for the year, we’ve had it for two quarters in a row. and gdp now at the atlanta fed has been bouncing around but it’s around 3% for the third quarter. when is the last time we had something like 3% growth for three quarters in a row? it’s a long time. why would you be stimulating the economy?”

    Finally on bitcoin:

  • The Enemy Within – The "Intelligence Community"

    Authored by Justin Raimondo via,

    It was the Holy Grail of #TheResistance, the smoking gun they had been desperately searching for, solid evidence that Trump had colluded with the Russians to steal the presidency from its rightful owner: an email written and sent before WikiLeaks published the DNC material directing Trump’s attention to the data dump and even offering an “encryption key,” whatever that may be, so he could get a jump start on the news cycle.

    Collusion! Impeach! Gotcha!

    Except it wasn’t true.

    CNN, which initially reported the story, had the date of the email wrong: a 14 had somehow morphed into a 4. It turns out that CNN had never actually seen the email, but only had it described by “multiple sources.” CBS ran a story supposedly “confirming” the provenance of the incriminating email, and MSNBC followed suit with former Los Angeles Times national security reporter Ken Dilanian, whose reputation as a mouthpiece for the CIA is well-earned: Dilanian went on the air endorsing the story and tying it into the by now elaborate conspiracy theories that preoccupy #TheResistance.

    Of course it was the purest coincidence that no less than three major media outlets got the Trump email story wrong. Yes, those “multiple sources” sure were busy.

    It’s absurd to think that this episode is a case of simply getting it wrong: this was undoubtedly a deliberate lie, planted in the media by the same rogue “intelligence community” that invented Russia-gate. It didn’t matter that the truth would eventually come out: look at how many times the original story was tweeted and retweeted over social media, and then consider how many people don’t know it’s been debunked.

    It seems like years since the Russia-gate investigation was launched, amid predictions of Trump’s imminent doom. So what have they come up with so far? Enough evidence of foreign meddling in American politics to drive the Podesta Group out of business. Mike Flynn is in trouble not because of his Russia contacts but due to his lobbying on behalf of Turkey while in office. Of the many Russia-is-after-us stories that have come down the pipeline recently, a good many have been debunked.

    In short, Russia-gate is getting old, and going nowhere. It needed a jolt to kick it back into life again, and who cares what’s true and what isn’t? The point of circulating a lie, even a debunked one, is to normalize the inconceivable. A coup against the President? Why not? Violence directed at his supporters? Oh, it’s a moral obligation. War propagandists don’t need fact-checkers, and this is a war we’re in. We’re all living on a battlefield as the struggle for power goes on around us and our intelligence community – or at least the leadership – conducts open warfare against the President.

    We’ve seen the same pattern unfold abroad, as the CIA and its ancillary organizations undertook regime change operations in countries throughout the world. Remember the “color revolutions” of the Bush II era? Or look at what happened in Ukraine, where the elected president was driven out of office by a CIA-bought-and-paid-for mob. They hope to replicate their Ukrainian success in the US.

    Is it really necessary to explain why this is a deadly threat to the Constitution, the rule of law, and everything we stand for as a nation?

    Are we to be turned into some Third World banana republic, with coups, counter-coups, and a political police answerable to no one?

    The repeal of the Smith-Mundt Act of 1948, which forbade the CIA from carrying out actions designed to influence US domestic opinion, was justified by officials on the grounds that these limits prevented them from doing their job. Of course, if we had known that they considered it their job to pick and choose who can be President, perhaps Smith-Mundt would still be intact. As it is now, our spooks can use government resources to push their political agenda, and rest assured they have one: they are a de facto political party as well as a welter of government agencies.

    Particularly frightening is the politicization of the FBI, which seems to have become a bludgeon in the hands of the President’s enemies. Their involvement with the Trump “dossier,” their refusal to hand over key documents to congressional oversight committees, not to mention the bizarre grandstanding of former FBI director James Comey – all point to a worrisome partisanship that has somehow infiltrated US law enforcement and called into question the integrity of our entire legal system.

    We have given these people access to our most private information: they have a “legal” mandate to invade our privacy at will. We’ve given them unlimited resources, although nobody knows how much they really spend. We’ve allowed them to roam the earth, overthrowing governments, assassinating opponents, and engaging in dirty tricks that we’ll never even know about. So the question isn’t “How did they get to the point where they can conceivably pull off a coup?” – it’s “Why didn’t this happen sooner?”

    We are facing a mortal threat to our republic, to our liberties, and to the future of democracy in America, and it’s not coming from overseas. The danger is coming from within our own government – the permanent national security bureaucracy, which was never elected by anyone to anything, and is now determined to impose its will on a country that voted the “wrong” way.

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Dec 13

Today’s News 13th December 2017

  • UBS Is Using Ethereum Technology To Soften The Impact Of MiFid II

    After devising blockchain-based systems to help facilitate equity and bond trading (remember Goldman’s cryptocoin?) as well as derivatives clearing, some of the leading banks in the blockchain space are banding together to build a system that they hope will help banks streamline another essential function: Compliance.

    According to CoinDesk, UBS is leading an Ethereum-based project designed to make it easier for banks to reconcile a wide range of data about their counterparties. Barclays, Credit Suisse, KBC, SIX and Thomson Reuters have also signed on to the project. The project is meant to soften the impact of MiFid II, a set of new European banking regulations that will go live shortly after New Year’s.

    Traditionally, regulated firms use what are called "legal entity identifiers" that are stored in a global data system to execute transactions on behalf of clients, even if those clients themselves don't have one of the codes. But as part of a sweeping regulatory change called the Markets in Financial Instruments Directive (MiFID) II, scheduled to go live in the EU on Jan. 3, 2018, all eligible legal entities will be required to have and use these codes.


    Instead of mandating that each of these institutions perform these checks independently, though, the banks built Madrec to mutualize much of the effort in a potentially industry-wide reconciliation process hosted in the Microsoft Azure cloud.

    In an interview with CoinDesk, Peter Stephens, the head of UBS’s blockchain research and development efforts, explained how the system was designed, and to what end. Surprisingly, out of the many blockchain or distributed ledger projects that UBS is involved with (R3, Hyperledger etc.), Stephens said he expects the compliance project to be the first to go live.

    Built over a six-month period, the platform evolved into a smart contract-powered network designed to integrate with identifiers endorsed by The Legal Entity Identifier Regulatory Oversight Committee (LEI ROC) and others. The reconciliation of the LEI reference data includes industry classification and information from the European Securities and Markets Authority (ESMA).


    Instead of each company checking the information independently, and reconciling the results periodically, the blockchain smart contracts will ensure accuracy in almost real-time.


    To do this, the anonymized reference data is hashed to the Ethereum blockchain, while the source data itself remains within the institution. The smart contracts then reconcile the data, letting users quickly identify anomalies and reconcile them.


    Since every eligible entity will be held to those same standards, Stephens argues that helping one another ensure the accuracy of their work will only positively impact their respective bottom lines, leaving room for competition elsewhere.

    UBS is hardly the only major European bank that’s investing heavily in blockchain technology. In a presentation obtained by CoinDesk, Christian Nolting, also the bank’s global head of wealth, and Marcus Muller, global head of the CIO office, explained digital currencies and blockchain to their fellow bankers.

    In the presentation, the bankers asserted that the  “opportunities associated with blockchain technologies are huge,” and could be fully put into practice within the next few years.

    And in what's possibly one of most grandiose predictions about blockchain's impact on the global economy, the bankers predicted that roughly 10% of the global gross domestic product (GDP) would be tracked or otherwise "regulated" by a blockchain by 2027.

    Read the presentation in its entirety below:


    Cio Insights Reflections – Cryptocurrencies and Blockchains – Emea – Client Ready by zerohedge on Scribd


  • Paul Craig Roberts: "ISIS Is Defeated, The US Is Next In Line"

    Authored by Paul Craig Roberts,

    Is the US really a superpower or just the biggest collection of stupidity on the planet?

    Washington has already lost the Syrian war once. Now it is about to lose it a second time.

    A few days ago the president of Russia, Vladimir Putin, declared a “complete victory” in Syria:

    “Two hours ago, the (Russian) defense minister reported to me that the operations on the eastern and western banks of the Euphrates have been completed with the total rout of the terrorists.”

    The Iranian commander of the forces which support the Syrian and Iraqi governments sent a note to the U.S. to let Washington know that any remaining U.S. forces in Syria will be fought down:

    “The commander of the Iranian Revolutionary Guards Corp Brigadier General Haj Qassem Soleimani sent a verbal letter, via Russia, to the head of the US forces commander in Syria, advising him to pull out all US forces to the last soldier ‘or the doors of hell will open up.'”


    “My message to the US military command: when the battle against ISIS (the Islamic State group) will end, no American soldier will be tolerated in Syria. I advise you to leave by your own will or you will be forced to it.”

    According to reports, Russia has confirmed that Iran will stay in Syria as long as Syrian President Assad, who insists on liberating all of Syria without exception for the Americans, decides. Washington’s plan to occupy a corner of Syria and revive ISIS is dead in the water, as will be all US troops sacrificed to this purpose.

    According to reports, CIA director Mike Pompeo sent a letter to Soleimani expressing his concern about Iran’s intention to attack American interests, declaring Washington “will hold Soleimani and Iran accountable for any attack.”

    According to reports the CIA’s letter had no effect and was treated with total contempt:

    “Mohammad Mohammadi Golpayegani, a senior aid to the Grand Ayatollah Ali Khamenei confirmed Pompeo’s attempt to send a letter but said  ‘Soleimani refused to read it or to take it because he has nothing further to add.’


    Sources in the area believe it is not unlikely that Kurdish troops – operating in al-Hasakah and who are faithful to the government of Damascus – are willing to be spearheaded against the US forces. Many of these troops remained loyal to Syria: they reject any occupation forces on its land or the partition of the country.”

    There are references to 1983 events where hundreds of US Marines and French paratroopers were killed following double suicide attacks by Islamists in Beirut. As a consequence of these attacks, the American forces left in a rush. The future could well mirror this past event.

    Possibly this is fake news.

    If not, we must accept that the humiliation that the United States, its government and its peoples have suffered is the work of the Neoconservatives and their doctrine of American World Hegemony. It is the Neoconservatives who caused the US to be at war with Muslims for 16 years. It is the Neoconservatives acting through Obama and Hillary who brought America to humiliating defeat in Syria.

    There are only a handful of these neoconservatives. Why do Americans tolerate them?

    Why doesn’t Trump have them arrested? They are anti-American, pro-Israel to the core. The Neoconservatives are the worst enemy of Americans and of all mankind.

    It looks like the Russians have had enough of Washington’s arrogance.

    Russian general Konashenkov, whose Su-35 chased away the inferior US F-22 that was attempting to interfere with a Russian attack on ISIS said that any claims made by US military officials concerning the fact that there is “any part of the airspace in Syria that belongs to the US” are “puzzling.”


     Konashenkov also said that “Syria is a sovereign state and a UN member and that means that there can be no US airspace ‘of its own.’ Unlike the Russian Air Force, the US-led coalition is operating in Syria without any legal basis.”

    Will Washington realize that it has squandered its leadership in the Middle East and go home, or will Washington bring more humiliation upon America?

  • Ron Paul Says He Was "Surprised" His Followers Prefer Bitcoin To Gold

    Earlier this week, former Congressman Ron Paul posted a Twitter poll asking his followers to choose between four different assets for a long-term investment, with the stipulation that the bearer would need to keep their money locked up for ten years.



    Paul admitted he was surprised when he saw that a majority of respondents – 54% – selected bitcoin over gold, dollars and a 10-year Treasury bond.

    During an interview with the Street, a reporter asked Paul if he was surprised that his followers prefer bitcoin to gold.

    Yea a little bit. I was a little bit – of course I wasn’t surprised that only 2% would store it in Federal Reserve notes, nor do they think they should buy Treasury bills. Gold has 36% but bitcoin has 54%…it’s the sort of information that tells me where my viewers are and what they’re thinking. Most of my viewers know how supportive I am of gold, and they know I’m tolerant of digital currencies.

    Still, Paul believes cryptocurrencies are an interesting experiment and is generally supportive of their development and increasing popularity. But when asked for his thoughts on where bitcoin might be in ten years, he demurred.

    What’s it going to be like in ten years? Nobody knows. But we have a pretty good idea where gold will be. It’s been around a long time and it’s not going away.

    Though the market for gold is still much larger than the market for bitcoin, Paul’s interviewer asked if the interest in cryptocurrencies could be one reason for gold’s recent stumbles.

    I think we could still be in a phase where gold could take off. It’s just a matter of figuring out when…the fed has created so much money and people have sort of caught on to it like a fever."

    Paul said he doesn’t invest in bitcoin or any other cryptocurrencies, and has no plans to start.

    No, I don’t intend to at all. I find it fascinating, but as an investor, no…"

    At the interview’s conclusion, Paul explained that digital currencies have helped demonstrate an important principle about government and sound money: When a government loses all credibility and its currency becomes worthless, people will work out an alternative monetary system on their own. Venezuela and Zimbabwe have been perhaps the best examples of this: bitcoin trades at a premium in both countries. And in Venezuela, bitcoin miners risk being prosecuted by the government.

    “Take a country like Zimbabwe or Venezuela. They change their attitudes quickly when they get in trouble.”

  • John Lennon Was Right: The Government Is Run By Maniacs For Maniacal Means

    Authored by John Whitehead via The Rutherford Institute,

    Not much has changed in the 37 years since John Lennon was gunned down by an assassin’s bullet.

    All of the many complaints we have about government today – surveillance, corruption, harassment, political persecution, spying, overcriminalization, etc. – were used against Lennon, who never refrained from speaking truth to power and calling for social justice, peace and a populist revolution.

    Little wonder, then, that the U.S. government saw Lennon as enemy number one.

    A prime example of the lengths to which the U.S. government will go to persecute those who dare to challenge its authority, Lennon was the subject of a four-year campaign of surveillance and harassment by the U.S. government (spearheaded by FBI Director J. Edgar Hoover), in an attempt by President Richard Nixon to have him “neutralized” and deported. As Adam Cohen of the New York Times points out, “The F.B.I.’s surveillance of Lennon is a reminder of how easily domestic spying can become unmoored from any legitimate law enforcement purpose.”

    Years after Lennon’s assassination, it would be revealed that the FBI had collected 281 pages of surveillance files on him. As the New York Times notes, “Critics of today’s domestic surveillance object largely on privacy grounds. They have focused far less on how easily government surveillance can become an instrument for the people in power to try to hold on to power. ‘The U.S. vs. John Lennon’ … is the story not only of one man being harassed, but of a democracy being undermined.”

    Such government-directed harassment was nothing new.

    The FBI has had a long history of persecuting, prosecuting and generally harassing activists, politicians, and cultural figures, including Martin Luther King Jr.

    In Lennon’s case, the ex-Beatle saw that his music could mobilize the public and help to bring about change. Yet while Lennon believed in the power of the people, he also understood the danger of a power-hungry government. “The trouble with government as it is, is that it doesn’t represent the people,” observed Lennon. “It controls them.”

    By March 1971, when his “Power to the People” single was released, it was clear that Lennon was ready to participate in political activism against the U. S. government, the “monster” that was financing the war in Vietnam.

    The release of Lennon’s Sometime in New York City album, which contained a radical anti-government message in virtually every song, only fanned the flames of the government’s war on Lennon.

    In 1972, Nixon had the ex-Beatle served with deportation orders “in an effort to silence him as a voice of the peace movement.” Despite the fact that Lennon was not plotting to bring down the Nixon Administration, as the government feared, the government persisted in its efforts to have him deported. Equally determined to resist, Lennon dug in and fought back. Finally, in 1976, Lennon won the battle to stay in the country. By 1980, the old radical was back and ready to cause trouble.

    Unfortunately, Lennon’s time as a troublemaker was short-lived.

    Mark David Chapman was waiting in the shadows on Dec. 8, 1980, just as Lennon was returning to his New York apartment building. As Lennon stepped outside the car to greet the fans congregating outside, Chapman dropped into a two-handed combat stance, emptied his .38-caliber pistol and pumped four hollow-point bullets into Lennon’s back and left arm.

    John Lennon was pronounced dead on arrival at the hospital.

    Much like Martin Luther King Jr., John F. Kennedy, Malcolm X, Robert Kennedy and others who have died attempting to challenge the powers-that-be, Lennon had finally been “neutralized.” 

    Yet Lennon’s legacy lives on in his words, his music and his efforts to speak truth to power.

    Even so, his work to change the world for the better is far from done.

    As I make clear in my book Battlefield America: The War on the American People, peace remains out of reach. Activists and whistleblowers continue to be prosecuted for challenging the government’s authority. Militarism is on the rise, all the while the governmental war machine continues to wreak havoc on innocent lives. And those who do dare to speak up are labeled dissidents, troublemakers, terrorists, lunatics, or mentally ill and tagged for surveillance, censorship or, worse, involuntary detention.

    As Lennon shared in a 1968 interview:

    I think all our society is run by insane people for insane objectives…


    I think we’re being run by maniacs for maniacal means.


    If anybody can put on paper what our government and the American government and the Russian… Chinese… what they are actually trying to do, and what they think they’re doing, I’d be very pleased to know what they think they’re doing.


    I think they’re all insane. But I’m liable to be put away as insane for expressing that. That’s what’s insane about it.”

    So what’s the answer?

    Lennon had a multitude of suggestions.

    “If everyone demanded peace instead of another television set, then there’d be peace.”


    “Produce your own dream. If you want to save Peru, go save Peru. It’s quite possible to do anything, but not to put it on the leaders….You have to do it yourself.”


    “Peace is not something you wish for; It’s something you make, Something you do, Something you are, And something you give away.”


    “War is over, if you want it.”

    In other words, fighting the evil of the American police state can only come about by way of conscious thoughts that are put into action.

    Do you want an end to war? Then stop supporting the government’s military campaigns. Do you want government violence against the citizenry to end? Then demand that your local police de-militarize. Do you want a restoration of your freedoms? You’ll have to get the government to recognize that “we the people” are the masters in this relationship and government employees are our public servants.

    The choice is ours.

    The power (if we want it), as Lennon recognized, is in our hands.

    “The people have the power, all we have to do is awaken that power in the people,” concluded Lennon. “The people are unaware. They’re not educated to realize that they have power. The system is so geared that everyone believes the government will fix everything. We are the government.”

    For the moment, the choice is still ours: slavery or freedom, war or peace, death or life.

    The point at which we have no choice is the point at which the monsters—the maniacs, the powers-that-be, the Deep State—win.

    As Lennon warned, “You either get tired fighting for peace, or you die.”

  • Toronto's Housing Bubble Is Crushing The Strip Club Industry

    Until now, Canada’s soaring housing prices were just another innocent asset bubble spawned by low interest rates and an endless supply of Chinese cash that needed to get laundered.  That said, massive bubbles are almost always followed by severe unintended consequences that can have a crippling impact on society as a whole…and in Toronto those unintended consequences are now manifesting themselves in the form of a rapidly deteriorating supply of strip clubs.

    As Bloomberg points out today, the soaring value of Toronto real estate has made it all but impossible for strip club owners to turn down multi-million offers from condo developers leaving only a dozen strip clubs in a city whose purple neon lights used to be easily visible from the distant fringes of our solar system.

    Condos are killing the Toronto strip club. In a city that once had more than 60 bars with nude dancers, only a dozen remain, the rest replaced by condominiums, restaurants, and housewares stores. Demand for homes downtown and for the retailers that serve them is driving land prices to records, tempting owners of the clubs, most of which are family-run, to sell at a time when business is slowing.


    “Sometimes I feel like the last living dinosaur along Yonge Street,” says Allen Cooper, the second-generation owner of the famous—or infamous—Zanzibar Tavern. The former divorce lawyer says he has been approached by at least 30 suitors for his property in the past few years but is holding out for a “blow my socks off” offer. “I don’t know how many condos we’re going to get, but it seems like just a wall” of them, Cooper says.


    Of course, with ~1-acre plots of land selling for C$225 million, it’s not difficult to understand why strip club owners are increasingly choosing to shut off their neon signs for good…even with the consolidation of market share it’s nearly impossible to make that lap dance math pencil out.

    Remington’s Men of Steel, a male dance club behind a heavy door, sold to KingSett Capital Inc., which last year flipped it to Cresford Developments as part of a bigger portfolio on that block that went for about C$160 million ($125 million), according to real estate data supplier Altus Group. That club is closing next year, to be replaced by a 98-story condo.


    The fading of the strip-club era can be seen in a five-block area along Yonge Street, near Toronto’s counterpart to Times Square, Yonge-Dundas Square. It was once dubbed Sin Strip for its neon-clad bars, sex shops, and movie theaters. Today there are about 20 development applications for condos and commercial buildings on the stretch.


    Farther north, an entire city block is a construction site as two condo towers and some retail space replace a strip of colorful and creaky buildings that once offered body piercing and pole-dancing shoes. “We target a very specific market, mostly men. We’re not a shopping destination, so more people doesn’t mean a lot more business,” says Bill Greer, general manager and three-decade veteran of the Brass Rail Tavern, a two-story club in the area. “I don’t think we’ll be around in 10 years’ time.” Just outside the Brass Rail’s doors, a 75-story residential tower opened this year on a piece of land that cost C$53 million. An 80-story luxury tower is under construction following a C$225 million deal for less than 1 acre, according to data from Altus.

    But at least one Toronto strip club owner, Spiro Koumoudouros of the House of Lancaster, has drawn a line in the sand saying he’s not going anywhere…“What am I going to do, sit at home and die?”…if only we could all exhibit such courage in times of extreme crisis. 

    Finally, since we know your interest in this story was only prompted by your desire to see a larger version of the teaser pic…here you go:


  • GE Is Trying To Figure Out Who Knew About Immelt's "Chase Plane"

    The Wall Street Journal broke one of the most memorable news stories of the year over the summer when it reported that former General Electric CEO Jeff Immelt – who bowed out in June amid intensifying pressure to revitalize the company’s long-suffering share price – would routinely use a "chase plane" when flying to foreign destinations – that is, a second completely empty jet would fly behind Immelt's aircraft. The company has provided multiple justifications for the second plane, including saying it was for security purposes, and to ensure timely arrival for "business critical" meetings.

    The story, which has become emblematic of GE’s longstanding tradition of grossly overspending on executive perks, was a major embarrassment for Immelt, who denied reports that he specifically requested the jet, claiming instead that his air transportation was arranged by the company’s corporate air team. Finally, he admitted that he had used two GE corporate jets in this manner up until 2014, when he changed the policy to use "locally sourced jets" as chase planes instead of one of the GE fleet.

    Now, in what looks like yet another hollow gesture to try and assuage investors’ concerns about out-of-control spending at the company, WSJ is reporting that the results of yet another internal investigation into Immelt’s in-flight preferences were “discussed at the company’s latest board meeting."

    This investigation was purportedly led by William “Mo” Cowan, GE’s vice president of litigation and legal policy, is leading an effort in recent weeks to find out who knew about the extra plane and when they knew it. At first blush, the investigation has the feel of a purge, meant to help the company justify cutting loose any remaining Immelt loyalists.

    A similar investigation was reportedly carried out in 2014 after an employee complained to the board about the jets. Though the findings of that probe are unknown, one thing is clear: Nobody was fired because they knew about the jet but didn't inform the board.

    General Electric Co. recently conducted an internal review into the flying of a spare business jet to accompany former Chief Executive Jeff Immelt, as it seeks to understand an unusual practice that went on for years and surprised investors when they learned of it in October.


    The investigation was discussed at a GE board meeting last week, people familiar with the matter said. William “Mo” Cowan, GE’s vice president of litigation and legal policy, led an effort in recent weeks to find out who knew about the extra plane and when they knew it, one person said.


    It is unclear whether any findings would be made public.


    Mr. Immelt has said, including in a recent letter to GE’s board, that he wasn’t aware of the backup jet and that he ended the practice when he discovered it in 2014. GE has said that the two-plane practice was discontinued in 2014 and that it was limited to overseas trips with security risks and so-called business critical itineraries.

    That’s right: GE conducted a separate “internal investigation” into the two-jet practice back in 2014 after an employee complained to the board. According to Immelt, the practice was discontinued shortly after. But flight records cited by WSJ show the jet was in use as recently as this spring. Furthermore, during Immelt’s 16-year tenure as CEO, GE spent millions of dollars a year on air travel.

    Since Immelt left the company before the WSJ story broke, the only person who has been disciplined by the company so far for their involvement in corporate-jet gate is Susan Peters, the company's former head of HR, who recently "retired" after 38 years at the company.

    GE’s market cap has shrunk by $125 billion this year as the company’s finances have deteriorated. After taking the reins, Flannery wasted no time slashing expenses, including shedding thousands of jobs and halving the company’s annual dividend.

    Jeff Immelt

    Meanwhile, Immelt will remain chairman until his retirement at the end of this year.

    At that point, Flannery – who has only benefited from this story, which cast his predecessor in a negative light while highlighting his reputation as a fiscally responsible cost-cutter – will be emboldened to continue his push to undo his predecessor's legacy by downsizing the business.

  • In Stunning Victory, Democrat Doug Jones Wins Alabama Senate Seat; Trump Responds: "A Win Is A Win…"

    Update: President Trump has reacted to Doug Jones' victory:

    *  *  *


    Update: US equity futures are sinking after Democrat Doug Jones unexpectedly wins the Alabama Senate special election against Roy Moore, the state’s Republican former chief justice who was dogged throughout the campaign by sexual misconduct accusations.

    AP reports that Jones has 49.6% to Moore’s 48.8% with 88% of vote counted, enough to give him the win according to news stations. As a reminder, in 2016 President Trump carried the state election by nearly 30 ppts over Democrat Hillary Clinton.

    Jones wins seat vacated by Jeff Sessions, who became Trump’s attorney general.


    Jones, 63, a former federal prosecutor, becomes first Democrat in U.S. Senate from deeply-Republican state of Alabama in over 20 years (last Ala. Democratic senator was Howell Heflin, who left office in 1997; the state’s senior senator Richard Shelby was a Democrat but switched parties to the Republicans in 1994)

    Putting Jones' victory in context, T=the last time a new Democrat was elected to the Senate from Alabama is 1978. That senator, Howell Heflin, left in 1997.

    In a twitter post, Alabama's new senator was laconic, stating simply "thank you Alabama"…

    … while top Senate Democrat Chuck Schumer said "things are looking better and better for 2018."

    Once Jones is sworn in, GOP’s Senate majority would narrow to the smallest possible 51-49… which explains why US equity futures are sliding…

    *  *  *

    Shortly after 8pm EST this evening, the voting results of one of the most controversial special elections in modern history, which pits Republican Roy Moore against Democrat Doug Jones for Jeff Sessions' vacant Senate seat, will start to flow in to news desks all around the country.

    While this election would have been a complete blowout just a few months ago, allegations of sexual assault which surfaced against Moore in November and which reportedly occurred in the late '70s, have made it a complete toss up.  As we noted earlier this morning, even pollsters have no clue how to predict voter turnout tonight with Fox News predicting a 10-point win for Jones and Emerson predicting a 9-point win for Moore.

    For those looking to get an early read on how the night might turn out, we would suggest keeping a close eye on Mobile which is the second largest county in Alabama and is home to a disproportionate share of the state's affluent republicans who are the most likely to abandon Moore.  Otherwise, while voter turnout will undoubtedly be down from the 2016 presidential contest, shifts in support in Jefferson and Montgomery counties, both with high concentrations of African-American voters, could provide an early signal on whether Jones has been successful in turning out his base.

    With that intro, tune in below for the live results:

    * * *

    For those who missed it, below is the preview we shared earlier this morning.

    After a last weekend of campaigning with celebrities, Doug Jones (D) with Alabama native Charles Barkley and Roy Moore (R) with Breitbart News chairman Steve Bannon and controversial former Milwaukee County Sheriff David Clarke, election day for one of the most controversial special elections in modern U.S. history has finally arrived. 

    As The Hill points out, Moore's chances to become the first Democrat to win an Alabama Senate seat since 1992 rely on his ability to turnout African-American voters in cities like Birmingham and Montgomery.  Moore's fate, on the other hand, depends on voters in the more affluent city of Mobile and rural white voters from around the state.

    Jones spent the weekend on stops with prominent black Democratic lawmakers such as Alabama Rep. Terri Sewell and New Jersey Sen. Cory Booker, while Congressional Black Caucus members Rep. Sanford Bishop (D-Ga.) and Rep. Cedric Richmond (D-La.) held get-out-the-vote events down state.


    While African-Americans make up roughly a quarter of Alabama’s population, years of dismal Democratic returns have left his party without much of a ground game.


    “I wish that the [Democratic National Committee] had focused more on states and making certain they had infrastructure here,” he said.


    While Moore’s time on the trail has been limited recently — there were rumors he attended the Army-Navy football game in Philadelphia on Saturday — he did sit down for an interview on “The Voice of Alabama Politics” at the state Republican Party headquarters, which aired Sunday.

    Of course, as we pointed out yesterday, the polls headed into election day are almost completely useless as pollsters admit they have no idea how to handicap voter turnout today.  While voter turnout in mid-cycle elections is always difficult to predict, this one is especially complicated in light of the sexual assault allegations against Roy Moore. 

    Which is precisely why the latest Fox News Poll of likely voters showed a commanding 10-point lead for Democrat Doug Jones….

    Even though a poll released the day before by Emerson showed the exact opposite with a 9-point lead for Moore.  Per Real Clear Politics:


    As CNN notes, the key to victory in Alabama could come down to Mobile, a region that is home to scores of more affluent, moderate, business-type Republicans who are most likely to abandon Moore for Jones or simply elect to sit this election out.

    There's a reason Trump's event was in Pensacola, and Moore closed his campaign with big rallies in Fairhope a week from election day and Midland City on Monday night: They're all in the Mobile media market.


    If Jones is going to win, he can't rely purely on turning out his base and hoping Republicans stay home. He'll need some white, conservative supporters, and the Mobile region is his best chance to win some.


    Those are the voters Moore's supporters have targeted with a message that the election is a referendum on Trump's agenda.


    "It's an up-or-down vote tomorrow between the Trump miracle and the nullification project," Bannon said Monday night in Midland City.

    As a quick reminder, here is how Alabama voted in the 2016 Presidential election.  Hillary performed well in the heavily African-American cities of Birmingham (+7.6%) and Montgomery (+26.8%) while Trump carried Mobile (+13.7%) and most of the rural areas of the state.

    All of which ultimately resulted in a massive 27.7 point blowout victory for Trump.

    So, after weeks of intense media focus on an election that should have been a foregone conclusion, we are now just a few hours away from finding out whether Republicans made their first a serious special election blunder by choosing to support a highly controversial candidate who was potentially doomed from the moment sexual assault allegations against him first surfaced last month.

  • Bitcoin Bears Unleashed? Interactive Brokers Folds, Will Allow Clients To Short Futures

    A week after Thomas Peterrfy, the founder, Chairman and CEO of Interactive Brokers and one of the 'giants' of electronic trading in US financial markets warned that:

    "the introduction of bitcoin futures into a clearing house could increase systemic risk."

    And just days after the firm said its

    "clients would be unable to short the bitcoin futures market because of the extreme volatility of bitcoin."

    Interactive Brokers has reportedly flip-flopped and as Bloomberg reports, plans to let bitcoin bears bet against the digital currency’s recently debuted futures contracts.

    Starting this week, the brokerage will allow its users to take short positions on bitcoin futures under certain conditions, according to company spokeswoman Kalen Holliday, who said the decision was made “in response to client demand.”


    Interactive Brokers has accepted long positions with a margin requirement of at least 50 percent since the contracts debuted Sunday on Cboe Global Markets Inc.

    That is great news for the arbs who can now actively compress the $1000 Bitcoin futures premium…

    Of course, as Bloomberg notes, shorting bitcoin futures, or betting that their price will fall, is potentially an even riskier strategy.

    It’s possible to lose an unlimited amount of money on a short position, particularly if the cost of the digital currency and its derivatives continues to climb.

    Bloomberg reports that Interactive Brokers has a few requirements for shorting bitcoin futures, which seem to suggest this is not quite as cut and dried a short futures position as 'bitcoin bears' would hope.

    • the spread must be one-to-one, and
    • the short leg must have the earlier expiry date so that once it expires the surviving leg will be long…
    • Trading won’t be offered in retirement accounts or to Japanese residents.

    Sounds more like IB is allowing traders to short the front-month against the back-month – not exactly what most were hoping for, but it's progress perhaps. For now, the news has prompted some selling pressure across the complex.

    So prepare for the pending short squeeze as all 'the smartest people in the room' pile in short on this no-brainer bubble…

  • CNN & MSNBC Attempt Coverup of Bogus Story They Started

    Authored by Mike Shedlock via,

    CNN & MSNBC refuse to provide any transparency on how they blew a major anti-trump story.

    The headline image is from the BBC story Russia-Trump: Who's who in the drama to end all dramas?

    The BBC names the key players, but it missed one: the media.

    On December 9, Glen Greenwald at the Intercept reported The U.S. Media Suffered Its Most Humiliating Debacle in Ages and Now Refuses All Transparency Over What Happened.

    I covered the story in Trump Accuses CNN of Purposeful Fake News "Fraud on American Public".

    In a nutshell, three news outlets, starting with CNN and followed by MSNBC broke a bombshell story on Trump that false. CBS jumped on the bandwagon but later blamed CNN.

    Supposedly, multiple, credible sources said Trump had access to Wikileaks information on Russia before Wikileaks posted it.

    The story timeline was false.

    Coverup Begins

    Days later, CNN refuses to disclose its sources or say what happened.

    Greenwald blasted CNN in a Tweet again today…

    How Did It Happen?

    The Slate reports We Still Don’t Know Why Three Different Outlets “Confirmed” the Same Bogus Russia Story Last Week.

    "None of the outlets disclosed anything about the identities and/or motivations of the sources – and there are supposedly at least two of them! – who made such a consequential error of reading comprehension.


    Nor did any of them provide further information when I contacted them this afternoon asking whether they’d found out anything more about last week’s mysterious, sudden D.C.-wide inability to distinguish between 4 and 14," says the Slate, offering six possibilities.

    Six Possibilities

    1. The outlets were relying on solid sources who all made the same honest mistake.
    2. The outlets were relying on secondhand sources who were just B.S.-ing the whole time and repeating a bad story that had gotten to them via a game of national security telephone.
    3. The outlets were relying on bad-faith sources who were intentionally trying to make the mainstream media look bad. (The Sept. 14 email in question is in the possession of the House Intelligence Committee; maybe some Trump loyalists on the committee pulled a James O’Keefe.)
    4. Only one source ever actually misread the date of the email; the rest of the sources that “confirmed” the story simply confirmed the existence of the email, not when it was sent. These “confirming” sources were then all conflated together by outlets overeager to rush out a big scoop.
    5. “Fake news.” (As in, the reporters made all of it up to GET TRUMP.)
    6. Aliens.

    Trump Blasted CNN

    That Tweet was on the day it happened. Here are some followups.


    Trump on Fake News

    Trump on Dumbest Man on Television

    Trump on Coverup


    Which Door?

    The Slate writer opted for door number four. I suggest it's safe to rule out door number one, an honest mistake, and door number six, aliens.

    After that, many combinations are possible.

    But regardless of the answer, it's clear that CNN is willing to rush unconfirmed garbage to the press, from sources that are not exactly credible.


Digest powered by RSS Digest

Dec 12

Today’s News 12th December 2017

  • Yes, The FBI Is America's Secret Police

    Authored by James Bovard via,

    Politifact delivered a “pants on fire” slam to Fox News on Friday because one of its commentators asserted that the Federal Bureau of Investigation “has become America's secret police.”

    The FBI has legions of new champions nowadays among liberals and Democrats who hope that its probes will end Donald Trump’s presidency.

    This is a stunning reversal that may have J. Edgar Hoover spinning in his grave.

    In order to boost the credibility of the FBI’s investigations of the Trump team, much of the media is whitewashing the bureau’s entire history. But the FBI has been out of control almost since its birth.

    A 1924 American Civil Liberties Union report warned that the FBI had become “a secret police system of a political character.”


    In the 1930s, the Chief Justice of the Supreme Court feared that the FBI had bugged the conference room where justices privately wrangled over landmark cases, as Tim Weiner noted in his “Enemies: A History of the FBI.”


    In 1945, President Harry Truman noted that “We want no Gestapo or Secret Police. FBI is tending in that direction.


    And FBI chief J. Edgar Hoover compiled a list of 20,000 “potentially or actually dangerous” Americans who could be rounded up and locked away in one of the six detention camps the federal government secretly built in the 1950s.


    From 1956 through 1971, the FBI’s COINTELPRO program conducted thousands of covert operations to incite street warfare between violent groups, to get people fired, to smear innocent people by portraying them as government informants, to sic the IRS on people, and to cripple or destroy left-wing, communist, white racist, antiwar, and black organizations (including Martin Luther King Jr.). These operations involved vast numbers of warrantless wiretaps and illicit break-ins and resulted in the murder of some black militants. A Senate Committee chaired by liberal Sen. Frank Church (D-Idaho) issued a damning report on FBI abuses of power that should be mandatory reading for anyone who believes the bureau deserves deference today.

    According to Politifact, the FBI is not a “secret police agency” because “the FBI is run by laws, not by whim.” But we learned five years ago that the FBI explicitly teaches its agents that “the FBI has the ability to bend or suspend the law to impinge on the freedom of others.” No FBI official was fired or punished when that factoid leaked out because this has been the Bureau’s tacit code for eons. Similarly, an FBI academy ethics course taught new agents that subjects of FBI investigations have "forfeited their right to the truth." Are liberals so anxious to get Trump that they have swept under the rug the 2015 Washington Post bombshell about false FBI trial testimony that may have sentenced 32 innocent people to death?

    Politifact absolved the bureau because “The FBI doesn’t torture or carry out extrajudicial executions.” Tell that to the Branch Davidians — 80 of whom died after the FBI assaulted their ramshackle home with tanks and pyrotechnic devices and collapsed much of the building on their heads even before fires burst out.

    Politifact quotes a professor who asserts that “any use of unnecessary violence (by the FBI) would be met with the full force of the criminal law." Is that why an internal FBI report claimed that every one of the 150 shootings by FBI agents between 1993 and 2011 was faultless?

    FBI sniper Lon Horiuchi gunned down Vicki Weaver in 1992 as she stood in her Idaho cabin doorway holding her baby. After I accused the FBI of a coverup in a Wall Street Journal oped, FBI chief Louis Freeh denounced me for twisting the truth. But after a confidential Justice Department report leaked out revealing the FBI’s deceits and unconstitutional rules of engagement, the feds paid a $3 million wrongful death settlement to the Weaver family. When an Idaho County sought to prosecute the FBI sniper, the Justice Department invoked the Supremacy Clause of the Constitution to torpedo the case.

    Politifact asserts that “just because the FBI sometimes operates in secret does not mean that it’s a ‘secret police.’" But the FBI’s secrecy is profoundly skewing American politics. More than a year after the 2016 election, Americans still have no idea the true extent of the FBI's manipulation of the presidential campaign. Did the FBI wrongfully absolve Hillary Clinton on the email server issue? What role did the FBI have in financing or exploiting the Steele dossier? Will we ever learn the full truth?

    The so-called fact checkers insists that any comparison of the FBI and KGB is “ridiculous” because the FBI is “subject to the rule of law and is democratically accountable.” But there is little or no accountability when few members of Congress have the courage to openly criticize or vigorously cross-examine FBI officials. House Majority Leader Hale Boggs admitted in 1971 that Congress was afraid of the FBI: “Our very fear of speaking out (against the FBI) … has watered the roots and hastened the growth of a vine of tyranny … which is ensnaring that Constitution and Bill of Rights which we are each sworn to uphold.” The FBI is currently scorning almost every congressional attempt at oversight. Thus far, members of Congress have responded with nothing except press releases and talk show bluster.

    Politifact repeatedly scoffs at the notion that the FBI is “a secret police agency such as the old KGB.” And since the FBI is not as bad as the KGB, let’s mosey along and pretend no good citizen has a right to complain. A similar standard could exonerate any American president who was not as bad as Stalin.

    In the 1960s, some conservatives adorned their cars with “Support Your Local Sheriff” bumper stickers. How long until we see Priuses with “Support Your Secretive All-Powerful Federal Agents” bumper stickers? But those who forget or deny past oppression help forge new shackles for the American people.

  • "It's In The Mania Phase": Securities Regulator Warns That "Mortgages Are Being Taken Out To Buy Bitcoin"

    As the investing world continues to argue back and forth over whether Bitcoin is an acceptable store of value or nothing more than a massive bubble that has only been rivaled by the Dutch tulip mania of the 1600's, new information revealed by the President of the North American Securities Administrators Association would tend to lend some credence to the latter.

    Appearing on Power Lunch today, Joseph Borg, also director of the Alabama Securities Commission, argued that Bitcoin has clearly entered its "mania phase" with people now taking out home equity loans and cash advances on credit cards to purchase the digital currency in the hopes of getting rich quick.

    "We've seen mortgages being taken out to buy bitcoin. … People do credit cards, equity lines," said Borg, president of the North American Securities Administrators Association, a voluntary organization devoted to investor protection. Borg is also director of the Alabama Securities Commission.


    "This is not something a guy who's making $100,000 a year, who's got a mortgage and two kids in college ought to be invested in."


    "You're on this mania curve. At some point in time there's got to be a leveling off. Cryptocurrency is here to stay. Blockchain is here to stay. Whether it is bitcoin or not, I don't know," Borg said in an interview with "Power Lunch."

    Of course, as we noted a few months ago, JP Morgan's Jamie Dimon has has been among the most vocal critics of Bitcoin and has frequently expressed his skepticism that international governments will allow it to survive in any meaningful capacity after someone inevitably "gets killed…"

    Speaking to CNBC later in the day, Dimon said he’s skeptical governments will allow a currency to exist without state oversight: “Someone’s going to get killed and then the government’s going to come down,” he said. “You just saw in China, governments like to control their money supply.”


    “You’re wasting your time with Bitcoin! Virtual currency, where it’s called a bitcoin vs. a U.S. dollar, that’s going to be stopped,” said Dimon. “No government will ever support a virtual currency that goes around borders and doesn’t have the same controls. It’s not going to happen.”


    “Blockchain is like any other technology. If it is cheaper, effective, works, and secure, then we are going to use it. The technology will be used, and it could be used to transport currency, but it will be dollars, not bitcoins.”

    …perhaps the Americans now levering up their largest asset in the midst of yet another housing bubble, only to turn around and purchase what could very well end up being an even bigger bubble, are the people to whom Dimon was referring???

  • America's Decline And The Neglect Of Luther's Principles Of Liberty

    Authored by S.T.Karnick via, 

    Freedom requires a sense of personal responsibility if it is to survive.

    With the nation’s news dominated by reports of political corruption (most recently, the Clintons’ apparent use of “pay to play” schemes during Hillary Clinton’s tenure as U.S. secretary of state), sexual harassment scandals pandemic among the nation’s elites, extreme vulgarization of political speech and the common culture, riots against freedom of speech on the nation’s college campuses, paralyzing partisanship in Congress, death threats and open assassination attempts against government leaders and police officers, and the rest of the dismaying parade of moral shortcomings on display among the nation’s leaders in all walks of life, it appears that we are in the midst of a war not just between political and cultural factions, but over the very definition of our civilization.


  • Chinese Banks Push Back On Shadow Banking Regulations – Expose "Catch-22" For Financial System

    In November, we discussed how the post-Party Congress measures to deleverage and crackdown on the worst abuses in China’s credit bubble took an important step forward with the announcement of a new era of regulation for China’s $15 trillion shadow banking and asset management industry. See "A New Era In Chinese Regulation Means Turmoil For $15 Trillion In China's Shadows". In particular, the authorities turned their sights on wealth management products (WMPs).

    On the way out are “guaranteed returns” and “capital pools” which had turned the $4 trillion sector into a leveraged Ponzi scheme. We joked that in a “radical and shocking” departure from the norm, financial institutions would have to offer yields based on the risk and returns of the underlying assets. Paying out guaranteed returns with new funds from depositors would no longer be allowed.

    Commentators at the time described it as “a new era of regulation” which would lead to tighter risk control and slower but higher quality growth in the Chinese economy, blah, blah. However, our interest was piqued by the implementation date for the new rules. This is slated for the end of June 2019, providing Chinese banks and the entire shadow banking system a grade period to get their house in order. As we suggested.

    We can only guess the delay reflects the enormity of the problems discovered by China’s regulators when they finally looked under the hood.

    We didn’t have to wait long for confirmation that our cynicism was justified. It turns out that there was a “closed-door meeting” last week during which Chinese banks laid out the systemic risk if the regulators pursue their reform plan. According to Reuters.

    Ten Chinese banks have raised strong objections to the central bank’s recent move to tighten rules on the asset management sector, saying it may cause a rush of redemptions among other risks, three sources with knowledge of the matter told Reuters.

    Senior executives from the joint-stock banks said during a closed-door meeting in Shanghai last week that the rules would have a big impact on financial markets and could even “trigger systemic financial risks”, according to the sources, who declined to be identified due to the sensitivity of the matter. The executives also said the new rules on removing implicit guarantees for wealth management products (WMPs) could spark liquidity risks and increase market volatility, the sources said late on Thursday.

    Unlike the Big Four state-owned banks, the smaller banks have limited scope to increase lending in the absence of WMP funding…and that's ignoring the "black holes" hidden beneath the surface.

    In short, the entire Chinese financial system, from depositors to banks to asset management companies, has become addicted to the WPM model. Reforming it will only advance the crystallization of losses and bankruptcies, never mind largescale protests from investors who have always assumed that, somehow, the banks would make good on their promises. On a small scale, the clearest example of the near-impossibility of reforming WMPs without threatening China’s financial system, was the example of Foresea Life Insurance in May this year. This report from Fortune captured Ponzi nature and risk of civil unrest.

    A Chinese insurer has warned the country’s regulators of defaults in the billions and possible unrest unless it is allowed to launch new products again. Foresea Life Insurance asked the China Insurance Regulatory Commission (CIRC) in a letter dated Apr. 28 to lift its ban, “in order to avoid inciting mass incidents by clients and localized and systemic risks, producing greater damage to the industry,” reports the Financial Times. It further warned that, with an expected redemption of $8.7 billion this year, the insurer might not be able to meet payouts without selling new products.

    The Bloomberg article portrays the feedback they gave to regulators on the new regime as “a rare protest by Chinese bankers as pressure mounts amid a government campaign to de-leverage and de-risk the country’s massive and increasingly complex financial system”. However, it’s much more than that, it’s essentially a plea for the survival on the part of smaller banks. Without large pools of deposits, smaller banks have relied on WMP and other shadow banking conduits for funding. In the absence of guaranteed returns, leverage and fraud, that might not have been a problem.

    The new rules will pose a direct challenge to a business model that small- and mid-tier banks have been relying on to drive asset expansion and profit growth, bankers told Reuters earlier. “Every time when the regulators announce tighter regulations it would almost always benefit the large state banks and hurt the smaller ones, because they (the latter) are taking much bigger risks,” said a senior executive at one of the country’s big four state-controlled lenders.

    The joint-stock banks, which are unable to compete against large state banks for public deposits, have depended on selling WMPs with implicit guarantee of fixed returns to attract retail funds. In turn, they invest the money they manage into stocks, bonds and non-standard debt assets to generate profit. Bank executives said at the meeting the 28.38 trillion yuan of banks’ WMPs, part of the so-called shadow banking sector, have allowed them to bypass regulatory restrictions on credit expansion and capital constraints.

    The problem for Xi Jinping and his cronies is that they left the situation to fester for way too long before attempting to intervene. In an effort to dissuade the authorities, here is Reuters on more warnings from the threatened banks.

    If the current draft of the rules takes effect, banks will be forced to offload assets beforehand, including selling bonds, stocks and other liquid assets at a discount and asking clients to repay loans before time, the sources said. “No matter which solution we choose, it will hit financial markets,” they added.

    The banks also said rules on strictly limiting bank WMP investments in non-standard debt assets and private equities would reduce their support for the real economy and increase financing costs for companies, the sources said. They also suggested the central bank remove certain rules and extend the transition period for the new rules – currently up to June 2019 – to three years to smooth the impact, the sources said.

    …which basically amounts to a “Catch-22” situation for China’s financial system.

    Meanwhile, it’s worth highlighting a (very) recent example of fraud in the Chinese banking system which encompassed the WMP sector. Last Friday, the South China Morning Post (SCMP) reported on the 722 million yuan ($109 million) fine – the industry’s biggest penalty – served on Guangfa Bank, the largest bank in Guangzhou city. The bank covered up the default of two bonds issued by phone maker, Cosun Group, which had ben sold on an Ant Financial Holdings’ WMP platform. As the SCMP explains.

    Ant Financial and 10 other banks sought compensation for investors from Zheshang Property and Casualty Insurance, which had provided insurance coverage on the debt, only to discover that the insurer had been issued fake letters of guarantee by Guangfa’s branch in Huizhou city. The fraudulent documents were created using counterfeit corporate seals made by branch staff. The case involved as much as 12 billion yuan, as the bank tried to channel money to cover its mounting bad loans and operational losses.

    “Guangfa did everything that regulators hate the most,” said Chen Shujin, chief financial analyst at Huatai Securities. “They gave an under-the-table guarantee, and made illegal interbank investments to cover up a non-performing loan.”

    The epidemic of fraud across China’s financial system has been obvious for years. The Catch-22 situation faced by the Chinese authorities boils down to a timing preference. With Xi’s position cemented for the next five years, the authorities can bring on the “Minsky moment” adjustment, knowing that the economy can recover by 2022. Or they can postpone it, leading to a truly catastrophic collapse down the road.

  • "It Will Impact The Life Of Every Single Human Being" – The Cryptocurrency Revolution Documentary

    The latest short film from Jonathan Roth discusses the advent of the blockchain, where it goes next and how the technology will impact every single human being on the planet.

    Featuring investment powerhouses like Frank Giustra and Frank Holmes, as well as mathematician and finance entrepreneur Marco Streng:

    The blockchain will disrupt nearly every industry from purchasing groceries to heating your home… everyone from banking to government is racing to develop the technology.

    Watch the full movie:

    Source:'s Mac Slavo

  • "Millennials Don't Care About Logos": How Collapsing Brand Loyalty Will Allow Amazon To Dominate Apparel

    Despite daily affirmations from the White House that “everything is awesome” with the economy, 2017 has been a miserable year for retailers.  As Reorg First Day points out, over 30 retailers, with debt aggregating into the billions of dollars, have filed for bankruptcy so far this year…

    ...with over half of them coming from the apparel industry.

    Of course, as we discuss frequently, this trend is attributable to, among other things, collapsing mall traffic courtesy of a persistent shift of consumer spending to online retailers like Amazon and others.  And while apparel was always expected, or at least hoped, to be somewhat immune from the “Amazon Effect,” one of the derivative results of lower mall traffic, and one that is only becoming more apparent now, is the collapsing brand loyalty of millennials.

    As Bloomberg points out today, a whole generation of millennial Americans, who are just now starting to obtain financial self-sufficiency, couldn’t care less about polo ponies, crocodiles or any of the other clever logos that retailers have spent billions on over the years to convince you that you should pay $125 for a shirt that would sell for $15 absent the logo on the breast…

    “Every new generation is becoming less and less brand-loyal,” Bahulkar says. “Millennials don’t care as much about logos. They will buy anything from anywhere at any price point, and that is a big change.”


    The erosion of brand loyalty has been a boon for Target, the cheap-chic retailer that made its name in apparel via partnerships with top designers Isaac Mizrahi and Jason Wu more than a decade ago. It’s leveraged that success to create its own private labels in recent years, most notably Cat & Jack, a kids’ apparel line whose sales surpassed $2 billion after a little more than a year on the shelves. Target’s winning formula has emboldened Wal-Mart, which recently hired a veteran of Saks Fifth Avenue and Ralph Lauren Corp. to boost its fashion game.

    …which is great news if you’re an online retailing giant and want to get into apparel but haven’t spent decades dumping billions of dollars into now-useless brand development. 


    According to Wells Fargo estimates, Amazon will leapfrog T.J. Maxx and Macy’s in 2017 to become the second-biggest seller of apparel and footwear in the United States and it has everything to do with how they’ve managed to transform the shopping habits of consumers.

    For those of you who are old enough, consider how you planned out your apparel shopping trips in the late 90s.  For many of you it probably included a trip to the mall with predetermined stops at the specific stores you liked for any number of different reasons…not the least of which was brand recognition. 

    Now, contrast that to today when apparel shopping often begins with an online search…a search which consultants at Bain & Co. recently found to often exclude any mention of a brand at all…consumers just enter “yoga pants” and see what comes up.

    Searching for generic product categories on Amazon turns up plenty of private-label options. More than one-quarter of first-page Amazon search results in categories such as men’s button-down shirts were private labels, Bain says. That helps explain why almost 40 cents of every dollar spent online on clothing and footwear in the U.S. will go to Amazon this year, according to data tracker Euromonitor, up from 23 cents in 2014.


    In some categories—like the active wear that Americans increasingly wear all day, whether or not they hit the gym—private labels combined account for 20% of the market, according to researcher NPD. That makes store brands in aggregate larger than any single brand, which should strike fear in the executive suites of Lululemon Athletica, Nike, and Under Armour.


    “Active wear is going like wildfire,” Wilson says, for the simple reason that “you don’t have to try on spandex pants. If I was in those categories, I would be worried.”

    Of course, not everyone, including Candace Corlett of WSL Strategic Retail, thinks Amazon will be successful in apparel, saying “I don’t know anyone who is jumping up and down about buying clothes on Amazon…They’ve put together a lot of midpriced, uninteresting stuff.”  Somehow, we suspect the CEO of whichever apparel giant is forced into bankruptcy next just might disagree.

  • The Fed's "Magic Trick" Exposed

    Authored by Jeff Thomas via,

    In 1791, the first Secretary of the Treasury of the US, Alexander Hamilton, convinced then-new president George Washington to create a central bank for the country.

    Secretary of State Thomas Jefferson opposed the idea, as he felt that it would lead to speculation, financial manipulation, and corruption. He was correct, and in 1811, its charter was not renewed by Congress.

    Then, the US got itself into economic trouble over the War of 1812 and needed money. In 1816, a Second Bank of the United States was created. Andrew Jackson took the same view as Mister Jefferson before him and, in 1836, succeeded in getting the bank dissolved.

    Then, in 1913, the leading bankers of the US succeeded in pushing through a third central bank, the Federal Reserve. At that time, critics echoed the sentiments of Messrs. Jefferson and Jackson, but their warnings were not heeded. For over 100 years, the US has been saddled by a central bank, which has been manifestly guilty of speculation, financial manipulation, and corruption, just as predicted by Mister Jefferson.

    From its inception, one of the goals of the bank was to create inflation. And, here, it’s important to emphasise the term “goals.” Inflation was not an accidental by-product of the Fed – it was a goal.

    Over the last century, the Fed has often stated that inflation is both normal and necessary. And yet, historically, it has often been the case that an individual could go through his entire lifetime without inflation, without detriment to his economic life.

    Yet, whenever the American people suffer as a result of inflation, the Fed is quick to advise them that, without it, the country could not function correctly.

    In order to illustrate this, the Fed has even come up with its own illustration “explaining” inflation. Here it is, for your edification:

    If the reader is of an age that he can remember the inventions of Rube Goldberg, who designed absurdly complicated machinery that accomplished little or nothing, he might see the resemblance of a Rube Goldberg design in the above illustration.

    And yet, the Fed’s illustration can be regarded as effective. After spending several minutes taking in the above complex relationships, an individual would be unlikely to ask, “What did they leave out of the illustration?”

    Well, what’s missing is the Fed itself.

    As stated above, back in 1913, one of the goals in the creation of the Fed was to have an entity that had the power to create currency, which would mean the power to create inflation.

    It’s a given that all governments tax their people. Governments are, by their very nature, parasitical entities that produce nothing but live off the production of others. And, so, it can be expected that any government will increase taxes as much and as often as it can get away with it. The problem is that, at some point, those being taxed rebel, and the government is either overthrown or the tax must be diminished. This dynamic has existed for thousands of years.

    However, inflation is a bit of a magic trick. Now, remember, a magician does no magic. What he does is create an illusion, often through the employment of a distraction, which fools the audience into failing to understand what he’s really doing.

    And, for a central bank, inflation is the ideal magic trick. The public do not see inflation as a tax; the magician has presented it as a normal and even necessary condition of a healthy economy.

    However, what inflation (which has traditionally been defined as the increase in the amount of currency in circulation) really accomplishes is to devalue the currency through oversupply. And, of course, anyone who keeps his wealth (however large or small) in currency units loses a portion of it with each devaluation.

    In the 100-plus years since the creation of the Federal Reserve, the Fed has steadily inflated the US dollar. Over time, this has resulted in the dollar being devalued by over 97%.

    The dollar is now virtually played out in value and is due for disposal. In order to continue to “tax” the American people through inflation, a reset is needed, with a new currency, which can then also be steadily devalued through inflation.

    Once the above process is understood, it’s understandable if the individual feels that his government, along with the Fed, has been robbing him all his life. He’s right—it has.

    And it’s done so without ever needing to point a gun to his head.

    The magic trick has been an eminently successful one, and there’s no reason to assume that the average person will ever unmask and denounce the magician. However, the individual who understands the trick can choose to mitigate his losses. He can take measures to remove his wealth from any country that steadily imposes inflation upon him and store it in a country where this either does not occur, or occurs to a lesser degree.

    *  *  *

    Moving a portion of your wealth overseas sounds daunting… like something only the ultra-rich can or even should do. In reality, it’s one of the most important steps anyone can take to protect his wealth from an out of control government. Now Doug Casey is sharing practical ways to get started in his timely special report Getting Out of Dodge. Click here to download your free PDF copy now.

  • Top Crypto-Mining Executive Explains Why "We're Hoarding The Coins"

    Authored by Mac Slavo via,

    If the price action in crypto currencies over the last several months has proven anything, it’s that the blockchain has gone fully mainstream with global investors, major financial institutions and governments showing significant interest in the space. While a number of blockchain projects are moving onto the stage, the primary focus for investors has been Bitcoin, which has seen an increase of over 1,600% in 2017. And according to Frank Holmes, there is much more to come.

    In an interview with SGT Report, Holmes, the Chairman of Hive Blockchain Technologies, the world’s only publicly traded blockchain mining company explains that, while roughly 78% of the available 21 million Bitcoins, or about 16.4 million, have been mined up to this point, there are probably only about 10 million coins in actual circulation around the world because somewhere on the order of 25% have been lost forever due to misplaced wallet access keys and other issues. Moreover, of those 10 million or so available coins, it has been widely reported that about 1000 “whales,” or high net worth investors, own some 40% of the coins, creating a scarcity in the market that has left millions of global investors chasing a limited supply of BTC.

    Holmes suggests that this limited availability works to the advantage of cryptocurrency miners who use expensive computer hardware mining rigs to process transactions on the blockchain, because with so much investment capital moving into the space they can hoard the coins they mine and sell into the market during price spikes while loading up on more coins when markets dip. Hive currently mines Ethereum, Ethereum Classic, Bitcoin and will soon move into Litecoin and other popular cryptocurrencies using the same strategy:

    We’re hoarding the coins… we mine virgin coins and in fact we are getting offered premiums for our coins because they’ve never been tainted.


    We never buy the coins… anytime it has a huge surge we will sell one, two or three percent… and as soon as it corrects we just mine more and replenish ourselves…


    We want to wait until we get at least 20,000 coins and then we can turn around and use our quant models, so we’re doing things very unique…

    Most crypto currencies have a maximum supply of coins that can ever be mined. As Bitcoin demonstrates, a percentage of those already-mined coins will be lost. Another percentage will be locked up by high net worth and long-term investors. These mechanics create a situation where, perhaps only a little over half of the actual listed circulation of coins is actually circulating.

    With this being the case it’s not difficult to see why, as tens of billions of dollars, and perhaps even trillions as has been suggested by investment gurus, continue to pile into these assets, prices for top tier crypto currencies could continue to rise exponentially in coming months and years.

  • Measuring the Mania of Crypto

    From the Slope of HopeIt seems everyone is talking about Bitcoin these days. On ZeroHedge, I’d say easily half the articles are crypto-related. And why not? The equity market has become a bore. How much can you say about a market which basically goes up about half a percent day after day until the end of time? I’ve anchored my life to discussing equity markets, God help me, so having something that actually moves up AND down is exciting and novel after the past eight years.

    Of course, daring to predict ANYTHING about cryptos is a fool’s errand. Just a few months ago, a Bitcoin trader and “expert” offered up this prediction for the second half of the year:

    So – – basically down to “S3” at about $1200 and then a tremendous rally to $3,000 by about now. Of course, nothing like that took place. As I’m typing this, we’re around $17,000 or so (click here to see the latest chart) and there was never any big dip – – except maybe for the chap who created the aforementioned chart in the first place.

    Some predictions – – maybe even wild guesses – – have been closer to the mark. Way back in December 2013, the Winklevoss twins (of Social Network fame) made the lunatic prediction that Bitcoin would rise to $40,000 (it was $1,000 at the time). Surely that seemed to be stark raving mad, and also quite self-serving, since they had bought $11 million of Bitcoin.

    And how foolish they must have looked (and felt) when just weeks after their ridiculous prediction, Bitcoin fell 90% – – NINETY PERCENT!! – – which made it look like it was a ruinous choice. I confess, I’d have been the first one laughing. But he who laughs last laughs loudest, and the Winklevii are laughing their assess off now, since their stake is approaching $2 billion. Their $40,000 prediction is, to some, looking conservative.


    The now-super-rich WInklevoss twins have updated their crazy prediction with, of course, something even crazier, stating that even with the incredible rise we’ve seen so far, it’s going to go up another twenty-fold. In other words, about $300,000 per Bitcoin (let’s all remember this launched at a value of 1 penny in 2009, so that’s a rise of 30-million-fold in value).

    The ascent of cryptos is, of course, unprecedented. People keep talking about tulips. Look, I wrote a book about financial manias, and tulips went up about ten-fold during its mania. Bitcoin has already gone up hundreds-of-thousands-of-fold, so it’s not even close. Instead, let’s compare it to the one mania we experienced in our lifetimes, which was the hottest stocks of the Internet bubble.

    To give us a baseline, let’s try to think of a “base” for Bitcoin. It isn’t a penny. Instead, I like to think of the price where Bitcoin stabilized after its first big crash (see chart above), which is around $160 to $200 (see two arrows pointing out the double bottom). Let’s split the difference and call it $180. So that’ll be our starting point.

    There were hundreds of new stocks during the initial Internet era, but the two I want to use for this little thought experiment are Amazon and Yahoo, both of which had breathtaking ascents in price. When people remember the Internet bubble, they might think stocks had insane P/E ratios of 100, 200, or 300. Not so. Yahoo, for instance, had a P/E of nearly 2,200 before the bubble burst. (Of course, Bitcoin has a P/E of infinity, but let’s not get distracted with the fact it actually isn’t a business that could ever produce a profit someday).

    So, starting off with Amazon………….


    The red arrow from the late 1990s show its incredible explosion from about $1.31 to $113, a rise of about 90-fold. Using our base of $180, that gives us a target “bubble peak” of $16,200. Well, although Bitcoin does seem to be stalling and struggling at around the $17,000 level, it seems to me we’ve already smashed by this lofty target. In other words, Bitcoin has outperformed Amazon’s 1990s bubble phase.

    Turning our attention to the late Yahoo (now a funky holding company with the unfortunate moniker of Altaba…….):


    Its rise was even crazier, from .70 to 125, which is 180-fold, giving us a target price of about $30,600. And, since one guess is as good as any other, let’s go with that. It’s a mere 1/10th what the Winklevii are calling for, and who knows, they may well be right. But at least loony Yahoo in the late 1990s give us SOME basis for just how high the public might bid up a totally new financial instrument before greed gives way to fear, and it all comes tumbling down to something a little less tethered to stark, raving madness.

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Dec 11

Today’s News 11th December 2017

  • FRee BiTCoiN ORNaMeNT
  • Greenwald: The U.S. Media Just Suffered Its Most Humiliating Debacle in Ages

    Authored by Glenn Greenwald of The Intercept,

    Friday was one of the most embarrassing days for the U.S. media in quite a long time. The humiliation orgy was kicked off by CNN, with MSNBC and CBS close behind, with countless pundits, commentators and operatives joining the party throughout the day. By the end of the day, it was clear that several of the nation’s largest and most influential news outlets had spread an explosive but completely false news story to millions of people, while refusing to provide any explanation of how it happened.

    The spectacle began on Friday morning at 11:00 am EST, when the Most Trusted Name in News™ spent 12 straight minutes on air flamboyantly hyping an exclusive bombshell report that seemed to prove that WikiLeaks, last September, had secretly offered the Trump campaign, even Donald Trump himself, special access to the DNC emails before they were published on the internet. As CNN sees the world, this would prove collusion between the Trump family and WikiLeaks and, more importantly, between Trump and Russia, since the U.S. intelligence community regards WikiLeaks as an “arm of Russian intelligence,” and therefore, so does the U.S. media.

    This entire revelation was based on an email which CNN strongly implied it had exclusively obtained and had in its possession. The email was sent by someone named “Michael J. Erickson” – someone nobody had heard of previously and whom CNN could not identify – to Donald Trump, Jr., offering a decryption key and access to DNC emails that WikiLeaks had “uploaded.” The email was a smoking gun, in CNN’s extremely excited mind, because it was dated September 4 – ten days before WikiLeaks began promoting access to those emails online – and thus proved that the Trump family was being offered special, unique access to the DNC archive: likely by WikiLeaks and the Kremlin.

    It’s impossible to convey with words what a spectacularly devastating scoop CNN believed it had, so it’s necessary to watch it for yourself to see the tone of excitement, breathlessness and gravity the network conveyed as they clearly believed they were delivering a near-fatal blow on the Trump/Russia collusion story:

    There was just one small problem with this story: it was fundamentally false, in the most embarrassing way possible. Hours after CNN broadcast its story – and then hyped it over and over and over – the Washington Post reported that CNN got the key fact of the story wrong.

    The email was not dated September 4, as CNN claimed, but rather September 14 – which means it was sent after WikiLeaks had already published access to the DNC emails online. Thus, rather than offering some sort of special access to Trump, “Michael J. Erickson” was simply some random person from the public encouraging the Trump family to look at the publicly available DNC emails that WikiLeaks – as everyone by then already knew – had publicly promoted. In other words, the email was the exact opposite of what CNN presented it as being.

    How did CNN end up aggressively hyping such a spectacularly false story? They refuse to say. Many hours after their story got exposed as false, the journalist who originally presented it, Congressional reporter Manu Raju, finally posted a tweet noting the correction. CNN’s PR Department then claimed that “multiple sources” had provided CNN with the false date. And Raju went on CNN, in muted tones, to note the correction, explicitly claiming that “two sources” had each given him the false date on the email, while also making clear that CNN did not ever even see the email, but only had sources describe its purported contents:

    All of this prompts the glaring, obvious, and critical question – one which CNN refuses to address: how did “multiple sources” all misread the date on this document, in exactly the same way, and toward the same end, and then feed this false information to CNN?

    It is, of course, completely plausible that one source might innocently misread a date on a document. But how is it remotely plausible that multiple sources could all innocently and in good faith misread the date in exactly the same way, all to cause to be disseminated a blockbuster revelation about Trump/Russia/WikiLeaks collusion? This is the critical question that CNN simply refuses to answer. In other words, CNN refuses to provide the most minimal transparency to enable the public to understand what happened here.

    Why does this matter so much? For so many significant reasons:

    To begin with, it’s hard to overstate how fast, far and wide this false story traveled. Democratic Party pundits, operatives and journalists with huge social media platforms predictably jumped on the story immediately, announcing that it proved collusion between Trump and Russia (through WikiLeaks). One tweet from Democratic Congressman Ted Lieu, claiming that this proved evidence of criminal collusion, was re-tweeted thousands and thousands of times in just a few hours (Lieu quietly deleted the tweet after I noted its falsity, and long after it went very viral, without ever telling his followers that the CNN story, and therefore his accusation, had been debunked).

    Brookings’ Benjamin Wittes, whose star has risen as he has promoted himself as a friend of former FBI Director Jim Comey, not only promoted the CNN story in the morning, but did so with the word “Boom” – which he uses to signal that a major blow has been delivered to Trump on the Russia story – along with a gif of a cannon being detonated:

    Incredibly, to this very moment – almost 24 hours after CNN’s story was debunked – Wittes has never noted to his more than 200,000 followers that the story he so excitedly promoted turned out to be utterly false, even though he returned to Twitter long after the story was debunked to tweet about other matters. He just left his false and inflammatory claims uncorrected.

    Talking Points Memo’s Josh Marshall believed the story was so significant that he used an image of an atomic bomb detonating at the top of his article discussing its implications, an article he tweeted to his roughly 250,000 followers. Only at night was an editor’s note finally added noting that the whole thing was false.

    It’s hard to quantify exactly how many people were deceived – filled with false news and propaganda – by the CNN story. But thanks to Democratic-loyal journalists and operatives who decree every Trump/Russia claim to be true without seeing any evidence, it’s certainly safe to say that many hundreds of thousands of people, almost certainly millions, were exposed to these false claims.

    Surely anyone who has any minimal concerns about journalistic accuracy – which would presumably include all the people who have spent the last year lamenting Fake News, propaganda, Twitter bots and the like – would demand an accounting as to how a major U.S. media outlet ended up filling so many people’s brains with totally false news. That alone should prompt demands from CNN for an explanation about what happened here. No Russian Facebook ad or Twitter bot could possibly have anywhere near the impact as this CNN story had when it comes to deceiving people with blatantly inaccurate information.

    Second, the “multiple sources” who fed CNN this false information did not confine themselves to that network. They were apparently very busy eagerly spreading the false information to as many media outlets as they could find. In the middle of the day, CBS News claimed that it had independently “confirmed” CNN’s story about the email, and published its own breathless article discussing the grave implications of this discovered collusion.

    Most embarrassing of all was what MSNBC did. You just have to watch this report from its “intelligence and national security correspondent” Ken Dilanian to believe it. Like CBS, Dilanian also claimed that he independently “confirmed” the false CNN report from “two sources with direct knowledge of this.” Dilanian, whose career in the U.S. media continues to flourish the more he is exposed as someone who faithfully parrots what the CIA tells him to say (since that is one of the most coveted and valued attributes in US journalism), spent three minutes mixing evidence-free CIA claims as fact with totally false assertions about what his multiple “sources with direct knowledge” told him about all this. Please watch this – again, not just the content but the tenor and tone of how they “report” – as it is Baghdad-Bob-level embarrassing:

    Think about what this means. It means that at least two – and possibly more – sources, which these media outlets all assessed as credible in terms of having access to sensitive information, all fed the same false information to multiple news outlets at the same time. For multiple reasons, the probability is very high that these sources were Democratic members of the House Intelligence Committee (or their high-level staff members), which is the committee that obtained access to Trump Jr.’s emails, although it’s certainly possible that it’s someone else. We won’t know until these news outlets deign to report this crucial information to the public: which “multiple sources” acted jointly to disseminate incredibly inflammatory, false information to the nation’s largest news outlets?

    Just last week, the Washington Post decided – to great applause (including mine) – to expose a source to whom they had promised anonymity and off-the-record protections because they discovered that she was purposely feeding them false information as part of a scheme by Project Veritas to discredit the Post. It’s a well established principle of journalism – one that is rarely followed when it comes to powerful people in DC – that journalists should expose, rather than protect and conceal, sources who purposely feed them false information to be disseminated to the public.

    Is that what happened here? Did these “multiple sources” who fed not just CNN but also MSNBC and CBS completely false information do so deliberately and in bad faith? Until these news outlets provide an accounting of what happened – what one might call “minimal journalistic transparency” – it’s impossible to say for certain. But right now, it’s very difficult to imagine a scenario where multiple sources all fed the wrong date to multiple media outlets innocently and in good faith.

    If this were, in fact, a deliberate attempt to cause a false and highly inflammatory story to be reported, then these media outlets have an obligation to expose who the culprits are – just as the Washington Post did last week to the woman making false claims about Roy Moore (it was much easier in that case because the source they exposed was a nobody-in-DC, rather than someone on whom they rely for a steady stream of stories, the way CNN and MSNBC rely on Democratic members of the Intelligence Committee). By contrast, if this were just an innocent mistake, then these media outlets should explain how such an implausible sequence of events could possibly have happened.

    Thus far, these media corporations are doing the opposite of what journalists ought to do: rather than informing the public about what happened and providing minimal transparency and accountability for themselves and the high-level officials who caused this to happen, they are hiding behind meaningless, obfuscating statements crafted by PR executives and lawyers.

    How can journalists and news outlets so flamboyantly act offended when they’re attacked as being “Fake News” when this is the conduct behind which they hide when they get caught disseminating incredibly consequential false stories?

    The more serious you think the Trump/Russia story is, the more dangerous you think it is when Trump attacks the U.S. media as “Fake News,” the more you should be disturbed by what happened here, the more transparency and accountability you should be demanding. If you’re someone who thinks Trump’s attacks on the media are dangerous, then you should be first in line objecting when they act recklessly and demand transparency and accountability from them. It is debacles like this – and the subsequent corporate efforts to obfuscate – that have made the U.S. media so disliked and that fuel and empower Trump’s attacks on them.

    Third, this type of recklessness and falsity is now a clear and highly disturbing trend – one could say a constant – when it comes to reporting on Trump, Russia and WikiLeaks. I have spent a good part of the last year documenting the extraordinarily numerous, consequential and reckless stories that have been published – and then corrected, rescinded and retracted – by major media outlets when it comes to this story.

    All media outlets, of course, will make mistakes. The Intercept certainly has made our share, as have all outlets. And it’s particularly natural, inevitable, for mistakes to be made on a highly complicated, opaque story like the question of the relationship between Trump and the Russians, and questions relating to how WikiLeaks obtained DNC and Podesta emails. That is all to be expected.

    But what one should expect with journalistic “mistakes” is that they sometimes go in one direction, and other times go in the other direction. That’s exactly what has not happened here. Virtually every false story published goes only in one direction: to be as inflammatory and damaging as possible on the Trump/Russia story and about Russia particularly. At some point, once “mistakes” all start going in the same direction, toward advancing the same agenda, they cease looking like mistakes.

    No matter your views on those political controversies, no matter how much you hate Trump or regard Russia as a grave villain and threat to our cherished democracy and freedoms, it has to be acknowledged that when the U.S. media is spewing constant false news about all of this, that, too, is a grave threat to our democracy and cherished freedom.

    So numerous are the false stories about Russia and Trump over the last year that I literally cannot list them all. Just consider the ones from the last week alone, as enumerated by the New York Times yesterday in its news report on CNN’s embarrassment:

    It was also yet another prominent reporting error at a time when news organizations are confronting a skeptical public, and a president who delights in attacking the media as “fake news.”


    Last Saturday, ABC News suspended a star reporter, Brian Ross, after an inaccurate report that Donald Trump had instructed Michael T. Flynn, the former national security adviser, to contact Russian officials during the presidential race.


    The report fueled theories about coordination between the Trump campaign and a foreign power, and stocks dropped after the news. In fact, Mr. Trump’s instruction to Mr. Flynn came after he was president-elect.


    Several news outlets, including Bloomberg and The Wall Street Journal, also inaccurately reported this week that Deutsche Bank had received a subpoena from the special counsel, Robert S. Mueller III, for President Trump’s financial records.


    The president and his circle have not been shy about pointing out the errors.

    That’s just the last week alone. Let’s just remind ourselves of how many times major media outlets have made humiliating, breathtaking errors on the Trump/Russia story, always in the same direction, toward the same political goals. Here is just a sample of incredibly inflammatory claims that traveled all over the internet before having to be corrected, walk-backed, or retracted – often long after the initial false claims spread, and where the corrections receive only a tiny fraction of the attention with which the initial false stories are lavished:

    • Russia hacked into the U.S. electric grid to deprive Americans of heat during winter (Wash Post)
    • An anonymous group (PropOrNot) documented how major U.S. political sites are Kremlin agents (Wash Post)
    • WikiLeaks has a long, documented relationship with Putin (Guardian)
    • A secret server between Trump and a Russian bank has been discovered (Slate)
    • RT hacked C-SPAN and caused disruption in its broadcast (Fortune)
    • Crowdstrike finds Russians hacked into a Ukrainian artillery app (Crowdstrike)
    • Russians attempted to hack elections systems in 21 states (multiple news outlets, echoing Homeland Security)
    • Links have been found between Trump ally Anthony Scaramucci and a Russian investment fund under investigation (CNN)

    That really is just a small sample. So continually awful and misleading has this reporting been that even Vladimir Putin’s most devoted critics – such as Russian expatriate Masha Gessen, oppositional Russian journalists, and anti-Kremlin liberal activists in Moscow – are constantly warning that the U.S. media’s unhinged, ignorant, paranoid reporting on Russia is harming their cause in all sorts of ways, in the process destroying the credibility of the U.S. media in the eyes of Putin’s opposition (who — unlike Americans who have been fed a steady news and entertainment propaganda diet for decades about Russia — actually understand the realities of that country).

    U.S. media outlets are very good at demanding respect. They love to imply, if not outright state, that being patriotic and a good American means that one must reject efforts to discredit them and their reporting because that’s how one defends press freedom.

    But journalists also have the responsibility not just to demand respect and credibility but to earn it. That means that there shouldn’t be such a long list of abject humiliations, in which completely false stories are published to plaudits, traffic and other rewards, only to fall apart upon minimal scrutiny. It certainly means that all of these “errors” shouldn’t be pointing in the same direction, pushing the same political outcome or journalistic conclusion.

    But what it means most of all is that when media outlets are responsible for such grave and consequential errors as the spectacle we witnessed yesterday, they have to take responsibility for it by offering transparency and accountability. In this case, that can’t mean hiding behind PR and lawyer silence and waiting for this to just all blow away.

    At minimum, these networks – CNN, MSNBC and CBS – have to either identify who purposely fed them this blatantly false information, or explain how it’s possible that “multiple sources” all got the same information wrong in innocence and good faith. Until they do that, their cries and protests the next time they’re attacked as “Fake News” should fall on deaf ears, since the real author of those attacks – the reason those attacks resonate – is themselves and their own conduct.

    (Update: hours after this article was published on Saturday – a full day-and-a-half after his original tweets promoting the false CNN story with a “boom” and a cannon – Benjamin Wittes finally got around to noting that the CNN story he hyped has “serious problems”; needless to say, that acknowledgment received a fraction of re-tweets from his followers as his original tweets hyping the story attracted).

  • After $150 Billion Buying Binge, 'Tokyo Whale' Seen Paring Back ETF Purchases In 2018

    A few months ago, we noted that the Bank of Japan had decided to throw every textbook out of the window and crank their plunge-protection to ’11’after reports surfaced that they owned a staggering 75% of Japan’s ETFs.

    The BOJ first started their buying spree in December 2010 – when they held no ETFs at all – and have since accumulated some $150 billion in aggregate holdings.  The buying was all as part of unprecedented “economic stimulus” which has undoubtedly contributed to the Nikkei 225 Stock Average surging roughly 125% since December 2010.

    Here’s a quick graphical recap of the program courtesy of Bloomberg…

    …and another look which shows the central bank owns three quarters of ETFs by market value…


    …all of which has resulted in the following bubble stock market appreciation…

    Not surprisingly, since the program started, everyone from the head of the country’s stock exchange to the chairman of the Japanese Bankers Association has questioned the ETF program’s size and whether it artificially depresses volatility.

    Now, with the Nikkei surging to 25 year highs, analysts are increasingly saying it’s time for the BOJ to put this specific component of their many controversial bubble-blowing policies to rest.  Per Bloomberg:

    Sometime next year, the BOJ will cut its annual buying target for domestic exchange-traded funds by as much as a third from the current 6 trillion yen ($53 billion), says Toru Ibayashi, head of Japanese equities at UBS Wealth Management in Tokyo. Soichiro Monji of Daiwa SB Investments Ltd. expects a similar reduction, but by the end of March.


    “Four trillion yen,” UBS’s Ibayashi predicted. “And everybody will understand.”


    “Fear of deflation was behind the 6 trillion yen target,” Daiwa SB’s Monji said in an interview. “We’re no longer in that kind of environment. Risks are now skewed toward the upside, rather than the downside. It’s hard for the central bank to justify its buying spree.”


    “Given the circumstances at this point in time, it is difficult for the BOJ to keep buying ETFs at six trillion yen per year,” Ibayashi said.

    Jonathan Garner, chief Asia and emerging markets equity strategist at Morgan Stanley in Hong Kong, described the ETF purchases as “perhaps the most controversial part” of the bank’s stimulus program which includes everything from negative interest rates and yield-curve control to buying tens of trillions of yen of bonds each year, on top of its stock purchases. 

    Of course, not everyone agrees as Naoki Kamiyama, chief strategist for Nikko Asset Management Co. in Tokyo, and Hisao Matsuura, a strategist at Nomura Holdings Inc., both saying the BOJ won’t cut its ETF target anytime soon as “it would hurt investor confidence and make a pickup in inflation much less likely…”

    You know, because every central bank’s primary objective is to boost “investor confidence” by creating massive asset bubbles that make the masses feel richer…at least until the marginal stimulus fails and the whole ponzi comes crashing down…

  • A Gift From The Oldies

    By Chris at

    I bumped into a friendly bloke at my local gym last week. Jim is his name.

    Jim tells me he just started because, and I quote, “my doctor says I’m going to die unless I do something”.

    Now, I assure you it doesn’t take a doctor to figure this out.

    One glance in Jim’s direction and you can tell that underneath all that weight there’s a big struggling heart in there… just ready to explode. He was surprisingly frank and tells me it’s so bad that he can only do little bits of exercise because if he pushes it too hard, there is a very serious risk that his ticker just says, “You know what… f*ck it,” and gives up.

    Jim’s 52, which is really a ripe old age and about normal life expectancy — if we lived in the 1700’s. But we don’t.

    I feel for Jim, told him so, and naturally we all hope that he can bring himself back from the brink. But the fact is many people aren’t like Jim. As mentioned in a previous article on pensions, they’re living longer and stronger.

    Years ago it seemed that when you hit 65 you’d retire, receive a gold watch, and proceed to spend your pension money on a rocking chair and pot plants. Ten years later you’d be in a box and, since pot plants are cheap, the cost of keeping you alive wasn’t prohibitive.


    Not anymore. Today things are different. My wife belongs to a running club and there are a bunch of octogenarians there who put us both to shame. Nope, today you retire and spend your pension on kickboxing classes and second wives, with no plan of dying anytime soon.

    Now, this second group (our kickboxing oldies) pose a grave problem.

    You see, unlike Jim, these folks, who’ve spent their life exercising, go on and on and on.

    70 is spring chicken young for them, and many make it well into their 80’s and 90’s when inevitably they need nappies, nursing care, accommodation, and mushy food to eat. And then finally machines on wheels need to be wheeled in and they end up with tubes in their noses. Don’t laugh. We’re all going to get there, unless we’re fortunate enough to just drop dead quick and fast. The point is this all costs a boatload of money.

    Now, I’m aware that this topic isn’t rosy Friday red or shampoo advert fresh and clean, but there are some serious implications that I think you’ll thank me for so hear me out.

    Demographics and Pensions

    Demographics is an elephant in the room we shouldn’t ignore. It’s stomped around, defecated in the corner, and is now proceeding to knock over all the furniture. Ignore it at your peril. Rather, there are a number of ways to invest.

    Let’s explore a few…

    Old people (Mabel and Bob) pay for their retirements with pensions, and those pensions are held in pooled accounts at the DTC and managed by folks with pointy shoes and Tom Ford suits.

    And because old Mabel and Bob are closer to the box than younger folks, the pointy shoed gents are extremely risk averse (as they should be), and this is where it gets exciting because you know what?

    They’re presently engaged in the worst possible leveraged speculation you can think of.

    Nope, it’s not Bitcoin.

    First, to understand the insanity we have to take a step back and examine how these pointy shoed gents think.

    They like fixed income because it’s far less volatile and ostensibly less risky than equities.

    They hate small caps and frankly can’t invest in them due to their size, and they have a disdain for commodity markets. That volatility thing again…

    In fact, volatility is like a barometer in their world by which everything else is measured.

    The problem is with central banks shatbit crazy interest rate policies none of them have been able to make any money in a yield starved world and so they’re, wait for it, selling volatility.

    Either through tailor made products from the investment banks or by buying any number of the low volatility ETPs out there.

    Volatility isn’t even an asset.

    In fact, the VIX is an index of volatility on 1 month to expiry ATM puts and calls on stocks in the S&P 500.

    But now the geniuses on Wall Street have figured that they can actually package this animal, which as you can see, is a derivative of a derivative, and treat it like a bond. Fun, heh?

    In all fairness, hats off to the asset managers who’ve had the balls to do this. They believed in the central banks’ liquidity machine, and they backed their belief and for that they deserve to be paid. I sure wouldn’t have been able to do it.

    Now, I’m not some miserable jealous git here to tell you that armageddon is coming and I’ve the answers.

    God knows there’s enough of that nonsense in the financial publishing blogosphere for you to get your fill elsewhere. What we do know, however, is that this entire game: the selling of vol, the passive indexing — all of it is predicated on one thing. The central banks keeping rates low and pumping liquidity into the market. It’s why BTFD has become a meme.

    The problem that I have with it, other than the distortions made, is that when so many are on one side of the boat like right now and that boat has many moving pieces, then I begin to wonder.

    I’m reminded that markets change at the margin, where the slightest hiccup can act like a spark to light the fire of volatility, and these poor suckers who’ve managed to earn steady incomes selling puts find out what “unlimited risk” actually looks like as they’re forced to cover in a market that’s gapping the other way.

    I’ve thought about this a lot and, in fact, we recently published how we are going “long vol” for members. And no, it’s not buying puts on VIX because that is, in my humble opinion… how do I say this politely, like begging to be stabbed in the eyes. repeatedly.

    In any event that’s just one angle to this market. Here’s another.


    I would be remiss in mentioning that as retirees retire, these pension funds will be drawn down.

    It’s what Mabel and Bob do to pay for their mushy food, viagra, and bingo nights.

    Now, I’m sure you’re all sharp enough to figure out what can happen to the assets these guys have been buying when they have to go from flat out full throttle, to stall, to reverse.

    How big is this problem?

    Well, for some context global institutional pension fund assets in 22 major markets stood at US$36.4 trillion at year end 2016, amounting to 62% of global GDP.

    That is a staggeringly large amount of money.

    Pension funds are big cumbersome dumb money. And they’re all allocated in equally dumb indexes, passive strategies, and bonds. So what happens when pensioners draw down on their funds?

    You tell me…

    Talking of staggeringly large amounts of money, the passive bubble grows bigger as I write this because this beast is fuelled not just by our pointy shoed friends but by Joe Sixpack himself.

    Bloomberg just ran a piece:

    BlackRock and Vanguard Are Less Than a Decade Away From Managing $20 Trillion

    Two towers of power are dominating the future of investing.
    Dominating indeed. Here’s how come the pointy shoed crowd can afford Tom Ford suits.
    The article goes on to say:
    Investors from individuals to large institutions such as pension and hedge funds have flocked to this duo, won over in part by their low-cost funds and breadth of offerings. The proliferation of exchange-traded funds is also supercharging these firms and will likely continue to do so.

    Sometimes when everyone is zigging and you zag, you just get run over. But think about it…

    We don’t need to go the other way. All we need to do is look where others are no longer.

    These behemoths don’t do battle in the little unloved sectors or with stocks that don’t make it into an index. They can’t because they’re too big.

    This means that there are a lot of orphans out there and here’s the good news. If it’s not in an index, passives aren’t buying it. And if passives aren’t buying it, it’s only active money that’s even looking at it.

    Which brings me to the double helping of good news.

    Here’s your competition in active with the accompanying passive.

    Right now, it’s a mosh pit food fight to grab and create the next index or ETF so that more capital can be attracted, earning more fees, buying more suits.

    This is all well and good.

    Markets do what markets do, and I’m not here to grumble about it. I’m here to make money. And indeed if I was in the passive business, I’d be enjoying the steady stream of fees and hoping like hell the market keeps going up.

    QE more? Yes, please.

    But I’m not.

    I’m a humble squirrel searching for nuts in the forest. And gosh, with all this moshing going on it’s wonderful how few other squirrels there are about. The same Bloomberg article makes a good point on this.

    While bigger may be better for the fund giants, passive funds may be blurring the inherent value of securities, implied in a company’s earnings or cash flow.

    Nah. You think?

    Stocks in the index funds no longer trade on fundamentals but rather on asset flows, which sucks the oxygen out of the small guys who don’t make it into the indexes where brain dead passive money is playing.

    It means we can gladly play in a sandpit with all the toys and there are very few we have to share them with.

    The Cracks Have Already Appeared

    Nothing lasts forever, and as I argued when discussing the impact of the incoming strong men on the global economy, there are 3 critical points worth thinking about:

    1. Political cohesion and stability can no longer be relied upon as politics becomes inward looking with everything from trade deals to central bank swap lines being renegotiated or cancelled altogether.
    2. Global coordinated central bank action. The era of global coordinated monetary policy which we’ve been experiencing since the GFC, especially with the three largest players (ECB, FED and BOJ), will be looked back upon with nostalgia by the current clutch of central bankers who muddy the halls of power. Policy will increasingly be driven with greater sensitivity to nationalist rather than international concerns, which brings me to…
    3. Liquidity in the financial system which has stemmed from easing monetary policy is already contracting. In a world where derivatives traverse borders, connecting financial systems like never before, a liquidity crisis presents enormous tail risk in a leveraged world.

    Invest accordingly, and thank you for reading.

    – Chris

    “If you can’t take a small loss, sooner or later you will take the mother of all losses.” — Ed Seykota


    Liked this article? Then you’ll probably like my other missives on

    this topic as well. Go here to access them (free, of course).


  • These Are The 30 Biggest Risks Facing Markets In 2018

    Once upon a time, Wall Street analysts had just two things to worry about: interest rate risk and corporate profits – virtually everything else was derived from these.  Unfortuantely, we now live in the new normal, where central banks step in every time there is even a whiff of an imminent market correction (as BofA explained last week), and the result is that nobody know what is and what isn’t priced into the market any more, simply because the market in the conventional sense of a future discounting mechanism no longer exists (as Citi explained earlier this summer).

    Which is why, paradoxically, even as the VIX slides to record lows, the number of things to worry about on Wall Street grows longer and longer. In fact, according to Deutsche Bank’s Torsten Slok, there are no less than 30 material risks investors should beware in the coming year, ranging from a U.S. equity correction to a reversal of Brexit to Irish presidential elections, to a “Bitcoin crash,” rising inflation, danger from North Korea and results from special counsel Robert Mueller’s probe.

    The risks should be thought of “not only as potential VIX-boosters but also as potential sources of faster or slower growth than what we have in our baseline forecast,” Slok explained in his note, which also shows that even without a major risk materializing, the GDP rebound of 2017 is unlikely to persist.

    As for the recent surges and drops in Bitcoin, “you wonder where prices will even be by the end of 2017,” Slok said during an appearance on CNBC’s Trading Nation broadcast.

    Predicting that price swings of the cryptocurrency will remain an issue in 2018, Slok said questions about Bitcoin regulation, transparency and disclosure issues remain unanswered. “It’s mainly because it is something that I think financial markets so far have been discounting as a small issue,” Slok said. “We do worry a bit that it could become more systemic, in particular, if the current trends continue into 2018.”

    But the Deutsche Banker’s biggest worry is understandably a spike in inflation in the coming months. Low national unemployment, growth projections for the nation’s gross domestic product, and other financial measures signal a potential rise, Slok said. As we have reportedly previously, virtually every bank from BofA to Goldman to Barclays has warned that their optimistic forecasts are null and void if inflation in the coming months spikes, forcing the Fed to tighten monetary conditions at a faster pace.

    On the geopolitical front, U.S. and global uncertainty about North Korea’s test launches of ICBMs capable of reaching the U.S. mainland and other potential targets could roil financial markets. Slok cited fear that we could have a “further escalation of the situation.”

    The bank’s worry list, in random order and featuring both upside and downside concerns for financial markets, questioned whether Jerome Powell, the incoming Federal Reserve chairman, will be “politically driven or driven by the incoming data.”

    Other risks include tests for the Fed’s near chair, the potential replacement of BOJ’s head Haruhiko Kuroda, the ECB announcing its QE exit in Q2, housing bubble bursts in Canada, Australia, Sweden or Norway, a correction in the U.S. stock market where there is a mismatch between valuation and fundamentals, a harder landing than expected for China as economic growth there slows, and many other risks which would all weigh on financial markets.

    “Are markets ready for even a small correction?” the Deutsche Bank strategist asked rhetorically, reminding his reads that there has not been one for “a long time.”

    The full list of 30 risk factors is below.

  • California Is Running Out Of Prisoners To Fight Its Deadly Wildfires

    While many on the left have celebrated California’s push to legalize marijuana as a victory for a progressive, harm-reduction approach to combating addiction and crime, the pullback in the number of low-level prisoners entering the state’s penal system is leaving the California Department of Forestry and Fire Protection.

    Court mandates to reduce overcrowding in the state’s prisons – combined with the legalization of marijuana, the most commonly used drug in America (aside from alcohol, of course) – have led to a sharp drop in the number of prisoners housed at state facilities in recent years. Interestingly, one byproduct of this trend is it’s creating headaches for the state officials who are responsible for coordinating the emergency wildfire response just as California Gov. Jerry Brown is warning that the severe fires witnessed this year – the most destructive in the state’s history – could become the new status quo.

    To wit, since 2008, the number of prisoner-firemen has fallen 13%.

    As the Atlantic reports, California has relied on inmates to help combat its annual wildfires since World War II, when a paucity of able-bodied men due to the war effort forced the state to turn to the penal system for help. More than 1,700 convicted felons fought on the front lines of the destructive wildfires that raged across Northern California in October.

    While communities from Sonoma to Mendocino evacuated in the firestorm’s path, these inmates worked shifts of up to 72 straight hours to contain the blaze and protect the property residents left behind, clearing brush and other potential fuel and digging containment lines often just feet away from the flames. Hundreds more are on the fire line now, combatting the inferno spreading across Southern California.

    But over the course of the last decade, their ranks have begun to thin. As drought and heat have fueled some of the worst fires in California’s history, the state has faced a court mandate to reduce overcrowding in its prisons. State officials, caught between an increasing risk of wildfires and a decreasing number of prisoners eligible to fight them, have striven to safeguard the valuable labor inmates provide by scrambling to recruit more of them to join the force. Still, these efforts have been limited by the courts, public opinion, and how far corrections officials and elected leaders have been willing to go…

    With dry conditions expected to persist for the foreseeable future, California will need to adjust to this new reality. Meanwhile, the fate of the inmate-firefighting program lies in the balance between two trends: the increasing need for cheap labor, and the pending decline in incarceration.

    The push to reduce overcrowding is a reaction to the rising incarceration rates of the 1990s, when President Bill Clinton declared gangsters and criminals “superpredators” and authorized stiff penalties for relatively minor drug offenses.

    For inmates, the reduction in state prison populations that first nudged that balance was long overdue. In the 1990s and 2000s, increasingly severe overcrowding in California prisons compromised medical services for prisoners and led to roughly one preventable death each week. A federal court ruled in 2009 that the inadequate health care violated the Eighth Amendment’s embargo against cruel and unusual punishment, and ordered the state to reduce its prison population by just shy of 27 percent – a cut of nearly 40,000 prisoners at the time of the ruling. California appealed the decision, but the Supreme Court upheld it in May 2011.

    As one might expect, the push to reduce overcrowding has had the greatest impact on the population of inmates in minimum security prisons. Typically, state officials prefer to recruit minimum security inmates who are already serving relatively light sentences and thus have the most incentive to cooperate and not cause problems (like disappearing into the wilderness).

    Also, state guidelines prohibit the recruitment of certain violent criminals and, of course, sex offenders.

    The pool of potential recruits was limited long before the courts’ mandate. It comprises only inmates who earn a minimum-custody status through good behavior behind bars and excludes arsonists, kidnappers, sex offenders, gang affiliates, and those serving life sentences. To join the squad, inmates must meet high physical standards and complete a demanding course of training. They also have to volunteer.


    “But,” cautioned David Fathi, the director of the ACLU’s National Prison Project, “you have to understand the uniquely coercive prison environment, where few things are clearly voluntary.” In the eyes of criminal-justice reformers, corrections officials recruit inmates under duress. “In light of the vast power inequality between prisoners and those who employ them,” Fathi continued, “there is a real potential for exploitation and abuse."

    Aside from the shrinking inmate population, a handful of inmate deaths this year while battling the NorCal wildfires is causing some low-level offenders to reconsider whether the incentives being offered by the state – credit toward parole, and a generous wage (at least by prison standards) – are really worth the risks.

    Many inmates join the force to escape unpalatable prison conditions. In doing so they take on great personal risk, performing tasks that put them in greater danger than most of their civilian counterparts, who work farther from the flames driving water trucks and flying helicopters, among other activities. By contrast, inmates are often the first line of defense against fires’ spread, as they’re trained specifically to cut firebreaks—trenches or other spaces cleared of combustible material—to stop or redirect advancing flames. The work can be fatal: So far this year, two inmates have died in the line of duty, along with one civilian wildland-firefighter. The first, 26-year-old Matthew Beck, was crushed by a falling tree; the second, 22-year-old Frank Anaya, was fatally wounded by a chainsaw.


    “Obviously this is not something that everyone is willing to volunteer for,” said Bill Sessa, a CDCR spokesman. “We’ve always been limited by the number of inmates who were willing to volunteer for the project.” Even when state prisons were at their most crowded, the camps where inmate firefighters live weren’t filled to capacity. And as the pool of qualified prisoners has contracted, he said, corrections officials have had to “work harder now than we did before to bring the camp to the inmates’ attention."

    In an effort to entice more recruits to join up, state officials are trying to emphasize the benefits of volunteering to fight the blazes: Volunteer firefighters can receive visits from family out in the open, instead of behind a thick pane of glass. It also allows them to escape the confines of the prison – for a brief time at least.

    But with legal marijuana rapidly draining the ranks of low level offenders, a sizable shortfall will likely to persist in the years to come.

    And after the death and devastation wrought by this year’s fires, many inmates have good reason to reconsider.

    After all, you can’t enjoy visits with family and friends when you’re dead.

  • Eric Peters: Today's Opportunities Include Negative Convexity, Complexity, Illiquidity, Leverage, Or All The Above

    From the latest Weekend Notes by Eric Peters, CIO of One River Asset Management


    “What are the odds we come across an opportunity in the coming 4yrs to earn 20%?” the investor asked his team.

    “High,” they answered. “The odds are 100%,” he said, having seen this movie a few times. “So our cost of capital is 5% per year (20% divided by 4yrs), plus the 1% we earn on cash,” he said. His team nodded.

    “Under no circumstances should we deploy capital unless it earns well more than 6% per year from here on out.” It made sense.

    “What do we see that earns more than this hurdle?” he asked. His team’s list was as short today as it was long in 2016, 2011, 2009, 2003, 1998, 1997, 1994, 1992, 1990, 1987, etc. Today’s few opportunities have much in common with previous peaks: negative convexity, complexity, illiquidity, leverage, and/or all the above.

    Investors confuse a 7.5% average annualized return target with a 7.5% annual return target,” he explained. “They’re entirely different things.”

    Targeting average annualized returns allows you to accept what the market gives you, while targeting annual returns forces you to leverage investments near peak valuations to hit your bogey. “Typical pension and endowment boards want incoming investment returns to consistently exceed outgoing flows.”

    So most investors attempt to produce the highest return every year, no matter what it takes. “But that’s the wrong objective. Never underestimate the value of cash and patience in achieving the real goal; superior returns over the complete cycle,” he explained.

    “Markets tell you what to do if you listen,” he said. “Near the highs, few opportunities exist to earn substantial returns, so you should take little risk. Near the lows, opportunities to earn attractive returns are abundant.” You should take a lot of risk. “This sounds simple because it is. It’s obvious. But obvious is not easy.”

  • "You Grow Up Wanting To Be Luke Skywalker, Then Realize You've Become A Stormtrooper For The Empire"

    Authored by US Army combat veteran Daniel Crimmins via,

    You grew up wanting so bad to be Luke Skywalker, but you realize that you were basically a Stormtrooper, a faceless, nameless rifleman, carrying a spear for empire, and you start to accept the startlingly obvious truth that these are people like you.

    Question: How do you Americans as a people walk around head held high, knowing that every few months your country is committing a 9/11 size atrocity to other people. Imagine if the 9/11 terror attacks were happening in America every few months. Again and again, innocent people dying all around you. Your brothers and sisters. For no reason.

    Daniel Crimmins from U.S. Army 3rd Infantry Division answered:

    Many of us are unable. Many of us watched 9/11, and accepted the government and media’s definition of the attack as a act of war rather than a criminal action. A smaller portion, drifting along passively thought a major war was coming, that people we knew were going to fight and die. Some of us maybe worried about our younger brother being drafted, despite being in college. Now, it seems stupid, but in the 72 hours after 9/11, some Americans, maybe suffering from depression, certainly with a mind shaped by comic books and action movies, ate up the “us vs. them” good vs. evil rhetoric spouted by the cowboy in chief. After all, he was the president, and no matter how bright you might think yourself, you can still be swayed by passion and emotion, led to terrible decisions.

    Some of us, therefore, left our dorm rooms, and walked down Main Street to the recruiter’s office. Some of us were genuinely surprised the office wasn’t full to bursting of young men eager to avenge their fallen countrymen. Some of us were genuinely surprised when we had to push the recruiter to stop trying to sell desk jobs and just let us join the damn Infantry.

    Image via

    Some of us got enlisted, then, and went down to Georgia, head high to mask the anxiety and fear they might have helped. Perhaps some number of Americans in this situation discovered that maybe it hadn’t been the best idea, but would be goddamned if they were going to admit it, and let everyone back home smuggly remark on how right they were.

    So they persevere. They learn to work as a unit, to look past personality issues, to see each other as Soldiers rather than as a race, or economic status, or any of the other things people hate about each other. They learn to kill.

    Then some of these people, perhaps while sitting hungover in the platoon area in the Republic of Korea hear that we have invaded Iraq. They have “Big Scary Bombs”, and Saddam Hussein, the secular Arab dictator had somehow colluded with the devoutly religious Osama Bin Laden to attack the US. They hated our freedom, you see.

    Then some of these young American men might transfer back to Georgia and be assigned to the 3rd Infantry Division, and end up in Iraq in January of 2005. And maybe these kids, still drunk on Fox News and fantasies of glory and renown being enough to win their ex-girlfriends back, are excited to go to Iraq. Sure, we hadn’t found any WMDs yet, and we had Hussein in custody, but they were still somehow a threat and had to be dragged kicking and screaming into Jeffersonian democracy. Inside every dirka is a good American, yearning to be free.

    So you fight. You kill. Watch friends die. Its usually quick, almost never quiet, but for the rest of your life, when you remember sitting at the bar with them, they’re blown open. You picture the nights you spent downtown at Scruffy Murphy’s, but instead of the stupid hookah shell necklace, your boy’s jaw is blown off, and his left eye is ruined, and he’s screaming.

    You fight, you kill, you watch friends die, and you notice a distinct lack of change. You kick in doors and tell terrified women to sit on the floor while you and your friends ransack their home, tearing the place apart, because they might be hiding weapons. There is no reason to believe this house in particular is enemy, same for the next one, and the one after that, or the seven before; they just happened to be there, and maybe they had weapons. Probably not, they almost never did. There were a few times when we had deliberate raids based on solid intel and we’d turn up some stuff, but generally we were just tossing houses because we could.

    Then maybe your FISTer [field artillery forward observer] forgets to carry the remainder, and drops a mess of mortars on the village your supposed to protect. Maybe the big Iraqi running at you screaming was just mentally ill. Of course, you won’t know this until after you’ve put seven rounds through his rib cage, and his wailing, ancient mother is cradling his body, spitting at you.

    Maybe when you get back to the FOB [Forward Operating Base], the Platoon Sergeant tells you you did the right thing; next time, it might be a suicide bomber. They tell you it was an honest mistake, it wasn’t your fault. They tell you to go get some chow, take a shower if the water works, and sleep it off. You did good work that day, apparently.

    Chris Hondros' well-known "One Night in Tal Afar" photograph (Getty Images) showing the aftermath of a checkpoint shooting – Samar Hassan, 5, screams after her parents were killed after their car unwittingly approached a US Army checkpoint at dusk in Tal Afar, Iraq.

    During chow, the TV is on AFN, and they are rebroadcasting some Fox News show, and you’re hearing about drone strikes, and all the great things we’re doing, and you can’t help but see that poor dumb assholes face, looking past his mother as he bleeds to death. He’s in pain, obviously, but he has the most perfectly confused look on his face. He doesn’t comprehend what’s happening. Little more hot sauce on your eggs doesn’t really help.

    Then you realize you haven’t seen anything to support the idea that these poor fuckers are a threat to your home. You look around and you see all he contractors making six figure salaries to fix your shit, train Iraqis, maintain the ridiculous SUVs the KBR dicks ride around in. You consider the fact that every 25mm shell costs about forty bucks, and your company has been handing those fuckers out like shrapnel flavored parade candies. You think about all the fuel you’re going through, all the ammo and missiles and grenades. You think about every time you lose a vehicle, the Army buys a new one. Maybe you start to see a lot of people making a lot of money on huge amounts of human suffering.

    Then you go on leave, and realize that Ayn Rand has no idea what the fuck she’s talking about. You realize that Fox News and Limbaugh and John McCain don’t respect you or your buddies. They don’t give a fuck if you get a parade or a box when you get home, you’re nothing to them but a prop.

    Then you get out, and you hate the news. You hate the apathy, and you hate the murder being carried out in your name. You grew up wanting so bad to be Luke Skywalker, but you realize that you were basically a Stormtrooper, a faceless, nameless rifleman, carrying a spear for empire, and you start to accept the startlingly obvious truth that these are people like you.

    Maybe your heart breaks a little every time some asshole brags about a “successful” drone strike.

    Your statement is correct enough; if all of America was one dude, that dude would not give a shit about the little brown people we’re burning and crushing and choking to death. We aren’t all like that, but it makes me incredibly, profoundly sad to see what my country actually is.

    Some of us care, and I think there are more every day.

  • 49 Countries Have Violated Sanctions On North Korea

    A new report from the Institute for Science and International Security has found that 49 countries violated sanctions on North Korea to varying degrees between March 2014 and September 2017.

    Infographic: 49 Countries Have Violated Sanctions On North Korea  | Statista

    You will find more statistics at Statista

    13 governments including Cuba, Egypt, Iran and Syria were involved in military violations, which as Statista's Martin Armstrong notes, includes either receiving military training from North Korea or being involved in the import and export of military equipment.

    The range of nations involved in breaching non-military sanctions is much broader.

    Those violations include importing and exporting sanctioned goods and minerals or aiding shipments by re-flagging vessels. Other instances include the involvement of front companies as well as other business activities like financial transactions. The list of nations violating sanctions non-militarily includes China, France, Germany and Japan.

    13 other countries violated sanctions in a manner that seems completely inadvertent.

    North Korea targeted countries including the Canada, Switzerland and the U.S. in an attempt to buy equipment which could potentially have military applications. This strategy has proven successful in the past, with the most famous example occurring in the 1980s when Pyongyang duped U.S. aerospace manufacturer McDonnell Douglas in order to illegally obtain 87 civilian MD-500 helicopters. The North Korean military later modified them to carry Susong-Po anti-tank missiles and these aircraft are still in active service today.

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Dec 08

Today’s News 8th December 2017

  • Time For Détente With North Korea

    Authored by Robert McCoy via The Strategic Culture Foundation,

    While the military and political environments on the Korean Peninsula have evolved, American policy towards the North has not changed since 1991

    North Korea’s Hwasong-14 ICBM. Photo: KCNA via Reuters

    The reality is North Korea has nuclear weapons – perhaps thermonuclear bombs – and they are probably miniaturized enough to fit atop its missiles, one of which will soon be, if not already, able to reach all parts of the continental United States.

    Washington missed an opportunity for a preventive strike that would have stopped the North Korean nuclear effort – or at least seriously set it back – in 1994.

    The decision to not take action was based on the advice of a former US president who believed that the United States would be able to successfully negotiate with Pyongyang.

    And by relying upon diplomacy to deal with Pyongyang during that time, Washington has failed to get North Korea to cease developing nuclear weapons, and now to give them up.

    The state of affairs can now be summarized as the three “no’s” of North Korea:

    First, as Pyongyang has stated on many occasions, there will no negotiating away its nuclear weapons or missiles.


    Second, there will be no collapse or internal revolution bringing down the Kim Jong Un regime.


    And third, there will be no participation by North Korea in any reunification effort headed by South Korea – with or without any of Seoul’s allies.

    No negotiations

    With its nuclear and missile programs in their crowning stages, Pyongyang has absolutely no reason to negotiate with either Seoul or Washington. The goal of nuclear deterrence is finally in its grasp. As the North has often declared, its nuclear weapons and missiles are the only guarantors of its existence and they will not be given up.

    Neither has Pyongyang indicated any interest in Beijing’s “freeze for freeze” proposal in which the North would stop developing its nuclear weapons and testing missiles in exchange for ceasing war games on the peninsula by Seoul and its allies. That is an unequal trade.

    The North already has the ability to hold South Korea and much of Japan hostage to its conventional weapons. With the addition of nuclear weapons and longer-range missiles, the real target has been openly identified: the United States, as Pyongyang has asserted not only in the past but recently as well.

    No revolution

    Despite the appalling conditions endured by average North Korean citizens, there are no indications that the regime itself is anything but stable. While citizens have every reason to be dissatisfied and unhappy, the conditions for a successful uprising simply do not exist.

    There is no critical mass of would-be revolutionaries, but even if a sufficient number did exist, communication among citizens is restricted and monitored. And heavy surveillance by authorities further prevents any organization or coordination of a revolution.

    Above all, there is such a lack of knowledge about how the regime functions that it would be an insurmountable challenge to overthrow the Kim dictatorship from the grass-roots level.

    And while some citizens may be holding in their discontent, it is because they are well aware of what punishment awaits protesters: either summary execution or sentences to prison camps, which often enough are death sentences in slow motion.

    No reunification

    There are reasons why there will be no reunification of the two Koreas any time soon. To begin, there is no significant economic or political engagement with the North. No trust has been established for such endeavors to proceed, so engaging Pyongyang in commercial activities such as reopening the Kaesong Industrial Complex is thus premature.

    Another condition necessary for reunification is for at least one of the two states contemplating reunification to be in crisis. If both nations are stable – and both appear to be – there is no motivation to change the status quo. Predictions that the North will collapse or experience a destabilizing insurrection has been shown to be nothing more than wishful thinking for decades.

    There needs to be some power-sharing agreement, however that doesn’t exist today and there seems to be nothing like that in the works. Moreover, for such an arrangement to work, compromises that would either be unacceptable to either side or cumbersome to deal with – “one country, two systems” for example – would be required.

    Finally, for any reunification attempt to succeed, there would have to be some third-party guarantor of the process to prevent outside interference and to look out for the interests of both North and South Korea. Finding such a state acceptable to all other nations in the region looks an impossible task.

    Detente only option

    Military options by Washington are not possible because of the intolerable collateral costs to South Korea – and quite possibly to Japan as well.

    Unfortunately, as the past 25-plus years undeniably show, diplomacy has not worked. The reality is that Pyongyang has nuclear weapons, it has the means to deliver them, and it will continue to exist for the foreseeable future.

    The US established successful détente first with Moscow and later with Beijing as those two countries developed their nuclear weapons and delivery systems.

    The US learned how to coexist with two nuclear adversaries in the past, and now needs to do that with Pyongyang. Washington must revert to realistic diplomacy. There is no other acceptable choice.

  • What's The Best Company To Work For Where You Live?

    With unemployment in the US purportedly reaching its lowest level in 17 years (that is, according to the Department of Labor's flawed household survey) employees who once would've been too fearful to leave their jobs are now actively looking for opportunities. With that in mind, many have probably wondered what's the best company to work for where they live?

    Well, gathered data compiled by Forbes into an infographic to try and map out the best and largest employers in every country.

    Forbes recently released a ranking of the best companies in the world using a variety of different perks and benefits, like the quality of food served to employees, parental leave policies or whether companies allow their employees to nap while on the job.

    HowMuch mapped these companies by paying attention to their market capitalization to get a feel for how large an organization needs to be to afford such high-quality benefits. One company therefore represents each country, color-coded by market cap. Red countries have an employer worth over $100 billion, and dark blue countries boast relatively small employers under $10 billion.

    Several trends immediately pop out from our map:

    • Red countries with huge companies predominantly originate in North America and Western Europe.
    • Alphabet is the largest on our list by a landslide with a market cap of $579.5 billion, bigger than the entire GDP of Argentina.
    • The three exceptions proving the rule are a tobacco company in India called ITC with a market cap of $51.6 billion, plus Hong Kong (CNOOC, $54.8 billion) and Taiwan (Han Hai Precision, $54.4 billion). All three of these places experienced long-term and unique economic and political relationships with the West.
    • Africa only contributes a single company to Forbes’ list, namely Remgro from South Africa, a conglomerate made of many subsidiaries from different industries.
    • The Middle East and Eastern Europe also have only a few companies that made the cut.

    Here’s a simplified list of the countries with the best employers in the world, ranked in order of their total market cap:

    • 1. United States – Alphabet: Computer Services – $579.5B and 72,053 employees
    • 2. Switzerland – Nestle: Food Processing – $229.5B and 328,000 employees
    • 3. Netherlands – Unilever: Household/Personal Care – $143.9B and 169,000 employees
    • 4. Germany – Daimler: Auto & Truck Manufacturers – $76.1B and 282,488 employees
    • 5. Hong Kong – CNOOC: Oil & Gas Operations – $54.8B and 19,718 employees
    • 6. Taiwan – Hon Hai Precision: Electronics – $54.4B and 1,000,000 employees
    • 7. Canada – Suncor Energy: Oil & Gas Operations – $51.7B and 12,837 employees
    • 8. India – ITC: Tobacco – $51.6B and 25,564 employees
    • 9. Italy – Enel: Electric Utilities – $47.5B and 62,080 employees
    • 10. Australia – CSL: Biotechs – $43.9B and 16,000 employees

    Coming in at No. 1 is, of course, Alphabet. It tops the list because of its size and market dominance.

  • Expect Desperate, Insane Behavior From Government In 2018 – Part 3

    Authored by Mike Krieger via Liberty Blitzkrieg blog,

    In the first two installments of this series, I discussed the potential for the U.S. federal government to make some spectacularly foolish moves against its own people in the realms of cannabis and Bitcoin.

    My basic assumption is that government tends to despise freedom, and that “leaders” of an empire in decline like the U.S. are particularly vulnerable to very bad decisions.

    Government propagandists constantly instruct the public that they need to be fearful of their neighbors or some guy in a cave overseas (who they probably funded in the first place), when they themselves tend to be the most unethical, corrupt thieves of all. It’s a very clever scam.

    With that in mind, today’s post will zero in on what I consider to be the greatest threat to world peace going into 2018. While I remain unsure as to what the U.S. government may attempt when it comes to cannabis and Bitcoin, I’m far more concerned about the prospects of Donald Trump entangling this nation in an escalating and increasingly disastrous conflict in the Middle East. The signs are everywhere, and it’s all becoming very obvious. In fact, I’ve probably written more articles on this topic than any other in 2017.

    Rather than rehash everything I’ve already said, below are links to my October series on the matter:

    Empire Destroying Wars Are Coming to America Under Trump – Part 1

    Empire Destroying Wars Are Coming to America Under Trump – Part 2

    Empire Destroying Wars Are Coming to America Under Trump – Part 3

    Confrontation with Iran has been the holy grail of neocons for decades, but it’s become increasingly likely under Trump, as I detailed above. Since I wrote those articles, the situation has only escalated and Trump has decided to attach himself even more clearly to the hip of crazed Saudi princeling Mohamed bin Salman (MBS) and Israel. It’s become obvious that Trump sees both Israel and Saudi Arabia as direct extensions of the U.S., and is quite willing to sacrifice his own country to protect their position. In prior posts, I spent most of my time focused on why I thought Trump would go in such a non-MAGA direction. Today’s post will focus on why I think it’ll be such a historical failure.

    Conventional wisdom says that a dedicated alliance of the U.S., Israel and Saudi Arabia is an unstoppable force in the Middle East. Trump’s bought into this view hook, line and sinker, which is why he’s willing to go all in on such a foolish showdown with Iran. I’m going to take the complete other side of that view, and assert than a more aggressive posture against Iran in the Middle East will lead to another huge fail, sparking a more serious collapse in the U.S. empire and ultimately Iranian domination of the region. Crazy, you say? I also heard Brexit had no shot and that Trump couldn’t win. When it comes to conventional wisdom at this point in the historical cycle, I want to be short.

    Why do I think this? First of all, the U.S. simply doesn’t have the position it thinks it has in the world any longer. The moral authority, irrespective of whether it was ever deserved in the first place, is gone. Disastrous and bloody wars based on lies and media propaganda have been exposed for the world to see, and many allies won’t be willing to go along with an unnecessary Saudi/Israel/USA mission against Iran. Empires always make increasingly stupid decisions toward the end driven by hubris and a lack of self-awareness. The U.S. is no different.

    Second, the U.S. would be getting in bed with a complete and total lunatic when it comes to de facto Saudi leader MBS. Pretty much everything this guy touches turns to shite, with his campaign in Yemen and attempt to isolate Qatar being prime examples. Now with his mass arrests of Saudi princes and other powerful people/family members in a quest to firm his position, he’s lost even more credibility in the region and created a slew of dangerous enemies, who will never forget what he did to them.

    MBS is far, far weaker both internally and externally than he realizes. He thinks he’s this grand figure who’s destined to bring glory to himself and Saudi Arabia in the region, but he’ll end up accomplishing the exact opposite. In addition to all the the dangerous mistakes I’ve already mentioned, he recently made the biggest mistake of all by bringing the Saudi-Israeli alliance public for the world to see.

    Here’s a little snippet from an NBC News article published last month to give you a little sense of what’s going on:

    For Israel, Saudi Arabia’s growing willingness to confront Iranian influence in the Middle East presents an opening for an awkward alliance. As the kingdom’s dynamic new crown prince, Mohammed bin Salman, tries to rally an anti-Iran coalition, Israel — with the blessing of the Trump administration — is presenting itself as a willing and able partner.


    The appetite for cooperation between two of America’s closest allies in the Middle East has grown in recent years as their security interests have dovetailed. Both Israel and Saudi Arabia view Iran’s growing influence in the region as an existential threat and want to squash militant Islamist groups like ISIS and Iran’s main proxy, Hezbollah.


    A U.S. official who witnessed a Saudi and Israeli official hold a closed-door meeting together recently said such informal meetings have been taking place for “at least five years.”

    Remember, MBS has an undeservedly huge head and thinks of himself as some brilliant strategician. He thinks by publicly cozying up to Israel he’ll gain the total support and blessing of the Trump administration for whatever insane crusade his twisted mind can envision. In that sense, he’s correct, but I’m of the opinion he loses a lot more than he gains by going down this route. 

    Everything this princeling does is shortsighted and driven by impulsive arrogance. He just gave the biggest gift possible to Iran by becoming close to Israel, because the average person on the street in the region will see this as a massive betrayal. The Iranian leadership gets this. As Reuters reported:

    (Reuters) – Iranian President Hassan Rouhani urged Muslims on Tuesday to disrupt what he called a plot by unnamed countries in the region to build ties with Israel.


    He gave no more details on the states. But an Israeli cabinet minister said last month that his government had covert contacts with Saudi Arabia linked to their common concerns over Tehran.


    “Some regional Islamic countries have shamelessly revealed their closeness to the Zionist regime (Israel),” Rouhani said in a speech broadcast live by state TV.


    “I am sure that the Muslims around the world will not let this sinister plot bear fruit.”

    This entire thing is setting up to be the graveyard of the U.S. empire. Recall what I wrote in my October post:

    It’s sad to say it, but over the course of the 21st century the U.S. government has exposed itself as a corrupt bully, not just to the outside world, but also to its own people. Moreover, those in positions of power and influence in America either don’t recognize this reality or don’t care. It’s this sort of disconnected hubris combined with rampant internal corruption that is the true graveyard of empires. I think both allies and enemies abroad have had enough, and given the right opportunity, will let the U.S. sink.

    With that in mind, read the following from Reuters:

    France rejected the “unilateral” decision while appealing for calm in the region. Britain said the move would not help peace efforts and Jerusalem should ultimately be shared by Israel and a future Palestinian state. Germany said Jerusalem’s status could only be resolved on the basis of a two-state solution.


    Trump upended decades of U.S. policy in defiance of warnings from around the world that the gesture risks aggravating conflict in the tinderbox Middle East.


    Palestinian President Mahmoud Abbas, in a pre-recorded speech, said Jerusalem was the “eternal capital of the State of Palestine” and that Trump’s move was “tantamount to the United States abdicating its role as a peace mediator.”


    Lebanese President Michel Aoun said Trump’s Jerusalem decision was dangerous and threatened the credibility of the United States as a broker of Middle East peace. He said the move would put back the peace process by decades and threatened regional stability and perhaps global stability.


    Qatar’s foreign minister, Sheikh Mohammed bin Abdulrahman al-Thani, said Trump’s undertaking was a “death sentence for all who seek peace” and called it “a dangerous escalation”.


    Turkey said Trump’s move was “irresponsible”.


    Iran “seriously condemns” Trump’s move as it violates U.N. resolutions on the Israel-Palestinian conflict, state media reported. Supreme Leader Ayatollah Ali Khamenei said earlier in the day that the United States was trying to destabilize the region and start a war to protect Israel’s security.

    If the decision on Jerusalem ends up inflaming the region in aa major way, the entire world will see Trump and the U.S. as directly responsible. This will further the perception amongst allies that the U.S. is a global problem, and raise the likelihood that any military adventure in the region instigated by the U.S., Saudi Arabia and Israel will fail spectacularly. This trio will increasingly look like an alliance of rogue states to most of humanity.

    While I’m already sufficiently concerned about the likelihood of another stupid escalation in the Middle East by Trump, there are milestones I’m looking out for to let me know it’s about to get really bad. At the core of any major disaster will be Senator Tom Cotton, a rabid neocon who I unequivocally believe is the most dangerous, anti-freedom person in the U.S. Congress. He reminds me of an American Mohamed bin Salman, and his elevated prominence around Trump earlier this year is what got me increasingly concerned in the first place.

    If Cotton takes on a more senior role in the Trump administration, such as a rumored position as CIA director, you can bet the farm that U.S. foreign policy is about to take the most dangerous turn since George W. Bush. Tom Cotton is a neocon on steroids, and seems to genuinely love conflict and authoritarianism. To get a better sense of what sort of person he is, take a look at him taking Twitter legal counsel to task. He believes U.S. companies act as an active arm of state intelligence.

    If that doesn’t send a shiver down your spine, I don’t know what will.

    Tom Cotton policy on anything represents a guaranteed nightmare for America and its people. If Trump promotes him in any way, prepare for almost unimaginable foreign policy disaster.

    *  *  *

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  • Bloomberg Has Identified Buffett's Successor At Berkshire Hathaway (It Thinks)







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    There are some well-kept secrets in the financial world. For example, there’s the identity of the person or people who designed Bitcoin under the pseudonym, Satoshi Nakamoto. Then there’s the identity of the parties responsible for the frequent dumping of billions of dollars of gold futures contracts on to the market without regard for maximising price. Another one is Warren Buffett’s successor as Chief Executive Officer Berkshire Hathaway.

    Besides his advancing years, he’s 87, there are other signs that curtain is coming down on the era of the <span lang="EN" style="mso-ansi-language:
    EN”>world’s most successful investor. As we noted in August in “The Value Of Lunch With Warren Buffett Plunges 22%”.

    The winning bidder in legendary investor Warren Buffett’s annual charity auction has<span lang="EN" style="font-family:"Calibri",sans-serif;mso-ascii-theme-font:minor-latin;
    <span lang="EN" style="font-family:"Calibri",sans-serif;
    minor-latin;mso-ansi-language:EN;font-weight:normal;mso-bidi-font-weight:bold”>pledged $2.68 million for the privilege of eating lunch with the billionaire investor…While the sum is far greater than the $25,000 paid in 2000
    – the first year Buffett held the fundraiser – it’s <span lang="EN" style="font-family:"Calibri",sans-serif;
    minor-latin;mso-ansi-language:EN;font-weight:normal;mso-bidi-font-weight:bold”>about $800,000 shy of the record sum of $3,456,789 paid in 2012 and 2016.

    By his own admission, Buffett has also found it increasingly challenging to find “value” in keeping with his investment style which he modelled on an earlier doyen of value investing, Benjamin Graham. That’s not Buffett’s fault, it merely reflects the longevity of the latest iteration of central bank bubbles.

    <span lang="EN" style="mso-bidi-font-family:Calibri;
    mso-bidi-theme-font:minor-latin;mso-ansi-language:EN”>Speaking to the usual throngs of shareholders as Berkshire’s AGM in May 2017, Buffett admitted that.

    <span lang="EN" style="mso-bidi-font-family:Calibri;
    mso-bidi-theme-font:minor-latin;mso-ansi-language:EN”>“If I die tonight, I think the stock would go up tomorrow.”

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    EN;mso-fareast-language:EN-GB”>He wasn’t joking, the world’s greatest capital allocator was merely acknowledging that the market would likely price the parts of his very disparate conglomerate higher than the whole. “It would be a good Wall Street story”, he was reported to have said.

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    EN;mso-fareast-language:EN-GB”>Bloomberg Businessweek has published an article on Buffett and Berkshire Hathaway arguing that the pressure to break up the company will mount after he steps down. Buffett’s successor will be critical if that is to be prevented…and Bloomberg thinks it knows his identity. For the time being, while Buffett remains in situ, nothing is going to change.

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”>The glue is Buffett, who’s argued persuasively for decades that this hodgepodge makes sense. His market-beating returns have helped: $100 invested in Berkshire in 1964, when he began aggressively buying shares to take control, would be worth more than $2 million today.

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”>Nothing of the sort is likely to happen while Buffett is there. He’s still the controlling shareholder, Berkshire is his life’s work, and he doesn’t want it torn apart by investment bankers or activist investors. To slow that process, Buffett assembled a board that backs his approach, and after his death he’ll leave his remaining shares to charities run by family and friends who know his wishes. But the pressure to dismantle his creation will mount—eventually.

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”>The bulwark against that impulse will be Buffett’s successor as chief executive officer, whose identity is one of the business world’s best-kept secrets. In all his years of giving interviews and taking questions at the company’s marathon annual meeting, Buffett has acknowledged that the board has picked his replacement, but he’s never disclosed the name.

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”>In a cheeky dig at Buffet’s ego, the Businessweek article suggests that by naming his successor, it might take the spotlight away from the man himself, “who loves the attention”. While we think there’s some truth to that, we also agree that Berkshire’s board is keen to give itself room to maneuver. Prior to his resignation from Berkshire, it was widely accepted that David Sokol, known as his “Mr Fix-It and major influence on acquisition targets, would succeed Buffett.

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”> Arguing that “These days, however, most arrows are pointing toward one man”, Bloomberg begins making its case by re-capping what Buffett has said about the qualifications for his job.  

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”>Buffett, at least, has talked about the qualifications for the position. In a <span style="color:windowtext;text-decoration:none;text-underline:
    none”>2015 letter to shareholders
    , he said the board wants his successor to be drawn from the company’s ranks and “relatively young, so he or she can have a long run in the job.” He suggested future Berkshire CEOs should hold the post for more than a decade and that they should be “rational, calm, and decisive.” And, he noted, they should have upstanding character, be unmotivated by ego or a big paycheck, and be “all-in” at Berkshire.

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”>As the article points out, Buffett neglected to mention stockpicking skills, although the next CEO will be able to call on the two former hedge fund managers hired by Buffett, Todd Combs and Ted Weschler. The two manage about $20 billion of Berkshire’s stock portfolio, but are unlikely to have the skills or the desire to oversee Berkshire string of operating businesses. The role of Chairman is expected to be given to eldest son, Howard Buffet who’s job will be to “guard the company’s culture—and force out any future CEO who messes with it”.

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”>Bloomberg thinks that a major clue to the identity was dropped by Buffett’s partner, Charlie Munger.

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”>Munger called two executives—Ajit Jain and Greg Abel—examples of the company’s “world-leading” managers who are in some ways better than their boss. While Buffett later denied that any executives were in a “horse race” to succeed him, the logical inference from Munger’s letter was that the board had already settled on one of these two—and probably wasn’t as seriously considering other internal candidates such as BNSF Executive Chairman Matt Rose or Tony Nicely, the CEO of Geico. Abel declined to comment, and Jain and Buffett didn’t respond to requests for comment.

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”>Jain and Abel each fit many aspects of Buffett’s carefully tailored job description. They’re deeply committed to Berkshire’s culture, which prizes efficiency and long-term thinking. Neither has outward character flaws that would immediately be disqualifying. And each has built large businesses for Buffett.

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”>Jain runs the insurance business, which remains the core of Berkshire, while Abel runs the energy/utility businesses. It’s tough to make a judgement between the two, but Bloomberg thinks that, in the end, Abel’s youth will sway it.

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”>Jain runs the company’s namesake reinsurance operation, which for decades has provided Berkshire with billions of premium dollars for investments and acquisitions. Buffett has repeatedly said that Jain has probably made more money for shareholders than he has. In 2011 he said the board would make Jain CEO if he wanted the job.

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”>Abel has steadily expanded a utility holding company in Iowa into a colossus in the energy industry. It runs several power companies throughout North America and the U.K., interstate natural gas pipelines, and giant wind and solar farms. It’s a big part of Berkshire that stands to get only bigger, Buffett said in May, adding that it’s “hard to imagine a better-run operation.”

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”>A key distinction between the two executives is age: Jain is 66, Abel is 55. Buffett is proof that the CEO can do well by shareholders long past typical retirement age. Even so, Jain has been facing some health challenges that could eventually make working more difficult, according to people who’ve recently spent time with him. Analysts and some longtime investors don’t think he wants the job. He’s also spent his career in insurance, a business less essential to Berkshire than it once was.


    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”>Bloomberg notes that others are increasingly sharing the same view about Greg Abel, including Berkshire investors and analysts. If Abel is the man for the job, he will have to contend with Berkshire’s need to allocate around $400 billion of capital over the next decade, a larger sum than Buffett deployed during the last half century. The article argues that Abel is far from a bad allocator.

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”>That’s a skill Abel has spent years honing. An accountant by training, he joined the business he now runs in 1992 when it was a small geothermal power producer in California. Its head at the time was Sokol, who spotted talent in the young executive and promoted him to bigger roles. In 2000, as investors chased the latest dot-com stocks, Berkshire bought a majority stake in the business.

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”>Being part of Buffett’s empire created an opportunity. Abel’s company, then called MidAmerican Energy Holdings, was able to retain its earnings, a rarity in the utility industry, where the norm is to pay generous dividends..For a time, he ran a utility in the U.K. People who’ve worked for him say he’s steeped in the details of his operations. He often visits his far-flung utilities in person. “He’s made big bets,” says Jeff Matthews, an investor who’s written three books about Berkshire. “He’s as smart as they come.”

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";
    mso-ansi-language:EN;mso-fareast-language:EN-GB”>Ironically, if Abel is promoted to fill Buffet’s considerable boots, one scenario which would make his job considerably easier would be a market crash. Finding value would be much easier in deploying the company’s $100 billion cash mountain.

    <span lang="EN" style="mso-fareast-font-family:"Times New Roman";

    <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;
    line-height:21.75pt”><span lang="EN" style="font-size:13.5pt;font-family:"Georgia",serif;
    mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:Arial;

  • Silicon Valley's 'Working Homeless' Shows How Hard Life Is In "Democrat's Paradise"

    Authored by Mac Slavo via,

    Silicon Valley is the home to tech giants like Facebook, Apple, and Google. It’s also home to a surging working homeless population who live in dilapidated RV’s, tents, and their own cars, all thanks to the policies Democrats love to implement.

    The surging number of those working in Silicone Valley and still unable to afford adequate housing should be a warning about big government, but it sure doesn’t seem like anyone is taking notice as their taxes continue to rise.

    As governments creep toward socialism though, poverty becomes the norm, not the exception.

    Silicon Valley has the highest median income in the nation. But a soaring tax burden and expensive regulations have caused housing prices to increase which has also caused homelessness to surge.

    More than 10,000 people were living without shelter across San Jose and Santa Clara Counties on any given night in 2016, though that figure is probably low. Thanks to big government, the cost of living is not low.

    An influx of tech workers along with decades of under-building (thanks again to the regulations of big government) has created a historic homelessness in the Bay Area.

    The governments in California continue to attempt to control deadly Hepatitis A outbreaks caused by a booming homeless population and usually do so by taking even more from those who actually work. The cycle will continue: socialists governments will put a cheap band-aid on the gaping wound they created themselves.

    Rather than freeing poor people from dependence on benefactors and bosses, they merely transfer the dependence to the state, leaving the least politically connected people at the mercy of the political process. FEE

    The one thing government has are programs to help those in poverty. But those have proven ineffective. And the one thing that will work is the very thing government refuses to do: Climb off the backs of those they pretend they want to help.

    Progressives routinely deplore the “affordable housing crisis” in American cities. But it is the very laws that Progressives favor—land-use policies, zoning codes, and building codes—that ratchet up housing costs, stand in the way of alternative housing options, and confine poor people to ghetto neighborhoods. Historically, when they have been free to do so, poor people have happily disregarded the ideals of political humanitarians and found their own ways to cut housing costs, even in bustling cities with tight housing markets.  – FEE

    Imagine just how much more money the working poor would have if the big government in California wasn’t stealing over half their income to implement the very rules and laws that continue to make “scraping by” even more expensive.

  • IMF Stress Tests Find $280 Billion Black Hole In Chinese Banks' Capital

    The IMF released a new analysis on the instability stability of the Chinese financial system. Speaking to the media in an online briefing, some of the insights from Ratna Sahay, deputy director of the IMF’s Monetary and Capital Markets Department, hardly advanced our knowledge much.

    Sahay noted that “Risks are large. Having said that, the authorities are really aware of risks and they are working proactively to contain these risks.”

    That’s why the authorities are finally racing to contain the worst excesses of China’s insane credit boom following October’s Party Congress, for example overhauling the $15 trillion shadow banking and asset management sector. As we noted on the latter, the new measures don’t take effect until the end of June 2019, no doubt reflecting the enormity of the problems uncovered by Chinese regulators.

    Sahay pointed to three main risks: credit growth, the complex and opaque financial system and implicit guarantees which “encourage excessive risk-taking” (think WMPs).

    However, the IMF does a better job in explaining why a massive financial crisis in China is all but inevitable – the conflicting needs of social stability versus financial stability. According to Reuters.

    But the near-term prioritisation of social stability seems to depend on credit growth to sustain financing to firms even when they are non-viable, it said. “The apparent primary goals of preventing large falls in local jobs and reaching regional growth targets have conflicted with other policy objectives such as financial stability,” the report said. “Regulators should reinforce the primacy of financial stability over development objectives,” the fund said.

    Too late.

    Xi Jinping and his predecessors allowed the excesses to go too far before Xi had solidified his grip on power sufficiently to intervene. The IMF itself has been missing in action when it comes to assessing China’s financial stability, as the latest report was the first of its kind since 2011. In terms of a financial system which has been out-of-control, we can use growth in the wealth management products (WMPs) as a proxy.

    The IMF conducted stress-tests on 33 Chinese banks in a so-called “severely adverse scenario” and the majority failed. The capital shortfall even under this scenario was a staggering $280 billion dollars, about 2.5% of GDP. We should highlight – and we suspect it’s significance won’t be lost on readers – that the IMF stated in a footnote that the PBoC did not provide access to all of the “supervision data” it needed to properly conduct the stress tests. Bloomberg discusses the results.

    China’s banks should increase their capital buffers to protect against any sudden economic downturn following a credit boom, the International Monetary Fund said. In its first comprehensive assessment of China’s financial system since 2011, the IMF recommended “a gradual and targeted increase in bank capital.” In a worst-case scenario, IMF stress tests suggested the country’s lenders would face a capital shortfall equivalent to 2.5 percent of China’s gross domestic product — about $280 billion in 2016 — together with ballooning soured loans.

    Overall, 27 of 33 banks stress-tested by the fund, covering about three quarters of China’s banking-system assets, were under-capitalized by at least one measure. A larger financial cushion would better reflect potentially underestimated risks stemming from the banks’ exposure to opaque investments, and absorb losses as implicit government guarantees are removed, the fund said.

    We are struggling to believe the IMF’s finding that the “Big Four” state-owned banks have sufficient capital. As we explained in detail in “How Ghost Collateral And Yin-Yang Property Loans Will Collapse China’s Credit Bubble”, there is an epidemic of fraudulent loans in China, with all parties, including the legal profession and the courts, complicit. At the same time, Xi is cracking down on the systemic corruption within government, so it doesn’t take much to link the two in the case of the Big Four. Nevertheless, Bloomberg notes the IMF’s assertions.

    China’s top four banks, led by the world’s largest lender by assets Industrial & Commercial Bank of China Ltd., have enough capital, the fund said. But it said the nation’s smaller lenders, including those focused on individual cities “appear vulnerable.”

    “Stress test results reveal widespread under-capitalization of banks other than the Big Four banks under a severely adverse scenario,” the fund said in its report. “Increasing capital would enhance the resilience and credibility of the financial system, as well as reassure markets.” The fund didn’t name the specific banks that need more capital.

    There are some moments of mild tragi-comedy in the IMF’s report, for example, when it notes that the official proportion of non-performing loans in the Chinese banking system – 1.5% at the end of June 2017 – may understate the reality. Even using the official figures, China’s “debt at risk” exceeds most other major EM economies.

    Stress-testing the 22 Chinese banks under the “severely adverse” scenario, the IMF calculate that the non-performing loan ration would rise from 1.5% to 9.1%, cutting tier 1 capital ratios by 4.2%. Under these circumstances, bank would have to slow the pace of lending to the Chinese economy and the fiscal impact could exceed the direct recapitalization needs of the banking system “by a wide margin”, a.k.a a major crisis.

    The PBoC responded surprisingly quickly to the IMF report. Regarding the very low official figure for bad debts, it noted that it resulted from banks having written off the bad ones, although obviously doesn’t square with the incredibly low number of defaults which continues to be a feature in the banking system. Bloomberg reports the response to the stress tests as follows.

    Responding to the report, the People’s Bank of China said the assessment was generally fair but disputed the IMF’s interpretation of the stress test results. “Comments about the stress test in the report do not fully reflect the results of the tests," the central bank said in a statement on its website Thursday. "China’s financial system has shown relatively strong capability to cope with risks.”

    As we’ve found to our own cost on many occasions, hubris is not a good think when it comes to financial markets.

    To its credit, the IMF’s staffers did place a lot of focus on the risk from guaranteed returns and off-balance sheet exposure in China’s $4 trillion WMP sector. Without calling it a Ponzi scheme, they identify the possibility of a bank-run.

    “Off-balance sheet WMPs also represent a significant risk to capital,” the report said. “They are not guaranteed, but banks almost always compensate retail investors for principal losses. In a stress scenario, the costs to the banks of supporting WMPs could be substantial and could, in case of a run, place the liquidity position of some banks under strain.”

    As part of the stress-tests, the IMF discovered four banks that could suffer liquidity shortfalls within 30 days, while confirming that the liquidity position of the Big Four was “strong” (hmmm). Besides increasing bank capital, holding more liquid assets and reforming WMPs, we were intrigued by another of the IMF’s recommendations. The IMF stated that the PBoC and other regulators needed a substantial increase in staffing. We find this hard to believe…and very worrying…but the IMF found.

    …the staff count at the “PBoC and the regulatory agencies has not risen in 10 years, while the financial sector has doubled in size.

    It’s even less surprising how fraudulent lending grew into an epidemic in the Chinese financial system. What the IMF report doesn’t say is that it’s gone way too far to ever be reined back in orderly fashion. We are reminded of some Bank for International Settlements (BIS) analysis discussed by Bloomberg a year ago. The BIS found that the single most reliable indicator of looming banking crises is when the aggregate of credit to households and businesses exceeds GDP by more than 10% (as it did prior to the US subprime crisis). Needless to say, China was well past the point of no return.


  • World's Largest Online Seller Of Gold Is Now Accepting Bitcoin

    It’s not quite the non-fiat singularity just yet: for that to happen, one should be able to buy gold with bitcoin, and bitcoin with gold… but thanks to Apmex, the world’s largest online retailer of precious metals, one can now cross out one half of the missing links, because as of yesterday Apmex is now accepting bitcoin.

    From the company’s statement:

    For more than 15 years, APMEX has been an industry leader and along the way has adapted to the growing needs of our customer base. As bitcoin becomes more popular and widely accepted as payment, we are thrilled to welcome the use of this cryptocurrency for buying Gold, Silver and other Precious Metals by integrating BitPay into our website.


    With BitPay integration, APMEX customers can now pay using bitcoin and complete their order in seconds. Because bitcoin works like cash for the Internet, customers enjoy a quick process, as the only delay is in the “mining” required of all bitcoin purchases. Additionally, all eligible bitcoin orders will be processed and shipped within one business day of your payment’s clearing and processing with the QuickShip® guarantee (domestic orders only).


    Buyers can make purchases with bitcoin at any time, from nearly anywhere, just as with most credit cards. International orders become significantly easier as cryptocurrency like bitcoin is accepted worldwide without conversion. Also, many customers prefer Bitcoin payment because of the anonymity offered by a blockchain purchase.

    And best of all, there’s an added extra: a 4% discount on your new, shiny yellow metal:

    For a limited time, all bitcoin orders are eligible for a 4.0% cash discount, similar to orders paid with check or bank wire. Take advantage of this new payment type and the limited-time introductory pricing offer. Start shopping today!

    Oh, and with a whole lot of bitcoin millionaires and billionaires suddenly popping up, guess what countless other struggling online retailers, desperate for the sudden riches of these newly minted, pardon the pun, bitcoinaires will do? Exactly the same, as bitcoin acceptance suddenly becomes the next big thing…

  • China Launches World's First All-Electric Cargo Ship

    Authored by Zainab Calcuttawala via,

    Tesla is not the only one bringing electric engines to cargo transport.

    China just launched its first all-electric cargo ship, which will travel 50 miles at a top speed of 8 miles per hour on a single charge. Though it will be able to carry 2,200 tons of cargo with every haul, that battery capacity is barely enough to fulfill any transatlantic shipments. It will take just two hours to recharge, which is about as much time the vessel needs to unload at a destination.

    Of course, the vessel is the first of its kind, so ports will have to be fitted with charging stations specifically for the ship. So far, only two ports have received the special upgrade.

    “As the ship is fully electric powered, it poses no threats to the environment. The technology will soon be likely … used in passenger or engineering ships,” Huang Jialin, head of Hangzhou Modern Ship Design & Research Co, said regarding his company’s new innovation.

    Claiming it poses “no threat to the environment” is a stretch though. Electric vehicles are only as green as the manufacturing of their batteries and the sourcing of the electricity that powers them. Charging the ship with the Chinese electric grid in its current form—which is largely powered by fossil fuels—will definitely contribute to more carbon emissions. But China is diversifying away from oil and gas quickly, meaning the electric engine will get greener by default in the coming years.

    The battery system contains 1,000 lithium-ion packs, which can be supported with additional units if the cargo is heavier or needs to travel a longer distance.

    The biggest impact of this innovation could be seen in consumer markets. Goods transported on the new ships can cut some transportation costs since the price of electricity is cheaper than the equivalent price of diesel for massive combustion engines. BUT, the ship is currently slated to primarily ship coal up and down the Pearl River. Oh, the irony. Related: Oil Prices Slide On Major Gasoline Build

    “This kind of ship takes into consideration the harmony between humans and nature and can protect water quality and marine life, and should be copied by other ships sailing on local rivers,” says Chinese environmentalist Wang Yongchen. Still, the ship, which took its maiden voyage in November, has a long way to go before it can be considered as a green contribution to the shipping industry.

    Tesla, Daimler, Cummins, and Toyota are working on the trucking end of the equation. Most containers spend at least a portion of their lives on trucks, after being hauled across an ocean and over hundreds of miles of train tracks. 

     “This is no mere ‘truck.’ It will transform into a giant robot, fight aliens, and makes one hell of a latte,” Tesla CEO Elon Musk said of his company’s latest bid to increase the scope of electric vehicles.

    The other three major companies taking on this challenge have equal promise, but lack the Apple-like fanfare that Tesla enjoys. The Chinese innovators who got the first electric cargo ship going will face a similar fate. The concept will need to be tested out in Asian markets—with more ships on more rivers carrying more kinds of cargo—before Hangzhou can hope to sell the model abroad, if that is the firm’s game-plan.

    China is the leading producer of solar panels and wind turbines, as well as a speedy adopter of natural gas and other alternative fuels. The development of this major innovation in China means that the ship will have ample exposure to innovators in green space who could help the electric ship become a global product.

  • Preview Of Tomorrow's Jobs Report: Here's What Wall Street Expects

    What a difference a year makes: last December, just as the ECB was about to shock the market with the announcement of its first €20 billion QE tapering, macroeconomic data mattered, especially since the Fed’s tightening intertia appeared to truly be data-dependent, if only for a very short period of time. Fast forward one year, when 3 rate hikes into the Fed’s “paradoxical” tightening cycle, in which much to the BIS’s shock the higher Fed Funds rates rise, the easier financial conditions get, a “dovish” December rate hike is assured, and as such tomorrow’s payroll report,  which will probably print withint a few thousands of 200K, is completely irrelevant.

    Still, to at least some headline-scanning algos, tomorrow’s jobs report will matter, if only so that it can respond in a knee-jerk reaction, and be stopped out by yet another group of headline-scanning algos whose only job is to make sure the first group of algos pukes their trades at a loss, regardless of what the underlying data is.

    With that in mind, and with the understanding that fundamental data hasn’t really mattered since 2009, here is what Wall Street expects – and algos – will expect from tomorrow’s charade, which no matter what will send the market higher.

    From RanSquawk

    The BLS will release November’s Employment Situation Report at 1330 GMT (0830 EST) on Friday 8 November

    • After October’s bounce-back, analysts expect normalisation in the rate of payroll additions (consensus 200k)
    • Wage growth may be buoyed by calendar effects, pushing the Y/Y rate up to 2.7%

    SUMMARY: Analysts expect payroll growth to ease in November; the October data was boosted by unwinding negative effects from hurricanes Harvey, Irma and Maria, and therefore, analysts will see a slowing as more of a normalisation, rather than the beginning of a new slowdown. There may be some upside in retail hiring given the early Thanksgiving Holiday. Rounding effects may result in the rate of joblessness slipping slightly. Earnings growth is likely to be supported by calendar effects, which may push the Y/Y rate up to 2.7%, matching the pace of annualised wage growth seen in Q3.


    • Non-farm Payrolls: Est. 200k (144k to 261k), Prev. 261k
    • Unemployment Rate: Est. 4.1% (4.0% to 4.3%), Prev. 4.1%
    • Average Earnings Y/Y: Est. 2.7% (2.5% to 2.8%), Prev. 2.4%
    • Average Earnings M/M: Est. 0.3% (0.1% to 0.5%), Prev. 0.0%
    • Average Work Week Hours: Est. 34.4hrs (34.4 to 34.5hrs), Prev. 34.4hrs
    • Private Payrolls: Est. 190k (155k to 250k), Prev. 252k
    • Manufacturing Payrolls: Est. 17k (9k to 35k), Prev. 24k
    • Government Payrolls: Est. 5k (-4k to 10k), Prev. 9k
    • U6 Unemployment Rate: No forecasts, Prev. 7.9%
    • Labour Force Participation: No forecasts, Prev. 62.7%


    • Capital Economics (261K)
    • Goldman (225K)
    • Wells Fargo (220K)
    • Lloyds (220K)
    • Barclays (200K)
    • UBS (190K)
    • BMO (190K)
    • TD Securities (175K)
    • RBC (175K)
    • JPMorgan (175K)
    • Societe Generale (165K)

    TRENDS: US payroll growth has averaged 169k per month in 2017; as a comparison, in the first ten months of 2016, payroll growth was averaging 192k, and as a whole for 2016, payroll growth averaged 187k per month in the year. The trend rate was hit in September following disruptions caused by hurricanes Harvey, Irma and Maria. However, on a three-month rolling average basis, payroll growth is running at a clip of 162k heading into the holiday season, rising from the previous 121k on the same basis.

    INITIAL JOBLESS CLAIMS: Heading into October’s Employment Situation Report, initial jobless claims were averaging 231,250 on a four-week rolling basis; and heading into the November data, that pace has increased to 241,500 on the same basis. “Back to the pre-hurricane trend,” Pantheon Macroeconomics said, “the trend in claims has been re-established just under 240K, returning to its pre-hurricane level and perhaps even a bit lower.” The economic consultancy has noted that, as a share of payroll employment, claims are now at an all-time low, and that appears to be consistent with labour demand at elevated levels. “This picture is unlikely to change anytime soon; indeed, if economic growth is sustained at the recent 3% trend, claims probably will fall to new lows. That, in turn, will reduce fear of job loss and support even higher levels of consumer confidence.”

    ADP EMPLOYMENT REPORT: The ADP reported 190k payrolls were added to the US economy in November, which was in line with the consensus, and the prior remained unrevised at 235k. “The job market is red hot, with broad-based job gains across industries and company sizes,” according to Moody’s chief economist, who helps compile the survey. “The only soft spots are in industries being disrupted by technology, brick-and-mortar retailing being the best example. There is a mounting threat that the job market will overheat next year.”

    CHALLENGER JOB CUTS: The payrolls processor’s survey showed US employers announced 35k job cuts in November – up 30% Y/Y and 17% M/M; it brings the 2017 total up to 386k which is 22% fewer than the November’16-YTD total. “Employers have reported a lack of skilled workers to fill demand in many industries,” Challenger said, “in this tight labour market, those with requisite skills and training have a leg up over the competition.” It added “opportunities exist for job seekers,” though “it remains to be seen whether the recent tax reform bill will have a significant impact on job growth or announced cuts. It may make it easier for companies to combine, which generally leads to eliminating redundancies.”

    BUSINESS SURVEYS: The November ISM manufacturing survey recorded the rate of employment growth easing slightly (59.7 vs 59.8 previous), though has now remained in expansion for the fourteenth consecutive month; ISM noted that “employment expansion remains strong in spite of signs of labour market tightening.” The non-manufacturing ISM saw the employment sub-index fall by around 2 points, though has been in expansion for the 45th consecutive month. November’s manufacturing PMI from IHS Markit noted that employment levels were growing at the second-strongest rate since June 2015. The services PMI saw employment growth rising to a three-month peak, and points to “solid non-farm payroll growth of circa 200,000 as companies continue to take on staff in encouraging numbers to meet rising order books,” the survey-compiler said.


    BARCLAYS (EST. 200K): We expect payroll employment to rise by 200k, with private payrolls up 195k and government payrolls up 5k. Our forecast would represent a modest slowing from the 261k recorded last month, but we see that number as influenced by a storm-induced rebound in hiring that is not representative of the underlying trend. Hence, we view the moderation in employment growth this month as labor markets returning to a more normal state. At 200k, employment growth remains in line with the average monthly increase during the recovery and well in excess of that needed to keep the unemployment rate steady. For the unemployment rate, we forecast another one-tenth decline to 4.0%, but note that this is partly due to rounding effects, as the unemployment rate in October to three decimals stood at 4.065%; a minor drop will cause it to tick lower. Elsewhere in the report, we forecast a bounce in average hourly earnings to 0.3% m/m (2.7% y/y) and expect average weekly hours to remain unchanged at 34.4.

    BMO (EST. 190K): After getting buffeted by hurricanes in the past two months, nonfarm payrolls are expected to increase a solid 190,000 in November. This would mark a pickup from the 12-month average (167,000) due to the perkier economy. A steadier participation rate (following a big retreat last month) should hold the unemployment rate at a 17- year low of 4.1%, with downside risk given a further improvement in net job prospects in the Conference Board’s consumer confidence survey. A likely snapback in average hourly earnings should kick the yearly rate up to 2.8%, at the high end of its past-year range, though still no threat to inflation. Following Chair Yellen’s recent upbeat testimony on the economy, the expected solid jobs report should seal the deal on a December 13 rate hike.

    CAPITAL ECONOMICS (EST. 261K): After the disruption to the payrolls figures caused by Hurricanes Harvey and Irma, with a near-stagnation in September being followed by a 261,000 surge in October, we forecast a more normal 200,000 gain in non-farm payrolls in November. The latest indicators suggest that employment growth remained strong last month. Jobless claims are close to multi-decade lows, while the business surveys still look strong. The employment index of the Markit Services PMI climbed to 54.1 November, putting it close to its highest level in two years. Meanwhile, we expect that the unemployment rate held steady at 4.1% in November. Surveys suggest it could fall further before the year is out. The surveys are also consistent with a steady acceleration in wage growth over the next year or so. (See Chart 1.) We have pencilled in a 0.3% m/m gain in average hourly earnings in November, lifting the annual growth rate up from 2.4% to 2.7%.

    GOLDMAN SACHS (EST. 225K): We estimate nonfarm payrolls rose 225k in November, compared to a consensus of +200k. November job growth likely benefited from additional normalization in hurricane-affected regions. Additionally, the early Thanksgiving this year is likely to boost retail job growth, as relatively more of the holiday hiring will occur before the survey week. The arrival of over 200k Puerto Ricans in Florida (following Hurricane Maria) could also increase payrolls this month. We estimate a stable unemployment rate (4.1%), as the downward trend (-0.3pp over the last three months) seems due a pause. For average hourly earnings, we estimate +0.3% with upside risk, reflecting somewhat favorable calendar effects and a boost from the unwind of hurricane-related distortions.

    JPMORGAN (EST. 175K): We forecast that nonfarm payrolls increased 175,000 in November while the unemployment rate ticked down to 4.0%. The payroll data have been choppy lately, in what appears to be weather-related distortions that depressed the September reading and then boosted the October data. We think that the bulk of the weather-related distortions are now behind us and we look for a more trend-like reading for job growth in the upcoming report. We do think that the November figure will be a bit stronger than the average gain from recent months considering some upbeat employment data in the PMI surveys as well as mostly favorable jobless claims data over the past month or so. For the main details of the payroll count, we believe that private goods-producing industries added 30,000 jobs in November while the private service sector contributed 140,000. We think that government payrolls will continue to trend higher, with another 5,000 jobs added in November. Elsewhere in the establishment survey, we forecast that average hourly earnings increased 0.3% in November (2.7%oya). The tighter labor market likely is putting upward pressure on compensation and we think that the weak October reading reflected noise in what is often a choppy series. We think that the average workweek held at 34.4 hours between October and November; when combined with our forecast for job growth, we estimate that the aggregate hours index ticked up 0.1%. For the household survey, we forecast that the unemployment rate declined from 4.1% to 4.0% between October and November. The October report showed large declines in the household measures of both employment and unemployment. We think that we will probably see more of a bounce back in the employment data than the unemployment data considering that employment has been trending higher in recent years while unemployment has been trending down, and we think that this will result in a decline in the unemployment rate.

    LLOYDS (EST. 220K): We look for a solid rise of 220k in November, no change in the unemployment rate at 4.1% and a 0.3% month-on-month rise in average earnings which will pull the annual rate up to 2.7% from 2.4%.

    PANTHEON MACROECONOMICS (EST. 225K): We think payrolls rose by a robust 225K, following sustained strength in leading hiring indicators. The return of the last few people kept from work by the hurricanes should lift the numbers too. The unemployment rate should be unchanged at 4.1%. Hourly earnings should rise 0.3%, boosted by a calendar effect.

    RBC (EST. 175K): We expect U.S. employment rose by 175k in November. That would be down from the 261k increase in October – a gain that reflected the unwinding of hurricane-related disruptions that slowed job growth to just 18k in September. The November employment data should provide a ‘cleaner’ read and the increase we expect would be above the 140k average gain over the prior two months and well above the pace needed to put downward pressure on the unemployment rate. Although labor markets increasingly look to be bumping up against capacity limits, the U.S. economy has shown clear signs of strength, arguing for near-term job growth to be sustained at a pace well-above trend in the near-term. We expect November’s employment gain will be enough to push the unemployment rate down to 4.0% — building on a 0.3 percentage point drop over the last two months.

    SOCIETE GENERALE (EST. 165K): Hurricanes restricted job gains in September to just 18,000, but job growth rebounded by 261,000 in October. Looking through the weather-related swings the last two months, payroll gains have averaged about 169,00 year-to-date, and we expect that the labor market returned to that pace of advance in November, as the economy likely added 165,000 new jobs. Similarly, private payrolls averaged 150,000 over the last three months, 157,000 over the last six months, and 162,000 year-to-date. In other words, the underlying trend does not seem to have shifted dramatically despite the hurricane-related swings recently. The big move in job growth the last two months was in the leisure and hospitality industry, which shed 102,000 spots in September but bounced by 106,000 jobs in October. Prior to those sharp changes, this industry averaged job gains of about 31,000 from March to August. Meanwhile, the anticipated surge in construction jobs failed to materialize in October, rising by just 11,000, the same as in September and in line with the six-month average rise of 10,000. As we noted prior to the last report, a shortage of construction workers likely held back growth in this sector. One bright spot in October was manufacturing, which added 24,000 positions and has added an average of 25,000 jobs per month in the last three months. In any case, we expect that softness in retail, a modest cooling in factory job growth, a more trend-like reading in the leisure industry restrained payrolls, although a reading in line with our estimate would still be a healthy figure. In any case, average hourly earnings jumped by 0.5% in September but were flat in October, pushing the yoy rate down from 2.8% to 2.4%. We expect that earnings increased by 0.2% in November, which would push the yoy rate back up to 2.6%. We also expect an unchanged unemployment rate, and we anticipate that the workweek may have remained steady.

    TD SECURITIES (EST. 175K): We expect nonfarm payrolls to advance by 175k in November. Data on persons not at work due to bad weather suggest that hurricane impacts should have faded by this month, allowing payrolls to print closer to their current trend in the 150-200k range. Upward revisions to the prior two months are also likely. Meanwhile, labor market indicators (regional Fed surveys and consumer confidence) remained supportive of solid job growth. We expect the unemployment rate to tick higher to 4.2% from 4.1%, given the outsized decline in labour force participation that has the potential to correct. We also look for a relatively modest 0.2% m/m increase in average hourly earnings, as calendar effects are less favourable this month. Still, that should leave earnings tracking higher on a y/y basis at 2.6% vs 2.4%.

    UBS (EST. 190K): Our payrolls forecast for November reflects idiosyncratic swings in employment in a number of industries. State level data suggest that the storm-related swings in payrolls are mostly in the past. In Texas, the payroll rise in October more than made up for the shortfall (relative to trend) in September. In Florida, the October bounce almost made up the September shortfall. However, we still see some potential for storm-related employment gains in November, and the jobs data will also reflect businesses’ preparation for the holiday shopping season. We estimate a fairly rapid increase in payrolls in leisure and hospitality. Within leisure and hospitality, food services employment reversed most but not all of its hurricane-related weakness in October—suggesting some potential for a further temporary boost to November. Food service payrolls had been rising about 25k per month in the year before the storm, with some hint of faster increase in Q2. We allow for a 40k rise. There are risks on both sides of the estimate: industry employment had been on the soft side prior to the storm effects—suggesting either more to make up or a somewhat softer underlying trend. Growth of food services sales has been slowing. We forecast softness in retail payrolls but strength in transport and warehousing as online sales continue to shift retail distribution. Last year, retail payrolls weakened throughout Q4, while couriers and warehousing payrolls offset much of their deterioration. We expect a repeat this year, signalled by the pattern in retail and transportation hiring plans. Strength in construction payrolls is likely, amid momentum in housing starts and new home sales. We expect another solid gain in manufacturing payrolls. With strength in relatively high paid manufacturing and construction and weakness in lower-paid retail, average hourly earnings probably rose slightly above trend, +0.3%m/m. Wages would be pick up from 2.4%y/y in October to 2.7%y/y in November, reaccelerating to their Q3 pace. The unemployment rate was probably unchanged following a steep, 0.3 pt decline since August.

    WELLS FARGO (EST. 220K): We expect nonfarm payrolls to rise by 220,000 in November, which should keep the unemployment rate steady at 4.1%. Overall, job growth should average 197,000 in the fourth quarter, and we expect the unemployment rate to end the year at the current 4.1% rate. We continue to expect the pace of job growth to gradually decelerate next year as slack in the labor market continues to diminish. By the end of 2018 we see the unemployment rate at 3.9%.

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Dec 07

Today’s News 7th December 2017

  • "The Threat Is Real" – Millions In Tokyo Join Nuclear Strike Evacuation Drills

    Earlier this week, Hawaii reportedly tested its system of nuclear sirens for the first time since the 1960s as the state’s governor warned that he was taking North Korea’s threats of nuclear annihilation extremely seriously. Today, the Telegraph is reporting that the paranoia has spread to Japan, where millions of Tokyo residents will participate in evacuation drills meant to simulate their response to North Korean nuclear strike.

    And Tokyo isn’t the first city to conduct these types of large scale drills: Towns facing the Korean Peninsula have conducted similar drills in recent months.

    The national and city governments are to carry out a series of exercises between January and March to prepare for a potential attack on Tokyo, the Sankei Shimbun newspaper reported, the first time that a major Japanese city will have carried out responses to a simulated attack.


    Towns facing the Korean Peninsula have in recent months conducted similar drills, with residents instructed to seek shelter in response to sirens warning of an imminent missile strike.

    Prime Minister Shinzo Abe has called on local governments throughout the country to identify underground facilities or buildings that are sufficiently sturdy to withstand a missile attack and to designate those facilities as shelters.

    Many ordinary Japanese believe the evacuation drills are an important precaution. One Tokyo resident said he participates because he believes that, if North Korea chose to attack, Tokyo would be the logical target.

    "I believe the threat is very real and that war could break out at any time", said Ken Kato, a human rights campaigner who lives in Tokyo. Nearly 9.3 million people live in the city, with millions more travelling into the metropolis every day for work.


    "I also believe that the average Japanese person does not want to think about the worst-case scenario because it is simply too unpleasant, but we cannot keep our heads in the sand any longer", he told The Telegraph.


    "Evacuation drills are a sensible precaution that would help to minimize casualties, in much the same way as we practice what to do in the event of a major earthquake", he said.


    "And if war did break out, then I think it is unfortunately inevitable that North Korea would target Tokyo", he added. "The US has a major military base at Yokota, to the west of the city, and its main naval base in the region is at Yokosuka, to the southwest. 


    "It is hard to believe they would not want to strike those military concentrations," he said, adding that it is unlikely that the North Korean regime would be particularly concerned about casualties among civilians living nearby.

    Last week, North Korea launched its ne Hwasong-15 ICBM, the country’s first missile test in more than two months. The missile’s peak height and flight time have led experts to suspect that it could probably strike anywhere on the Continental US – though perhaps not with the highest degree of accuracy.

    Like the US, Japan is also at risk of an airburst – the detonation of a nuclear weapon far above the earth’s surface that could knock out the country’s power grid, indirectly killing hundreds of thousands of people.

  • What Went Wrong In Charlottesville: At All Levels, Government Is Still The Problem

    Authored by John Whitehead via The Rutherford Institute,

    Corruption. Graft. Intolerance. Greed. Incompetence. Ineptitude. Militarism. Lawlessness. Ignorance. Brutality. Deceit. Collusion. Corpulence. Bureaucracy. Immorality. Depravity. Censorship. Cruelty. Violence. Mediocrity. Tyranny.

    These are the hallmarks of an institution that is rotten through and through.

    We have been saddled with the wreckage of a government at all levels that no longer represents the citizenry, serves the citizenry, or is accountable to the citizenry.

    It doesn’t matter whether you’re talking about the federal government, state governments, or local governing bodies: at all ends of the spectrum and every point in between, a shift has taken place.

    “We the people” are not being seen or heard.

    Everything happening at the national level is playing out at the local level, as well.

    Take my own hometown of Charlottesville, Virginia, for instance.

    In the summer of 2017, Charlottesville became ground zero for a heated war of words—and actions—over racism, “sanitizing history,” extremism (both right and left), political correctness, hate speech, partisan politics, and a growing fear that violent words will end in violent actions.

    In Charlottesville, as in so many parts of the country right now, the conflict was over how to reconcile the nation’s checkered past, particularly as it relates to slavery, with the present need to sanitize the environment of anything—words and images—that might cause offense, especially if it’s a Confederate flag or monument.

    That fear of offense prompted the Charlottesville City Council to get rid of a statue of Confederate General Robert E. Lee that has graced one of its public parks for 82 years.

    That’s when everything went haywire.

    In attempting to pacify one particularly vocal and righteously offended group while railroading over the concerns of those with alternate viewpoints, Charlottesville attracted the unwanted attention of the Ku Klux Klan, neo-Nazis and the alt-Right, all of whom descended on the little college town with the intention of exercising their First Amendment right to be disagreeable, to assemble, and to protest.

    When put to the test, Charlottesville did not handle things well at all.

    No one—not the armed, violent, militant protesters nor the police—gave peace a chance on August 12 when what should have been an exercise in free speech quickly became a brawl that left one dead and dozens more injured.

    The police, who were supposed to uphold the law and prevent violence, failed to do either.

    Indeed, a 220-page post-mortem of the protests and the Charlottesville government’s response by former U.S. attorney Timothy J. Heaphy merely corroborates our worst fears about what drives the government at all levels: power, money, ego, politics and ambition.

    When presented with a situation in which the government and its agents were tasked with protecting free speech and safety, Heaphy concluded that “the City of Charlottesville protected neither free expression nor public safety.”

    Read Heaphy’s report for yourself.

    It’s full of drama and intrigue, plots and dueling egos, petty tyrants and ambitious politicians. (There’s even mention of a personal email account and deleted text messages.)

    Not much different from what is happening on the national scene.

    Commissioned by the City of Charlottesville, this Heaphy report was intended to be an independent investigation of what went right and what went wrong in the government’s handling of the protests.

    Here’s what went wrong, according to the report:

    1. Police failed to get input from other law enforcement agencies experienced in handling large protests.

    2. Police failed to adequately train their officers in advance of the protest.

    3. City officials failed to request assistance from outside agencies.

    4. The City Council unduly interfered by ignoring legal advice, attempting to move the protesters elsewhere, and ignoring the concerns of law enforcement.

    5. The city government failed to inform the public about their plans.

    6. City officials were misguided in allowing weapons at the protest.

    7. The police implemented a flawed operational plan that failed to protect public safety.

    8. While police were provided with riot gear, they were never trained in how to use it, nor were they provided with any meaningful field training in how to deal with or de-escalate anticipated violence on the part of protesters.

    9. Despite the input and advice of outside counsel, including The Rutherford Institute, the police failed to employ de-escalation tactics or establish clear barriers between warring factions of protesters.

    10. Government officials and police leadership opted to advance their own agendas at the expense of constitutional rights and public safety.

    11. For all intents and purposes, police abided by a stand down order that endangered the community and paved the way for civil unrest.

    12. In failing to protect public safety, police and government officials undermined public faith in the government.

    The Heaphy report focused on the events that took place in Charlottesville, Virginia, but it applies to almost every branch of government that fails to serve “we the people.”

    As the Pew Research Center revealed, public trust in the government remains near historic lows and with good reason, too.

    This isn’t America, land of the free, where the government is “of the people, by the people [and] for the people.”

    Rather, as I make clear in my book Battlefield America: The War on the American People, this is Amerika, where fascism, totalitarianism and militarism work hand in hand.

    So what’s the answer?

    As always, it must start with “we the people.”

    I’ve always advised people to think nationally, but act locally. Yet as Charlottesville makes clear, it’s hard to make a difference locally when the local government is as deaf, dumb and blind to the needs of its constituents as the national government.

    Still, it’s time to clean house at all levels of government.

    You’ve got a better chance of making your displeasure seen and felt and heard within your own community. But it will take perseverance and unity and a commitment to finding common ground with your fellow citizens.

    Stop tolerating corruption, graft, intolerance, greed, incompetence, ineptitude, militarism, lawlessness, ignorance, brutality, deceit, collusion, corpulence, bureaucracy, immorality, depravity, censorship, cruelty, violence, mediocrity, and tyranny.

    Stop holding your nose in order to block out the stench of a rotting institution.

    Stop letting the government and its agents treat you like a servant or a slave.

    You’ve got rights. We’ve all got rights. This is our country. This is our government. No one can take it away from us unless we make it easy for them.

    Right now, we’re making it way too easy for the police state to take over.

    Stop being an accessory to the murder of the American republic.

  • North Korean "Ghost Ship" Arrivals In Japan Surge

    Large numbers of North Korean fishing boats are washing up along the Japanese coast, some of which have contained decaying corpses.

    Winds and water currents push dozens of boats onto Japan's northern coasts annually. Rickety North Korean fishing boats are particularly vulnerable because they lack the sturdiness and equipment to return home.



    But the alarming pace over the past few weeks has prompted Japanese authorities to step up patrols.

    In November of this year alone, 28 of the so-called "ghost ships" were discovered by Japanese authorities with 42 people who claim to be fishermen found alive.

    18 bodies have also been recovered so far.

    As Statista's Niall McCarthy notes, the grim discoveries suggest that the situation in North Korea is becoming desperate with sanctions and food shortages likely driving fishermen further out to sea to secure bigger catches.

    Infographic: North Korean

    You will find more statistics at Statista

    So far this year, 64 "ghost ships" have washed up along the Japanese coast and last year, the number was 66. 2013 was a particularly bad year with 80 vessels discovered by Japanese authorities.

  • Peter Schiff Warns Of "Too Big To Pop" Bubble – "Everybody Is Going To Get Wiped Out!"

    via Greg Hunter's,

    Money manager Peter Schiff correctly predicted the financial meltdown in 2008.

    Now, 10 years later, what does Schiff see today?  Schiff says,

    “I predicted a lot more than just the stock market going down back then.  I predicted the financial crisis, but more importantly, I predicted what the government would do as a result of the financial crisis and what the consequences of that would be because that’s where we’re headed. 


    The real crash I wrote about in my most recent book is still coming…


    This is the third gigantic bubble that the Fed has inflated, and when this one pops, it’s not going to be ‘the third time is a charm.’  It’s going to be ‘three strikes and you’re out.’ 


    I think this bubble is too big to pop.  I think it’s the mother of all bubbles, and when it bursts, there is not a bigger one that the Fed is going to be able to inflate to mask these problems, meaning we can’t kick the can down the road anymore.”

    This time, the crisis is going to hit everyone in the wallet. Schiff goes on to say,

    “I think the problem we are going to be confronted with is going to be much worse than a financial crisis.  It is going to be a dollar crisis, and it is going to be a sovereign debt crisis where the bonds people are worried about are not some sub-prime mortgages


    It’s going to be the U.S. government that people are worried about and the solvency of the U.S. government and the Treasury bonds.  If it’s a dollar crisis and people are worried about the dollar, the only thing worse than owning a dollar today is owning the promise of being paid in dollars in the future. 


    I don’t think we have the courage to default and admit to our creditors that we don’t have the money and we can’t repay.  I think we will create all the money that we need so we can pretend to repay, but what we end up doing is wiping out the debt with inflation.

    So, how long can it go on? Schiff says,

    “How high can the debt go?  I don’t know and you don’t know…


    How many straws can you put on a camel’s back?  You don’t know until you put that final straw that’s one too many and you break his back.  So, can we go to $25 trillion in debt?  Maybe.  At some point, we are going to break the back of the camel with all this debt.  Then we are going to find out how much debt we can pile on, and it’s not going to be pretty. 


    Everybody is going to lose.  Everybody is going to get wiped out who has been partying in the stock market, the bond market and the real estate market.  The dollar is going to tank, and purchasing power is going to get wiped out.”

    Inversely, Schiff says it is the same with the suppressed gold and silver markets. Schiff contends,

    “They can’t keep doing it, and it will end.  It’s just like how much debt can we take on.  It’s not an unlimited amount.  We will know when we get there. 


    How long can they keep the price of gold suppressed?  We will know when we get there.  At some point, the price is going to explode because there is real physical buying, and all that paper selling can’t camouflage that…


    People don’t trust fiat currencies . . . . More and more people are looking for alternatives, and the real alternative is gold.  When they embrace it, it’s going to overwhelm central banks’ ability to suppress the price.  In the meantime, enjoy the gift that they are giving.”

    Join Greg Hunter as he goes One-on-One with money manager and financial expert Peter Schiff, founder of Euro Pacific Capital…

    (To Donate to Click Here) 

  • New Study Says 40% Of American Households Will 'Cut The Cord' By 2030

    Cord cutting is a topic which we discuss on a fairly regular basis, particularly over the last several quarters as the subscriber losses for cable companies have seemingly accelerated (see: Cord-Cutting Accelerates, Sends Shock Wave Across Traditional TV).  Not surprisingly, one of the biggest losers of the cord cutting phenomenon has been ESPN, a media giant that ironically was one of the largest, if not the largest, beneficiaries of the cable TV bundle since it made its debut in 1979 (see: ESPN Lost 15,000 Subscribers A Day In October).

    Of course, as TDG Research notes this morning, the wave of Americans electing to forego the massively overpriced cable TV bundle is only getting started and will see some 40% of American households ditch their service by 2030.

    Generally, TDG expects that the penetration of live multi-channel pay-TV services will decline from 85% of US households in 2017 to 79% in 2030. While statistically a loss of only 7%, it nonetheless illustrates the ongoing secular decline of a once healthy market space. TDG predicts that, by 2030, roughly 30 million US households will live without an MVPD service of any kind, be it virtual or legacy.


    During this time, legacy MVPDs will experience considerable subscriber losses, due not only to long-term industry trends but also growing competition from virtual pay-TV providers. Consequently, legacy pay-TV penetration will fall from 81% of US households in 2017 to 60% in 2030, down 26%. At the same time, virtual pay-TV penetration will grow from roughly 4% of US households to 14%, up 350% but from a very small base.


    “TDG said early on that the future of TV was an app. Unfortunately, most incumbent MVPDs weren’t taking notes,” notes Joel Espelien, TDG Senior Analyst. “The question is no longer if the future of TV is an app, but how quickly and economically incumbents can adapt to this truth and transition to an all-broadband app-based live multi-channel system.”

    As the Pew Research Center noted over the summer, while part of the cord cutting story is attributable to the growing availability of quality streaming content, another component is a simple demographic transition with only 30% of millennials aged 18-29 saying they subscribe to cable versus 61% with a streaming subscription.

    About six-in-ten of those ages 18 to 29 (61%) say the primary way they watch television now is with streaming services on the internet, compared with 31% who say they mostly watch via a cable or satellite subscription and 5% who mainly watch with a digital antenna, according to a Pew Research Center survey conducted in August. Other age groups are less likely to use internet streaming services and are much more likely to cite cable TV as the primary way they watch television.


    • Women are more likely than men to say their primary way of watching TV is via cable subscription (63% vs. 55%).


    • Men are more likely than women to say their primary pathway is online streaming (31% vs. 25%).


    • Those with a college education or more are more likely than those with less education to say their primary way to watch TV is online streaming. Roughly a third of college-educated Americans (35%) say they mainly watch via streaming, compared with 22% of those who have a high school diploma or less.


    • Those in households earning less than $30,000 are more likely than others to say they rely on a digital antenna for TV viewing. Some 14% say this, compared with just 5% who live in households earning $75,000 or more.

    Of course, many people wrongfully interpret the death of the cable TV bundle as a precursor the imminent demise of cable companies overall…but, as we pointed out in a post entitled “Streaming Killed The Cable Bundle: Record 941,000 Pay-TV Customers Ditch Cable In Q2,” nothing could be further from the truth as the real losers will be the weaker content providers who won’t have enough of a draw to sell their content direct to consumers when the channel bundle goes away.  Meanwhile, the cable companies will make out just fine as they will still control the fastest internet connections into the home which will become even more valuable to data-hungry consumers.

    We’ve long held the opinion that the content creation and media distribution businesses are on the precipice of a major transformation.  Since the birth of cable TV, content creators (think Disney, Discovery, Scripps, AMC, etc.) have been locked in a perpetual tug-of-war with distribution companies (Comcast, Charter, Verizon, AT&T, etc.).  Up until now, content creators have been the clear winners as they’ve continued to force cable companies to carry their growing lineup of channels, many of which are awful, by effectively holding their good content hostage until distributors agree to pay for channels that they (and their customers) likely don’t want.  As an example, a company like Scripps may refuse to sign a distribution agreement with Charter for HGTV or the Food Network, unless they also agree to pay for their less popular channels like TVN, Fine Living or the Asian Food Channel.


    All of which is precisely why cable customers have ended up paying for 1,000 channels when they really only watch about 5 of them.


    But, that is all changing with the onset of direct-to-customer streaming.  HBO was the first to blink, then came ShowTime and now Disney has just announced that ESPN will also go direct.  What this means, of course, is that increasingly people will be able to make a la carte purchases of the media they actually value and ditch all the ‘crap’ that clever content creators have forced down our throats for years by holding their desired content hostage.

    In summary, just like “Video killed the Radio Star,” streaming has just killed the cable bundle.

  • Lewis Dartnell: How To Rebuild The World From Scratch

    Authored by Adam Taggart via,

    If society collapsed overnight, how would we re-create it?

    If our technological society collapsed tomorrow, what crucial knowledge would we need to survive in the immediate aftermath and to rebuild civilization as quickly as possible?

    Ask yourself this: If you had to go back to absolute basics like some sort of post-cataclysmic Robinson Caruso, would you know how to recreate an internal combustion engine? Put together a microscope? Get metals out of rock? Or produce food for yourself?

    This week's podcast guest is Lewis Dartnell, author, presenter, and professor of science communication at the University of Westminster. He's best known to the public as a popular science writer, especially for his book The Knowledge: How to Rebuild Our World from Scratch. In that book and in his related TED Talk, Lewis explains how every piece of our modern technology rests on an enormous support network of other technologies, all interlinked and mutually dependent:

    There's the fundamental fact that the economic system the developed world has based itself on capitalism which has this core assumption that you can forever continue generating wealth by growing your economy, by making more things, by extracting more raw materials and ingredients and environment. And in a sense, that's served us very well since even before the Industrial Revolution when, in a sense, the planet, the Earth, was very, very big compared to the demands of the human population living on it. But that assumption is no longer true anymore. With over 7 billion people on the planet all wanting to have a decent and comfortable standard of living, that puts an enormous amount of demand on the natural systems on our planet for producing those raw materials. That's everything from agriculture and the degradation of the kind of soil and the growing environment through to how many minerals and metals there might be that we're trying to dig up. So there is this limitation.


    And even if there never is an apocalypse, and I certainly hope that there isn’t one, over the next couple of decades, we really are going to have to root deeply and reassess how we go about things. Not just try to grow as quickly as possible and not extract as much energy and raw materials as we possibly can. We need to act in a much, much more sustained and careful manner, otherwise we're going to degrade the environment around us to such an extent that it will no longer support us, and there could then be some kind of crash or collapse.


    And what a lot of people talk about is a post-oil world in that we are rapidly sucking up all of the easily suck-up-able crude oil around the world. And it's very much a finite resource. It is going to run out. There are signs that it's already starting to run out. They’ve already passed peak oil. And so we need to be thinking very carefully about what we're going to next system. How could we fuel our cars and our transport network without using diesel or gasoline, using petrol? And how can we do a lot of industrial processes? And how can we create things like artificial pesticides and herbicides and plastics and pharmaceuticals which all come from oil as their base stock?


    In writing The Knowledge, I wanted to engage in a thought experiment that asks: What's going on behind the scenes to support our everyday lives and all the stuff that we just take for granted nowadays?


    In the long term, if you're not just talking about wilderness survival skills but how to go about rebooting the whole of civilization, the key issue is all that we use today is inextricably linked to everything else. There's this vast iceberg of understanding; much of it is under the surface. You don't really interact with it or are aware that it's there. Even the simplest things like how to make a toaster requires this entire infrastructure of capability and knowhow to create things, and where to go to get particular things from the natural world and the environment around you. So I try to explore all of that, as well as how to start reconstructing this network of scientific understanding and technological inventions.

    Click the play button below to listen to Chris' interview with Lewis Dartnell (39m:45s).

  • South Korean Army Developing "Drone-Bot Combat Unit" To Swarm The North

    As North Korea continues its saber-rattling exercises, with the latest coming via an ICBM test that confirmed the rogue nation could reach a bombing target anywhere in the continental U.S., the South has responded with similar displays of force largely consisting drills conducted in coordination with the United States military (see: In “Largest-Ever” Military Drill, US Orders 16,000 Troops, 230 Jets To Simulate War With North Korea). 

    Now, as the Financial Times points out this morning, South Korean preparations for a potential confrontation with their northern neighbor will include the creation of a weaponized drone unit that could be used to swarm North Korea in the event of a conflict.

    Operated by the army, the unit will primarily engage in reconnaissance missions to survey developments at the North’s nuclear weapons and ballistic missile sites, but could in future be used to launch swarm attacks, according to people familiar with the matter.


    The establishment of the army unit follows calls from western officials and analysts for South Korea to improve its advanced surveillance technology.


    “South Korea’s army plans to create a drone-bot combat unit in 2018 and set up a professional combat team to operate it,” an official at the Ministry of Defence confirmed.


    “South Korea has reached a level of consensus on swarm technology, but adoption will take a while,” said a person familiar with the military developments. “The army is facing [political] pressure to reduce its forces, so it has to come up with new ideas.”


    Of course, this plan comes amid growing concerns that the rapid advancement of Pyongyang’s nuclear and ballistic weapons programs has effectively changed the balance of power in the region.

    Earlier this week, William Perry, a US defense secretary in the Clinton administration, told a forum it would be “preferable” for South Korea and Japan to develop their own nuclear force — an option that the US has been historically reluctant to support and one which South Korean President Moon Jae-in has also rejected so far. That said, he is facing growing pressure from members of the conservative establishment, who view a balance of nuclear power between the two Koreas as the only way to maintain peace on the peninsula.

    As the FT notes, the drone-bot army unit could be used to carry bombs or simply create a swarm of thousands of drones to effectively form a blockade of ships or aircraft…

    Experts say such technology could have lethal and non-lethal capabilities. In the case of the latter, a swarm of thousands of cheaply made but connected drones could prevent area access by clustering around and blocking ships or aircraft.


    “Some of us in the field proposed the Republic of Korea military should take advantage of this superiority against North Korea,” said Bong Young-shik, an expert on North Korean military developments at Yonsei University.


    “Although it is unlikely, if the South Korean military wants, these drones can carry bombs as the nation is no longer bound by payload limits,” he added, referring to a decision by the Trump administration earlier this year to lift limits on South Korean munitions.

    …a strategy which may or may not have been derived from a scene in Guardians of the Galaxy…


  • Why Is An Appendectomy In The US 10 Times More Expensive Than An Appendectomy In Mexico?

    Authored by Michael Snyder via The Economic Collapse blog,

    This is what can happen when you go to a socialized healthcare system. 

    A lot of people out there believe that the United States has a free market healthcare system, but that is actually not true.  The percentage of the population that receives government-subsidized healthcare is rapidly approaching 50 percent, and the healthcare industry may be the most heavily regulated sector of the entire U.S. economy. 

    Every year the rules, red tape and regulations seem to get even worse, and every year health insurance premiums rise much faster than the overall rate of inflation.  If we don’t start applying free market principles and start getting healthcare costs under control, our entire healthcare system could very easily implode.

    I would like to share with you an excerpt from an article by former DEA agent David Hathaway.  According to Hathaway, the average cost for an appendectomy in the United States is $33,000

    My son had an attack of appendicitis late Saturday night. I knew that the Obamacare inflated prices for surgery in the U.S. would be ridiculous and that the service would likely be impersonal, involve long waits, and be nerve-wracking. I have friends in the medical field so I inquired just for grins.


    The price for the latest routine appendectomy in my area was, my jaw dropped, $43,000. I read on-line that the average cost for an appendectomy in the U.S. is $33,000. I am not near some of the great direct-pay medical facilities in the U.S. like the Surgery Center of Oklahoma, but I am near Mexico. I chose that option since I have often utilized foreign medical and dental facilities in the past and find the service and prices to be outstanding.

    You can buy a very nice brand new car for $33,000.

    How in the world did we get to the point where costs have escalated so far out of control?  Should performing an appendectomy really be this expensive?

    I can imagine that some of my readers may be thinking that the quality of care down in Mexico is much lower, but this is actually not the case at all.  Here is more from David Hathaway

    My son was checked into a private room with private bath and satellite TV awaiting his surgery. The surgical staff was prepped and ready to start within an hour-and-a half of our arrival. The appendix was ruptured, so extra precautions were taken to clean and flush the abdominal cavity. Since the appendix was ruptured, the chief surgeon said that my son should stay two days to receive intravenous antibiotics to prevent the development of peritonitis.

    The surgery was a success, and David’s son did stay in the hospital for two full days in order to receive the antibiotics that the doctor suggested.

    But despite the extra time, the bill for the appendectomy was still less than 10 percent of what it would have been if the appendectomy had been performed in the United States…

    The hospital stay was for 48 hours in a private room where my wife was allowed to spend the nights with my son sleeping on a couch in his room. This cost would have been significantly less if we hadn’t incurred emergency fees and if the appendectomy had not involved complications which required a longer stay and more medication.


    Despite all that, I though the total price of $2,830 dollars was very reasonable.

    So why can’t we have hospitals like that on our side of the border?

    This is yet another example that shows that Obamacare has got to go and that we need to get government out of the healthcare business.

    We once had the greatest healthcare system in the history of the world, and we can do it again if we will just return to free market principles.  Elections really matter, and we simply cannot allow the Democrats and the establishment Republicans to take us even further down the road of socialized medicine.

    They have already turned our once great healthcare system into a giant disaster zone, and we need to show them the door before they can do even more damage.

    *  *  *

    Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on

  • People Are Plowing Millions Into ‘CryptoKitties’ And BREEDING THEM

    Content originally published at

    It was bound to happen… Cat people have hopped on the digital currency bandwagon and collectively plowed over $6.7 million into ‘CryptoKitties’ – an Ethereum-based virtual cat described as “breedable Beanie Babies,” which have sold for upwards of $114,000. Each. The median price of CryptoKitties is $25.04.


    “CryptoKitties players buy and sell unique digital kittens using ethereum. With two kittens, players can then breed their own digital kittens and sell them on the marketplace. The starting price is set by the user, and the price goes down until the end of the auction or the kitten is sold. The CryptoKitties team plans to release a new CryptoKitty every 15 minutes until Nov. 2018, whose starting price is set by the average of the last five CryptoKitties that were sold, plus 50 percent.” -CNBC

    There’s a 256-bit ‘genome’ for each kitten, meaning there are 4 billion possible unique variations, according to the company. The reproduction rate for the randy CryptoCats is a distinguishing feature of the scheme, which features a “cooldown” time – or the time it takes a kitty to have a smoke, make a sandwich, and get back to breeding. The cooldown time varies from “fast” one minute breaks, to week-long “catatonic” breaks, and increases each time the kitty breeds.

    Created by Vancouver company Axiom Zen, CryptoKitties launched on Thanksgiving in a limited offering to 200 people, and was opened to the public last Tuesday. Over 41,000 digital ‘kittens’ have been sold since then.

    “The popularity of virtual cats fits the euphoria we see elsewhere in the crypto-currency space,” Peter Atwater, who studies market sentiment and heads Financial Insyghts, said in an email to CNBC. “It feels very reminiscent of the Candy Crush craze that helped propel the King Entertainment IPO back at the peak of the ‘Unicorn’ era in mid 2014.”

    Source: Niel de la Rouviere

    The CryptoKitties accounted for around 13.5 percent of the ethereum network’s trading Wedensday morning, according to Benjamin Roberts, co-founder and CEO of Etherium-focused startup company, Citizen Hex.

    “With Cryptokitties every Ethereum user has suddenly taken on the computational overhead of running a mainstream application,” Roberts said in an email. “This overhead affects not only Cryptokitty transactions, but every other transaction on the Ethereum network.”

    In fact, thanks to the heavy load put on the Ethereum network, Blockchain project SophiaTX postponed its sale of tokens by 48 hours due to the CryptoKitties clogging the network.

    CryptoKitties has also had to raise its “birthing fee” multiple times due to network congestion – from .002 ETH (.90c) to .0015 ($6.69).

    Joseph Lubin, co-founder of Ethereum, responded to critics who said the network clearly lacks the ability to scale to a flood of demand:

    “With the largest developer community of any blockchain platform by far, the Ethereum blockchain is in an excellent position, especially at this early stage, to be able to deliver on its potential,” -Joseph Lubin

    Digital Artwork

    Struggling to find a valid reason why in the hell people are buying these cat-tulips, Joey Krug, co-chief investment officer at Pantera Capital and a very early investor in Bitcoin, says “From a high level, abstract point of view, this stuff is almost digital artwork, if you will. It doesn’t have any inherent value other than what you think it’s worth,” adding “It does lend weight to the idea that the market is exuberant,‘ he said. But “just because a market is exuberant [it] doesn’t mean that market is fraudulent.”

    CNBC continues:

    The rapid surge of interest in CryptoKitties mirrors the exuberant growth of cryptoassets overall, which some have compared to the mania around tulip bulbs in the 1600s and the Beanie Babies fad in the 1990s. Enthusiasts of digital currencies and their blockchain technology point out that after the tech stock bubble burst in 2000, companies such as Facebook and Google emerged as giants.

    Bitcoin has leaped more than 1,200 percent this year to a record above $12,800, according to CoinDesk. Ethereum has climbed 5,500 percent to $446, and the entire market value of cryptocurrencies has exploded from around $17 billion at the start of this year to nearly $376 billion Wednesday, according to CoinMarketCap.

    Ethereum’s version of blockchain technology allows developers to create applications on top of the network, which does not need a centralized, third party to operate. Proponents say the system could transform the world as much as the internet did.

    “The tulip mania comparison needs to die,” said Brian Patrick Eha, author of How Money Got Free: Bitcoin and the Fight for the Future of Finance. “Whether or not there is a bubble today in the price of bitcoin and other digital assets, you can’t compare a short-lived fervor for exotic flowers with the rise of an entirely new asset class built on game-changing technology.”

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Today’s News 6th December 2017

  • THE BLIND CONSPIRACY: The Gold Market Is Heading Towards A Big Fundamental Change


    By The SRSrocco Report,


    The gold market is heading towards a big fundamental change that few are prepared.  While many analysts in the alternative media community suggest that the gold price is manipulated due to Fed and Central bank intervention, there is another more obscure rationale that is the likely culprit.  I call it, “The Blind Conspiracy.”

    But, before I get into the details of this Blind Conspiracy, there are a few very troubling developments in the alternative media community that I would like to discuss first.  The bulk of these concerns has to do with the increasing amount of faulty analysis and misinformation as well as the peddling of lousy conspiracy theories on the internet.

    Why is this a big problem?  Because a lot of readers are being misguided as to the true nature of the serious predicament we are facing.  Half of the emails that I receive are from readers who are bringing up doubts based on other analysts’ faulty analysis and misinformation.  Thus, it takes a great deal of effort to provide the real facts and data to counteract the damage being done by certain individuals, even those with good intentions.

    Furthermore, an increasing number of so-called precious metals analysts have switched over to Bitcoin and other cryptocurrencies, believing that gold and silver will no longer function as monetary metals.  However, some of these analysts suggest that silver will still be valuable because it will be used as critical raw material in advanced products in our new HIGH-TECH WORLD.  I find this idea of a future modern high-tech world quite amusing when we can’t even maintain the failing complex infrastructure we are currently using.

    American Society Of Civil Engineers 2017:  U.S. Infrastructure Grade Is…???

    According to the Amercian Society Of Civil Engineers, ASCE, they just came out with their grade this year for U.S. infrastructure.  Does anyone want to guess what overall grade we received here in the good ole U.S. of A?  The ASCE gave us a D+:

    Well, at least a D+ isn’t an “F” grade.  Here is the ASCE’s Infrastructure Report Card Grading Scale for receiving a “D”:

    The infrastructure is in poor to fair condition and mostly below standard, with many elements approaching the end of their service life. A large portion of the system exhibits significant deterioration. Condition and capacity are of serious concern with strong risk of failure.

    The ASCE U.S. Infrastructure Report also provides separate grades for different aspects of U.S. infrastructure.  For example, the U.S. Energy Infrastructure received a “D+” as well.  This is a brief description of the Energy Infrastructure:

    Much of the U.S. energy system predates the turn of the 21st century. Most electric transmission and distribution lines were constructed in the 1950s and 1960s with a 50-year life expectancy, and the more than 640,000 miles of high-voltage transmission lines in the lower 48 states’ power grids are at full capacity.

    Moreover, the report states that $4.5 trillion needs to be invested 2016-2025 to raise the U.S. infrastructure to a “B’ Grade.  However, only $2.5 trillion has been budgeted.  Thus, we are $2 trillion short of the total amount needed.  Regardless, I doubt we will be able to spend anywhere close to the budgeted $2.5 trillion over the next decade for our infrastructure.  Unfortunately, I see the U.S. Government and private sector running into serious financial trouble by 2020 as the massive amount of debt and derivatives finally take down the system.

    So, the question remains.  How are we going to move into a new HIGH-TECH world if we can’t even maintain our current infrastructure?

    The notion that we can bring on some new “Energy Technology” fails to consider the tremendous amount of raw materials, manufacturing, transportation, and logistics to repair and maintain our current infrastructure.  You see, we have much bigger problems than just replacing an energy source or technology.  But, to understand that principle, you must look past superficial thinking and “Silver-Bullet energy technologies.”

    Now, if you hear certain analysts suggesting that gold and silver will no longer be used as money in the future because cryptocurrencies will take over the monetary role in our new high-tech world, you may want to contact them and provide the link to the U.S. Infrastructure D+ Grade Report.

    Destroying Once Again…. Certain Myths About The Gold Market

    If I collected an ounce of gold for every email that I have received about patently false gold myths and conspiracies; I could buy one hell of a lot of silver….LOL.  Gosh, if I went back to my email folder and added up all the emails on this subject, it would number well over 500 in my ten years publishing articles in the alternative media community.  However, I continue to receive the same type of emails because individuals are still being misled.

    Before I begin, let me say that I focus my work on disproving the faulty analysis by other individuals, and not directing anything negative towards the person.  I am adamantly against the idea of “targeting the messenger.”  Rather, I like to target the faulty message.  So, there is nothing personal in my attempt to set the record straight.

    Let me start off by saying…. THERE AREN’T MILLIONS OF TONS OF HIDDEN GOLD in the world.  Anyone who continues to believe this needs to pay close attention to the following information.

    One of my readers sent me the following recent YouTube video by Bix Weir, titled “Vast Gold Riches Hidden In The Grand Canyon“:

    In the video, Bix quotes a New York Times article published on June 19, 1912, that proclaimed vast gold riches in the Grand Canyon.  According to Bix, this massive gold find is what prompted the starting of the Federal Reserve because billions of ounces of new gold from the Grand Canyon dumped into the market would destroy the monetary system.

    While this may sound plausible to the layman, if we carefully read the article and do some additional research, we will come to a much different conclusion than what Mr. Weir is suggesting.

    First, Bix makes a grave error during the interview when he states “billions of ounces of gold,” rather than “billions of Dollars of gold.”  Here is the segment of the article:

    There’s a big difference between a billion ounces of gold and a billion dollars worth of gold.  For example, the market price of gold in 1912 was $20.65 an ounce.  If we assume that $2 billion worth of gold was extracted from the Grand Canyon, it would equal approximately 100 million oz of gold.  If we take it a step further and convert it to metric tons, it would equal 3,110 metric tons…. a figure much much lower than one million tons stated by Mr. Weir.

    Second, the article provides us with an idea of the very low quality of the gold found in the silt on the banks of the Grand Canyon:

    As we can see, the individual in charge of the mining operation in the Grand Canyon stated that the value of gold was worth 50 cents per yard.  When gold miners refer to a “yard,” they mean a cubic yard or a volume that equals 1.3 tons.  With an ounce of gold worth $20 in 1912, 50 cents a yard is a tiny amount of gold.  Thus, 50 cents worth of gold in a yard is approximately 0.025 oz or one-fortieth of an ounce of gold.

    Let’s compare the supposed vast Grand Canyon gold riches worth 50 cents a yard to the gold mining that took place in Alaska during the same period.  According to the data provided by the U.S. Bureau of Mines in 1912 Report:

    This chart represents “Placer” gold mining in Alaska, which was the same type of gold mining that took place on the banks of the Grand Canyon.  Placer gold mining is the process of washing gold from gravel, sand or silt.  Lode mining is extracting gold ores from veins in rock.  Here we can see that the average value of gold recovered in Alaska in 1912 was $2.10 per cubic yard.  Now, why on earth would anyone want to go to the remote location in the Grand Canyon and mine gold for 50 cents a yard when you could receive four times as much in Alaska???  Please, someone forward that information to Mr. Weir.

    Third, the notion of extracting Billions of Dollars of gold from the Grand Canyon fails logistics miserably.  Let’s overlook  Mr. Weir’s error in quoting billions of ounces of gold rather than billion dollars of gold and consider the tremendous logistics of mining that amount gold out of the Grand Canyon.  According to the same U.S. Bureau of Mines 1912 Report linked above, Alaska produced a total of 7.4 million oz of gold worth $154 million between 1880 and 1912:

    So, in over three decades of mining placer gold in Alaska, the total amount was $154 million.  Furthermore, the value of the gold per yard was likely much higher between 1880-1900.  Regardless, it took a great deal of human resources, energy, and capital to produce the $154 million worth of gold and the most ever produced in one year during that time-period in Alaska, was 1,066,000 oz of gold in 1906 valued at over $22 million.

    Which brings us to the next logical conclusion…. was it ever possible for anyone to produce billions of dollars worth of gold valued at 50 cents a yard in the Grand Canyon when a small percentage of that amount ($154 million) took over three decades to produce in Alaska?  Hell, even during the mighty California Gold Rush of 1848, the peak year of 3.9 million ounces in 1852 was only worth $80 million.  However, the average annual gold production for the California gold rush was only 1.3 million ounces per year valued at $26 million.  It would take a great deal of time mining gold during the famous California Gold Rush to equal just $1 billion.

    Even at $1 billion, that is only 50 million oz of gold or a measly 1,555 metric tons of gold.  Again, nowhere near the one million tons of gold suggested by Mr. Weir.

    Lastly, the supposed vast gold riches in the Grand Canyon came to a dismal end.  That’s correct.  If we spent a few minutes doing a bit of research on the internet, we would find out The Rest Of The Ugly Story.

    (American Placer Gold – Spencer Mining Operation 1911, Grand Canyon)

    According to Arizona State history of gold mining at Lee Ferry in the Grand Canyon, the American Placer Gold company needed coal to process the gold.  Unfortunately, the only coal seam was 28 miles away.  So, the gold mining investors decided to incorporate a steamboat to transport the coal:

    Investors decided a 92-foot steamboat would improve coal transport and gold production; it was ordered and assembled by late February 1912. Dubbed the Charles H. Spencer, the steamboat performed the way it was supposed to, but it burned most of the coal it transported in the process. Spencer also had trouble with his amalgamator and by 1912 his investors had seen enough and shut the project down. Spencer left, and his boat sank to the bottom of the Colorado River. The Charles H. Spencer is now on the National Register of Historic Places as a shipwreck in Arizona.

    Just consider for a moment the type of intellectual thought process taken by these investors who couldn’t understand that the steamboat would consume most of the coal during its 28-mile trip.

    Thus, the LIFE & DEATH of the Great Vast Gold Riches in the Grand Canyon came to an abrupt end, not because there were billions of ounces of gold that would destroy the global monetary system, but rather due to the typical mistake made by investors.  And that is… the belief that utterly incompetent management and miners could extract low-quality gold that is uneconomical to produce.

    So, if we look at the New York Times article that Mr. Weir quotes as his source of billions of ounces of gold, we can logically assume that it was likely written by the company spokesman to get more POOR UNWORTHY INVESTOR SLOBS to purchase the American Placer Gold stock before it went belly-up.  It’s called the PUMP and DUMP…. a shady stock marketing technique that has been going on for hundreds of years.

    If we can have an open mind and the ability to discern fact from fiction or lousy conspiracy theories, we can finally put an end to the notion that the world has a Million Tons of Hidden Gold in the world.

    THE BLIND CONSPIRACY:  The Gold Market Is Heading Towards A Big Fundamental Change

    Now that we have dispensed with certain conspiracies that don’t pass the smell test, there is a real one that very few are aware.  I call it the BLIND CONSPIRACY.  The interesting thing about this conspiracy is that nobody really knows about it.  However, it behaves like a conspiracy because many individuals and parties are manipulating the market which is providing a false sense of security to the average investor.

    Thus, investors with a false sense of security, continue to invest in STOCKS, BONDS, and REAL ESTATE at amazing inflated values.  Today, the Dow Jones hit a new record high of 24,272 points:

    If you look at this chart of the Dow Jones Index, it is starting to resemble the Bitcoin chart.  However, Bitcoin’s graph is moving up at a level  ten times more insane than the Dow Jones Index:

    While the Dow Jones Index increased 4,200 points, or 21% since the beginning of 2017, the Bitcoin price has surged more than $9,000, or a staggering 1,125% increase.  Furthermore, the Bitcoin price doubled in just the past month.  This is completely insane.  Even though a lot of Bitcoin enthusiasts are shouting for $20,000 and $100,000 Bitcoin, if we are ever going to get there, there needs to be a serious correction first.  However, we may have already seen the top of Bitcoin at $11,400.

    Folks, nothing goes straight up and then continues even higher.  I would be very cautious about investing in Bitcoin at this time.  Both the stock market and cryptocurrencies are extremely overbought… to say the least.  On the other hand, gold and silver have been selling off over the past several days and are even closer to their lows and cost of production.

    Getting back to the Blind Conspiracy and the Big Fundamental Change in the gold market, investors are entirely in the dark about the dire energy predicament we are facing.  I continue to receive emails from individuals in various industries that tell me the “Situation is MUCH WORSE than you realize.”  Also, there are good CLUES published in the media if you are IN-TUNE to this information.

    According to this jewel, titled Oil Major: 70% Of Crude Can Be Left In The Ground, by Nick Cunnigham:

    “A lot of fossil fuels will have to stay in the ground, coal obviously … but you will also see oil and gas being left in the ground, that is natural,” Statoil’s CEO Eldar Saetre told Reuters in an interview. “At Statoil we are not pursuing certain types of resources, we are not exploring for heavy oil or investing in oilsands.

    If heavy oil and oil sands are to be left unproduced, then a lot of oil will need to stay in the ground. According to the USGS, about 70 percent of the world’s discovered oil reserves are in the form of heavy oil and bitumen. Much of that comes from Venezuela – one of the last places in the world that an oil company wants to do business in these days – and Canada.

    Last year, Statoil abandoned Canada’s oil sands, selling off its assets to Athabasca Oil Corp. But Statoil is hardly alone in the exodus. ConocoPhillips unloaded a whopping $13.3 billion of oil sands assets to Cenovus Energy earlier this year. Shell sold off $4.1 billion in oil sands assets to Canadian Natural Resources. Meanwhile, ExxonMobil wrote off 3.5 billion barrels of oil sands from its book in February, admitting that they were unviable in today’s market.

    ConocoPhillips’ CEO said that it would no longer invest in any oil project that needs a breakeven price of $50 or higher, according to the FT.

    If the Major Oil Industry believes that upwards of 70% of the oil reserves should be left in the ground, how much do we really have left to produce??  Furthermore, it was quite surprising to see that the ConocoPhillips CEO said they would no longer invest in oil projects with a breakeven above $50.  Folks, there aren’t many oil discoveries available with a price tag less than $50 a barrel.

    Again, the clues are all around.  Let me repost the completely awful financial results by the second largest natural gas producer in the United States.  Chesapeake Energy produced the second highest amount of natural gas during the first nine months of 2017 at 2.9 billion cubic feet per day compared to ExxonMobil’s 3.1 billion cubic feet per day.  So, what benefit did Chesapeake receive for producing the country’s second largest amount of natural gas?  Take a look at the Q3 2017 Cash Flow Statement:

    After everything was considered, Chesapeake’s operations provided $273 million in cash (shown in the highlighted yellow).  For those who are not familiar with Cash Flow Statements, we subtract capital expenditures from cash from operations to arrive at their FREE CASH FLOW.  Unfortunately for Chesapeake, they spent a staggering $1.6 billion (highlighted in blue) on drilling and completion costs (capital) to produce their natural gas and oil.  Thus, Chesapeake’s Free Cash Flow was a negative $1.3 billion.

    That would have been terrible news if it wasn’t for the sale of properties of worth $1,193 million ($1.2 billion.. two lines below the highlighted blue line).  Which means, the financial wizards at Chesapeake used asset sales to help pay for their natural gas drilling capital expenditures.  How long can Chesapeake sell properties to fund their drilling costs??

    Are we starting to get a PICTURE here?  Regrettably, even highly trained energy analysts do not understand that the oil and gas industry is cannibalizing itself just to stay alive.  If investors do not understand just how bad our energy situation has become, they are BLINDLY investing in the worst assets (STOCKS, BONDS & REAL ESTATE) that derive their value from the burning of ENERGY.

    This is the BLIND CONSPIRACY.  It’s taking place right in front of our eyes, and virtually no one sees it.

    We are going to experience a Massive Fundamental Change in the gold market because investors will finally begin to understand what a true store of wealth is versus one that is an ENERGY IOU.  Stocks, Bonds, and Real Estate get their value from burning energy IN THE FUTURE, while a gold or silver coin bought today, received its value from burning energy IN THE PAST.  That is a big difference that investors, even precious metals investors fail to realize.

    Lastly, if you want to pay more for precious metals, than I suggest you don’t check out our PRECIOUS METALS INVESTING section or our new LOWEST COST PRECIOUS METALS STORAGE page.

    Check back for new articles and updates at the SRSrocco Report.

  • THE BLIND CONSPIRACY: The Gold Market Is Heading Towards A Big Fundamental Change


    By The SRSrocco Report,


    The gold market is heading towards a big fundamental change that few are prepared.  While many analysts in the alternative media community suggest that the gold price is manipulated due to Fed and Central bank intervention, there is another more obscure rationale that is the likely culprit.  I call it, “The Blind Conspiracy.”

    But, before I get into the details of this Blind Conspiracy, there are a few very troubling developments in the alternative media community that I would like to discuss first.  The bulk of these concerns has to do with the increasing amount of faulty analysis and misinformation as well as the peddling of lousy conspiracy theories on the internet.

    Why is this a big problem?  Because a lot of readers are being misguided as to the true nature of the serious predicament we are facing.  Half of the emails that I receive are from readers who are bringing up doubts based on other analysts’ faulty analysis and misinformation.  Thus, it takes a great deal of effort to provide the real facts and data to counteract the damage being done by certain individuals, even those with good intentions.

    Furthermore, an increasing number of so-called precious metals analysts have switched over to Bitcoin and other cryptocurrencies, believing that gold and silver will no longer function as monetary metals.  However, some of these analysts suggest that silver will still be valuable because it will be used as critical raw material in advanced products in our new HIGH-TECH WORLD.  I find this idea of a future modern high-tech world quite amusing when we can’t even maintain the failing complex infrastructure we are currently using.

    American Society Of Civil Engineers 2017:  U.S. Infrastructure Grade Is…???

    According to the Amercian Society Of Civil Engineers, ASCE, they just came out with their grade this year for U.S. infrastructure.  Does anyone want to guess what overall grade we received here in the good ole U.S. of A?  The ASCE gave us a D+:

    Well, at least a D+ isn’t an “F” grade.  Here is the ASCE’s Infrastructure Report Card Grading Scale for receiving a “D”:

    The infrastructure is in poor to fair condition and mostly below standard, with many elements approaching the end of their service life. A large portion of the system exhibits significant deterioration. Condition and capacity are of serious concern with strong risk of failure.

    The ASCE U.S. Infrastructure Report also provides separate grades for different aspects of U.S. infrastructure.  For example, the U.S. Energy Infrastructure received a “D+” as well.  This is a brief description of the Energy Infrastructure:

    Much of the U.S. energy system predates the turn of the 21st century. Most electric transmission and distribution lines were constructed in the 1950s and 1960s with a 50-year life expectancy, and the more than 640,000 miles of high-voltage transmission lines in the lower 48 states’ power grids are at full capacity.

    Moreover, the report states that $4.5 trillion needs to be invested 2016-2025 to raise the U.S. infrastructure to a “B’ Grade.  However, only $2.5 trillion has been budgeted.  Thus, we are $2 trillion short of the total amount needed.  Regardless, I doubt we will be able to spend anywhere close to the budgeted $2.5 trillion over the next decade for our infrastructure.  Unfortunately, I see the U.S. Government and private sector running into serious financial trouble by 2020 as the massive amount of debt and derivatives finally take down the system.

    So, the question remains.  How are we going to move into a new HIGH-TECH world if we can’t even maintain our current infrastructure?

    The notion that we can bring on some new “Energy Technology” fails to consider the tremendous amount of raw materials, manufacturing, transportation, and logistics to repair and maintain our current infrastructure.  You see, we have much bigger problems than just replacing an energy source or technology.  But, to understand that principle, you must look past superficial thinking and “Silver-Bullet energy technologies.”

    Now, if you hear certain analysts suggesting that gold and silver will no longer be used as money in the future because cryptocurrencies will take over the monetary role in our new high-tech world, you may want to contact them and provide the link to the U.S. Infrastructure D+ Grade Report.

    Destroying Once Again…. Certain Myths About The Gold Market

    If I collected an ounce of gold for every email that I have received about patently false gold myths and conspiracies; I could buy one hell of a lot of silver….LOL.  Gosh, if I went back to my email folder and added up all the emails on this subject, it would number well over 500 in my ten years publishing articles in the alternative media community.  However, I continue to receive the same type of emails because individuals are still being misled.

    Before I begin, let me say that I focus my work on disproving the faulty analysis by other individuals, and not directing anything negative towards the person.  I am adamantly against the idea of “targeting the messenger.”  Rather, I like to target the faulty message.  So, there is nothing personal in my attempt to set the record straight.

    Let me start off by saying…. THERE AREN’T MILLIONS OF TONS OF HIDDEN GOLD in the world.  Anyone who continues to believe this needs to pay close attention to the following information.

    One of my readers sent me the following recent YouTube video by Bix Weir, titled “Vast Gold Riches Hidden In The Grand Canyon“:

    In the video, Bix quotes a New York Times article published on June 19, 1912, that proclaimed vast gold riches in the Grand Canyon.  According to Bix, this massive gold find is what prompted the starting of the Federal Reserve because billions of ounces of new gold from the Grand Canyon dumped into the market would destroy the monetary system.

    While this may sound plausible to the layman, if we carefully read the article and do some additional research, we will come to a much different conclusion than what Mr. Weir is suggesting.

    First, Bix makes a grave error during the interview when he states “billions of ounces of gold,” rather than “billions of Dollars of gold.”  Here is the segment of the article:

    There’s a big difference between a billion ounces of gold and a billion dollars worth of gold.  For example, the market price of gold in 1912 was $20.65 an ounce.  If we assume that $2 billion worth of gold was extracted from the Grand Canyon, it would equal approximately 100 million oz of gold.  If we take it a step further and convert it to metric tons, it would equal 3,110 metric tons…. a figure much much lower than one million tons stated by Mr. Weir.

    Second, the article provides us with an idea of the very low quality of the gold found in the silt on the banks of the Grand Canyon:

    As we can see, the individual in charge of the mining operation in the Grand Canyon stated that the value of gold was worth 50 cents per yard.  When gold miners refer to a “yard,” they mean a cubic yard or a volume that equals 1.3 tons.  With an ounce of gold worth $20 in 1912, 50 cents a yard is a tiny amount of gold.  Thus, 50 cents worth of gold in a yard is approximately 0.025 oz or one-fortieth of an ounce of gold.

    Let’s compare the supposed vast Grand Canyon gold riches worth 50 cents a yard to the gold mining that took place in Alaska during the same period.  According to the data provided by the U.S. Bureau of Mines in 1912 Report:

    This chart represents “Placer” gold mining in Alaska, which was the same type of gold mining that took place on the banks of the Grand Canyon.  Placer gold mining is the process of washing gold from gravel, sand or silt.  Lode mining is extracting gold ores from veins in rock.  Here we can see that the average value of gold recovered in Alaska in 1912 was $2.10 per cubic yard.  Now, why on earth would anyone want to go to the remote location in the Grand Canyon and mine gold for 50 cents a yard when you could receive four times as much in Alaska???  Please, someone forward that information to Mr. Weir.

    Third, the notion of extracting Billions of Dollars of gold from the Grand Canyon fails logistics miserably.  Let’s overlook  Mr. Weir’s error in quoting billions of ounces of gold rather than billion dollars of gold and consider the tremendous logistics of mining that amount gold out of the Grand Canyon.  According to the same U.S. Bureau of Mines 1912 Report linked above, Alaska produced a total of 7.4 million oz of gold worth $154 million between 1880 and 1912:

    So, in over three decades of mining placer gold in Alaska, the total amount was $154 million.  Furthermore, the value of the gold per yard was likely much higher between 1880-1900.  Regardless, it took a great deal of human resources, energy, and capital to produce the $154 million worth of gold and the most ever produced in one year during that time-period in Alaska, was 1,066,000 oz of gold in 1906 valued at over $22 million.

    Which brings us to the next logical conclusion…. was it ever possible for anyone to produce billions of dollars worth of gold valued at 50 cents a yard in the Grand Canyon when a small percentage of that amount ($154 million) took over three decades to produce in Alaska?  Hell, even during the mighty California Gold Rush of 1848, the peak year of 3.9 million ounces in 1852 was only worth $80 million.  However, the average annual gold production for the California gold rush was only 1.3 million ounces per year valued at $26 million.  It would take a great deal of time mining gold during the famous California Gold Rush to equal just $1 billion.

    Even at $1 billion, that is only 50 million oz of gold or a measly 1,555 metric tons of gold.  Again, nowhere near the one million tons of gold suggested by Mr. Weir.

    Lastly, the supposed vast gold riches in the Grand Canyon came to a dismal end.  That’s correct.  If we spent a few minutes doing a bit of research on the internet, we would find out The Rest Of The Ugly Story.

    (American Placer Gold – Spencer Mining Operation 1911, Grand Canyon)

    According to Arizona State history of gold mining at Lee Ferry in the Grand Canyon, the American Placer Gold company needed coal to process the gold.  Unfortunately, the only coal seam was 28 miles away.  So, the gold mining investors decided to incorporate a steamboat to transport the coal:

    Investors decided a 92-foot steamboat would improve coal transport and gold production; it was ordered and assembled by late February 1912. Dubbed the Charles H. Spencer, the steamboat performed the way it was supposed to, but it burned most of the coal it transported in the process. Spencer also had trouble with his amalgamator and by 1912 his investors had seen enough and shut the project down. Spencer left, and his boat sank to the bottom of the Colorado River. The Charles H. Spencer is now on the National Register of Historic Places as a shipwreck in Arizona.

    Just consider for a moment the type of intellectual thought process taken by these investors who couldn’t understand that the steamboat would consume most of the coal during its 28-mile trip.

    Thus, the LIFE & DEATH of the Great Vast Gold Riches in the Grand Canyon came to an abrupt end, not because there were billions of ounces of gold that would destroy the global monetary system, but rather due to the typical mistake made by investors.  And that is… the belief that utterly incompetent management and miners could extract low-quality gold that is uneconomical to produce.

    So, if we look at the New York Times article that Mr. Weir quotes as his source of billions of ounces of gold, we can logically assume that it was likely written by the company spokesman to get more POOR UNWORTHY INVESTOR SLOBS to purchase the American Placer Gold stock before it went belly-up.  It’s called the PUMP and DUMP…. a shady stock marketing technique that has been going on for hundreds of years.

    If we can have an open mind and the ability to discern fact from fiction or lousy conspiracy theories, we can finally put an end to the notion that the world has a Million Tons of Hidden Gold in the world.

    THE BLIND CONSPIRACY:  The Gold Market Is Heading Towards A Big Fundamental Change

    Now that we have dispensed with certain conspiracies that don’t pass the smell test, there is a real one that very few are aware.  I call it the BLIND CONSPIRACY.  The interesting thing about this conspiracy is that nobody really knows about it.  However, it behaves like a conspiracy because many individuals and parties are manipulating the market which is providing a false sense of security to the average investor.

    Thus, investors with a false sense of security, continue to invest in STOCKS, BONDS, and REAL ESTATE at amazing inflated values.  Today, the Dow Jones hit a new record high of 24,272 points:

    If you look at this chart of the Dow Jones Index, it is starting to resemble the Bitcoin chart.  However, Bitcoin’s graph is moving up at a level  ten times more insane than the Dow Jones Index:

    While the Dow Jones Index increased 4,200 points, or 21% since the beginning of 2017, the Bitcoin price has surged more than $9,000, or a staggering 1,125% increase.  Furthermore, the Bitcoin price doubled in just the past month.  This is completely insane.  Even though a lot of Bitcoin enthusiasts are shouting for $20,000 and $100,000 Bitcoin, if we are ever going to get there, there needs to be a serious correction first.  However, we may have already seen the top of Bitcoin at $11,400.

    Folks, nothing goes straight up and then continues even higher.  I would be very cautious about investing in Bitcoin at this time.  Both the stock market and cryptocurrencies are extremely overbought… to say the least.  On the other hand, gold and silver have been selling off over the past several days and are even closer to their lows and cost of production.

    Getting back to the Blind Conspiracy and the Big Fundamental Change in the gold market, investors are entirely in the dark about the dire energy predicament we are facing.  I continue to receive emails from individuals in various industries that tell me the “Situation is MUCH WORSE than you realize.”  Also, there are good CLUES published in the media if you are IN-TUNE to this information.

    According to this jewel, titled Oil Major: 70% Of Crude Can Be Left In The Ground, by Nick Cunnigham:

    “A lot of fossil fuels will have to stay in the ground, coal obviously … but you will also see oil and gas being left in the ground, that is natural,” Statoil’s CEO Eldar Saetre told Reuters in an interview. “At Statoil we are not pursuing certain types of resources, we are not exploring for heavy oil or investing in oilsands.

    If heavy oil and oil sands are to be left unproduced, then a lot of oil will need to stay in the ground. According to the USGS, about 70 percent of the world’s discovered oil reserves are in the form of heavy oil and bitumen. Much of that comes from Venezuela – one of the last places in the world that an oil company wants to do business in these days – and Canada.

    Last year, Statoil abandoned Canada’s oil sands, selling off its assets to Athabasca Oil Corp. But Statoil is hardly alone in the exodus. ConocoPhillips unloaded a whopping $13.3 billion of oil sands assets to Cenovus Energy earlier this year. Shell sold off $4.1 billion in oil sands assets to Canadian Natural Resources. Meanwhile, ExxonMobil wrote off 3.5 billion barrels of oil sands from its book in February, admitting that they were unviable in today’s market.

    ConocoPhillips’ CEO said that it would no longer invest in any oil project that needs a breakeven price of $50 or higher, according to the FT.

    If the Major Oil Industry believes that upwards of 70% of the oil reserves should be left in the ground, how much do we really have left to produce??  Furthermore, it was quite surprising to see that the ConocoPhillips CEO said they would no longer invest in oil projects with a breakeven above $50.  Folks, there aren’t many oil discoveries available with a price tag less than $50 a barrel.

    Again, the clues are all around.  Let me repost the completely awful financial results by the second largest natural gas producer in the United States.  Chesapeake Energy produced the second highest amount of natural gas during the first nine months of 2017 at 2.9 billion cubic feet per day compared to ExxonMobil’s 3.1 billion cubic feet per day.  So, what benefit did Chesapeake receive for producing the country’s second largest amount of natural gas?  Take a look at the Q3 2017 Cash Flow Statement:

    After everything was considered, Chesapeake’s operations provided $273 million in cash (shown in the highlighted yellow).  For those who are not familiar with Cash Flow Statements, we subtract capital expenditures from cash from operations to arrive at their FREE CASH FLOW.  Unfortunately for Chesapeake, they spent a staggering $1.6 billion (highlighted in blue) on drilling and completion costs (capital) to produce their natural gas and oil.  Thus, Chesapeake’s Free Cash Flow was a negative $1.3 billion.

    That would have been terrible news if it wasn’t for the sale of properties of worth $1,193 million ($1.2 billion.. two lines below the highlighted blue line).  Which means, the financial wizards at Chesapeake used asset sales to help pay for their natural gas drilling capital expenditures.  How long can Chesapeake sell properties to fund their drilling costs??

    Are we starting to get a PICTURE here?  Regrettably, even highly trained energy analysts do not understand that the oil and gas industry is cannibalizing itself just to stay alive.  If investors do not understand just how bad our energy situation has become, they are BLINDLY investing in the worst assets (STOCKS, BONDS & REAL ESTATE) that derive their value from the burning of ENERGY.

    This is the BLIND CONSPIRACY.  It’s taking place right in front of our eyes, and virtually no one sees it.

    We are going to experience a Massive Fundamental Change in the gold market because investors will finally begin to understand what a true store of wealth is versus one that is an ENERGY IOU.  Stocks, Bonds, and Real Estate get their value from burning energy IN THE FUTURE, while a gold or silver coin bought today, received its value from burning energy IN THE PAST.  That is a big difference that investors, even precious metals investors fail to realize.

    Lastly, if you want to pay more for precious metals, than I suggest you don’t check out our PRECIOUS METALS INVESTING section or our new LOWEST COST PRECIOUS METALS STORAGE page.

    Check back for new articles and updates at the SRSrocco Report.

  • China's Infrastructure Boom Heading For Rapid Slowdown In 2018

    There have been signs since October’s Party Congress that China’s infrastructure boom was about to cool off as the leadership seeks to contain debt levels and focus on the quality not the quantity of growth. Subway building is one sector which has seen some high-profile project cancellations. In mid-November 2017, Caixin reported that China’s top economic planning authority, the National Development and Reform Commission, was “raising the bar for subway proposals” – increasing scrutiny in terms of fiscal conditions, population and GDP. In recent weeks, we’ve seen two large subway projects shelved, one in Hohhot, the capital city of Inner Mongolia (worth 27 billion Yuan) and another in Baotou, another Inner Mongolian city (worth 30 billion Yuan). As Caixin noted.

    The cancellation of the Inner Mongolia subway projects is having a ripple effect in other cities. Several city governments, including those of Xianyang in Shaanxi province and Wuhan in Hubei province, said in statements that their subway plan are unlikely to win immediate approval under the central government’s crackdown on financial risks related to borrowing for such projects.

    The crackdown on local government debt, a key source of infrastructure financing, will have a knock-on effect on Chinese GDP growth. A difficulty for China’s central planners is that the infrastructure share of Chinese fixed asset investment has been on a rising trend, surpassing 20% during 2017 versus just over 15% in early 2014. While we’ve been expecting China’s infrastructure spend to slow next year, we are surprised by the rate of slowdown estimated by Bloomberg, which surveyed a large number of forecasters.

    China’s frenzied construction of roads, bridges and subways is set for a major slowdown, adding a headwind to economic growth in 2018. The nation’s fixed-asset investment in infrastructure will grow 12 percent next year, according to the median estimate in a Bloomberg survey, down from almost 20 percent in the first ten months this year. All 18 economists in the survey anticipated a moderation, adding to reports by Morgan Stanley, Goldman Sachs Group Inc. and UBS Group AG predicting a similar trend.

    The cooling construction fever is taking shape as authorities renew a pledge to focus on debt management following the Communist Party Congress in October. In a rare move, China has suspended subway projects in some cities, and scrutiny has also toughened on public-private partnerships — until now a widespread way to fund projects. The easing could even threaten global capital expenditure growth, as China represents one-fifth of the world’s total investment, according to estimates by Oxford Economics.

    Infrastructure investment "grew much faster than other investments in the past five years," Larry Hu, chief China economist at Macquarie Securities Ltd. in Hong Kong, wrote in a note. "Policy makers might be able to accept slower growth for infrastructure spending from next year, as the growth in the past five years is unsustainable."

    Slowdown or not, the scale of spending on Chinese infrastructure remains vast, about $1.7 trillion during January-October 2017. The pick-up in spending during the last two years followed efforts by the authorities to promote PPP (public-private partnerships) to finance infrastructure projects as one way to limit the growth in local government debt. As is the case with many things related to investment in China, the policy was quickly subject to abuse. In the majority of cases, the “private” partner in PPP projects turned out to be a state-owned firm, which merely added to the state’s debt burden via a different route. Eight local governments have been reprimanded by the finance ministry and the National Audit Office for “disguised borrowing”. We can only imagine the degree of abuse when local governments guaranteed returns on PPP-funded projects. According to Bloomberg.

    The Ministry of Finance last month banned local governments from guaranteeing returns for private investors in PPP projects or backing a project’s debt. The national watchdog for state-owned enterprises also published rules to regulate state companies’ participation — a potential blow to a major source of funding.

    "A change in central government’s attitude towards PPP does not bode well for infrastructure in 2018," according to Yao Wei, chief China economist at Societe Generale SA in Paris. "A slowdown from the rapid pace this year looks inevitable."

    The challenges for Xi Jinping and his top bureaucrats are mounting, as 2018 looks like it will see the convergence of a host of major reforms of which slower infrastructure spending and altering PPP funding arrangements are a small part. Other major ones include cooling the property market, reducing overcapacity in heavy industry, pollution control, continuing the crackdown on corruption, deleveraging and reforming the out-of-control shadow banking sector.

    The China bulls will undoubtedly downplay the scale of these challenges, expecting little deceleration in Chinese growth, helped by a near seamless transition from investment to consumer-led growth. We will be amazed very impressed if Xi can pull it off.

  • Paul Craig Roberts Exposes "Plunder Capitalism"

    Authored by Paul Craig Roberts,

    I deplore the tax cut that has passed Congress. It is not an economic policy tax cut, and it has nothing whatsoever to do with supply-side economics. The entire purpose is to raise equity prices by providing equity owners with more capital gains and dividends.

    In other words, it is legislation that makes equity owners richer, thus further polarizing society into a vast arena of poverty and near-poverty and the One Percent, or more precisely a fraction of the One Percent wallowing in billions of dollars. Unless our rulers can continue to control the explanations, the tax cut edges us closer to revolution resulting from complete distrust of government.

    The current tax legislation drops the corporate tax rate to 20%. This means that global corporations registered in the US will be taxed at a lower income tax rate than a licensed practical nurse making $50,000 per year. The nurse, if single, faces in 2017 a 25% marginal tax rate on all income over $37,950.

    A single person is taxed at a rate of 33% on all income above $191,651. 33% was the top tax rate extracted from medieval serfs, and approaches the tax rate on US 19th century slaves. Such an upper middle class income as $191,651 sounds extraordinary to most Americans, but it is so far from the multi-million dollar annual incomes of the rich as to be invisible. In America, it is the shrinking middle and upper middle class incomes that bear the burden of income taxation. The rich with their capital gains from their equity holdings are taxed at 15%.

    Even single individuals who earn between $1 and $9,325 are taxed at 10% on their pittance.

    The neoliberal economists who are the shills for the rich, Wall Street, and the Banks-Too-Big-Too-Fail claim, erroneously, that by cutting the corporate income tax rate to 20% all sorts of offshored profits will be brought back to the US and lead to a booming economy and higher wages.

    This is absolute total nonsense. The money won’t come back, because it is invested abroad where labor costs are lower, if invested at all instead of buying back the corporation’s stock or buying other existing companies. After 20 years of offshoring US manufacturing and professional tradable skills and the incomes associated with the jobs, who is going to invest in America? The American population has no income with which to purchase the goods and services from new investment, and the American population’s credit cards are maxed out.

    All that is going to happen is that Wall Street will calculate the lower tax rate into a higher equity price. Wall Street can do this without any of the offshored earnings coming home. Suddenly, everyone who owns equities will experience a boost in wealth, or the boost has already occurred in anticipation of the handout.

    The deficit-conscious Republicans have put into the Bill for Enhancement of the Rich’s Wealth, cuts in social services in order to “save workers from higher interest rates from budget deficits.” This is more dishonesty. If the Fed lets real interest rates rise to any meaningful amount, derivatives will unwind, and the Fed will have to create trillions more in new dollars to keep its ponzi scheme in place. The deficit that results from the tax cut will be covered by the Fed purchasing the Treasuries, not by a rise in interest rates.

    What we are witnessing in the US and indeed throughout the western world is the total failure of capitalism. Capitalism is now merely a looting machine. The financial sector no longer supplies capital for production. What the financial sector does is to turn discretionary consumer income into interest and fee payments to banks. Aggregate demand can only grow through debt expansion, and the consumers reach a point where they cannot expand their debt.

    Capitalism, hiding behind “globalism,” which is misrepresented as a good thing when it is death itself, locates production where labor is cheapest, thus depriving First World labor of good wages and work opportunities and putting First World countries on the path to becoming Third World countries.

    Short-term profits and executive and board bonuses and stock options are maximized at the cost of the destruction of the domestic consumer market.

    Plunder Capitalism also privatizes as much of the public sector, such as the military, as possible, thus driving up the cost of the Pentagon’s budget. Jobs that the soldiers themselves formerly did are given to politically-connected firms. What was once KP (kitchen patrol) is now provided by an outside private service. Private mercenaries hired by the Pentagon collect as much in a month as troops in the line of fire earn in a year. I don’t know that the army any longer has a supply organization other than the private business that has the contract.

    Medicare and Medicaid are the next to be privatized, along with Social Security. The tax cut will result in deficit and high interest rate hype, and these lies will be used to save the workers from high interest rates on their mortgage, credit card, and student loan debt by scaling back or privatizing Medicare, Medicaid, and Social Security.

    The environment and public lands will be sacrificed to the private profits of timber, mining, and energy companies. Grizzly bears and wolves are losing their protection under the endangered species act so that states can sell trophy hunting licenses to men who have to prove their manhood by killing an animal with a high-powerful rifle at a safe distance.

    What we are witnessing is the complete looting of America and the entirety of the West. While the Western World collapses, the insouciant, submissive people sit there sucking their thumbs while they are being ruined.

    Nothing is left of the West except looters at work.

    This tax bill is an abomination, an act of brutal plunder. Its sponsors should be tarred and feathered and ridden out of town on a rail, if not hung from a lamp post.

  • Nationwide Net Neutrality Protests Planned For Thursday

    Last Wednesday, the Federal Communications Commission (FCC) released its plan to reverse net neutrality regulations that were put in place under the Obama administration in 2015. Net neutrality is the concept that all internet traffic should be treated equally by internet service providers (ISPs), regardless of the content that is delivered or who it was created by.

    Statista's Felix Richter explains that the new proposal, named the Restoring Internet Freedom order, would no longer classify ISPs as public utilities but rather as information services, meaning that telecommunication companies such as Comcast or Verizon would be legally allowed to create so-called fast lanes for content by providers that either pay for preferential treatment or that the ISP itself has a financial stake in, such as Comcast has in NBC Universal. While the FCC argues that scrapping net neutrality rules would boost investments and innovation by limiting government regulation, advocates of net neutrality argue that the concept creates a level playing field for content providers and fear that getting rid of net neutrality would stifle competition and further increase concentration in the online media landscape.

    As Statista's chart below, based on a Consumer Reports survey, shows, the majority of Americans support the current net neutrality rules and don’t think that ISPs should be allowed to regulate what content their customers can access.

    Infographic: Americans Voice Support for Net Neutrality | Statista You will find more statistics at Statista

    Considering the Republican majority in the commission, it is expected to pass regardless of the vocal opposition from companies and consumers alike.

    More than 600 demonstrations are planned at Verizon stores across the United States on Thursday amid the Federal Communications Commission’s (FCC) plan to kill net neutrality.

    FCC Chairman Ajit Pai made it clear last month that the FCC will vote on the fate of net neutrality on December 14. The rules currently prohibit internet service providers from charging extra fees, censorship and throttling website speeds.

    The rollback is expected to pass the FCC vote next week. However, that is not stopping Demand Progress, Fight for the Future and the Freepress Action Fund who have formed the coalition called “Battle for the Net”.

    Evan Greer, campaign director of Fight for the Future said in a statement: “This is the free speech fight of our generation and internet users are pissed off and paying attention. Ajit Pai may be owned by Verizon, but he has to answer to Congress, and lawmakers have to answer to us, their constituents.”

    Common Dreams, a non-profit news-oriented website claims, since Pai revealed his plan to kill net neutrality rules back in mid-November, public outrage has continued to expand– despite the lack of coverage from major media outlets. Since the phone lines opened on November 21, more than 774,325 calls have flooded congressional phone lines.

    On Thursday, Americans will take to the streets outside their local Verizon stores and congressional offices to protest against rolling back net neutrality, exactly one week ahead of the FCC’s planned vote.

    Mark Stanley, director of communications for Demand Progress said, “With what would be a catastrophic vote by the FCC to repeal net neutrality looming, people are ready to take to the streets in protest and to offer Congress one last chance to answer the question: ‘Do you stand for your constituents’ ability to communicate and connect, or do you stand for Verizon’s bottom line?”

    Verizon stores were chosen as the premiere site for the demonstrations because  FCC Chairman Ajit Pai previously was the company’s associate general counsel from 2001 to 2003.


    Below is a list of websites, companies, and organizations who are defending net neutrality:

    Here are the companies who want to end net neutrality:

    Common Dreams said 27 senators including Elizabeth Warren and Bernie Sanders have sent Pai a letter on Monday demanding the FCC to delay the vote. Also, 40 consumer protection groups have sent a letter to Pai asking for a delay as well.

    Building on the outrage expressed by the American public, a group of 27 senators including Maggie Hassan (D-N.H.), Elizabeth Warren (D-Mass.), and Bernie Sanders (I-Vt.) delivered a letter to Pai on Monday demanding that the FCC vote be delayed in the face of evidence that the public “record may be replete with fake or fraudulent comments, suggesting that your proposal is fundamentally flawed.”


    A coalition of over 40 consumer protection groups also called on the FCC to postpone its vote on repealing net neutrality in a letter to Pai on Monday, citing a pending court case that could ultimately “leave consumers at the mercy of internet service providers.”

    The attempt seemed promising on Monday, but earlier on Tuesday the FCC rejected all calls to delay the net neutrality vote, according to The Hill.

    The FCC said in a statement Monday that “the vote will proceed as scheduled on December 14.” In a separate statement provided to Ars Technica, the FCC hit back at those seeking a delay:

    This is just evidence that supporters of heavy-handed Internet regulations are becoming more desperate by the day as their effort to defeat Chairman Pai’s plan to restore Internet freedom has stalled. 

    With the delay thwarted by the FCC, and over 600 demonstration sites planned at Verizon locations across the nation on Thursday, and with the US already in a state of constant and belligerent outrage, one wonders what else could possibly go wrong on the day the US government itself at risk of being shut down.

  • The Collapse Of Media (And What You Can Do About It)

    Authored by Nafeez Ahmed and Andrew Markell via,

    When a system enters into the final stage of its deterioration – whether that is an institutional system, a state, an empire, or the human body – all the important information flows that support coherent communication breakdown. In this final stage, if this situation is not corrected the system will collapse and die.

    It has become obvious to nearly everyone that we have reached this stage on the planet and in our democratic institutions. We see how the absolute dysfunction of the global information architecture?—?represented in the intersection of mainstream media outlets, social technology platforms and giant digital aggregators?—?is generating widespread apathy, despair, insanity and madness at a scale that is terrifying.

    And we are right to be terrified, because this situation is paralyzing us from taking the action required to solve global and local challenges. While liberals fight conservatives and conservatives fight liberals we lose precious time.

    While progressives fight government, the corporations and the super-rich we drown in despair. While philanthropists, fueled by their own certainty and wealth, fight for justice or equality or for some poor hamlet in Africa we become apathetic and distracted from the real source of the problem. And while the president fights everyone and everyone fights the president, the collective goes mad.

    In the background, however, the game of hoarding resources and not redistributing them accelerates; absorbing the sum total of our collective actions and commitments into a singular unacceptable future. There is only one way to avoid this fate; uncover the source of the disease and cure it by mobilizing solutions.

    We are about to break down for you the source of this disease of information that is accelerating us to ecological and institutional collapse because once you see it, you will be free to act and build something else.

    The Collapse of Democratic Institutions

    Industrial civilization is in the throes of a great disruption, a systemic transition which could either lead to regression, crisis and collapse; or a new way of working and living, a new mode of prosperity, a new narrative of success.

    The global media industrial complex is not equipped to address this great disruption to civilization-as-we-know-it. To the contrary, it is literally incapable of meaningfully processing information in such a way that it produces, for a significant percentage of the human population, real actionable knowledge? which can render humanity capable of transitioning successfully into the new era.

    The global media industrial complex today compounds the problems we are facing.

    It does this by providing, despite appearances, no knowledge at all. The prevailing model of media is to monopolize and manipulate information flows to produce beliefs and emotions that will allow giant aggregators to maximize ‘clicks’, to maximize advertising revenues, to maximize profits?—?for a few.

    So rather than creating knowledge, the global media industrial complex is designed to generate competing, polarized narratives around which different audiences coalesce into irreconcilable segregated communities; it reinforces beliefs without teaching critical thinking; it blunts an attitude of openness while promoting a banal left-right dichotomy that fuels a global culture of mindless consumerism.

    This prevailing media structure constrains the public’s capacity to make intelligent decisions. And that allows global ecological, energy, economic, social and other challenges to accelerate, while we argue amongst ourselves about ideology.

    The consequence is that information flows are inexorably linked to dominant processes of profit-maximization for a tiny minority; so much so, that people’s relationship to information is managed as a control mechanism over attention and ideological persuasion.

    The Monopolization of Media & Journalism

    At the heart of our collapsing democratic institutions sits the global media industrial complex. If you are brave enough to look closely you will see that both ‘free press’ and ‘fake news’ outlets operate as a structural extension of an extreme form of predatory capitalism, using information to capture wealth for the few at the expense of the many, by capturing our minds. They are two sides of one coin that make the same people obscene piles of cash.

    We only have to peer under the hood to see this fact staring us in the face.

    In the US, six huge transnational conglomerates own the entirety of the mass media, including newspapers, magazines, publishers, TV networks, cable channels, Hollywood studios, music labels and popular websites: Time Warner, Walt Disney, Viacom, News Corp., CBS Corporation and NBC Universal.

    In the UK, 71% of UK national newspapers are owned by just three giant corporations, while 80% of local newspapers are owned by a mere five companies.

    Today, the world’s largest media owner is Google, closely followed by Walt Disney, Comcast, 21st Century Fox and Facebook. Together, Google and Facebook monopolize one-fifth of global ad revenue. And all these corporations control the bulk of what we read, watch and hear, including online. They define our understanding of the world and ourselves.

    Yet they reflect a tiny number of people who have a very narrow outlook on the world.

    That’s because these power structures are part of what one study in the journal PLoS One describes as a “network of global corporate control.” The study authors, a team of systems theorists at the Swiss Federal Institute of Technology, found that the world’s most powerful 43,000 transnational corporations are dominated by a core 1,318 companies, further dominated by a “super-entity” of just 147 firms.

    So most of what we read, watch and hear through the media is structurally conditioned by a network of special interests that are self-supported and self-sustained. This is why the distinction between fake news and real news is both illusory and dishonest. Due to this structure, virtually everything you encounter as ‘news’ functions a subtle or overt piece of propaganda that distracts you from the real activity that is driving the machinery. It matters little whether it comes from Mother Jones, the New York Times, Breitbart or Fox News – everything coming at you within this structure produces the debilitating effect of confusing your mind and stimulating your emotions into a complex mash-up of anger, resignation apathy and sloth.

    Through the Google Glass

    To understand the power of these special interests to monopolize information in service to their own vested ends, we need look no further than the story of world’s largest media owner of all.

    In January 2015, INSURGE broke the exclusive story of how Google was founded and evolved under the wing of the US intelligence community.

    The report revealed that during his development of the core code behind the Google search engine as a Stanford University postgraduate student, Sergey Brin received seed-funding from a CIA and NSA-run research program, the Massive Digital Data Systems (MDDS). The confirmation came from a former manager of the MDDS, Dr. Bhavani Thuraisingham, who is now the Louis A. Beecherl distinguished professor and executive director of the Cyber Security Research Institute at the University of Texas, Dallas.

    This was not necessarily unusual?—?the intelligence community has long been involved in Silicon Valley for all sorts of obvious reasons. What’s interesting is that you probably never knew about how this worked in relation to Google. And that says a great deal about the way the global media industrial complex operates. Her claims are corroborated by a reference to the MDDS programme in a paper co-authored by Brin and fellow Google co-founder Larry Page while at Stanford.

    How the Media – All Media – Handles the Truth

    This story was totally blacked out in the English-language media: except the US tech news site Gigaom, which recommended our investigation as follows:

    “An interesting, if extremely dense, account of Google’s longstanding interactions with US military and intelligence was published on Medium last week.”

    This has very important implications that deserve careful scrutiny: In short, the inside story of Google’s seed-funding and founding by the CIA and NSA breaks into the open?—?but not a single English-language newspaper wants to cover or even acknowledge the story. Yet what could be bigger news, than one of the world’s biggest ‘news-facilitators’ being so closely aligned with the US intelligence community at birth?

    The lack of interest is not the result of a conspiracy. It’s the predictable outcome of the fact that the global media industrial complex represents a highly centralized institutional structure that perpetuates a culture of slavish obedience to power.

    The global media industrial complex largely obscures important knowledge about the very structure and nature of power. That’s why this is probably the first time you’ve seen direct evidence that the most powerful media owner in the world, Google, was conceived with the support of the US intelligence community.

    Power and Control Over Your Mind & Your Resources

    This is not about whether Google is uniquely ‘evil’. It’s about a wider pattern of unacceptable ownership patterns and social networks across the media landscape.

    Consider William Kennard. He served on the board of the New York Times, then became US Federal Communications Commission chairman. He then joined the Carlyle Group as Managing Director. Carlyle majority-owns Booz Allen Hamilton, the defense contractor managing NSA mass surveillance. After Kennard joined the Obama administration as US Ambassador to the EU, he pushed for the secretive, pro-corporate Transatlantic Trade and Investment Partnership (TTIP).

    Consider John Bryson, Obama’s Secretary of Commerce until 2012. In the preceding decade he sat on the board of the Walt Disney Company, which owns the American Broadcasting Corporation (ABC). He was simultaneously on the board of US defense contractor Boeing. Despite resigning from those positions after joining government, he held lucrative stock, option assets, and deferred-compensation plans with both Disney and Boeing.

    Consider Aylwin Lewis, another Walt Disney Company director and simultaneous longtime director at Halliburton, one of the largest transnational oil services firms, formerly run by Dick Cheney. A Halliburton subsidiary, Houston-based KBR Inc., received $39.5 billion in Iraq related contracts over the last decade?—?many of which were no-bid deals.

    Consider Douglas McCorkindale, a director of giant media conglomerate Gannett for decades, and head of various Gannet subsidiary spin-offs. Gannett is the largest US newspaper publisher measured by daily circulation, and owns major US TV stations, regional cable news networks, and radio stations. Yet for about a decade, McCorkindale also served as a director at the US defence giant, Lockhead Martin, resigning in April 2014.

    Consider that these individuals, through their media and defense industry interests, profited directly from devastating wars enabled, effectively, by their own propaganda.

    And notice that this is a bipartisan game, lavishly benefitting liberals and conservatives alike.

    So the global crisis of information and the global Crisis of Civilization? – where we see an escalating convergence of political extremism, ecological destruction, and economic volatility, unravelling our societies and families, decapitating the hopes of our youth? – are clearly one and the same reality.

    The commodification of information is part and parcel of the commodification of the planet.

    This is a game where your mind, your attention and future are reduced to a worthless asset, traded through the markets until there is nothing left. But there is no need to accept this fate. All that is required is that you see it for what it is.

    Once seen, new information and ideas can flow into your mind, new emotions can flow into your body, and you will be empowered to take action. If you see you can act. It becomes obvious that the only solution is to redesign the journalistic format such that new ideas and information lead to constructive action. It becomes obvious that to enliven the public sphere and restore our democratic institutions, we should facilitate the flow of money in media back to where it belongs; into the hands of both journalists and reader-participants committed to the creation of a just and sane future.

  • Chinese Stocks Plunge Below Key Support, Global Tech Wreck Escalates

    Asia's 'FANG' stocks are tumbling once again as the global tech wreck continues to escalate (TATS down 10% from highs).

    Taiwan Semi, Alibaba, Tencent, and Samsung (TATS) are down 7 days in a row and over 10% – the biggest such drop on record…


    While Chinese bonds are holding back from their 4.00% yield line of doom, Chinese stocks are tumbling with the benchmark Shanghai Composite breaking below key support to 4-month lows.


    But whoile Shanghai Comp is down notably, it is the tech and small cap heavy Shenzhen and CHINEXT that are getting hit hard…

  • Bitcoin Blasts Above $12,000, Soars To New All Time High

    After slowing down fractionally in its relentless ascent after topping $11,000 for the first time less than a week ago, Bitcoin has brushed off the weekend selloff and on Wednesday morning (Asian time) exploded higher following a renewed burst of buying out of the usual Asian suspect exchanges – and Bitfinex – surging above $12,000 for the first time ever, and trading at a new all time high of $12,200 at publication time.

    For those keeping track, this is how long it has taken the cryptocurrency to cross the key psychological levels:

    • $0000 – $1000: 1789 days
    • $1000- $2000: 1271 days
    • $2000- $3000: 23 days
    • $3000- $4000: 62 days
    • $4000- $5000: 61 days
    • $5000- $6000: 8 days
    • $6000- $7000: 13 days
    • $7000- $8000: 14 days
    • $8000- $9000: 9 days
    • $9000-$10000: 2 days
    • $10000-$11000: 1 day
    • $11000-$12000: 6 days

    The skeptics can take heart: at least the rate of ascent appears to have slowed down.

    There has been no news to catalyze the move, and as most recent buying, it has been attributed to excitement over the upcoming December 10 CFTC bitcoin futures launch.

    And speaking of bitcoin futures, the CEO of ICE, the owner of the New York Stock Exchange, Jeff Sprecher told a Goldman investor conference on Tuesday that that “we may be stupid for not being first on that” adding that “I don’t have the answers, I wish I knew” how the investments will evolve, he said. “I don’t know what to make of cryptocurrencies.”

    In a surprising tangent, Sprecher gave another impetus for the bulls when he questioned the existence of natural sellers of bitcoin futures, or investors who short the contract, noting that much of the wealth in the bitcoin world has been amassed by data miners in China and algorithmic traders.

    “To short that, that means they’re deciding to exit” the market through a futures market, Sprecher said. He decided that may not be a good scenario for one of his exchanges.

    They may have a reason to do that if there are additional state crackdowns: one emerged on Wednesday morning in South Korea, where according to a Yonhap report a private association of cryptocurrency exchanges in South Korea which has emerged as one of the most active trading venues for cryptocurrencies, said that it will voluntarily restrict cryptocurrency transactions with bank accounts starting next year, in a bid to prevent such transactions from being used for money laundering and other crimes.

    However, contrary to some headlines that South Korea would restrict crypto transactions, all this means is that the Blockchain Association, an industry group of some 30 cryptocurrency exchanges, including Bithumb and Korbit, said it will encourage customers just one bank account in the selling and buying of cryptocurrencies.

    Under the voluntary restrictions, which will be implemented Jan. 1, customers will be discouraged from using multiple bank accounts, the association said. Currently, customers use virtual bank accounts when they buy or sell cryptocurrencies.

    South Korea is home to one of the world’s largest bitcoin exchanges, with about 1 million people estimated to trade the digital currency.

  • Pentagon: US Troops Will Stay In Syria "As Long As We Need To"

    US forces plan to stay in Syria "as long as they need to” support local partners and to ensure that terrorists will not return, a Pentagon official told AFP on Tuesday. The announcement comes as the Islamic State has ceased to be a reality, and as the Syrian Army is on the cusp of final victory over ISIS in remaining pockets of eastern Syria.

    “We are going to maintain our commitment on the ground as long as we need to, to support our partners and prevent the return of terrorist groups,” Pentagon spokesman Eric Pahon said. “To ensure an enduring defeat of ISIS, the coalition must ensure it cannot regenerate, reclaim lost ground, or plot external attacks.”

    Artillery support in Syria for the US-backed SDF. Image source: US Marine Corps 

    Though officials recently hinted that the Pentagon would soon formally acknowledge that it has "about 2,000" American troops in Syria, the long standing official number of 503 still hasn't changed. In late October a top military official briefly admitted to 4,000 troops on the ground in Syria during an interview, but awkwardly backtracked on his statement and said, “I’m sorry, I misspoke there, there are approximately 500 troops in Syria."

    As we reported previously, President Trump has made a point of troop levels needing to be kept secret from “the enemy,” but consistent lies from the Pentagon about their deployments have made the figures less a closely guarded secret than a mockery of transparency.

    Perhaps more worrisome is that Pahon further said US troop commitment in Syria would be "conditions-based" – which indicates that the Pentagon has no timeline or near-term plans for exiting Syria, though recent reports suggest that after Raqqa was liberated by the US-backed Syrian Democratic Forces (SDF) a troop withdrawal of hundreds of Marines may be in progress.

    "This is essential to the protection of our homeland as well as to defend our allies and partners… The United States will sustain a 'conditions-based' military presence in Syria to combat the threat of a terrorist-led insurgency, prevent the resurgence of ISIS, and to stabilize liberated areas," Pahon continued.

    But all available evidence and the recent history of American action in Syria suggests that the only real reason for open ended commitment in Syria is so that Washington can achieve its own geopolitical goals in the region: to oppose the Damascus government, Iran, Hezbollah and Russia. The stated reason of bombing ISIS inside Syria (without Syrian approval, which amounts to an act of aggression in a sovereign state's territory) never had anything to do with some noble-minded goal of defeating terrorism, but was always the Trojan Horse backdoor attempt to defeat the Syria-Iran-Iraq-Hezbollah 'resistance axis' that stretches from Tehran to South Lebanon.

    Though American officials have from day one emphasized the short-term and temporary nature of the Pentagon operations, last summer Turkey controversially exposed the locations of 13 US bases in Syria, and the US-backed Syrian YPG had previously indicated seven American military bases in northern Syria. The Pentagon, however, has never confirmed base locations or numbers – though less than two years ago the American public was being assured that there would be "no boots on the ground" due to mission creep in Syria.

    During the last year of the Obama administration for example, State Department spokesman John Kirby was called out multiple times by reporters for telling obvious and blatant lies concerning promises of "no boots on the ground" in Syria – something which US officials falsely and consistently claimed. Yet now the American public is being told, with not so much as even the pretense of national or congressional debate, of "commitment on the ground as long as we need to" in Syria.

    But we've pointed out the obvious many times before. Whether it's the Middle East, Africa, or Eastern Europe, the familiar pattern of American military expansion goes something like this: first we are promised that US troops are merely in a country for limited "training" missions with "partner" forces; next we are told of "counter-terror" operations which require an increased "footprint"; after which we are assured once again that there are "no boots on the ground" but a "minimal" increase of train and assist missions; finally, US soldiers begin to come home in body bags at which point the 9/11 era AUMF is cynically invoked (Authorization For Use of Military Force).

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Dec 05

Today’s News 5th December 2017

  • Visualizing The 4,000 Year History Of Global Power

    Imagine creating a timeline of your country’s whole history stretching back to its inception.

    It would be no small task, as VisualCapitalist's Nick Routley explains, simply weighing the relative importance of so many great people, technological achievements, and pivotal events would be a tiny miracle in itself.

    While that seems like a challenge, imagine going a few steps further. Instead of a timeline for just one country, what about creating a graphical timeline showing the history of the entire world over a 4,000 year time period, all while having no access to computers or the internet?


    Today’s infographic, created all the way back in 1931 by a man named John B. Sparks, maps the ebb and flow of global power going all the way back to 2,000 B.C. on one coherent timeline…

    View a high resolution version of this graphic

    Courtesy of: Visual Capitalist

    Histomap, published by Rand McNally in 1931, is an ambitious attempt at fitting a mountain of historical information onto a five-foot-long poster. Although the distribution of power is not quantitively defined on the x-axis, it does provide a rare example of looking at historic civilizations in relative terms. While the Roman Empire takes up a lot of real estate during its Golden Age, for example, we still get a decent look at what was happening in other parts of the world during that period.

    The visualization is also effective at showing the ascent and decline of various states, nations, and empires.


    Since this chart was created at the beginning of the Great Depression, one does have to consider to what extent Sparks saw history as a zero-sum exercise; a collection of nations battling one another for control over scarce territory and resources.

    Crowning a world leader at certain points in history is relatively easy, but divvying up influence or power to everyone across 4,000 years requires some creativity, and likely some guesswork, as well. Some would argue that the lack of hard data makes it impossible to draw these types of conclusions (though there have been other more quantitative approaches.)

    Another obvious criticism is that the measures of influence are skewed in favor of Western powers. China’s “seam”, for example, is suspiciously thin throughout the length of the timeline.

    Lastly, the histomap refers to various cultural and racial groups using terms that may seem rather dated to today’s viewers.


    John Spark’s creation is an admirable attempt at making history more approachable and entertaining. Today, we have seemingly limitless access to information, but in the 1930s an all encompassing timeline of history would have been incredibly useful and groundbreaking.

    Critiques aside, work like this paved the way for the production of modern data visualizations and charts that help people better understand the world around them today.

  • How The U.S. Dictatorship Works

    Authored by Eric Zuesse via The Strategic Culture Foundation,

    A recent article in the Washington Post described how the current US tax-‘reform’ bill is being shaped; and it describes, basically (at least as far as tax-law changes are concerned), the operation of a US dictatorship by the super-rich.

    First of all, however: there is no longer any realistic question as regards whether the US in recent decades has been a dictatorship, or instead a democracy. According to the only scientific analysis of the relevant data, that has been done in order to determine whether the US is a dictatorship or a democracy, the US is definitely a dictatorship that’s perpetrated by the extremely richest, against the public-at-large; in other words: the US Government functions as an aristocracy, otherwise referred-to as an oligarchy, or a plutocracy, or a kleptocracy; but, in any case, and by whatever name, it’s ruled by a tiny number of the extremely wealthiest and their agents, on behalf of those few super-rich, against the concerns and interests and needs of the public (everyone else). So: instead of being rule by the public (the “demos” is the Greek term for it), it’s rule on behalf of a tiny dictatorial class, of extreme wealth — by whatever name we might happen to label this ruling class.

    That study, by professors Gilens and Page, explained that it examined “1,779 instances between 1981 and 2002 in which a national survey of the general public asked a favor/oppose question about a proposed policy change,” and it compared those public-policy preferences, by the public, versus the public-policy preferences regarding those same issues, by the super-wealthiest; and, it found that only the public-policy preferences by the super-wealthiest and their paid agents, made any discernible difference, at all, in the likelihood that a given public policy ultimately became enacted into law, in the United States. Whereas the public-policy preferences of the wealthiest do, at far higher than mere random chances, become enacted into laws, the public-policy preferences of the public are (except in political rhetoric and promises — frauds perpetrated to deceive the public) ignored, in the United States.

    Here is an excellent six-minute video describing the methodology and findings in that landmark study…

    And here is a commentary by former US President Jimmy Carter, in which he says that he knows it’s true.

    He said this not on the basis of examining thousands of cases and doing the statistical analysis of the data, like Gilens and Page had done, but just on the basis of his observations of how the US federal government has been functioning in recent decades. And, of course, the scientific study is vastly more reliable than is any individual’s mere opinion about the matter.

    Furthermore, there exists evidence that even in some local or state governments in the United States, considerable corruption exists, and therefore an extreme slant prevails in favor of the rich. During June 2016, I headlined about this, “Here Is How Corrupt America Is”, and opened:

    The best reporting on the depth of America’s dictatorship is probably that being done by Atlanta Georgia’s NBC-affiliated, Gannett-owned, TV Channel “11 Alive,” WXIA television, its “The Investigators” series of local investigative news reports, which show, up close and at a cellularly detailed level, the way things actually work in today’s America. Although it’s only local, it displays what meets the legal standards of the US federal government in actually any state in the union; so, it exposes the character of the US government, such that what’s shown to be true here, meets America’s standard for ‘democracy’, or else the federal government isn’t enforcing federal laws against it (which is the same thing as its meeting the federal government’s standards).

    What was exemplified in this reporting by that excellent investigative team could be called “corporate organized-gangsterism,” and this gangsterism was being led by an operation, “ALEC,” that was founded by politicians whose careers are funded by the Koch brothers and some other US billionaires.

    Furthermore, as was mentioned briefly at the opening here, a recent issue of the Washington Post’s “PowerPost” section was titled "The Finance 202: Tax overhaul's big test comes now”, and it described in detail what was shaping the Trump Administration’s tax-overhaul bill. This article reported that the lobbyists were shaping it 100%. It’s a superb nitty-gritty, down among the weeds, description, of the monetary deals, the horse-trading, that were being made, not only for corporations, but for the wealthiest non-business lobbies, including ‘nonprofit’ ones, but almost all of these lobbies, too, depend overwhelmingly upon billionaires for their funding. What’s being carved-up and served, is being carved-up from governments, and being served to the super-rich. (After all: conservatives say “Government bad, business good,” and Republicans are the conservative Party; so, it’s taking from government, and going to business.)

    So: is it any wonder why Gilens and Page found what they did? They found that "economic elites and organized groups representing business interests have substantial independent impacts on US government policy, while mass-based interest groups and average citizens have little or no independent influence.” (By “mass-based groups” was being referenced what the left often calls “movements” or “grass-roots” organizations. After all, what happened from “Occupy Wall Street”? Nothing. It was a big waste of time and effort. Authentic movements get marginalized, because the billionaires’ ‘news’media despise them. Fake ones, such as the Kochs’ “The Tea Party ‘movement’,” get weaponized, because the billionaires’ ‘news’media treat them extensively, and often grant them respect. Top-down’s the way, in any dictatorship. That includes in America.)

    Here is another excellent video – this one 10 minutes long – summarizing the Gilens and Page study…

    The only major difference between Republican politicians and Democratic ones, then, is that, whereas Republican ones don’t even need to pretend that they oppose limitless greed (since limitless greed that’s carried out by frauds instead of by outright physical violence — which latter type of coercion is the type that’s employed more by lower-class crooks, anyway, and those are the type of crooks who fill our prisons, not the type who fill our boardrooms — is, essentially, supported by Republicans’ ideology, as ‘being entrepreneurial’ and ‘competitive spirit’), Democratic politicians do need to make that pretense (since their voters are liberals, and liberals don’t share the conservatives’ “Greed is good” libertarian faith). But the outcomes, even when Democrats are in power, are vastly more helpful to the billionaires, than to the public. 

    Does this mean that Democratic (or liberal) politicians are necessarily more hypocritical than Republican ones are? No. Whereas Democrats pretend to be opposed to the system’s favoring the super-rich, Republicans pretend to be opposed to “sins” and other religious-based shiboleths. Both Parties can win and retain power only by deceiving (defrauding) the public, and serving the billionaires, though in different ways — some conservative, and some liberal. Virtually everything else than that service to billionaires (and to centi-millionaires) is just frauds by politicians, because, at least after around 1970, only the richest 1% or (usually far) less are actually being served by the US federal Government. It’s not the billionaires that are defrauded by politicians; it is clearly the public that is being defrauded by them.

    The public are served only to the extent that the public’s interests are the same as the billionaires’ interests. And the Gilens and Page study found that the public’s policy-preferences are simply ignored — not ignored in the political rhetoric, but ignored in the political outcomes.

    The US Government, thus, is of a few people (the policymakers), by the billionaires, and for the billionaires. And that’s just an established fact.

  • China: Systemic Risk Surges As HNA's High Coupon Borrowing Binge Accelerates

    In early November 2017, we returned to one of our favourite subjects, systemic risk in China related to its big four highly-indebted conglomerates, HNA, Anbang, Evergrande and Dalian Wanda. In particular, we asked whether the extortionately high coupon of 9% on an HNA dollar bond issue, with less than one year to maturity, marked the beginning of China’s Minsky moment? As we noted at the time, HNA has $28 billion of short-term debt maturing before the end of June 2018, much of it accumulated during an acquisition binge over the last two years, which has seen it become a major shareholder in companies such as Deutsche Bank AG and Hilton Worldwide Holdings.

    Speaking to Bloomberg at the time, Warut Promboon, managing partner at credit research firm, Bondcritic, noted…

    “Nine percent is really high for one year. Basically, it tells you that the worry is real."

    In a sign that HNA is under pressure, both from the Chinese government and its creditors, CEO Adam Tan announced last week that the company was reversing its previous strategy. From Reuters.

    HNA Group CEO Adam Tan said the acquisitive company is making adjustments to conform with national policies, and has sold some investments and real estate projects to improve its liquidity, domestic media reported on Tuesday.


    Tan said the company would not invest in those areas not backed by the government, while supporting Beijing’s Belt and Road initiative, the 21st Century Herald reported. “Companies cannot invest chaotically overseas, because chaotic investment creates trouble,” Tan was quoted in a separate article by the media portal

    HNA is already in trouble, the question is how much? The group is planning an IPO of Gategroup Holding AG, an airline catering company it only purchased in 2016 for $1.5 billion, next year. However, its interest expenses have been rising rapidly and paying 9% coupons is only going to make it worse.

    Meanwhile, it continues to tap bond markets at high rates, this time paying 8.2% for an issue by a subsidiary of Hainan Airlines, the core business from which HNA developed. According to Bloomberg, units of HNA Group Co. are stepping up fundraising in the local bond market even as borrowing costs soar, adding to concerns about the Chinese conglomerate’s debt burden. Yunnan Lucky Air Co., a unit of Hainan Airlines Holding Co. — HNA’s flag carrier — sold a 270-day yuan bond to yield 8.2 percent last week, the highest coupon rate ever for the Yunnan airline. Tianjin Airlines Co., another subsidiary of Hainan Airlines, issued similar-maturity notes at the highest coupon rate in five years in November.

    As Bloomberg notes, while other Chinese companies have cancelled bond issues, HNA doesn’t have that luxury.

    While surging onshore bond yields last month forced Chinese companies to cancel the most bond offerings since April, HNA’s units didn’t slow their pace of financing. They revived debt sales from November, following a lull after news emerged in June about a crackdown by China’s banking regulator. The accelerated fundraising suggests a need for money and may hurt the conglomerate’s credit profile, according to credit research firm Bondcritic Ltd.

    “They just keep piling on debt,” said Warut Promboon, managing partner at Bondcritic. “It’s not going to work.”


    Two calls to Hainan Airlines’ public relations officers weren’t answered. There were no replies to questions sent via text messages.

    The flood of issues from constituents of the HNA group is expected to continue, assuming that bond markets are amenable.

    Hainan Airlines said last week that it is planning to sell 1 billion yuan of perpetual bonds on Dec. 6. That would be its third note sale in the local Chinese market in a month, according to Bloomberg-compiled data. In the carrier’s most recent sale of onshore securities last month, the company, which has top ratings from local credit assessors, issued local bonds at yields equivalent to junk notes in the nation.


    Another HNA unit, Sanya Phoenix International Airport Co., is planning its third bond sale in three weeks on Monday, according to a statement on Nov. 29.

    During his presentation last week, CEO Adam Tan commented that “Each of our business groups has its own cash flow management”. However, if Hainan Airlines is paying junk rates despite its “top” local ratings, it suggests that creditors are assessing risk from a group perspective…and unfavourably. Last week, Bloomberg noted that S&P cuts the HNA Group’s credit rating to five times below junk, citing its significant debt maturities, rising borrowing costs and proposed acquisition of New Zealand’s UDC Finance (will it ever learn).

    S&P said on Wednesday it lowered HNA’s credit profile by one notch to b, or five levels below investment grade, from b+. The change was disclosed in a report by S&P on New Zealand’s UDC Finance Ltd., which HNA is seeking to buy.


    “HNA Group has significant debt maturities over the next several years and its funding costs are meaningfully higher than that of a year ago," Andrew Mayes and Sharad Jain, analysts at S&P, wrote in their report. "We will closely monitor HNA Group’s access to capital markets and funding costs to determine whether additional actions are necessary.”


    As to Australia & New Zealand Banking Group Ltd.’s UDC Finance, S&P said it may cut the company’s long-term debt rating by four notches to a junk level of BB- from BBB if its sale to HNA is completed. The deal, announced in January, has yet to be completed pending approval from New Zealand’s overseas investment approvals board.

    It’s possible that HNA is approaching the “catastrophic margin call”, from its practice of pledging its own shares and those of its investments, which we first postulated in July 2017 in “A Reverse Rollup From Hell’: China's ‘Boldest Dealmaker’ Faces Margin Call Disintegration”. From our post.

    …while most Chinese companies pledged "only" their own shares to get loans, a handful of companies also used shares of the acquired companies as pledged collateral. This is precisely what HNA Group did, which now faces not only growing regulatory scrutiny from Beijing that threatens to spook bond investors and raise HNA’s financing costs, but also send its shares plunging as holders are forced to liquidate even as most of the shares pledged to fund its buying spree are already declining, accelerating its demise. And, in a scenario that can only be dubbed as a "reverse rollup from hell" – on steroids and margin – one that would make even Valeant blush and snicker, if the value of its collateral, i.e. stock price, falls enough, HNA will soon be forced to sell its holdings to repay debt, thereby resulting in the disintegration of the company.

    HNA is a private company, hence a detailed breakdown of its borrowing position and its share pledges is not available. However, the circumstantial evidence remains highly negative and the systemic risk it poses for China is likely rising not falling.

  • The War On Gold Intensifies: It Betrays The Elitists' Panic And Coming Defeat – Part 1

    Authored by Stewart Dougherty via,

    Dictatorship (noun):  Definition #3:   absolute power or authority (Websters);
    Def. #2:   absolute, imperious or overbearing power or control (Random House);
    Def. #3:   Absolute or despotic control or power (American Heritage);
    Def. #3:  Absolute or supreme power or authority (Collins English Dictionary);
    Def. #1:  A type of government where absolute sovereignty is allotted
    to an individual or small clique (Wikipedia).

    “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained, you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” Sun Tzu, The Art of War

    In recent weeks, the War on Gold, which is a subset of the broader War on Human Freedom, has sharply intensified, with massive, multi-billion dollar naked short price raids now being launched on a weekly and even daily basis by the criminal, state-sponsored price manipulators. This escalation proves the supreme importance to the Deep State financial elite of the maintenance of their gold price dictatorship, which is a vital component of their long term, systemic campaign of financial plunder.

    The elitists have no problems whatsoever with stratospheric stock and bond prices; 5,000 year low interest rates; $450 million Da Vinci’s; $250 million private homes; $50,000,000 annual salaries for circus masters, whose role in keeping the masses distracted and dumb is vital; $1.9 million Aston Martins; $100,000 Air Jordan sneakers, or any of the other prices that have now gone into outer space.

    But there is one thing they will not accept: an honest, free market price for gold. Because while all debauchery under the sun is permitted and encouraged in the Castle of Fraud and Corruption they have constructed and in which they revel, one thing is strictly prohibited: the utterance of truth. Being monetary truth when free to speak, gold is their deadliest enemy. Therefore, it is silenced, in the same way truth tellers are silenced in all dictatorships.

    The vast majority of people, aside from a small, enlightened minority who refuse to poison their minds by ingesting mainstream media (MSM) fake news, propaganda and brainwashing, do not yet realize what they are up against in the wars that have been declared against them, and are therefore at serious risk. For those who wish to survive the wars, there has never been a greater need to know the enemy and know yourself.

    As the gold price war becomes manic, so has the MSM’s anti-gold propaganda campaign, with their attempts to smear gold now a clinical obsession.

    In a prime example of their over-the-top anti-gold propaganda, on 10 November 2017, the Financial Times, a long-time Deep State bullhorn and puppet, ran an article entitled, “Gold is the new cocaine for money launderers.” In this screed, the author beat the dead horse of the NTR Metals gold import scheme. This operation, whose total dollar yield was an infinitesimal fraction of the massive sums stolen by the financial Deep Statists in their forty year gold price manipulation crime, was already the subject of an over-dramatized Bloomberg Businessweek propaganda piece published on 9 March 2017, entitled “How to Become an International Gold Smuggler.” Apparently, the MSM is running so short of new material with which to try to demonize gold, that it is now forced to recycle old, stale non-stories to keep the smear machine going.

    In the article, the MSM propagandist states such things as: 2017 has seen, according to his one time Goldman Sachs source, a “dramatic crash in [physical gold coin] demand,” that interest in gold coins is linked to “political conservatism, or anarcho-libertarianism” and “end of the world right wing sentiments,” that gold has been implicated in a “conspiracy to commit money laundering,” that gold is “financed by people in the narcotics trade,” that it comes from “illegal mines and drug dealers in Peru, Bolivia and Ecuador,” that “the federal authorities assume the NTR Metals [case] represented only a fraction of illegally sourced and financed gold,” that therefore the US attorney is broadly investigating the gold industry, that gold is “produced by exploited workers,” that “crude [gold] extraction techniques create serious and lasting environmental damage,” that gold plays an important part in “tax evasion,” that it is related to American gun sales, which the author abhors; that “drug dealers [use] gold imports as a way of laundering their proceeds,” and that “they came to realize that illegal gold [is] an intrinsically better business” than drug dealing; to name but a few of the aspersions cast against gold in the short article. As we can see, when it comes to their smear jobs, the MSM flings at the wall all the mud it can fit in its hands, hoping that some of it might stick.

    As is always the case with the MSM’s consistently negative, biased and dishonest reporting on gold, no mention was made in the article of the Deep State financial elite’s criminal gold price manipulation fraud that has been perpetrated non-stop for nearly forty years and that has resulted in a massive, $1,000,000,000,000.00+ theft from its victims. This is because the MSM is the Deep State’s in-house public relations agency, whose job is to whitewash the elitists’ crimes, no matter how egregious they are.

    But buried in the article was an important clue that the Deep Statists are concerned they are losing the War on Gold, which we will further explore later in the article. It turns out that the Deep Statists’ paranoia about and rage toward gold might be entirely justified, because more than ever in the past 37 years, gold is poised to tell the world what it knows, and this will absolutely annihilate them.

    Many people are completely baffled as to why, with so many serious fiscal, financial, monetary, economic, social, and geopolitical problems in the world, the Deep Statists remain so mono-maniacally fixated on demagogically denigrating gold and controlling its price.

    The answer is that the Deep Statists cannot, under any circumstances, allow the price of gold to replicate the surging price of Bitcoin and other cryptocurrencies. If the gold price genie were to get out of the bottle, becoming international news in the process no matter how much the MSM might try to suppress it, it would spur a gold buying stampede that would cause a flood of money to pour out of bank accounts and into physical precious metals. $325+ billion worldwide now resides in cryptocurrencies, a highly specialized and complex product class. In the right set of circumstances, many multiples of that amount could incrementally flow into gold, a simple product that has been innately understood for millennia by human beings all over the globe.

    Already fragile, the banking system cannot withstand a large scale withdrawal of funds. Being finite and in short supply, incremental demand for physical gold would result in immediate and sustained price gains, creating a positive feedback loop in the market place. As people watched the price go up, more and more of them would want to jump on the band wagon and participate in the gains, which is exactly what has happened in the cryptocurrency market.

    If interest in gold goes mainstream, then basic supply fundamentals indicate the price would have to rise by thousands of dollars per ounce to even approach what might be considered overbought and/or bubble territory. Which is exactly what has happened to Bitcoin, whose price has exploded to over $10,500 as of today, 29 November 2017.

    In the United States, the latest Federal Reserve Board tally of Household and Non-profit Organization (much of which is private) wealth totals $96.2 trillion. If a miniature, 1% sliver of this amount, $962 billion, attempted to find its way into the physical gold market, it would represent incremental demand, at $1,300 per ounce, of 740 million ounces. Not even a small fraction of this incremental demand would be available in the physical gold market at this time, given that it already operates at a supply / demand equilibrium. The gold price would have to surge in order to flush out supplies from current gold owners, whose hands have proven to be, and are likely to remain strong. We believe it would take years for incremental demand of this magnitude to be filled, even at much higher prices. Please keep in mind that this example relates to the United States, alone; there are additional, vast stores of private wealth all over the world, all of which would almost certainly be activated in unison by a run to gold.

    With the right spark, the same viral, Social Media-enhanced demand that has come to cryptocurrencies could come to gold. The Deep Statists know it, and the ghostly whites of their eyes now glow eerily and blinkingly across the dark battlefield of Liberty, in the senseless war they provoked and are going to lose.

    While there are now hundreds of cryptocurrencies, physical gold is physical gold, and cannot be replicated or conjured out of nothing. There will be no endless stream of new ICOs for genuine, physical gold, because gold is what it is and always will be. This means that funds flowing into gold will be forced into the one and only physical gold market that already exhibits tight, inflexible supply. This further means that the upward price pressure on gold could become volcanic if a run starts.

    A steadily increasing number of people will want to get in on the “new Bitcoin,” a bizarre paradox given that gold is as old as time, and will soon realize that gold possesses virtues Bitcoin does not, given that it is real, not digital and abstract; that owners can personally possess and store it in physical form; that it will survive any kind of electric grid or Internet disruption that might occur; that it cannot ever be hacked; that it is the epitome of private, quiet wealth; that it is actually quite beautiful to behold; and that it was not and cannot be made by man, only by God, who does not appear to have any interest in making any more of it.

    To date, in order to prevent a surge in physical gold demand from happening, the Deep Statists have created various forms of transparently fake gold, such as electronic gold futures, options and non-auditable ETFs and EFPs. These fake gold products have siphoned funds away from real, physical gold, which cannot be created out of the nothing the way the imposter electronic gold products can be. Increasingly, people are learning that there are no substitutes for physical gold.

    More, we find it interesting that while there have been certain highly publicized condemnations of cryptocurrencies, such as J. P. Morgan Chase CEO Jamie Dimon’s comment that Bitcoin is a “fraud,” the financial authorities in the west have done little to nothing to shut down the crypto market. They seem to be just fine with $10,500 Bitcoin, but will stop at nothing to prevent $1,300 gold. Today’s (29 November) market action is a case in point.

    The reason is that monetary elitists fully approve of cryptocurrencies, because this the new form of fiat currency the western banks intend to issue. Mass adoption of cryptocurrencies is the necessary forerunner to the elimination of cash, a well-known and important agenda for the financial elite. By issuing their own cryptocurrencies, and/or co-opting Bitcoin and other private cryptos via regulation and edict, central bankers can continue their tradition of controlling the money supply. A population that has learned the value of owning and become adept at trading physical gold would prevent central banks from continuing to use fiat currencies as economic, political and societal control mechanisms. It should be no surprise that they loathe gold so much; in its honesty and integrity, it is the exact antithesis of everything they stand for, are, and do.

    Some people argue, “Even if people run to gold, their funds will still remain within the banking system, so the bankers aren’t worried about this happening.” In our opinion, this is wrong.

    Fiat currency used to buy precious metals will move from personal and business bank accounts, to gold dealer accounts, to gold wholesaler accounts; and then to a variety of sovereign mint, gold precious metals refiner, gold miner and other gold supplier accounts, a large percentage of which are international.

    A bank that hosts a deposit account used to purchase physical gold has no assurance whatsoever that the buyer’s funds will transfer into another personal or business account managed by it. In all likelihood, the funds will disappear from the host bank and not return. Ultimately, the likelihood is also high that a portion of the funds, potentially significant, will disappear from the country’s banking system altogether, given the global nature of gold mining, refining, minting and fabrication. Therefore, bankers regard a run to gold as a severe, direct threat to them, which is why they do everything in their power to discredit it and crush its price. They are attempting to prevent a run on their banks.

    Over the past several years, the Deep Statists have gone to extraordinary lengths to internationally legalize bank “bail-ins.” They did not do this casually, by accident, or for fun; they did it because they know that when the system fails, a time-bomb guaranteed to detonate given the system’s very design, they will be able to make an unprecedented fortune by expropriating customers’ deposits via the elaborate bail-in mechanism they have engineered. They will use the phony pretext of “rescuing” and “resetting” the financial system for the public good to justify this action. If, before they spring the bail-in trap, depositors have already withdrawn their funds to purchase physical precious metals held outside the banking system, those funds will no longer be available for bail-in looting. The bankers cannot steal bank balances that have disappeared.

    The cryptocurrency phenomenon, now an international sensation, has stunned them into the awareness that people all over the world have a deep, abiding, instinctive desire to own honest money of limited supply that will serve as a reliable store of value, and that cannot be hyper-inflated into oblivion for the private gain of plunderers and profiteers, the chief problem with corrupt, endlessly counterfeited fiat currencies controlled by self-interested, opportunistic, predatory central bankers and their controllers, the Deep State financial elite.

    *  *  *

    Due to the length of this article, we have divided it into two parts. This ends Part 1. In Part 2, which is already written and will be released in a few days, we will share with you important clues indicating the Deep State’s concerns about losing the War on Gold, despite the unprecedented intensification of their attacks. We will also discuss how the United States Federal Reserve is outright warning that new threats to financial and economic stability are on the horizon.

  • SEC Wins Injunction Against ICO Organized By Financial Fraudster

    The Securities and Exchange Commission is stepping up its long-overdue crackdown on shady initial coin offerings that are churning out suckers at a record clip with one simple promise: Invest in our coin and you, too, can receive an astronomical IRR just like your savvy cousin who bought a handful of bitcoins back in 2011 and decided to hold on for dear life.

    In an enforcement action that, as far as we can tell, is the first of its kind anywhere, the SEC just won an emergency asset freeze to stop an initial coin offering that the agency said has defrauded investors by promising a 13-fold profit in less than a month.

    While such an outrageous guarantee should immediately set alarm bells ringing in the minds of any experienced investor, bitcoin’s 1,000%-plus return so far this year has inspired many lazy would-be crypto millionaires to throw caution to the wind and approach every new ICO with a level of credulity that’s totally unjustified. But anybody who actually reads the “white papers” that many of these companies release will realize that they typically comprise hypertechnical gibberish designed to convince investors that there is no problem in the world today that can’t be solved with a blockchain and thousands of monetized tokens.

    According to Bloomberg, the asset freeze was granted after the SEC sued Dominic Lacroix and his company PlexCorps in federal court in Brooklyn. The firm and Lacroix, described by the SEC as a recidivist securities-law violator (a status that’s not uncommon among so-called “entrepreneurs” in the massively fraudulent world of ICOs), have raised $15 million since August marketing and selling a product called PlexCoin.

    The case is the first brought by a new SEC unit created in September to focus specifically on ICOs.

    “This first Cyber Unit case hits all of the characteristics of a full-fledged cyber scam and is exactly the kind of misconduct the unit will be pursuing,” said Robert Cohen, head of the SEC’s Cyber Unit.


    “We acted quickly to protect retail investors from this initial coin offering’s false promises."

    According to the SEC, Lacroix and PlexCorps violated securities laws by failing to register the offering and not disclosing Lacroix’s involvement with probes by Canadian authorities, the SEC said. The agency also sued and froze the assets of Sabrina Paradis-Royer, described as Lacroix’s romantic partner. The suit seeks fines and disgorgement from Lacroix and Paradis-Royer, as well as a ban on their participation in offerings of digital securities.

    The SEC fired its warning shot in July when its ruling on an investigation into the collapse of the DAO – a sort of proto-ICO that went bust after hackers stole $50 million worth of ethereum tokens (of course, the total value of the tokens stolen has massively inflated in the interveneing period) – officially declared ICOs to be securities that must be registered with the SEC. In August, the regulator warned investors to exercise extreme caution before investing in ICOs, warning that many are classic pump-and-dump schemes obscured by a new techno-veneer.

    Even the most successful ICOs are on the verge of collapse. The 800 or so ICOs that have launched this year have raised nearly $4 billion. Yet the market has been astonishingly devoid of success stories.

    Yesterday, we reported how frustrated investors in Tezos, which raised more than $230 million in an ICO over the summer, have filed a spate of class action lawsuits against the company alleging that its founders intentionally defrauded investors. The company, which had little more than a white paper to its name when it completed its offering, has yet to produce the digital tokens it promised investors.

    Meanwhile, the ethereum and bitcoin that it accepted as payment during its crowdsale have appreciated massively in the intervening months.

    But for those investors who still insist on invest in the ICO market – where founders fool investors with nonsensical business plans that they pass off as “too complicated” for the average layperson to grasp – one 16-year-old math whiz has created a product that will reportedly allow investors to invest in a “tranche” covering the entire ICO market.

    As the press release explains, the answer is simple:

    In a nutshell: We’re going to take a position in each ICO, then wrap those up into their own ICO and then you can buy tranches of that ICO depending on your “risk tolerance” i.e. how strong a person you are.


    Basically, it’s all a question of how RICH YOU WANT TO BECOME. The bottom tranche is so safe that you can basically put your entire life savings in and earn a fat return.

    The notion that diversification can help investors avoid losses in a massively fraudulent market is, of course, a canard. At the end of the day, it'll be the investors – not the offering's organizer – left holding the bag once the entire market goes to zero.

  • Antarctic Volcano Warning: Ash Could "Encircle The Globe" Causing Worldwide Health Problems

    Authored by Mac Slavo via,

    Scientists are sounding the alarm about a volcano eruption in Antartica that could cause global health problems. The ash from this eruption could encircle the globe, affecting millions of people.

    Deception Island, off the coast of the Antarctic Peninsula, is a hotbed of volcanic activity with at least 50 craters spread across the region. A recent study done in the area by scientists has found evidence that an eruption on the island could disrupt air traffic on continents in the Southern Hemisphere, including South America and Africa. It could also cause some major health concerns for the whole globe.

    The findings of the research show that Antarctica’s volcanoes can have an effect across the world, says Charles Connor, a geoscientist at the University of South Florida in Tampa not involved in the research. “We have to reassess the potential hazards for global transportation networks posed by even these remote volcanoes.”

    Ash emitted during explosive volcanic eruptions may disperse over vast areas of the globe posing a threat to human health and infrastructures and causing significant disruption to air traffic,” scientists warned in their report. 


    “Volcanic ash emitted from Antarctic volcanoes could potentially encircle the globe, leading to significant consequences for global aviation safety.”

    The study revealed the “significant consequences to global aviation” after reviewing computer models of ash flows from different types of eruption during different seasons. The research is the first of its kind investigating the horrifying impact of ash from an Antarctic volcano on the rest of the word. “No attention has been paid to the potential socio-economic and environmental consequences of an ash-forming eruption occurring at high southern latitudes,” the study declared.

    Adelina Geyer, a geologist at the Institute of Earth Sciences Jaume Almera in Barcelona, Spain, and colleagues focused on Deception Island because of its history of eruptions—30 or so in the past 10,000 years, and one as recently as 1970. It is also a popular destination: Both Argentina and Spain manage scientific research bases on the island, and tourists come to admire the world’s largest colony of chinstrap penguins and the rusted boilers and tanks that are relics of the early 20th century whaling industry there.


    Geyer’s team modeled an eruption on Deception Island by simulating different column heights for volcanic ash: 5, 10, and 15 kilometers. (Indonesia’s Mount Agung, when it erupted last month, sent ash billowing up 9 kilometers.) The height of the plume determines which wind patterns it encounters, which, in turn, affects its dispersal. The researchers used an atmospheric transport model to track the way ash would disperse on regional and global scales and assess its possible effect on air travel.

    Science Mag

    The impact on the global economy could be immense. The eruption of Icelandic volcano Eyjafjallajokull in 2010 cost the global economy £3.49billion ($4.7billion) by grounding flights across Europe.

    Planes are under threat because the ash can clog engines and fuel lines causing them to stall and potentially fall out of the sky.

    “We demonstrate here that ash from high southern latitude volcanoes may pose a threat higher than previously believed,” the study concluded.

    But the health effects of an eruption on Deception Island could be even more horrific than the economic impact. Volcanic ash distributed globally could cause health issues worldwide.

  • California Residents Increasingly Ditching Their Massive Tax Bills And Unaffordable Housing For Las Vegas

    Los Angeles residents have apparently had just about enough of their city’s excessive home prices, unaffordable rents, crushing personal and corporate tax rates, overly burdensome regulations, polluted air, etc. and are increasingly leaving for a better life in Sin City.  As Los Angeles Times columnist Steve Lopez puts it, “the rent steals so much of your paycheck, you might have to move back in with your parents, and half your life is spent staring at the rear end of the car in front of you.”

    As Jonas Peterson points out, his family made the move from LA to Las Vegas in 2013 and were able to double the size of their house while lowering their mortgage payment all while enjoying the added benefits of moving from one of the most over-taxed states in America to one of the lowest taxed.

    Las Vegas is one of the most popular destinations for those who leave California. It’s close, it’s a job center, and the cost of living is much cheaper, with plenty of brand-new houses going for between $200,000 and $300,000.


    Jonas Peterson enjoyed the California lifestyle and trips to the beach while living in Valencia with his wife, a nurse, and their two young kids. But in 2013, he answered a call to head the Las Vegas Global Economic Alliance, and the family moved to Henderson, Nev.


    “We doubled the size of our house and lowered our mortgage payment,” said Peterson, whose wife is focusing on the kids now instead of her career.


    Part of Peterson’s job is to lure companies to Nevada, a state that runs on gaming money rather than tax dollars.


    “There’s no corporate income tax, no personal income tax…and the regulatory environment is much easier to work with,” said Peterson.

    Of course, while many residents of metropolitan areas like Los Angeles get addicted to the ‘large’ salaries they can earn in big cities, others, like Michael Van Essen who recently made a move from LA to Mason City, Iowa, realize that the purchasing power of your income is far more important that the nominal dollars printed on the front of your paycheck.

    You’d like to think it will get better, but when? All around you, young and old alike are saying goodbye to California.


    “Best thing I could have done,” said retiree Michael J. Van Essen, who was paying $1,160 for a one-bedroom apartment in Silver Lake until a year and a half ago. Then he bought a house with a creek behind it for $165,000 in Mason City, Iowa, and now pays $500 a month less on his mortgage than he did on his rent in Los Angeles.


    “If housing costs continue to rise, we should expect to see more people leaving high-cost areas,” said Jed Kolko, an economist with UC Berkeley’s Terner Center for Housing Innovation.

    Of course, Los Angeles isn’t the only place where residents are increasingly fleeing in search of greener pastures.  As we’ve pointed out before, there is a growing wave of domestic migrants that are abandoning over-taxed and generally unaffordable metropolitan areas like San Francisco, New York, Chicago and Miami in search of better lifestyles in the Southeast and Texas.

    Domestic Migration

    Not surprisingly, the dark areas on the map above seem to match perfectly with the dark areas on this map which indicate those with the highest state income tax rates. 

    Taxes by State

    Tack on a rising violent crime rate and things in Illinois have grown so unbearable that the state is losing 1 resident every 4.6 minutes.

    illinois outmigration

    Of course, while liberal politicians often bemoan the existence of the Electoral College, these domestic migration trends could spell disaster for their opponents in national elections over the long-term as pretty much every major migratory pattern involves a mass exodus from blue states, like New York and California, into Red or Purple states like Texas, Florida, Arizona and Nevada.

  • If Michael Flynn's 'Crime' Is All Robert Mueller Has… It's Time To Move On

    Authored by James Robbins, op-ed via USA Today,

    Transitions include the president-elect talking to foreign officials. That's not treason; that's the job description.

    On Friday, President Trump’s former national security adviser, Michael Flynn, pleaded guilty to lying to federal investigators about a perfectly legal conversation he had during the presidential transition with then-Russian Ambassador Sergey Kislyak.

    Flynn should not have lied, and why he chose to remains a mystery, but the substance of the single-count indictment against Flynn shows that special counsel Robert Mueller’s investigation has strayed far from its original purpose.

    We have come down quite a way from the hyperventilation about Russia “hacking the election” a year ago. What happened to Democratic Sen. Mark Warner’s claim, later promoted by Hillary Clinton, that there were 1,000 Russian agents planting anti-Hillary fake news stories in key swing states? Or that Russians had delivered Wisconsin to Trump? All the conspiracy theorists have so far are a few Facebook ads that can’t credibly be shown to have changed even one vote.

    Flynn was fully in his rights making the call to Kislyak.

    Despite the best efforts of the anti-Trumpers, it is still not illegal to talk to Russians. Even Democratic former CIA director and Defense secretary Leon Panetta said it was a “stretch” to say these contacts broke the law. 

    The dust-up seems mainly to be about the decorum of presidential transitions. Days after the 2016 election, the Trump team cautioned the Obama administration against pursuing new and damaging foreign policy initiatives that did not align with Trump’s priorities.

    “I don’t think it’s in keeping with the spirit of the transition,” one of president-elect Trump’s national security advisers told Politico on Nov. 10, 2016, “to try to push through agenda items that are contrary to the president-elect’s positions.” 

    The Trump transition team feared, for good reason, that the lame-duck Obama administration was poisoning the well with Russia, and pursuing spiteful anti-Israel policies on the way out the door. Trump asked Flynn, his soon-to-be national security adviser, to open a semi-official channel to Russia through its ambassador to discuss future cooperative efforts against the Islamic State and the United Nations vote on an anti-Israel resolution. As lawyer Alan Dershowitz argued, “Not only was that request not criminal, it was the right thing to do.”

    The phone call to Kislyak, and any other such contacts with foreign officials, should be viewed in that context. This was not, for example, on the level of colluding with shadowy Russian intelligence contacts to create disinformation to try to swing the election, as the authors of the Clinton-connected Trump smear dossier did.

    There was ample precedent for the president-elect to put out feelers to foreign leaders.

    • A memo from the Podesta files released by WikiLeaks shows that the Obama team had planned for the “president-elect and senior officials (to) begin confidential policy consultations with key actors in U.S. and abroad” between Thanksgiving and Inauguration Day.
    • Obama also openly used emissaries and go-betweens to meet with foreign leaders during his transition.
    • And for overwrought members of “the resistance” who think the unenforceable Logan Act is suddenly in play, recall that in 2008 then-candidate Obama arranged substantive foreign policy discussions with numerous foreign dignitaries and leaders during an overseas campaign trip before the election.

    An erroneous ABC News report that Trump had dispatched Flynn to make contact with Russia before the election appears to have caused a massive stock market selloff. The report was corrected, and reporter Brian Ross was suspended. The important takeaway of ABC’s fake news outbreak is that since the Trump team’s outreach to Russia took place after the election, it implies there were no channels to Moscow before the fact. This puts a stake in the heart of the collusion theory.

    A CNN analyst speculated that instead of outright coordination, there was an implicit quid pro quo for Russia getting Trump elected. This might be called the “grasping at straws” gambit.

    On Sunday, Sen. Diane Feinstein, D-Calif., resurrected the notion that Trump obstructed justice by firing then-FBI Director and Bible scholar James Comey. But again, this is a weak and constitutionally suspect narrative.

    The real obstruction might be found in the Mueller investigation itself. The legitimacy of the FBI witch hunt against Trump was further damaged by reports that leading FBI investigator Peter Strzok, who had spearheaded the investigation into Hillary Clinton’s sketchy home-brew email server, was demoted because of anti-Trump texts he exchanged with co-worker Lisa Page, with whom he was having an extramarital affair.

    This is hardly an unbiased investigation. If the type of process crime that Flynn was nailed for is all the Mueller team can come up with, it is time to move on.

  • RNC Reverses, Will Back Roy Moore Following Trump Endorsement

    Confirming an earlier report by Breitbart, the Hill reports that the Republican National Committee has decided to reinstate its support of Alabama Senate candidate Roy Moore after initially cutting ties over allegations of sexual misconduct, following Trump's official endorsement earlier on Monday of the Alabama Judge after weeks of silence.  Breitbart first reported that the RNC had decided to step back into the race.

    Trump endorsed Moore in a tweet that blasted out to millions of his followers as well as in a follow-up call aboard Air Force One, in which the president said, "Go get 'em, Roy."

    Last month Trump told reporters that “[Moore] denies it. He totally denies it — that’s all I can say”, although he did not endorse the controversial candidate until today.

    The abrupt reversal comes after RNC officials told The Associated Press last month that they would not support Moore even after Trump stood by him. Subsequently, the two GOP campaign groups cut ties with Moore in October, halting their financial and field support for his bid as a chorus of Republican lawmakers called on him to step aside. Their decision to break ties with Moore came after several women alleged that he made unwanted sexual advances while they were underaged minors and he was in his 30's.

    While the RNC – which is President Trump’s political arm – is backing Moore now, Breitbart notes that the National Republican Senatorial Committee (NRSC), which is controlled by Mitch McConnell, is still withholding support. McConnell has pushed for Moore’s ouster after spending more than $30 million in a failed effort to beat him in the GOP primary and runoff.

    It remains to be seen if the NRSC will join President Trump in supporting the GOP nominee for the U.S. Senate in Alabama in the final week of the election. Voters head to the polls a week from Tuesday on Dec. 12.

    While Moore's odds of winning took a hit after the allegations first surfaced, his standing in the polls has risen over the past two weeks., and Moore now holds a solid five-point lead over Jones, according to the latest data from RealClearPolitics.

    Trump initially supported Luther Strange, who was appointed by former Alabama Governor Robert Bentley to temporarily fill the senate seat previously held by now-Attorney General Jeff Sessions, in a primary race against Moore, who handily won thanks to backing from Steve Bannon. Moore is considered a hero among the evangelicals of Alabama for refusing the remove a statue of the ten commandments he had installed in the Alabama Supreme Court when he was chief justice. The Alabama Republican Party has stood by Moore, and while many Republicans in initially tried to distance themselves, their fervant opposition has since died down.


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Today’s News 4th December 2017

  • Crypto Surge Sparks Establishment Panic: Bans, Crackdowns, & Fatwas As Bitcoin "Undermines Governments, Destabilizes Economies"

    The last few months have seen increasing notice being paid to Bitcoin (and the broader cryptocurrency space) by those that control the status quo.

    At first it was simple 'negative'-speak – "you'd be a fool to buy Bitcoin"-esque comments spewed forth from the truly ignorant or intentionally-ignorant (this group included bank CEOs, asset managers, payments systems, and remittance services) but to no avail, those fools saw the value of their bitcoins surge… Like the Winklevoss twins

    Then – as the price soared and the market cap of Bitcoin topped that of General Electric and Goldman sachs – the world's central bankers began to take notice… but in their standard manner, played down any risks, explaining that any systemic fragility "was contained" since cryptocurrencies were not big enough (this group included various Fed presidents, Bank of Canada, Bank of France, Bank of Japan, Bank of Korea, and so on all echoing similar phrases)… even though Bitcoin is now the 6th largest currency in circulation

    But this week has seen a new group of establishmentarians jump on to the offensive against anti-decentralization, de-control, pro-freedom cryptocurrencies – urging bans, crackdowns, fatwas, taxation, creating their own cryptocurrencies, demanding citizens sell, and outright confiscation (this group includes governments world wide and their mainstream media mouthpieces)


    India's finance minister, Arun Jaitley, has clarified that the government does not recognize bitcoin as legal tender. According to the Economic Times, when asked about the government's plans to regulate the cryptocurrency, Jaitley told reporters, "recommendations are being worked at." He continued:

    "The government's position is clear, we don't recognize this as legal currency as of now."


    Concerned over bitcoin's anonymity and its potential illicit uses, justices issued a notice to the central bank and other agencies asking them to answer a petition on the matter, reports indicated.


    Turkey has claimed Bitcoin is in fact “not compatible” with Islam due to its government being unable to control it.

    In a statement from a meeting of the state Directorate of Religious Affairs (Diyanet), lawmakers said that Bitcoin’s “speculative” nature meant that buying and selling it was inappropriate for Muslims.

    “Buying and selling virtual currencies is not compatible with religion at this time because of the fact that their valuation is open to speculation. They can be easily used in illegal activities like money laundering, and they are not under the state’s audit and surveillance,” Euronewstranslates the statement republished by local news outlet Enson Haber.

    Diyanet added that the same principles of “unsuitability” in particular applied to Ethereum.

    South Korea

    Kim Dong-yeon, South Korea’s deputy prime minister and the minister of strategy and finance, revealed earlier this week that the government is investigating various methods to better regulate the local Bitcoin market and tax Bitcoin users accordingly.

    While the South Korean government and its local financial authorities are actively discussing the possibility of enforcing a policy on Bitcoin taxation, at a press conference, Deputy Prime Minister Kim stated that the government does not intend to include any Bitcoin taxation policy in 2018’s amendment of the tax law.


    A Dutch news paper urges its citizens to sell their bitcoins patriotically because cryptocurrencies can undermine government and destabilize the economy.

    A bitcoin world can destabilize the real economy, a euro is also solidified trust.

    First, the bitcoin undermines the government because a lot of transactions are about money laundering and tax avoidance. Another problem is that the profits of new bitcoins that come with it do not benefit the government (as with normal money creation), but are absorbed in heavily environmentally harmful computer power.

    Central banks also have less influence on keeping the economy stable. In times of crisis, central banks can, through their influence on ordinary banks, ease credit conditions and encourage people to consume. The bank has no control over the bitcoin economy and an economic crisis can become deeper.

    The investor has air in his hands when the bitcoin crashes, but also when the company turns out to produce baked air.


    Putting money in an empty type of asset is “very, very worrying,” Robert Ophele, chairman of France’s market regulator. Bitcoin has no link to the real economy, Ophele says in a panel discussion at the Paris Europlace Financial Forum, warning that cryptocurrencies are a way to commit cybercrimes, allowing access to illicit goods and services.

    If bitcoin was a currency, "it would be a bad one," Ophel exclaimed, as it poses major challenge for central banks and regulators.


    The Telegraph reported just around the time of the big drop, UK "ministers are launching a crackdown on the virtual currency Bitcoin amid growing concern it is being used to launder money and dodge tax."

    Taking a page out of the Chinese playbook, the UK Treasury has announced plans to regulate the Bitcoin that will force traders in so-called crypto-currencies to disclose their identities and report suspicious activity. 

    According to the Telegraph, while "until now, anybody buying and selling Bitcoins and other  digital currencies have been able to do so anonymously, making it attractive to criminals and tax avoiders. But the Treasury has now said it intends to begin regulating the virtual currency, which has a total value of £145 billion, to bring it in line with rules on anti-money laundering and counter-terrorism financial legislation."


    John Mann, a member of the Treasury select committee, said he expected to hold an inquiry into the need for better regulation of Bitcoin and other alternative currencies in the new year.


    He said: "These new forms of exchange are expanding rapidly and we've got to make sure we don't get left behind – that's particularly important in terms of money-laundering, terrorism or pure theft.


    "I'm not convinced that the regulatory authorities are keeping up to speed. I would be surprised if the committee doesn't have an inquiry next year. "It would be timely to have a proper look at what this means. It may be that we want speed up our use of these kinds of thing in this country, but that makes it all the more important that we don't have a regulatory lag."

    The proposed changes come amid increasing fears that Bitcoin is being used by gangs to launder the proceeds of crime while also attracting currency speculators – with the value of the coin soaring in the past 12 months.

    In other words, the same reason why the IRS is cracking down on Coinbase clients in the US is also why UK and European regulators are joining China in cracking down on capital flight.

    United States

    The US Senate Judiciary Committee is currently tackling bill S.1241 that aims to criminalize the intentional concealment of ownership or control of a financial account. The bill also would amend the definition of ‘financial account’ and ‘financial institution’ to include digital currencies and digital exchanges, respectively. According to ranking committee member Senator Dianne Feinstein, the proposed bill is needed to modernize existing AML laws.

    The bill would amend the definition of ‘financial institution,’ in Section 53412(a) of title 31, United States Code, to include:

    “An issuer, redeemer, or cashier of prepaid access devices, digital currency, or any digital exchanger or tumbler of digital currency.”

    If passed, the bill would likely have far-reaching effects for users of digital currencies both in the US and abroad.

    Earlier reports also indicate that the White House is actively monitoring cryptocurrencies which could only mean more attempts to regulate the world’s first successful decentralized monetary system. With the growing involvement of Wall Street and the ever escalating media attention, it is not surprising that governments are stepping up their attempts to regulate digital currency.

    image courtesy of CoinTelegraph

    But as usual, any regulation-related-headline that the machines instantly sell, is bid back up, since it seems the algorithms have not figured out that there is no real way to 'stop' Bitcoin… which is exactly why the world's elite are so desparate.

    Several industry commentators have issued their opinions on the various proposed laws. Tone Vays claimed that he expects a confrontation between the Bitcoin team, including the holders and users, and the US government.

    “It’s bad… I think it’s gonna end in a very confrontational way between Bitcoin – even Bitcoin holders and users – and the US Government.”

  • America's Military-Industrial Addiction

    Authored by JP Sottile via,

    Polls show that Americans are tired of endless wars in faraway lands, but many cheer President Trump’s showering money on the Pentagon and its contractors, a paradox that President Eisenhower foresaw…

    The Military-Industrial Complex has loomed over America ever since President Dwight D. Eisenhower warned of its growing influence during his prescient farewell address on Jan. 17, 1961. The Vietnam War followed shortly thereafter, and its bloody consequences cemented the image of the Military-Industrial Complex (MIC) as a faceless cadre of profit-seeking warmongers who’ve wrested control of the foreign policy. That was certainly borne out by the war’s utter senselessness … and by tales of profiteering by well-connected contractors like Brown & Root.

    Over five decades, four major wars and a dozen-odd interventions later, we often talk about the Military-Industrial Complex as if we’re referring to a nefarious, flag-draped Death Star floating just beyond the reach of helpless Americans who’d generally prefer that war was not, as the great Gen. Smedley Darlington Butler aptly put it, little more than a money-making “racket.”

    The feeling of powerlessness that the MIC engenders in “average Americans” makes a lot of sense if you just follow the money coming out of Capitol Hill. The Project on Government Oversight (POGO) tabulated all “defense-related spending” for both 2017 and 2018, and it hit nearly $1.1 trillion for each of the two years. The “defense-related” part is important because the annual National Defense Authorization Act, a.k.a. the defense budget, doesn’t fully account for all the various forms of national security spending that gets peppered around a half-dozen agencies.

    It’s a phenomenon that noted Pentagon watchdog William Hartung has tracked for years. He recently dissected it into “no less than 10 categories of national security spending.” Amazingly only one of those is the actual Pentagon budget. The others include spending on wars, on homeland security, on military aid, on intelligence, on nukes, on recruitment, on veterans, on interest payments and on “other defense” — which includes “a number of flows of defense-related funding that go to agencies other than the Pentagon.”

    Perhaps most amazingly, Hartung noted in TomDisptach that the inflation-adjusted “base” defense budgets of the last couple years is “higher than at the height of President Ronald Reagan’s massive buildup of the 1980s and is now nearing the post-World War II funding peak.” And that’s just the “base” budget, meaning the roughly $600 billion “defense-only” portion of the overall package. Like POGO, Hartung puts an annual price tag of nearly $1.1 trillion on the whole enchilada of military-related spending.

    The MIC’s ‘Swamp Creatures’

    To secure their share of this grandiloquent banquet, the defense industry’s lobbyists stampede Capitol Hill like well-heeled wildebeest, each jockeying for a plum position at the trough. This year, a robust collection of 208 defense companies spent $93,937,493 to deploy 728 “reported” lobbyists (apparently some go unreported) to feed this year’s trumped-up, $700 billion defense-only budget, according to Last year they spent $128,845,198 to secure their profitable pieces of the government pie.

    The Pentagon, headquarters of the U.S. Defense Department, as viewed with the Potomac River and Washington, D.C., in the background. (Defense Department photo)

    And this reliable yearly harvest, along with the revolving doors connecting defense contractors with Capitol Hill, K Street and the Pentagon, is why so many critics blame the masters of war behind the MIC for turning war into a cash machine.

    But the cash machine is not confined to the Beltway. There are ATM branches around the country. Much in the way it lavishes Congress with lobbying largesse, the defense industry works hand-in-glove with the Pentagon to spread the appropriations around the nation. This “spread the wealth” strategy may be equally as important as the “inside the Beltway” lobbying that garners so much of our attention and disdain.

    Just go to U.S. Department of Defense’s contract announcement webpage on any weekday to get a good sense of the “contracts valued at $7 million or more” that are “announced each business day at 5 p.m.” A recent survey of these “awards” found the usual suspects like Raytheon, Lockheed Martin and General Dynamics. The MIC was well-represented. But many millions of dollars were also “won” by companies most Americans have never heard of … like this sampling from one day at the end of October:

    • Longbow LLC, Orlando Florida, got $183,474,414 for radar electronic units with the stipulation that work will be performed in Orlando, Florida.
    • Gradkell Systems Inc., Huntsville, Alabama, got $75,000,000 for systems operations and maintenance at Fort Belvoir, Virginia
    • Dawson Federal Inc., San Antonio, Texas; and A&H-Ambica JV LLC, Livonia, Michigan; and Frontier Services Inc., Kansas City, Missouri, will share a $45,000,000 for repair and alternations for land ports of entry in North Dakota and Minnesota.
    • TRAX International Corp., Las Vegas, Nevada, got a $9,203,652 contract modification for non-personal test support services that will be performed in Yuma, Arizona, and Fort Greely, Alaska,
    • Railroad Construction Co. Inc., Paterson, New Jersey, got a $9,344,963 contract modification for base operations support services to be performed in Colts Neck, New Jersey.
    • Belleville Shoe Co., Belleville, Illinois, got $63,973,889 for hot-weather combat boots that will be made in Illinois.
    • American Apparel Inc., Selma, Alabama, got $48,411,186 for combat utility uniforms that will be made in Alabama.
    • National Industries for the Blind, Alexandria, Virginia, got a $12,884,595 contract modification to make and advanced combat helmet pad suspension system. The “locations of performance” are Virginia, Pennsylvania and North Carolina.

    Sharing the Largesse

    Clearly, the DoD is large enough, and smart enough, to award contracts to companies throughout the 50 states. Yes, it is a function of the sheer size or, more forebodingly, the utter “pervasiveness” of the military in American life. But it is also a strategy. And it’s a tactic readily apparent in a contract recently awarded to Raytheon.

    On Oct. 31, 2017, they got a $29,455,672 contract modification for missions systems equipment; computing environment hardware; and software research, test and development. The modification stipulates that the work will spread around the country to “Portsmouth, Rhode Island (46 percent); Tewksbury, Massachusetts (36 percent); Marlboro, Massachusetts (6 percent); Port Hueneme, California (5 percent); San Diego, California (4 percent); and Bath, Maine (3 percent).”

    Frankly, it’s a brilliant move that began in the Cold War. The more Congressional districts that got defense dollars, the more votes the defense budget was likely to receive on Capitol Hill. Over time, it evolved into its own underlying rationale for the budget.

    As veteran journalist William Greider wrote in the Aug. 16, 1984 issue of Rolling Stone, “The entire political system, including liberals as well as conservatives, is held hostage by the politics of defense spending. Even the most well intentioned are captive to it. And this is a fundamental reason why the Pentagon budget is irrationally bloated and why America is mobilizing for war in a time of peace.”

    The peace-time mobilization Greider referred to was the Reagan build-up that, as William Hartung noted, is currently being surpassed by America’s “War on Terror” binge. Then, as now … the US was at peace at home, meddling around the world and running up a huge bill in the process. And then, as now … the spending seems unstoppable.

    And as an unnamed “arms-control lobbyist” told Grieder, “It’s a fact of life. I don’t see how you can ask members of Congress to vote against their own districts. If I were a member of Congress, I might vote that way, too.”

    Essentially, members of Congress act as secondary lobbyists for the defense industry by making sure their constituents have a vested interest in seeing the defense budget is both robust and untouchable. But they are not alone. Because the states also reap what the Pentagon sows … and, in the wake of the massive post-9/11 splurge, they’ve begun quantifying the impact of defense spending on their economies. It helps them make their specific case for keeping the spigot open.

    Enter the National Conference of State Legislatures (NCSL), which notes, or touts, that the Department of Defense (DoD) “operates more than 420 military installations in the 50 states, the District of Columbia, Guam and Puerto Rico.” Additionally, the NCSL is understandably impressed by a DoD analysis that found the department’s “$408 billion on payroll and contracts in Fiscal Year 2015” translated into “approximately 2.3 percent of U.S. gross domestic product (GDP).”

    And they’ve become a clearinghouse for state governments’ economic impact studies of defense spending. Here’s a sampling of recent data compiled on the NSCL website:

    • In 2015, for example, military installations in North Carolinasupported 578,000 jobs, $34 billion in personal income and $66 billion in gross state product. This amounts to roughly 10 percent of the state’s overall economy.
    • In 2014, Coloradolawmakers appropriated $300,000 in state funds to examine the comprehensive value of military activities across the state’s seven major installations. The state Department of Military and Veterans Affairs released its study in May 2015, reporting a total economic impact of $27 billion.
    • Kentuckyhas also taken steps to measure military activity, releasing its fifth study in June 2016. The military spent approximately $12 billion in Kentucky during 2014-15. With 38,700 active duty and civilian employees, military employment exceeds the next largest state employer by more than 21,000 jobs.
    • In Michigan, for example, defense spending in Fiscal Year 2014 supported 105,000 jobs, added more than $9 billion in gross state product and created nearly $10 billion in personal income. A 2016 study sponsored by the Michigan Defense Center presents a statewide strategy to preserve Army and Air National Guard facilities following a future Base Realignment and Closure (BRAC) round as well as to attract new missions. 

    Electoral Impact

    But that’s not all. According to the DoD study cited above, the biggest recipients of DoD dollars are (in order): Virginia, California, Texas, Maryland and Florida. And among the top 18 host states for military bases, electorally important states like California, Florida and Texas lead the nation.

    President Trump speaking at a Cabinet meeting on Nov. 1, 2017, with Secretary of State Rex Tillerson to Trump’s right and son-in-law Jared Kushner seated in the background. (Screen shot from

    And that’s the real rub … this has an electoral impact. Because the constituency for defense spending isn’t just the 1 percent percent of Americans who actively serve in the military or 7 percent of Americans who’ve served sometime in their lives, but it is also the millions of Americans who directly or indirectly make a living off of the “defense-related” largesse that passes through the Pentagon like grass through a goose.

    It’s a dirty little secret that Donald Trump exploited throughout the 2016 presidential campaign. Somehow, he was able to criticize wasting money on foreign wars and the neoconservative interventionism of the Bushes, the neoliberal interventionism of Hillary Clinton, and, at the same time, moan endlessly about the “depleted” military despite “years of record-high spending.” He went on to promise a massive increase in the defense budget, a massive increase in naval construction and a huge nuclear arsenal.

    And, much to the approval of many Americans, he’s delivered. A Morning Consult/Politico poll showed increased defense spending was the most popular among a variety of spending priorities presented to voters … even as voters express trepidation about the coming of another war. A pair of NBC News/Survey Monkey polls found that 76 percent of Americans are “worried” the United States “will become engaged in a major war in the next four years” and only 25 percent want America to become “more active” in world affairs.

    More to the point, only 20 percent of Americans wanted to increase the troop level in Afghanistan after Trump’s stay-the-course speech in August, but Gallup’s three decade-long tracking poll found that the belief the U.S. spends “too little” on defense is at its highest point (37 percent) since it spiked after 9/11 (41 percent). The previous highpoint was 51 percent in 1981 when Ronald Reagan was elected in no small part on the promise of a major build-up.

    So, if Americans generally don’t support wars or engagement in the world, why do they seem to reflexively support massive military budgets?

    Frankly, look no further than Trump’s mantra of “jobs, jobs, jobs.” He says it when he lords over the sale of weapon systems to foreign powers or he visits a naval shipyard or goes to one of his post-election rallies to proclaim to “We’re building up our military like never before.” Frankly, he’s giving the people what they want. Although they may be war-weary, they’ve not tired of the dispersal system that Greider wrote about during Reagan’s big spree.

    Ultimately, it means that the dreaded Military-Industrial Complex isn’t just a shadowy cabal manipulating policies against the will of the American people. Nor is the “racket” exclusive to an elite group of Deep State swamp things. Instead, the military and the vast economic network it feeds presents a far more “complex” issue that involves millions of self-interested Americans in much the way Eisenhower predicted, but few are willing to truly forsake.

  • Did Mike Flynn Wear A Wire During Conversations With Jared Kushner?

    By now, other potential Trump administration officials who might’ve interacted with Michael Flynn following his Jan. 24 interview with FBI agents – where the former general lied about the details of his conversation with then-ambassador Kislyak – are probably tearing their hair out trying to discern whether the former National Security Adviser – who served in that post for less than a month before being fired for allegedly misrepresenting these same conversations to Vice President Pence – might’ve worn a wire during their interactions.

    Of course, there’s nothing in Flynn’s Nov. 30 plea agreement that definitively answers the question of whether Flynn wore a wire.

    So, in the interest of reading the tea leaves, the Guardian spoke to a handful of experts about whether there was any language in the plea agreement to suggest that Flynn – who tried to cover up the fact that he intimated to then-ambassador Kislyak that Trump would roll back some of the sanctions against the Putin government while also soliciting a Russian veto of a UN resolution condemning Israeli settlements – might’ve been wired for sound.

    Their conclusion? That certain language in the Flynn plea about ‘covert actions’ suggests that, yes, he did wear a wire.

    Section eight of the deal reached by Donald Trump’s former national security adviser in the inquiry into Russian meddling in the US election is entitled “cooperation”. It specifies that as well as answering questions and submitting to government-administered polygraph tests, Flynn’s cooperation “may include … participating in covert law enforcement activities”.


    Long-time students of federal law enforcement practices agreed, speaking anonymously, that “covert law enforcement activities” likely refers to the possibility of wearing a concealed wire or recording telephone conversations with other potential suspects. It is not known whether Flynn has worn a wire at any time.


    “If the other subjects of investigation have had any conversations with Flynn during the last few months, that phrase must have all of them shaking in their boots,” said John Flannery, a former federal prosecutor in the southern district of New York.

    And if there’s one member of the Trump inner circle who might have something to worry about thanks to Flynn, it’s senior Trump adviser and son-in-law Jared Kushner.  

    “The one who must be particularly terrified is [Trump son-in-law and adviser] Jared Kushner, if he spoke to the special counsel’s office without immunity about the very matter that is the subject of Flynn’s plea. I think he must be paralyzed if he talked to Flynn before or after the investigators debriefed him."

    But aside from the language about covert action, few other details about what actions might’ve taken can be gleaned from the plea. Even the date when Flynn began cooperating with Mueller’s investigation remains a mystery – though at least one prominent Republican donor was telling friends in July this year that Flynn was already helping the Mueller probe, the Guardian reported.

    The exact nature of the information that Flynn provided to Mueller also is not yet known (though we imagine, given the sieve-like nature of the Mueller camp when it comes to media leaks, some of these details will likely begin appearing in the pages of the New York Times and Washington Post). However, if there’s one clue as to the magnitude of the assistance that Flynn provided to Mueller, it’s the updated sentencing guidelines for the single charge of obstruction that Flynn has chosen to eat instead of trying his luck with a trial.

    Considering the severity of Flynn’s crimes in the eyes of the FBI (which doesn’t look kindly on people who knowingly hinder investigations), the dramatic reduction in the former general’s sentencing suggests that he is going to help Mueller take down at least one other senior member of the Trump inner circle.

    The main clue in the plea agreement about the importance of the information Flynn has already provided lies in the discrepancy between the maximum penalty for the crime he has admitted and the maximum sentence the special counsel has promised to recommend.


    According to the document made public on Friday, Flynn could have been sentenced to as much as five years in prison and a $250,000 fine. As long as he cooperates in full with all of the special counsel’s requests, the document says the “estimated sentencing guidelines” range from zero to six months, with a possible fine of between $500 and $9,500. The proposed sentencing reduction also partly takes into account the fact Flynn has no criminal record.


    “No prosecutor I know would agree to reducing a sentence that dramatically unless the witness had provided very significant information about at least one other target of his investigation,” Flannery said. “You wouldn’t get such a low sentence unless you had implicated a big target. The person that you’re lifting up allows you to sit on the ground.”

    The exact language in the plea agreement requires Flynn to cooperate “fully, truthfully, completely and with this Office and other Federal, state and local law enforcement authorities identified by this Office in any and all matters as to which this Office deems the cooperation relevant”.

    If Flynn refuses to cooperate fully, “the agreement will be considered breached by your client.” The agreement says any breach will have a serious impact on Flynn’s sentence.

    Experts told the Guardian it was notable Flynn pleaded guilty before being indicted by a grand jury, though the logic here is easy to spot. By sparing Flynn this very public embarrassment, Flynn has more reason to feel genuinely grateful toward the former FBI director. It also makes sense from a strategic perspective: By preserving Flynn’s cover, the former National Security Adviser was free to begin recording incriminating information that could be useful for Mueller.

    Whatever the nature of the agreement, Flynn has every incentive to provide Mueller with as much useful information as he possibly can. According to the agreement Flynn must cooperate “fully, truthfully, completely and with this Office and other Federal, state and local law enforcement authorities identified by this Office in any and all matters as to which this Office deems the cooperation relevant”.

    If Flynn refuses or fails, “the agreement will be considered breached by your client.” The agreement says any breach will have a serious impact on Flynn’s sentence.

    To be sure, the idea that Flynn – or even Papadopoulos before him – wore a wire is still, at this point, mere speculation. While it sounds like prosecutors wanted both men to do so, in Flynn’s case, Mueller may have included the suspicious passage in his plea for another unrelated purpose: To scare other potential witnesses or targets into being completely truthful with investigators.

    Since there was no legal requirement for Mueller to include this information about covert law enforcement activities in the plea agreement, Flannery believes it was put there “to put the fear of God” into anyone who may have given the special counsel answers that conflict with Flynn’s information.

    Of course, the nature of Flynn’s cooperation was immediately overblown by ABC in an error that might cost one senior correspondent his career – indeed, it has already greatly damaged what little credibility he had left. ABC suspended Brian Ross – who erroneously reported that Flynn would testify Trump instructed him to contact the Russians during the campaign. Flynn was actually preparing to testify that a senior Trump official 0 revealed to be Kushner – ordered him to do so during the transition. Outreach between the transition and foreign regimes is legal and common.

    So, aside from undermining President Obama during the waning days of his administration, Flynn’s conversation with Kislyak was otherwise completely legitimate, which begs the question: Why’d Flynn lie? His actions, of course, were technically violations of a rarely enforced law against soliciting these types of quid-pro-quo arrangements. But the risk of being caught in a lie was far greater than risking possible punishment for his conversations with Kislyak.

    So why’d he do it?

    * * *

    Full Flynn Plea Agreement:

  • The Legal System Is Failing America When It Comes To Immigration

    Authored by Scott Greer via The Daily Caller,

    The illegal immigrant who fired the gun shot that killed Kate Steinle was able to beat a murder charge this week.

    Jose Garcia Zarate, a five-time deportee from Mexico and convicted felon, walked away with only a gun conviction after his legal team convinced the jury their client accidentally fired a gun three times and had no intent of killing anyone.

    The Steinle case has attracted national attention ever since her murder occurred in 2015 in the sanctuary city of San Francisco. The murder became the focal point in the debate over illegal immigration, showing the dangers of sanctuary city policies and how America can’t secure its borders from convicted felons with multiple deportations.

    Presidential candidate Donald Trump highlighted the murder several times on the campaign trail for why America needs to get tough on illegal immigration and eliminate sanctuary city policies.

    There was always a political element to the case, and that comes into play as to why a San Francisco jury sought fit to let Zarate go free without even an involuntary manslaughter charge.

    The prosecution team does warrant some of the blame for why that occurred. As RedState’s Sarah Rumpf argued, prosecutorial overreach trying to get a harder to prove first-degree murder charge bears some responsibility for the exoneration of Zarate for Kate’s killing.

    However, that factor can’t be solely responsible for the not guilty verdict for an illegal immigrant who somehow accidentally fired off a gun three times with no malicious intent in mind.

    San Francisco is a very liberal area and jury selection, according to Zarate’s defense team, was ensured to better benefit their client.

    “We are very pleased with the jury,” said Matt Gonzalez, the lead defense lawyer for Zarate, upon the completion of jury selection.


    “We have such great diversity built in in San Francisco and I think we have a jury that understands a lot of the concerns about the defendant receiving a fair trial.”

    That diversity was reflected in the jury consisting of three immigrants, at least one of whom’s primary language was Spanish. Potential jurors were quizzed about their thoughts on immigration, Latinos, guns and crime when being taken into consideration.

    Gonzalez also asked them how they would be fine with a verdict that came out contrary to President Trump’s wishes.

    While the judge presiding over the case urged the jury to leave aside their opinions on immigration and guns and focus on the facts, it was always hard for this case to escape from politics.

    Juries don’t always make the right decision, as anyone who is still upset by O.J. Simpson walking free can attest. The Steinle case seems to be emblematic for how America’s legal system seems incapable of adequately dealing with immigration issues.

    Zarate should’ve never been in the country to begin with, yet a San Francisco prison let him go free while under a sixth deportation order three months before Steinle’s murder. All thanks to sanctuary city policies.

    And this isn’t the only case where the legal system failed to find justice for illegal immigrant crime.

    In October, a Texas woman who lost her husband and two children to a car crash caused by an illegal immigrant expressed outrage that the man responsible only received a two-year sentence for the crime.

    In May, an Oregon circuit court overturned the conviction for an illegal immigrant who ran over and killed two girls playing in a leaf pile. The court bought the driver’s story that she didn’t realize she ran over anything as she drove away from the scene of the killing.

    That reversed conviction was not for vehicular homicide, but for the driver being found guilty of failing to perform her duties as a driver. The courts also managed to dismiss her deportation case over the incident.

    There’s also the example of San Francisco feeling embolden to continue to defend their sanctuary city policies, which give protection to illegal immigrants from deportation, after the Steinle verdict.

    A convicted felon who will apparently fire off guns without thinking isn’t exactly the poster boy you want for your policies, but San Fran seems comfortable with that association.

    Then again, the city should feel emboldened by how the courts continue to strike down the immigration orders of the president.

    Even more important than the individual cases of leniency given to illegal immigrant criminals is how the courts are presently shaping our country’s immigration policy.

    The White House has sought to punish jurisdictions that refuse to follow federal immigration law, yet courts have blocked the administration’s attempt to do so. In November, a U.S. district judge in California ruled the administration could not reduce federal funding to sanctuary cities because it “will cause them constitutional injuries.”

    Earlier the same month, another U.S. district court judge argued from the bench that the Department of Justice was wrong to say a city was failing to meet law enforcement requirements by giving protection to illegal aliens.

    Even more expansive than these court arguments on sanctuary cities is the legal system’s opinion on who the government can bar from entry into the country.

    Increasingly, the courts have inched towards the opinion that the federal government cannot restrict immigration from any part of the world. The various versions of Trump’s travel ban have been knocked down by the courts for the alleged reason they discriminate on the basis “of the person’s race, sex, nationality, place of birth, or place of residence.”

    In spite of the lengthy legal history of America restricting immigration based on national origin, judges have taken the initiative to make their own interpretation of migration policy. No matter how many times the Trump administration revises the executive order to prove it is not a Muslim ban, the courts still find it too discriminatory to take effect.

    By declaring that the government cannot restrict immigration based on national origin, judges are declaring any attempt to limit migration is inherently racist. This thinking operates under the delusion that there is some hidden open borders clause in the Constitution.

    We must take in any and all newcomers to the country because the Statue of Liberty poem says so. It doesn’t matter whether they come here legally or illegally, we must unquestionably welcome these immigrants or we are no longer America.

    Many Americans find this argument ridiculous, as a large percentage of our country supports immigration reduction. But courts don’t have to answer to the people, and judges have used their power to impose their own will on immigration policy.

    From the leniency shown to illegal alien criminals to preventing the president from enforcing immigration law, America’s legal system is proving it cannot be trusted to side with the interests of the nation’s citizens.

    Fortunately, Trump is reshaping the federal judiciary with conservative picks and one hopes thatrestores sanity to the courts soon.

    Until then, try not to be killed by an illegal immigrant in a sanctuary city. A jury may find it’s more important to send a message to the president than find justice for your murder.

  • Pentagon To Deploy THAAD Anti-Missile Systems On West Coast To Protect Against North Korean ICBM Attack

    Days after North Korea launched its most advanced ICBM which reportedly can hit a target anywhere in the United States with its 8,000+ mile range, Pyongyang said the U.S. is “begging” for a nuclear war by planning the “largest-ever” joint aerial drill with South Korea, according to Bloomberg. “Should the Korean peninsula and the world be embroiled in the crucible of nuclear war because of the reckless nuclear war mania of the U.S., the U.S. will have to accept full responsibility for it,” North Korea’s state-run KCNA said Saturday, citing a statement by the Ministry of Foreign Affairs.

    As we previously reported, the statement came after Yonhap News reported that six U.S. Raptor stealth fighters planes arrived in South Korea on Saturday for a joint air drill named “Vigilant Ace 18” scheduled for Dec. 4 to 8. The F-22s flew into South Korea together in a show of force. The stealth fighters, however, were just a small part of the upcoming show of force: according to local media, some 230 aircraft and up to 16,000 soldiers and airmen are taking part in the drill, which is one of the biggest ever of its kind.

    Meanwhile, in addition to Lindsey Graham’s warning that US civilians in South Korea should evacuate ahead of “military conflict”, in response to North Korea’s recently enhanced capabilities, the United States is beefing up security on the West Coast.

    Last week the New York Times reported that Hawaii was bringing back its Cold War-era early missile warning system designed to warn residents of an impending nuclear attack.

    The Attack Warning Tone, described as a “wailing tone,” will be heard for about 50 seconds on the first business day of every month, beginning on Dec. 1. It will sound after the regular monthly test of the sirens that warn residents of hurricanes or tsunamis, the Emergency Management Agency said.

    Now, according to Congressmen Mike Rogers who sits on the House Armed Services Committee along with Democrat Adam Smith, we learn that the Pentagon is also exploring locations on the West Coast for anti-missile hardware. Rogers and Smith said the Pentagon is looking to distribute the THAAD anti-missile system made by Lockheed Martin Corp at west coast sites.

    “It’s just a matter of the location, and the MDA making a recommendation as to which site meets their criteria for location, but also the environmental impact,” the Alabama Congressman and Republican told Reuters during an interview on the sidelines of the annual Reagan National Defense Forum in southern California, although the Congressmen said the number of sites that may ultimately be deployed had yet to be determined.

    As Zero Hedge reported in September, the THAAD ground-based regional missile defense system has a 100% success rate in test interceptions according to the U.S. Missile Defense Agency as of May 2017, hitting 13 out of 13 targets (unlike the new SM-3 Block IIA missile developed jointly by the US and Japan failed its first test in June). 

    Reuters elaborates:

    THAAD is a ground-based regional missile defense system designed to shoot down short-, medium- and intermediate-range ballistic missiles and takes only a matter of weeks to install. In addition to the two THAAD systems deployed in South Korea and Guam in the Pacific, the U.S. has seven other THAAD systems. While some of the existing missiles are based in Fort Bliss, Texas, the system is highly mobile and current locations are not disclosed.

    A Lockheed Martin representative declined to comment on specific THAAD deployments, but added that the company “is ready to support the Missile Defense Agency and the United States government in their ballistic missile defense efforts.” He added that testing and deployment of assets is a government decision.

    The United States also tested the THAAD system in July, shooting down a simulated, incoming intermediate-range ICBM.

    The addition to boost West Coast defense, THAAD locations will significantly beef up the existing ground-based Midcourse Defense System (GMD) located in Alaska and California, along with the ship-mounted Aegis system deplyed on U.S. Navy vessels. The THAAD system has a much higher success rate than the GMD. The Missile Defense Agency also told Congress in June that it planned to deliver 52 more THAAD interceptors to the U.S. Army between October, 2017 and September 2018, bringing total deliveries to 210 since May 2011, Reuters reports.

    There is a bit of conflicting information on the plan, however, as Missile Defense Agency deputy director, Rear Admiral Jon Hill, stated “The Missile Defense Agency has received no tasking to site the Terminal High Altitude Air Defense System on the West Coast,” directly contradicting reps Mike Rogers and (R-AL) and Adam Smith (D-WA).

    As reported in September, South Korea has already installed the THAAD system in the province of Gyeongsangbuk, which hundreds of residents took to the streets to protest in a major clash with police.

    Perhaps the South Koreans (and certainly China) are not especially excited by the U.S. military buildup, but now that the neighbor to the north has the ability to sling an ICBM over 8,000 miles, they may reconsider.

  • Elon Musk's First Payload To Mars: His "Midnight Cherry Tesla Roadster Playing Space Oddity"

    In late November, we reported on Elon Musk’s desperate attempt to boost market confidence with a shock and awe performance unveiling Tesla’s new semi-truck and roadster. While the event was a thriller, it appears the laws of physics may have finally caught up with Tesla’s stock – now in a bear-market from September highs.

    Musk is undeniably the greatest snake oil salesman modern financial markets have ever seen, and that is why he is planning the next spectacular event before a further correction.

    On Friday evening, Musk tweeted what the payload of the Falcon Heavy would be— his “midnight cherry Tesla Roadster playing Space Oddity”.

    But the story gets better, because the powerful Falcon Heavy rocket will launch his Tesla into the orbit around Mars. Musk added, the Tesla “will be in deep space for a billion years or so if it doesn’t blow up on ascent.”

    As Musk would say, the show must go on with the Falcon Heavy launch expected “next month” (January 2018) from Pad 39A at Kennedy Space Center in Florida. According to ARS Techinca, “a static fire test of the rocket’s three cores, and 27 engines, on the launch pad this month.”

    In simplest terms, the Falcon Heavy is three of the company’s Falcon 9 rockets strapped together. It will then create enough lift as proposed by Musk to propel his Tesla out of low Earth orbit onto a trajectory to Mars. When it comes to timing— don’t take the company seriously. Musk has pushed back Falcon Heavy’s maiden flight more than once: it was originally planned for a summer launch but moved to November and now to January 2018.

    Musk said, at a press conference in July, that the Falcon Heavy might not even make it to orbit on its first attempt to leave the atmosphere. That means the upcoming event could turn into a very expensive firework showing.

    While the practical use for a Tesla roadster on Mars is still unknown, it would buy Musk some time to keep the stock elevated for perhaps a few more secondly offerings. If Musk is successful in this latest endeavor, it would signal that NASA’s ambitions to Mars could be fulfilled by a Falcon Heavy. So far, no private company has launched a rocket beyond low-Earth orbit, nevertheless to another plant.

    Phil Larson, an assistant dean at the University of Colorado, and a former SpaceX official said, “the launch of the biggest rocket since the U.S. Moon booster is a game changer for our country’s space exploration future and for national security. The fact that development of such a capability is coming from U.S. industry is a very positive sign for our economic competitiveness.”

    As we have highlighted before, the short thesis for Tesla (see: Jim Chanos Adds To Tesla Short, Sees Musk Stepping Down) explains the financial circumstances of why Musk is attempting to conduct the great show ever known to man through SpaceX, as it means the cross promotion would keep his scheme alive. In the mean time, the short theses build:

    1. Negative Cash Flows

    “If you can’t make money selling a $100,000 car to rich people, how are you going to make money selling a $45,000 car to normal people?” Rocker told The Times. He was referring to the upcoming mass-market Model 3. “I’m saying they’re going to lose money on every Model 3 they build and sell,” Spiegel said. Based on Tesla’s Q4 2016 earnings report, he figured the combined average selling price for non-leased Model S and X is about $104,000 and the combined average cost of building them about $82,000.


    2. Competition from the Big Guys

    Electric vehicles are still only a tiny fraction of total new vehicle sales in the US. Tesla sold about half of them. In March, according to Autodata, Tesla sold 4,050 vehicles in the US, similar to Porsche. All automakers combined sold 1.56 million new vehicles. This gave Tesla a market share of 0.26%. “Tesla faces a formidable set of competitors, and they’re coming in with guns blazing,” Wahlman told The Times. “Once the market is flooded with electric vehicles from manufacturers who can cross-subsidize them with profits from their conventional cars, somewhere around 2020 or 2021, Tesla will be driven into bankruptcy,” Spiegel said.


    3. Tesla’s vanishing tax credits

    The federal tax credit of $7,500 that EV buyers currently get is limited to 200,000 vehicles for each automaker. Once that automaker hits that point, tax credits are reduced and then phased out. Of all automakers, Tesla is closest to the 200,000 mark. Under its current production goals, the tax credits for its cars could start declining in 2018. This would give competitors, whose customers still get the full tax credit, a major advantage. About 370,000 folks put down a refundable $1,000 deposit on Tesla’s Model 3, perhaps figuring they’d get the $7,500 tax credit. But as it stands, many won’t. Rocker thinks that this is going to be an issue. The refundable deposit “commits them to nothing,” he said. Those that don’t get the tax credit may just ask for their money back and buy an EV that is still eligible for the credit.


    4. The Question of patent protection

    Tesla has made its patents available to all comers, thus lowering its patent protections against competitors. Also, the key part of an EV, the battery, is produced by suppliers; they, and not Tesla, own the intellectual property. This is true for all automakers. But Tesla might still be closely guarding crucial trade secrets that are not patented.


    5. Musk’s distractions from his day job

    Musk has a lot of irons in the fire: Tesla, SpaceX (with which he wants to build a colony on Mars or something), solar-panel installer SolarCity which Tesla bailed out last year; projects ranging from artificial intelligence to tunnel digging; venture capital activities…. “He’s all over the map, from tunneling to flights to Mars to solar roof tiles,” Rocker said. These announcements have the effect of boosting Tesla’s stock: “It’s ‘Let’s get the acolytes excited. Implant in the brain! Let’s buy Tesla stock!’”


    6. Execution risk

    “Investing is all about possibility and probability,” Yusko said. “Is it possible that Tesla will produce 500,000 cars in the next two or three years? Yes. Is it probable? No.” Tesla has missed many deadlines and goals, and quality problems cropped up in early production models. As Tesla is trying to make the transition to a mass-market automaker, execution risk will grow since mass-market customers are less forgiving.


    7. Investor fatigue

    Having lost money in every one of its 10 years of existence, Tesla asks investors regularly for more money to fill the new holes. In March, it got $1.2 billion. In May last year, it got $1.5 billion. Tesla will need many more billions to scale up production and to digest the losses. Tesla has been ingenious in this department. But when will investors get tired of it? “We’re awfully close to the point where people wake up and realize these guys are seriously diluting our equity” with new stock and convertible bond issues, Yusko said. According to The Times, Yusko “is looking for the moment when the true believers begin to lose faith.”



    8. Emerging solid-state battery technology

    Musk has invested a lot into his Gigafactory and technology producing lithium-ion batteries. The EV game is all about the best battery technology and a new threat has emerged using solid-state technology. If Tesla does not adopt to these new battery trends consumers would likely gravitate to EVs who posses such technology, because of the longer distance and shorter charge time.


  • "We're Getting Close To Military Conflict": Sen. Graham Urges Evacuation Of Americans From South Korea

    Neocon Senator Lindsay Graham was stoking the flame of what is looking like increasingly probable war with North Korea today, when he warned on national TV that rising tensions between the the US and Pyongyang means preparations for war need to be taken, and that dependents of U.S. military personnel in South Korea should be relocated after the latest North Korean missile test.

    Speaking on CBS News’ “Face the Nation”, Sen. Graham said that “we’re getting close to a military conflict because North Korea’s marching toward marrying up the technology of an ICBM with a nuclear weapon on top that cannot only get to America but deliver the weapon. We’re running out of time.”

    Graham then urged American dependants should no longer be sent to South Korea, and added that it’s time to start evacuating dependents out of North Korea’s southern neighbor: “South Korea should be an unaccompanied tour. It’s crazy to send spouses and children to South Korea, given the provocation of North Korea. So I want them to stop sending dependents. And I think it’s now time to start moving American dependents out of South Korea.

    On Saturday, North Korea said the U.S. is “begging” for a nuclear war by planning the “largest-ever” joint aerial drill with South Korea just weeks after concluding an exercise with three nuclear-powered aircraft carriers. “Should the Korean peninsula and the world be embroiled in the crucible of nuclear war because of the reckless nuclear war mania of the U.S., the U.S. will have to accept full responsibility for it,” North Korea’s state-run KCNA said Saturday, citing a statement by the Ministry of Foreign Affairs.

    As reported earlier on Sunday, Pyongyang’s statement came after Yonhap News reported that six U.S. Raptor stealth fighters planes arrived in South Korea on Saturday for a joint air drill named “Vigilant Ace 18” scheduled for Dec. 4 to 8. The F-22s flew into South Korea together in a show of force. The stealth fighters, however, were just a small part of the upcoming show of force: according to local media, some 230 aircraft and up to 16,000 soldiers and airmen are taking part in the drill, which is one of the biggest ever of its kind. As part of “Vigilant Ace”, US and South Korean forces will be rehearsing for a full-scale war with North Korea, with Yonhap noting that “allies plan to stage simulated attacks on mock North Korean nuclear and missile targets.”

    The massive drill, and the latest verbal escalation, takes place after North Korea carried out its latest missile test last week, in which the reclusive country launched its third ICBM test, and the first of what North Korea is calling its Hwasong-15 missile. According to expets, the new missile may be able to travel a distance of more than 8,000 miles – enough to strike anywhere in United States.

    Prior to Graham’s warning, national security adviser H.R. McMaster said Saturday that the chances of war with North Korea are “increasing every day.” Speaking at the Reagan National Defense Forum in California, McMsater said: “I think it’s increasing every day, which means that we are in a race, really, we are in a race to be able to solve this problem.”

  • Comey Tweets Bible Quotes And Nature Scenes, Gets Wrecked By Sebastian Gorka In Spectacular Fashion

    Content originally published at

    James Comey has been quite the chatterbox on Twitter since revealing his new handle in early November (@Comey) – firing off tweets about nature scenes, bible quotes, social gatherings, and most recently quoting himself – proclaiming how ‘honest’ and ‘strong’ the FBI is amid revelations that he put an anti-Trump / pro-Hillary agent in charge of both the Clinton email investigation and the early Trump-Russia probe – for which the FBI is now facing a contempt action over their anti-Trump bias during the election.

    “I want the American people to know this truth: The FBI is honest. The FBI is strong. And the FBI is, and always will be, independent.” -Me (June 8, 2017)

    Comey is quite the deep thinker. To be honest, you have to have a pretty high IQ to understand:

    And look – Comey and his wife Patrice Failor love making onion rings! 

    Then Gorka shows up…

    Comey’s PR campaign then attempted to appeal to the religious demographic, quoting a bible verse (after quoting Churchill but before his Messiah complex kicked in and he quoted himself):

    Oh man, throwing Amos 5:24 around like he owns the joint… until former Trump advisor, new Fox commentator, and all around badass Dr. Sebastian Gorka shows up to call James out over exonerating Hillary Clinton in the email investigation before the anti-Trump / pro-Clinton agent in charge, Peter Strzok, was finished looking at the evidence

    Hours before, Gorka dinged Comey for buring the investigation into Tony Podesta – brother of Hillary Clinton’s campaign advisor, John Podesta, “influence-peddling for Uranium 1 with Hillary?”

    Tony Podesta is of course the disgraced co-founder of the Podesta group, who left his firm in late October when he reportedly became a central focus in Robert Mueller’s FBI Special Counsel investigation into Russian involvement in the 2016 election.

    As a former long-time Podesta Group executive who was “extensively” interviewed by Robert Mueller’s special counsel told Tucker Carlson Tonight, Tony Podesta and Paul Manafort were bringing a “parade” of Russian oligarchs into Washington D.C.through a shell corporation operating as a pro-Russia Ukrainian think tank.

    The former exec also said that in 2013, John Podesta recommended that Tony hire David Adams, Hillary Clinton’s chief adviser at the State Department, giving them a “direct liaison” between the group’s Russian clients and Hillary Clinton’s State Department, and that Tony Podesta regularly met with the Clinton Foundation while lobbying for Uranium One – the Canadian mining company bought by the Russia’s state-owned Rosatom after obtaining approval from the Obama administration.

    And on Friday, Gorka posed the question as to how Comey got to head the FBI after only 12 years in the field:  

    Maybe it’s because Comey has had deep ties to Democrat / Clinton interests for years; earning $6 Million dollars in one year as Lockheed’s top lawyer – the same year the egregiously overbudget F-35 manufacturer made a huge donation to the Clinton Foundation. Comey was also a board member at HSBC shortly after NY AG at the time Loretta “tarmac” Lynch let the Clinton Foundation partner slide with a slap on the wrist for laundering drug money.

    So as James “hand of the devil” Comey continues to tweet like everything’s normal – letting everyone know the FBI is “honest” and “strong,” while the noose is tightening, enjoy the white-hot phosphorous Dr. Gorka drops to illuminate the target.

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  • Cameron And Tyler Winklevoss Are World's First Confirmed Bitcoin Billionaires

    The Winklevoss twins are officially the founding members of what we'd like to call the bitcoin billionaires boys club.

    When Tyler and Cameron Winklevoss settled their lawsuit against Facebook founder Mark Zuckerberg, the twins probably thought they had missed a once-in-a-lifetime opportunity to become billionaires.

    Nearly ten years later, the twins have reached a net worth of $1 billion thanks to a timely $11 million investment in bitcoin during April 2013, just as the world’s largest digital currency was entering mainstream consciousness.

    That original $11 million was only part of a $65 million settlement they received from Facebook in 2008. Their lawsuit against the company provided much of the narrative grist for the Hollywood movie “The Social Network”.

    Since the Winklevii opened their positions, the price of a single coin has risen from about $130 four-and-a-half years ago to an all-time high north of $11,000 last month.

    According to City AM, the brothers’ have refused to disclose their exact return. Though it’s estimated that the size of their stake is around 100,000 bitcoins, a figure that will further cement their re-brand as bitcoin entrepreneurs. The Winklevii nearly three years ago became the first people to petition the SEC for a rule change that would effectively as

    Other notable investors in the cryptocurrency include infamous entrepreneur Charlie Shrem who served a two-year stretch in federal lockup because his old company was accused of helping facilitate notorious black-market drug bazaar the Silk Road.

    Furthermore, the secretive inventor of the Bitcoin currency – known only by his digital pen name Satoshi Nakamoto -has never been publicly identified.

    As City AM explains, bitcoin is a decentralized digital currency that is created and stored on a digital ledger known as the blockchain. The digital currency’s recent success has been widely attributed to an influx of new buyers from China, South Korea and other countries across the region.

    Last year, Tyler Winklevoss told the Telegraph the currency could be worth trillions and was “like a better version of gold”.

    Many investors, including hedge fund pioneer Mike Novogratz, believe the price of a single bitcoin could reach $100,000 – or even $1 million – by late next year.

    However, signs of turbulence are beginning to emerge: Just after 430pm ET on Sunday, we showed that bitcoin and the entire crypto space tumbled – with Bitcoin plunging from session highs just under $12,000 to a low of $10,600 – on news that Just after 430pm ET we showed that bitcoin, and the entire crypto space, tumbled, with Bitcoin plunging from session highs just under $12,000 to a low of $10,600 on what appeared at first sight to be no news….

    …But later investors realized the move was driven by reports that UK government "ministers are launching a crackdown on the virtual currency Bitcoin amid growing concern it is being used to launder money and dodge tax."

    Taking a page out of the Chinese playbook, the UK Treasury has announced plans to regulate the digital currency that will force traders to disclose their identities and report suspicious activity to government authorities.

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