- When It Comes To Fake News, The U.S. Government Is The Biggest Culprit
Submitted by John Whitehead via The Rutherford Institute,
“We Americans are the ultimate innocents. We are forever desperate to believe that this time the government is telling us the truth.”—Former New York Times reporter Sydney Schanberg
Let’s talk about fake news stories, shall we?
There’s the garden variety fake news that is not really “news” so much as it is titillating, tabloid-worthy material peddled by anyone with a Twitter account, a Facebook page and an active imagination. These stories run the gamut from the ridiculous and the obviously click-baity to the satirical and politically manipulative.
Anyone with an ounce of sense and access to the Internet should be able to ferret out the truth and lies in these stories with some basic research. That these stories flourish is largely owing to the general gullibility, laziness and media illiteracy of the general public, which through its learned compliance rarely questions, challenges or confronts.
Then there’s the more devious kind of news stories circulated by one of the biggest propagators of fake news: the U.S. government.
In the midst of the media’s sudden headline-blaring apoplexy over fake news, you won’t hear much about the government’s role in producing, planting and peddling propaganda-driven fake news—often with the help of the corporate news media—because that’s not how the game works.
Why?
Because the powers-that-be don’t want us skeptical of the government’s message or its corporate accomplices in the mainstream media. They don’t want us to be more discerning when it comes to what information we digest online. They just want us to be leery of independent or alternative news sources while trusting them—and their corporate colleagues—to vet the news for us.
Indeed, the New York Times has suggested that Facebook and Google appoint themselves the arbiters of truth on the internet in order to screen out what is blatantly false, spam or click-baity.
Not only would this establish a dangerous precedent for all-out censorship by corporate entities known for colluding with the government but it’s also a slick sleight-of-hand maneuver that diverts attention from what we should really be talking about: the fact that the government has grown dangerously out-of-control, all the while the so-called mainstream news media, which is supposed to act as a bulwark against government propaganda, has instead become the mouthpiece of the world’s largest corporation—the U.S. government.
As veteran journalist Carl Bernstein, who along with Bob Woodward blew the lid off the Watergate scandal, reported in his expansive 1977 Rolling Stone piece, “The CIA and the Media”:
“More than 400 American journalists … in the past twenty?five years have secretly carried out assignments for the Central Intelligence Agency… There was cooperation, accommodation and overlap. Journalists provided a full range of clandestine services… Reporters shared their notebooks with the CIA. Editors shared their staffs. Some of the journalists were Pulitzer Prize winners, distinguished reporters… In many instances, CIA documents show, journalists were engaged to perform tasks for the CIA with the consent of the managements of America’s leading news organizations.”
Bernstein is referring to Operation Mockingbird, a CIA campaign started in the 1950s to plant intelligence reports among reporters at more than 25 major newspapers and wire agencies, who would then regurgitate them for a public oblivious to the fact that they were being fed government propaganda.
In some instances, as Bernstein shows, members of the media also served as extensions of the surveillance state, with reporters actually carrying out assignments for the CIA.
Executives with CBS, the New York Times and Time magazine also worked closely with the CIA to vet the news. Bernstein writes: “Other organizations which cooperated with the CIA include the American Broadcasting Company, the National Broadcasting Company, the Associated Press, United Press International, Reuters, Hearst Newspapers, Scripps?Howard, Newsweek magazine, the Mutual Broadcasting System, the Miami Herald and the old Saturday Evening Post and New York Herald?Tribune.”
For example, in August 1964, the nation’s leading newspapers—including the Washington Post and New York Times—echoed Lyndon Johnson’s claim that North Vietnam had launched a second round of attacks against American destroyers in the Gulf of Tonkin. No such attacks had taken place, and yet the damage was done. As Jeff Cohen and Norman Solomon report for Fairness and Accuracy in Reporting, “By reporting official claims as absolute truths, American journalism opened the floodgates for the bloody Vietnam War.”
Fast forward to the early post-9/11 years when, despite a lack of any credible data supporting the existence of weapons of mass destruction, the mainstream media jumped on the bandwagon to sound the war drums against Iraq. As Los Angeles Times columnist Robin Abcarian put it, “our government … used its immense bully pulpit to steamroll the watchdogs… Many were gulled by access to administration insiders, or susceptible to the drumbeat of the government’s coordinated rhetoric.”
John Walcott, Washington bureau chief for Knight-Ridder, one of the only news agencies to challenge the government’s rationale for invading Iraq, suggests that the reason for the media’s easy acceptance is that “too many journalists, including some very famous ones, have surrendered their independence in order to become part of the ruling class. Journalism is, as the motto goes, speaking truth to power, not wielding it.”
If it was happening then, you can bet it’s still happening today, only it’s been reclassified, renamed and hidden behind layers of government secrecy, obfuscation and spin.
In its article, “How the American government is trying to control what you think,” the Washington Post points out “Government agencies historically have made a habit of crossing the blurry line between informing the public and propagandizing.”
Thus, whether you’re talking about the Cold War, the Vietnam War, the Gulf War, the government’s invasion of Iraq based upon absolute fabrications, or the government’s so-called war on terror, privacy and whistleblowers, it’s being driven by propaganda churned out by one corporate machine (the corporate-controlled government) and fed to the American people by way of yet another corporate machine (the corporate-controlled media).
“For the first time in human history, there is a concerted strategy to manipulate global perception. And the mass media are operating as its compliant assistants, failing both to resist it and to expose it,” writes investigative journalist Nick Davies. “The sheer ease with which this machinery has been able to do its work reflects a creeping structural weakness which now afflicts the production of our news.”
But wait.
If the mass media—aka the mainstream media or the corporate or establishment media—is merely repeating what is being fed to it, who are the masterminds within the government responsible for this propaganda?
Davies explains:
The Pentagon has now designated “information operations” as its fifth “core competency” alongside land, sea, air and special forces. Since October 2006, every brigade, division and corps in the US military has had its own "psyop" element producing output for local media. This military activity is linked to the State Department's campaign of "public diplomacy" which includes funding radio stations and news websites.
This use of propaganda disguised as journalism is what journalist John Pilger refers to as “invisible government… the true ruling power of our country.”
As I make clear in my book Battlefield America: The War on the American People, we no longer have a Fourth Estate.
Not when the “news” we receive is routinely manufactured, manipulated and made-to-order by government agents. Not when six corporations control 90% of the media in America. And not when, as Davies laments, “news organizations which might otherwise have exposed the truth were themselves part of the abuse, and so they kept silent, indulging in a comic parody of misreporting, hiding the emerging scandal from their readers like a Victorian nanny covering the children’s eyes from an accident in the street.”
So let’s have no more of this handwringing, heart-wrenching, morally offended talk about fake news by media outlets that have become propagandists for the false reality created by the American government.
After all, as Glenn Greenwald points out, “The term propaganda rings melodramatic and exaggerated, but a press that—whether from fear, careerism, or conviction—uncritically recites false government claims and reports them as fact, or treats elected officials with a reverence reserved for royalty, cannot be accurately described as engaged in any other function.”
So where does that leave us?
What should—or can—we do?
I’ll close with John Pilger’s words of warning and advice:
Real information, subversive information, remains the most potent power of all — and I believe that we must not fall into the trap of believing that the media speaks for the public. That wasn’t true in Stalinist Czechoslovakia and it isn’t true of the United States. In all the years I’ve been a journalist, I’ve never known public consciousness to have risen as fast as it’s rising today…yet this growing critical public awareness is all the more remarkable when you consider the sheer scale of indoctrination, the mythology of a superior way of life, and the current manufactured state of fear.
[The public] need[s] truth, and journalists ought to be agents of truth, not the courtiers of power. I believe a fifth estate is possible, the product of a people’s movement, that monitors, deconstructs, and counters the corporate media. In every university, in every media college, in every news room, teachers of journalism, journalists themselves need to ask themselves about the part they now play in the bloodshed in the name of a bogus objectivity. Such a movement within the media could herald a perestroika of a kind that we have never known. This is all possible. Silences can be broken… In the United States wonderfully free rebellious spirits populate the web… The best reporting … appears on the web … and citizen reporters.
The challenge for the rest of us is to lift this subjugated knowledge from out of the underground and take it to ordinary people. We need to make haste. Liberal Democracy is moving toward a form of corporate dictatorship. This is an historic shift, and the media must not be allowed to be its façade, but itself made into a popular, burning issue, and subjected to direct action. That great whistleblower Tom Paine warned that if the majority of the people were denied the truth and the ideas of truth, it was time to storm what he called the Bastille of words. That time is now.
- Equity Market Melt-Up Continues: Dow Futures Top 19,000, S&P Breaks 2,200
In the words of the great philosopher Buzz Lightyear, “to infinity and beyond.” Oil’s incessant liftathon – on hopes that a production freeze at record highs will seriously impact a record seasonal glut – appears to have sparked more panic-buying in stocks overnight as no news whatsoever has the machines incessantly bidding futures, pushing Dow futures over 19,000 and S&P futures over 2,200. Bonds are flat, USDJPY is flat, and offshore yuan is modestly weaker once again.
After the squeeze-fest from the Trump win, oil is now in charge tick for tick of stocks…
Just another manic-monday-melt-up…
Leaves stocks once again pushing to new record highs post-Trump lows…
- Minimum Wage Protesters Call For "Day Of Disruption" In 340 US Cities
In what may be an early crisis test for the president-elect, on November 29, the nationwide campaign to increase the federal minimum wage in the United States has calling for a “Day of Disruption”, namely strikes and civil disobedience, on November 29 in the latest push to raise the minimum wage in the US to $15.
The Fight for 15 group is preparing to protest in 340 cities across the United States, and is calling for airport and fast-food workers to strike.
Group representatives have stated that they expect subcontracted service staff at roughly 20 airports to participate. It is anticipated to be the largest day of protest in the organization’s four year history, coinciding with the anniversary of the launch of the movement.
“Tuesday, November 29, the #FightFor15 is staging a national day of disruption. We won’t back down,” the Fight for 15 Twitter account posted on Monday morning.
BREAKING: Tuesday, November 29, the #FightFor15 is staging a national day of disruption. We won’t back down.
RSVP: https://t.co/4pJIXGkLjq pic.twitter.com/eJcUdCQJIE— Fight For 15 (@fightfor15) November 21, 2016
On its website, the campaign writes the following statement: “For too long, McDonald’s and low-wage employers have made billions of
dollars in profit and pushed off costs onto taxpayers, while leaving
people like us – the people who do the real work – to struggle to
survive. That’s why we strike.”Fight for 15 began in New York City, as fast-food workers went on strike demanding $15-an-hour pay, as well as union rights. The movement was successful, and in April of this year NY Governor Andrew Cuomo signed a law to increase wages to a $15 minimum by the end of 2018 in New York City, and by 2021 in other counties, including Nassau, Suffolk and Westchester.
For the rest of the state, the minimum wage will be raised to $12.50 by the end of 2020.
The movement has since spread to over 300 cities on six different continents, and has seen additional successes, winning $15 an hour in the state of California, and in large cities such as Seattle. Other cities, including Portland and Chicago, have seen significant minimum-wage increases.
While previously the group’s demands have been ignored at the Federal level, in a potential complication this July, then-Republican presidential candidate Donald Trump broke from his party’s platform, promising to increase the federal minimum wage, which may boost the leverage of the protesting organization.
However, Trump acknowledged that states with more expensive urban regions need to have a higher minimum wage than lower-cost rural areas.
Minimum-wage regulations, Trump noted, are most feasible when they are based on the living costs in each particular area, rendering the federal wage level regulations largely irrelevant to the economic reality in different regions of the US.
With a $10/hour federal minimum wage, individual states, he claims, could go above that threshold. “I would leave it and raise it somewhat. You need to help people and I know it’s not very Republican to say but you need to help people,” Trump said in his July interview.
- Why America Called 'Bullshit' On The Cult Of Clinton
Submitted by Brendan O'Neill via Reason.com,
The one good thing about Trump’s win? It shows a willingness among Americans to blaspheme against saints and reject the religion of hollow progressiveness.
If you want to see politics based on emotionalism over reason and a borderline-religious devotion to an iconic figure, forget the Trump Army; look instead to the Cult of Clinton.
Ever since Donald Trump won the presidential election, all eyes, and wringing hands, have been on the white blob who voted for him. These "loud, illiterate and credulous people," as a sap at Salon brands them, think on an "emotional level." Bill Moyers warned that ours is a "dark age of unreason," in which "low information" folks are lining up behind "The Trump Emotion Machine." Andrew Sullivan said Trump supporters relate to him as a "cult leader fused with the idea of the nation."
What's funny about this is not simply that it's the biggest chattering-class hissy fit of the 21st century so far — and chattering-class hissy fits are always funny. It's that whatever you think of Trump (I'm not a fan) or his supporters (I think they're mostly normal, good people), the fact is they've got nothing on the Clinton cult when it comes to creepy, pious worship of a politician.
By the Cult of Hillary Clinton, I don't mean the nearly 62 million Americans who voted for her. I have not one doubt that they are as mixed and normal a bag of people as the Trumpites are. No, I mean the Hillary machine—the celebs and activists and hacks who were so devoted to getting her elected and who have spent the past week sobbing and moaning over her loss. These people exhibit cult-like behavior far more than any Trump cheerer I've come across.
Trump supporters view their man as a leader "fused with the idea of the nation"? Perhaps some do, but at least they don't see him as "light itself." That's how Clinton was described in the subhead of a piece for Lena Dunham's Lenny Letter. "Maybe [Clinton] is more than a president," gushed writer Virginia Heffernan. "Maybe she is an idea, a world-historical heroine, light itself," Nothing this nutty has been said by any of Trump's media fanboys.
"Hillary is Athena," Heffernan continued, adding that "Hillary did everything right in this campaign… She cannot be faulted, criticized, or analyzed for even one more second."
That's a key cry of the Cult of Hillary (as it is among followers of L. Ron Hubbard or devotees of Christ): our gal is beyond criticism, beyond the sober and technical analysis of mere humans. Michael Moore, in his movie Trumpland, looked out at his audience and, with voice breaking, said: "Maybe Hillary could be our Pope Francis."
Or consider Kate McKinnon's post-election opening bit on SNL, in which she played Clinton as a pantsuited angel at a piano singing Leonard Cohen's "Hallelujah," her voice almost cracking as she sang: "I told the truth, I didn't come to fool ya." Just imagine if some right-leaning Christian celeb (are there any?) had dolled up as Trump-as-godhead and sang praises to him. It would have been the source of East Coast mirth for years to come. But SNL's Hallelujah for Hillary was seen as perfectly normal.
As with all saints and prophets, all human manifestations of light itself, the problem is never with them, but with us. We mortals are not worthy of Hillary. "Hillary didn't fail us, we failed her," asserted a writer for the Guardian. The press, and by extension the rest of us, "crucified her," claimed someone at Bustle. We always do that to messiahs, assholes that we are.
And of course the light of Hillary had to be guarded against blasphemy. Truly did the Cult of Hillary seek to put her beyond "analysis for even one more second." All that stuff about her emails and Libya was pseudo-scandal, inventions of her aspiring slayers, they told us again and again and again.
As Thomas Frank says, the insistence that Hillary was scandal-free had a blasphemy-deflecting feel to it. The message was that "Hillary was virtually without flaws… a peerless leader clad in saintly white… a caring benefactor of women and children." Mother Teresa in a pantsuit, basically. As a result, wrote Frank, "the act of opening a newspaper started to feel like tuning in to a Cold War propaganda station."
Then there was the reaction to Clinton's loss. It just wasn't normal chattering-class behavior. Of course we expect weeping, wailing videos from the likes of Miley Cyrus and Perez Hilton about how Clinton had been robbed of her moment of glory; that's what celebs do these days. But in the media, too, there was hysteria.
"'I feel hated,' I tell my husband, sobbing in front of the TV in my yoga pants and Hillary sweatshirt, holding my bare neck," said a feminist in the Guardian. Crying was a major theme. A British feminist recalled all the "Clinton-related crying" she had done: "I've cried at the pantsuit flashmob, your Saturday Night Live appearance, and sometimes just while watching the debates." (Wonder if she cried over the women killed as a result of Hillary's machinations in Libya? Probably not. In the mind of the Hillary cultists, that didn't happen—it is utterly spurious, a blasphemy.)
Then there was Lena Dunham, who came out in hives—actual hives—when she heard Clinton had lost. Her party dress "felt tight and itchy." She "ached in the places that make me a woman." I understand being upset and angry at your candidate's loss, but this is something different; this is what happens, not when a politician does badly, but when your savior, your Athena, "light itself," is extinguished. The grief is understandable only in the context of the apocalyptic faith they had put in Hillary. Not since Princess Diana kicked the bucket can I remember such a strange, misplaced belief in one woman, and such a weird, post-modern response to someone's demise (and Clinton isn't even dead! She just lost!).
It's all incredibly revealing. What it points to is a mainstream, Democratic left that is so bereft of ideas and so disconnected from everyday people that it ends up pursuing an utterly substance-free politics of emotion and feeling and doesn't even realize it's doing it. They are good, everyone else is bad; they are light itself, everyone else is darkness; and so no self-awareness can exist and no self-criticism can be entertained. Not for even one second, in Heffernan's words. The Cult of Hillary Clinton is the clearest manifestation yet of the 21st-century problem of life in the political echo chamber.
Mercifully, some mea culpas are now emerging. Some, though not enough, realize that Hillaryites behaved rashly and with unreason. In a brilliant piece titled "The unbearable smugness of the liberal media," Will Rahn recounts how the media allowed itself to become the earthly instrument of Clinton's cause, obsessed with finding out how to make Middle Americans "stop worshiping their false god and accept our gospel."
Indeed. And the failure to make the gospel of Hillary into the actual book of America points to the one good thing about Trump's victory: a willingness among ordinary people to blaspheme against saints, to reject phony saviors, and to sniff at the new secular religion of hollow progressiveness. The liberal political and media establishment offered the little people a supposedly flawless, Francis-like figure of uncommon goodness, and the little people called bullshit on it. That is epic and beautiful, even if nothing else in recent weeks has been.
- After Trump Win, Ad Agencies Admit They're Clueless On How To Market To Midwest Consumers
Donald Trump’s election taught politicians several valuable lessons, including, but certainly not limited to, the following:
- More spending doesn’t necessarily equate to victory
- You can speak your mind without alienating voters…actually, a lot of voters kind of like/respect it
- The American electorate is smart enough to see through blatant pandering based on race, gender, etc.
- Rural populations in “flyover states” are absolutely fed up with the ruling elites of the establishment
But politicians aren’t the only ones learning valuable lessons from Trump’s stunning victory as advertising agencies have also been forced to admit that they have no idea how to market to the Midwest. As the CEO of McCann Worldgroup pointed out the Wall Street Journal, Trump’s victory highlighted the error of gearing marketing programs exclusively “toward metro elite imagery” saying that future efforts need to incorporate a bit more “Des Moines and Scranton” and a little less NYC and Los Angeles.
In the wake of Donald Trump’s election as U.S. president with a wave of support from middle American voters, advertisers are reflecting on whether they are out of touch with the same people—rural, economically frustrated, elite-distrusting, anti-globalization voters—who propelled the businessman into the White House. Mr. Trump’s rise has them rethinking the way they collect data about consumers, recruit staff and pitch products.
“Every so often you have to reset what is the aspirational goal the public has with regard to the products we sell,” said Harris Diamond, McCann’s CEO. “So many marketing programs are oriented toward metro elite imagery.” Marketing needs to reflect less of New York and Los Angeles culture, he said, and more of “Des Moines and Scranton.”
Like the large hedge funds and investment banks of wall street, most the people employed by the large, successful ad agencies happen to reside in NYC and Los Angeles. And, while those offices are well staffed to target consumers in the large metropolitan cities of the U.S. , they are uniquely unqualified to speak to the hearts and minds of people living in the “flyover” states that they loathe to visit. As one advertising CEO points out, a diversity hire “can be a farm girl from Indiana as much as a Cuban immigrant who lives in Pensacola.”
Some marketers, concerned that data isn’t telling them everything they need to know, are considering increasing their use of personal interviews in research. Meanwhile, some ad agencies are looking to hire more people from rural areas as they rethink the popular use of aspirational messaging showcasing a ritzy life on the two metropolitan coasts. One company is also weighing whether to open more local offices around the world, where the people who create ads are closer to the people who see them.
“This election is a seminal moment for marketers to step back and understand what is in people’s heads and what actually drives consumer choice,” said Joe Tripodi, chief marketing officer of the Subway sandwich chain.
Even as many ad agencies try to improve their gender and racial diversity, industry executives say they also need to ensure their U.S. employees come from varied socioeconomic and geographic backgrounds.
A diversity hire “can be a farm girl from Indiana as much as a Cuban immigrant who lives in Pensacola,” said John Boiler, chief executive of the agency 72andSunny, whose clients include General Mills Inc. and Coors Light. The agency plans to expand its university recruitment programs to include rural areas.
Like the pollsters who completely missed Trump’s victory, advertising agencies admit that their customers will likely reduce spending over the next several months as everyone “re-calibrates” their models to reflect the fact that not everyone lives in NYC, San Francisco and Los Angeles.
Advertising executives also said the surprising outcome to the election would likely hamper advertising spending next year, as marketers try to figure out what implications the new administration’s decisions will have on businesses.
WPP’s GroupM, the largest ad buying firm in the world, had been anticipating U.S. ad spending would grow 3% to $183.9 billion next year. Kelly Clark, global CEO of GroupM, now said he anticipates ad spending growth in the U.S. will likely decline a few percentage points over the next six months. “We do believe that investment decisions will be delayed,” said Mr. Clark.
If agencies internalize the societal changes the election reflected, the content or tone of advertising could change, some ad executives predicted.
“The election will have spooked the liberal elite away from high concept, ‘make the world a better place’” advertising to “a more down-to-earth ‘tell me what you will do for me’ approach” said Robert Senior, worldwide chief executive of Saatchi & Saatchi, a creative firm owned by Publicis Groupe.
Isn’t it just glorious to see the Ivy League-educated, coastal elites admit that they know absolutely nothing about roughly 50% of the people residing in their own country?
- Japanese Troops Deploy To South Sudan Risking First Overseas Conflict Since World War II"
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
The re-miliarization of Japan has been on my radar and caused me much concern in recent years. I’ve covered the topic on several occasions, with the most recent example published over the summer in the post, Japanese Government Shifts Further Toward Authoritarianism and Militarism. Here are the first few paragraphs:
One of the most discomforting aspects of Neil Howe and William Strauss’ seminal work on generational cycles, The Fourth Turning (1997), is the fact that as far as American history is concerned, they all climax and end with massive wars.
To be more specific, the first “fourth turning” in American history culminated with the Revolutionary War (1775-1783), the second culminated with the Civil War (1861-1865), while the third ended with the bloodiest war in world history, World War II (1939-1945). The number of years between the end of the Revolutionary War and the start of the Civil War was 78 years, and the number of years between the end of the Civil War and the start of World War II was 74 years (76 years if you use America’s entry into the war as your starting date). Therefore, if Howe & Strauss’ theory holds any water, and I think it does, we’re due for a major conflict somewhere around 75 years from the end of World War II. That brings us to 2020.
The more I look around, the more signs appear everywhere that the world is headed into another major conflict. From an unnecessary resurgence of a Cold War with Russia, to increased tensions in the South China Sea and complete chaos and destruction in the Middle East, the world is a gigantic tinderbox. All it will take to transform these already existing conflict zones into a major conflagration is another severe global economic downturn, something I fully expect to happen within the next 1-2 years. Frighteningly, this puts on a perfect collision course with the 2020 area.
Although I felt World War 3 was a virtual lock under Hillary Clinton, the election of Trump does not negate historical cycles or current geopolitical trends, and the world continues to move in a very dangerous direction.
While the below snippet from a Reuters article published today may not seem like a big deal, it’s just a small part of a much larger trend.
Via Reuters:
A contingent of Japanese troops landed in South Sudan on Monday, an official said – a mission that critics say could see them embroiled in their country’s first overseas fighting since World War Two.
The soldiers will join U.N. peacekeepers and help build infrastructure in the landlocked and impoverished country torn apart by years of civil war.
But, under new powers granted by their government last year, they will be allowed to respond to urgent calls for help from U.N. staff and aid workers. There are also plans to let them guard U.N. bases, which have been attacked during the fighting.
The deployment of 350 soldiers is in line with Japanese security legislation to expand the military’s role overseas. Critics in Japan have said the move risks pulling the troops into conflict for the first time in more than seven decades.
All it would take is a sharp global economic downturn to push world “leaders” towards overseas conflict in order to distract from problems at home. The risk is very real.
* * *
For prior articles on the trend toward militarization in Japan, see:
Unusually Massive Protests Erupt in Japan Against Forthcoming “War Legislation”
Video of the Day – Brawl Breaks Out in Japanese Parliament Over “War Bill”
How Japan’s “Stealth Constitution” Destroys Civil Rights and Sets the Stage for Dictatorship
- Generational Wealth Transfers Create 1,700 New Millionaires A Day As Middle Class Continues To Suffer
Trump won the 2016 presidential election, in large part, due to the support of the working class population in the Midwest that has suffered for decades as manufacturing wages have stagnated and jobs have been transplanted to lower cost regions like Mexico and China. On election night, Trump vowed to change the fate of the American middle class by pledging that “the forgotten men and women of our country will be forgotten no longer.”
That said, with a significant amount of America’s wealth held by a tiny fraction of households and a widening income gap, it’s unclear what, if anything, Trump can do to reverse the collapse of America’s once thriving middle class. As the St. Louis Fed points out, the median family in the U.S. today has accumulated roughly 30% less wealth than their counterparts in 1989 which has been a consistent trend now for decades.
The median family today is significantly poorer at any given age than their counterparts would have been 25 years earlier, according to the St. Louis Fed. For example, people born in 1970 have had about 40 percent less wealth at any given age, compared with people born in 1940. The median middle-aged family in 2013 had 31 percent less wealth than its counterpart in 1989, while the median young family had 28 percent less wealth than its 1989 counterpart. Meanwhile, the median wealth gap between young and old families has widened.
As Bloomberg points out, just 8mm households, or roughly 6% of the 125mm total households in the U.S., control a substantial portion of the country’s overall financial wealth.
And, with middle class incomes stagnating, the wealth gap is only expected to grow wider over time.
Meanwhile, more than 50% of the people with $25mm or more in financial wealth cite “inheritance” as the source of their “success.”
Others were just born lucky, as in: They inherited their cash. More than half of U.S. investors with over $25 million said inheritance was a factor in their wealth, according to a new survey by Spectrem Group, a consulting firm that specializes in polling the rich. Among these people, a whopping 73 percent of those aged 50 or younger said inheritance was a factor.
George Walper, Spectrem’s president, said there’s been an uptick in the last few years in the number of respondents who cite inheritance as a factor in their wealth. To be fair, the very wealthy people surveyed by Spectrem also cite hard work, education, and smart investing as playing a role in their riches.
But it’s become harder to build a fortune on hard work alone. Americans in their late seventies, eighties, and nineties began their careers in the midst of the U.S.’s postwar boom. More recent generations haven’t had the same economic tailwinds.
All of which leads to the inevitable conclusion that the growing pool of “old money” in the U.S. and stagnating incomes has resulted in a fairly grim outlook for millennials.
With the “old money” families taking an increasing portion of the overall American wealth pie while the overwhelming majority of American’s live month-to-month with no potential to save, it is no wonder that the American electorate has grown more divided over time. Certainly, the democratic party has used the income divide over the years to rally their base of support. But, with an economy that is dependent on consumers levering and spending every single dollar they make and a central bank that has removed every possible incentive to save, we suspect the income gap won’t narrow anytime in the near future.
- Canadian Bank Starts Charging Negative 0.75% Rate On Most Foreign Cash Balances
Despite speculation over the past year that Canada may join Japan and Europe in the NIRP club and launch negative interest rates, so far the BOC has stood its ground. However, starting on December 22, for the broker dealer clients of one of Canada’s most reputable financial institutions, BMO Nesbitt Burns, it will be as if the Canadian bank has cut its deposit rate on most currencies, to match the deposit rate of Switzerland.
In an internal letter sent today from management, the bank explains that its current policy with respect to cash balances of foreign currencies held in client accounts – excluding U.S. dollars – has been that it “does not pay or charge clients interest on these balances.” As a result, the bank writes, clients have traditionally tended not to hold non-U.S. dollar foreign currencies in a BMO Nesbitt Burns account for any extended period. However, the notice continues, “given the current global interest rate environment, which has extended much longer than anticipated, we have seen an increase in foreign currency cash reserves across accounts; indicating clients are, in fact, moving these funds into their BMO Nesbitt Burns account in order to avoid negative interest charges on cash holdings in other accounts they maintain.”
Welcome to the age of connected monetary vessels, where globally fungible money allows savers to bypass their own domestic “financial repression” and negative interest rates, by shifting their funds to offshore bank accounts. Or at least it did for clients using BMO Nesbitt Burns as a custodian of offshore money. Because as the bank adds, it has become necessary for the bank to update its current policy and selectively implement negative rates to avoid precisely this global interconnection. To wit:
Effective December 22, 2016, we will begin charging clients a market-rate negative interest charge of 75 basis points on cash balances of all foreign currencies held in their account(s), excluding U.S. dollars. Interest is calculated on the average daily balance during the interest period. The first negative interest charge will cover the period of December 22, 2016 to January 21, 2017, and will be charged to all applicable client accounts on January 23, 2017.
How long will BMO continue this unprecedented financial repression of its foreign clients? Simple: as long as NIRP in other nations forces funds to be parked in banks like the Bank of Montreal.
This rate will be regularly reviewed to ensure it remains competitive and will continue until to be charged until such time as foreign interest rate policies negate the need to apply this charge to client accounts. Please note that negative monthly interest charges below $5.00 will not be charged to client accounts.
What happens then? Well, if BMO depositors (of whom we wonder just what percentage are Chinese) take their money to another Canadian bank, that bank will promptly follow suit and implement a similar “negative rate” provision for foreign clients, until eventually every single bank, and not just in Canada, has a bifurcated deposit rate policy: one for account held in Canadian and US Dollars, and another for all other currencies, which will demand an annual fee of 0.75% for the privilege of holding their funds.
What is BMO Nesbitt Burns’ advice to advisors with clients that have any foreign, non-U.S. dollar foreign currencies on deposit? They are encouraged to contact these clients and advise them that they may wish to consider purchasing an alternative short-term investment denominated in the foreign currency, or another available product, as otherwise there is no evading the -0.75% fee.
- Venezuela's State-Owned Oil Company Misses Bond Coupon Payments Due To "Glitch", Bonds Tumble
Just a month after dodging a default bullet thanks to a last-minute bond swap, Venezuela’s state-owned oil company PDVSA missed coupon payments due on its bonds, according to JPMorgan. However, PDVSA president Del Pino raged on Twitter that “the information about a PDVSA default spread by the enemies of the fatherland is totally false,” but the bonds saw prices tumble despite his statement.
PDVSA in October swapped $2.8 billion in bonds due in 2017 for new bonds maturing in 2020... but that bounce is now dead…
As Bloomberg reports, PDVSA has activated a 30-day grace period after not meeting the full coupon payments on its 2021, 2024 and 2035 bonds that were due last week. About $400 million was due on those bonds, while PDVSA did pay $135 million due on its 2026 debt last week, JPMorgan’s Javier Zorrilla writes, citing information from the paying agent on the bonds.
“We still believe PDVSA will make these payments during the grace period,” Zorrilla wrote in the report.
“However, this highlights the cash difficulties and mismanagement of PDVSA with regards to its liabilities.”
But, as Reuters reports, PDVSA, in a statement, said it had paid “punctually” its obligations due this month for 2021, 2024 and 2026 papers, and was also “in the process of executing” interest payments for the 2035 bond.
“In this way, PDVSA honors its commitment … ratifying the financial solidity of Venezuelans’ main industry,” it said.
Prior to PDVSA’s response, Reuters reports that Torino Capital had said the reported delay appeared to be “a technical mistake” rather than an indication of default.
It noted that payments were being made “through accounts not conventionally used for these purposes” and that some PDVSA management changes had occurred, both of which could have contributed to a delay.
“Our tentative conclusion is thus that the delay in payments likely reflects administrative and technical issues of the type that the 30-day grace period is designed to handle,” wrote its chief economist Francisco Rodriguez in a note to clients.
“We do not believe it reflects a change in authorities’ willingness to service its international obligations.”
Venezuela bonds trade at distressed levels as a result of investor concern that a steep recession and spiraling inflation will leave it without resources to meet heavy commitments.
The country’s sovereign bonds on average pay 26 percentage points more than comparable U.S. Treasury Notes, according to JPMorgan’s Global Diversified Emerging Markets Bond Index.
But there is always a dip-buyer ready to scoop up collapsing bonds…
“I hope it gets cheaper so I can buy more,” said Diego Ferro, co-chief investment officer of Greylock Capital Management LLC in New York. “It’s a non-event most likely.”
Well the 2037s jut got a lot cheaper Mr. Ferro…
And all this on the day when the Bolivar crashed through 2000/$ on the black market for the first time…
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