Aug 25

Today’s News 25th August 2017

  • Macron Spent $30,000 On Makeup In Three Months

    One year ago, when he was still president, Francois Hollande scandalized the establishment when it emerged that amid record unemployment, painful labor reforms, a sliding economy and the most serious social unrest in decades, the French president’s personal hairdressed was getting paid a gross salary by the state of ~$11,000 per month (more than a European parliament member). As the media reported at the time, “the hairdresser, who the leaked contract names only as Oliver B, is set to earn half a million pounds over the course of Hollande’s current premiership, in exchange for being available at every waking moment and signing a contract promising not to speak about his position.”

    The fact that this was probably not the best way to spend French taxpayers’ money was confirmed this past summer, when Hollande’s approval rating was so low, the socialist president did not even run for re-election: a first in French history. Sadly, this was lost on Hollande’s former Minister of Economy – and current president – Emmanuel Macron who failed to learn from the mistakes of his former boss.

    According to French magazine Le Point, French President Emmanuel Macron spent €26,000 – over $30,000 – on makeup in his first three months as leader of the country.

    As Politico adds, “Macron’s personal makeup artist put in two claims for payment, one for €10,000 and another for €16,000, for doing his makeup during his travels and ahead of press conferences.”

    When asked about this abuse of taxpayer funds, The Elysee Palace said in response: “We called in a contractor as a matter of urgency.” Still, aides said that spending on makeup would be “significantly reduced” in future, Le Point reported.

    It gets better: according to the report, the amount spent was less than under Macron’s predecessors. Francois Hollande, for example, was said to spend €30,000 per quarter on makeup, including the salary of a makeup artist.  Which means that in addition to his hairdresser who ran just under €10,000, the former French president spent over quarter million dollars in taxpayer funds every year to look good. One almost wonders why he left the French political scene with an approval rating in the single digits. As for Hollande’s arguably even more vain predecessor, Nicolas Sarkozy spent slightly less on his makeup then Macron: €8,000 a month.

    The news comes as Macron’s popularity is plunging according to a new Harris Poll. Only 37% of voters approve of the job Macron is doing, down from a high of 57% after his election in May. Today’s incident will not help his popularity.

    Macron’s popularity collapse means that his fall from grace was even faster than that of Trump, although oddly enough, one will not read much, if anything, about that particular collapse in the objective and unbiased western press. It could be a problem for France, however, during the next election when that one third of eligible voters who did not vote for either Macron or le Pen, finally decide to vote against the establishment cadidate.

  • Trump's New Strategy For Afghanistan Is Neither New, Nor A Strategy, Nor Trump's

    Authored by James George Jatras via The Stratgic Culture Foundation,

    For some time it has been clear that the White House of President Donald Trump was convulsed with a struggle among various court factions vying for the Emperor’s ear. Crudely oversimplified, these are variously described as:

    1. The military «Junta» (Generals McMaster, National Security Council; Mattis, Pentagon; and Kelly, White House Chief of Staff;


    2. The Goldman-Sachs «Globalists» (preeminently First Daughter Ivanka and First Son-in-Law Jared Kushner);


    3. The «Populist-Nationalists» the two Steves» Bannon and Miller); and


    4. The Regular Republicans who, to their credit, in 2016 chose to join the Trump populist movement over more conventionally «conservative» GOP candidates (Former Chief of Staff Reince Priebus, Counselor to the President Kellyanne Conway).

    It is understood that the first two factions were generally allied against the second two. Following Priebus’s ouster, the bellwether would be who got tossed out next: Bannon or McMaster. It was Bannon.

    On August 18, with Bannon’s defenestration, it became clear that the Junta and the Globalists were firmly in charge. The only outliers left – besides somebody named Trump – are Conway and Miller. We’ll see how long they last. Any of them.

    The immediate impact of the Junta/Globalist victory in the internal struggle was renewed sharp rhetoric against North Korea (Bannon’s suggestion the there was no acceptable military option may have been one proximate cause of his ejection) and, even more so, Trump’s speech on Afghanistan on August 21 in front of a military audience.

    Before addressing the specifics, it’s important to note that his remarks not only signaled a humiliating defeat of Trumpism within Trump’s own administration but reflected the damage done by the vicious attacks he has suffered for speaking the truth about events in Charlottesville.

    His offense: to affirm that responsibility for violence lay not only with the «white nationalists» but also with the armed Antifa «protesters» bent on attacking them. In fact, to anyone with a fair mind watching the TV coverage, it was clear that the violence overwhelmingly came from the latter, abetted by the evidently deliberate decision of Virginia Governor and likely 2020 Democratic presidential hopeful Terry McAuliffe to withdraw police separation of the two sides and herd the nationalists up against Antifa.

    While not mentioning Charlottesville by name, the entire beginning section of Trump’s Afghanistan speech – his first prime time televised address to the nation as president – stuck to a politically correct script, ritually intoning that «there is no room for prejudice, no place for bigotry, and no tolerance for hate.» (In yet another zigzag, the very next night, at a rally with cheering supporters in Phoenix, Trump read back aloud his previous comments on Charlottesville and denounced Antifa. The media, notably CNN, dissolved in a deranged fit of rage.)

    As to what he now plans for Afghanistan:

    It’s not new, it’s same-old same-old:

    Aside from a few Trumpish rhetorical flourishes, it was a speech that could have been given by President Hillary Clinton or President Jeb Bush. In substance, it was a rehash of the failures of Barack Obama and George W. Bush. Only a few details changed. He will loosen rules of engagement for U.S. forces, which among other things will mean more dead Afghans and more Taliban recruits. He will boost troop numbers but won’t tell the enemy – or the American people – by how many; the number 4,000 has been kicked around, but who knows. Finally, no timetables will «guide our strategy», just «conditions on the ground», but what those conditions need to be for us to finally get out are not described either. Nor is there any clue as to how boosting American numbers to about 13,000 will accomplish what 100,000 couldn’t.


    «We will ask our NATO allies and global partners to support our new strategy with additional troop and funding increases in line with our own», said the President. «We are confident they will.»


    Pure fantasy. On the other hand, Trump completely ignored Afghanistan’s record opium production. Evidently promising to stamp that out would be just too fantastical.

    It’s not a strategy, it’s just a policy:

    One of the problems with being entirely guided by military men is their tendency to focus on their tactical tradecraft. Hopefully that’s something they’re good at. But their knowledge and skill, though vitally important, doesn’t of itself constitute a strategy. Or put another way, professional military men can tell a policymaker how to accomplish what he wants, but they can’t tell him what he wants. The result is a policy composed of various tactics that don’t add up to much of anything except more of what we’ve seen since 2001.


    We will not engage in nation-building, said Trump, or tell Afghans how to live. This could mean no more nagging them over laws mandating the killing of apostates or about women’s rights. («Don’t throw acid in the face of little girls because they attend school. That’s not nice.») We weren’t doing much of that anyway, but now it’s official: Americans are fighting to make Afghanistan safe for Sharia. (Paradoxically, Trump was reportedly convinced that Afghanistan is not doomed to be a Hobbesian abode of savages by McMaster’s showing him a picture of mini-skirted Afghan female students from the 1970s. As Justin Raimondo points out, the good general surely neglected to mention the reason there are no more mini-skirts to be seen is because of our support, with Pakistan and Saudi Arabia, for Osama bin Laden and his ilk. Mission accomplished!)


    On the other hand, is it telling Afghans how to live when Trump promised to root out corruption? (What Americans are calling corruption is what in Afghanistan is usually just called «life.») Indeed, very little was said about what the Afghan government thinks about the «new» plan. But then again, we barely care what Seoul thinks about deploying the THAAD system in South Korea, so why should we ask the opinions of an Afghan government that wouldn’t last a week without American support? One is reminded of the Soviet-era quip that Afghanistan was the most peace-loving country in the world. Why? Because it doesn’t even interfere in its own internal affairs.


    Regionally, Trump vowed to force Pakistan to stop providing safe haven for the Taliban (sure, that will work) and to get India more involved. U.S. Ambassador to the United Nations Nikki Haley said that in addition to «putting the pressure on Pakistan» Washington would «put the pressure on India that they have to be part of the political solution.» Just like we «pressure» North Korea, or «pressure» China on Korea and the South China Sea, and «pressure» Russia on Syria, Ukraine, what have you. Pressure, pressure, pressure! Doesn’t anyone in Washington know how to talk with anyone to seek common interests? Why no mention of the three regional powers – Russia, China, and Iran – that like India (but unlike Pakistan) don’t want an Afghanistan ruled by Salafists? Now that could be a strategy.

    It’s not Trump’s policy, it’s the Swamp’s:

    Trump pretty much let the cat out of the bag when he conceded that his first impulse was to get out of Afghanistan. (Interestingly the reflexively pro-war Washington Post and National Review published calls for the U.S. to withdraw our forces, saying Trump’s earlier instinct was right! Be prepared for them to rip out his liver when things turn out badly.) But then Trump talked with the big boys with the short haircuts who explained the facts of life to him. He seems to have bought the Swamp’s line that because Obama «hastily and mistakenly withdrew from Iraq» the result was ISIS. Nonsense. ISIS came into being because (a) we invaded Iraq in the first place and (b) for years Obama armed terrorists seeking to overthrow the government of Syria, continuing a policy in place since the 1980s Afghanistan war against the USSR. Given such assumptions, the most optimistic hope is for a «surge» like that in Iraq in 2007, which at least superficially stabilized Anbar province and Baghdad. Again, very optimistically, that could provide cover for us to withdraw our forces. More likely, given the fear of «hastily and mistakenly» withdrawing Obama-style, we will stay for an indefinite period amounting to a permanent occupation. After all, look how long we’ve been successfully stabilizing Germany, Japan, and South Korea!

    The sad fact is that Trump almost certainly knows all this, at least on a gut level. What exactly the exact political alchemy is that has led him to this juncture is open for speculation. But what is not speculative is the grim fact that whether or not this is Trump’s policy, Afghanistan is now Trump’s war.

  • China Is Building An Army Of Robot Workers

    As wages for Chinese workers’ skyrocket, the country’s manufacturers are scrambling to replace humans with machines, in many cases to preserve thin profit margins that have been choked by debt service.

    But according to a report from Bloomberg Intelligence, China’s embrace of automation – its companies are installing machines faster than in any other country – could have unintended consequences for the global economy, as the robots force wages to sink, inequality to balloon, and consumption to collapse.

    To be sure, the blistering pace of AI adoption hasn’t dented Chinese wages – at least not yet.  

    “Pay gains are intact. Domestic manufacturing workers with a high-school education saw wages rise 53 percent from 2010 to 2014, according to China Household Finance Survey data cited by BI.”

    But as one economist explained, the increasing reliance on automation could thwart the Communist Party’s plan to transition to a service-focused economy.   

    “By turbocharging supply and depressing demand, automation risks exacerbating China’s reliance on export-driven growth – threatening hopes for a more balanced domestic and global economy,” BI economists Tom Orlik and Fielding Chen wrote.”

    However, China’s leaders have embraced a different view. Beijing believes that if it can automate sectors like car manufacturing, electronics, appliances. Logistics and food, its citizens will focus on better service-sector jobs, while also compensating for an anticipated shrinking of the workforce. The Communist Party’s Made In China 2025 plan and a separate five-year plan governing the expansion of its robot workforce were launched last year.

    “Robots are at the core of the government’s sweeping Made in China 2025 plan to upgrade factories to be highly automated and technologically-advanced. Replacing assembly-line workers will also help it to offset a shrinking working-age population.”

    As part of its plan, China is also hoping to produce more of its own robots, crowding out the foreign firms that presently dominate that market.

    “The government also wants to increase the share of Chinese-branded robots in the country’s $11 billion market to more than 50 percent of total sales volume by 2020 from 31 percent last year, and aims to produce 100,000 robots a year by 2020, compared with 33,000 in 2015. That means competition will intensify for foreign firms that supply 67 percent of China’s robots, such as Japan’s Fanuc Corp. and Yaskawa Electric Corp., according to BI.

    While China is quickly catching up to South Korea and other global robotics leaders, the overall population density of robots in China remains below the world average.

    In a viral video published back in April, the People’s Daily provided a glimpse into the rapidly approaching future of China's labor force: The video, also released by the SCMP, shows hundreds of round Hikvision robots, each roughly the size of a seat cushion, swiveling across the floor of the large warehouse in Hangzhou. A worker is seen feeding each robot with a package before the machines carry the parcels away to different areas around the sorting center.

    The robots sort more than 200,000 packages a day.

    And as engineers continue to make progress building robots that are better suited toward working alongside humans, the robots’ numbers will probably continue to skyrocket.

    While the impact on wages has been mild for now, it likely won’t stay that way forever.

  • Paul Craig Roberts Explains How We Know The So-Called "Civil War" Was Not Over Slavery

    Authored by Paul Craig Roberts,

    When I read Professor Thomas DiLorenzo’s article, the question that lept to mind was, “How come the South is said to have fought for slavery when the North wasn’t fighting against slavery?”

    Two days before Lincoln’s inauguration as the 16th President, Congress, consisting only of the Northern states, passed overwhelmingly on March 2, 1861, the Corwin Amendment that gave constitutional protection to slavery. Lincoln endorsed the amendment in his inaugural address, saying “I have no objection to its being made express and irrevocable.”

    Quite clearly, the North was not prepared to go to war in order to end slavery when on the very eve of war the US Congress and incoming president were in the process of making it unconstitutional to abolish slavery.

    Here we have absolute total proof that the North wanted the South kept in the Union far more than the North wanted to abolish slavery.

    If the South’s real concern was maintaining slavery, the South would not have turned down the constitutional protection of slavery offered them on a silver platter by Congress and the President. Clearly, for the South also the issue was not slavery.

    The real issue between North and South could not be reconciled on the basis of accommodating slavery. The real issue was economic as DiLorenzo, Charles Beard and other historians have documented.

    The North offered to preserve slavery irrevocably, but the North did not offer to give up the high tariffs and economic policies that the South saw as inimical to its interests.

    Blaming the war on slavery was the way the northern court historians used morality to cover up Lincoln’s naked aggression and the war crimes of his generals.

    Demonizing the enemy with moral language works for the victor. And it is still ongoing. We see in the destruction of statues the determination to shove remaining symbols of the Confederacy down the Memory Hole.

    Today the ignorant morons, thoroughly brainwashed by Identity Politics, are demanding removal of memorials to Robert E. Lee, an alleged racist toward whom they express violent hatred. This presents a massive paradox. Robert E. Lee was the first person offered command of the Union armies. How can it be that a “Southern racist” was offered command of the Union Army if the Union was going to war to free black slaves?

    Virginia did not secede until April 17, 1861, two days after Lincoln called up troops for the invasion of the South.

    Surely there must be some hook somewhere that the dishonest court historians can use on which to hang an explanation that the war was about slavery. It is not an easy task. Only a small minority of southerners owned slaves. Slaves were brought to the New World by Europeans as a labor force long prior to the existence of the US and the Southern states in order that the abundant land could be exploited. For the South slavery was an inherited institution that pre-dated the South. Diaries and letters of soldiers fighting for the Confederacy and those fighting for the Union provide no evidence that the soldiers were fighting for or against slavery. Princeton historian, Pulitzer Prize winner, Lincoln Prize winner, president of the American Historical Association, and member of the editorial board of Encyclopedia Britannica, James M. McPherson, in his book based on the correspondence of one thousand soldiers from both sides, What They Fought For, 1861-1865, reports that they fought for two different understandings of the Constitution.

    As for the Emancipation Proclamation, on the Union side, military officers were concerned that the Union troops would desert if the Emancipation Proclamation gave them the impression that they were being killed and maimed for the sake of blacks. That is why Lincoln stressed that the proclamation was a “war measure” to provoke an internal slave rebellion that would draw Southern troops off the front lines.

    If we look carefully we can find a phony hook in the South Carolina Declaration of Causes of Secession (December 20, 1860) as long as we ignore the reasoning of the document. Lincoln’s election caused South Carolina to secede. During his campaign for president Lincoln used rhetoric aimed at the abolitionist vote. (Abolitionists did want slavery abolished for moral reasons, though it is sometimes hard to see their morality through their hate, but they never controlled the government.)

    South Carolina saw in Lincoln’s election rhetoric intent to violate the US Constitution, which was a voluntary agreement, and which recognized each state as a free and independent state. After providing a history that supported South Carolina’s position, the document says that to remove all doubt about the sovereignty of states “an amendment was added, which declared that the powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States, respectively, or to the people.”

    South Carolina saw slavery as the issue being used by the North to violate the sovereignty of states and to further centralize power in Washington. The secession document makes the case that the North, which controlled the US government, had broken the compact on which the Union rested and, therefore, had made the Union null and void. For example, South Carolina pointed to Article 4 of the US Constitution, which reads: “No person held to service or labor in one State, under the laws thereof, escaping into another, shall, in consequence of any law or regulation therein, be discharged from such service or labor, but shall be delivered up, on claim of the party to whom such service or labor may be due.” Northern states had passed laws that nullified federal laws that upheld this article of the compact. Thus, the northern states had deliberately broken the compact on which the union was formed.

    The obvious implication was that every aspect of states’ rights protected by the 10th Amendment could now be violated. And as time passed they were, so South Carolina’s reading of the situation was correct.

    The secession document reads as a defense of the powers of states and not as a defense of slavery. Here is the document:

    Read it and see what you decide.

    A court historian, who is determined to focus attention away from the North’s destruction of the US Constitution and the war crimes that accompanied the Constitution’s destruction, will seize on South Carolina’s use of slavery as the example of the issue the North used to subvert the Constitution. The court historian’s reasoning is that as South Carolina makes a to-do about slavery, slavery must have been the cause of the war.

    As South Carolina was the first to secede, its secession document probably was the model for other states. If so, this is the avenue by which court historians, that is, those who replace real history with fake history, turn the war into a war over slavery.

    Once people become brainwashed, especially if it is by propaganda that serves power, they are more or less lost forever. It is extremely difficult to bring them to truth. Just look at the pain and suffering inflicted on historian David Irving for documenting the truth about the war crimes committed by the allies against the Germans. There is no doubt that he is correct, but the truth is unacceptable.

    The same is the case with the War of Northern Aggression. Lies masquerading as history have been institutionalized for 150 years. An institutionalized lie is highly resistant to truth.

    Education has so deteriorated in the US that many people can no longer tell the difference between an explanation and an excuse or justification. In the US denunciation of an orchestrated hate object is a safer path for a writer than explanation. Truth is the casualty.

    That truth is so rare everywhere in the Western World is why the West is doomed. The United States, for example, has an entire population that is completely ignorant of its own history.

    As George Orwell said, the best way to destroy a people is to destroy their history.

  • Inside The "Wildest Commodity Trade" Ever… Just Don't Blink

    Besides the hilariously fabricated economic data and the whole central planning bit – both of which are now everywhere these days – the one most notable feature about China’s economy and capital markets are the constantly rolling, bursting and resurrecting asset bubbles: from housing, to stocks, to bonds, to commodities, to cryptocurrencies, to pretty much anything that isn’t nailed down and can be traded, and back to housing again, the lifecycle of a Chinese assets is best expressed in terms of its “tulipness”: how long before the swarming horde of Chinese bubble-chasers, armed with over $35 trillion in closed-capital account credit, latches on, bids it to the stratosphere, then sends it crashing only to repeat the cycle from scratch. And since these bubbles come ever faster and ever more furious, one has to be lightning fast to get in (and out) before it’s all over.

    One such place where “if you blink, you missed it” is China’s Zhengzhou Commodity Exchange, the location of what Bloomberg has called China’s “wildest commodity trade” du jour: the buying, and selling, but mostly buying (for now) of ferrosilicon contracts. Trading in futures of the little known commodity – an alloy used to harden steel – exploded this week, as humans became veritable HFT vacuum tubes, with the average contract on Wednesday held for an estimated 39 minutes, according to Bloomberg calculations, as “investors” scrambled to buy just so they could immediately flip it to another greater fool.

    And as the chart below shows, a whole lot of greater fools suddenly emerged at the start of the month.

    Incidentally, the tenure of oil contracts on the NYMEX is an ancient 47 hours.

    As Bloomberg’s Alfred Cang reports, “Ferrosilicon is just the latest commodity contract pounced on by China’s hordes of speculators with an intensity that makes the world’s most liquid markets look leisurely. In repeated bouts of manic trading over the past year, they’ve piled in and out of everything from cotton to zinc, eventually prompting regulators to step in and calm the frenzy.”

    Of course, the second regulators “step in” to  burst one bubble, the same hordes of speculators immediately shift to another, similar asset, which then becomes the next bubble du jour, and in recent days the choice has been a “hot potato” between the alloy, rebar, iron ore, siliconmanganese, and various other commodities, all of which are traded not with the intention of actually holding on to the asset, but selling it as soon as possible at a higher price, before the whole house of cards comes crashing down.

    “There are large volumes of short-term investment in steel and related products such as rebar, iron ore and ferroalloy futures with investors trading momentum and sentiment,” Wei Lai, an analyst at COFCO Futures in Shanghai, said by phone.

    For regular followers of China’s “investing” habits, none of the above should come as a surprise. What is surprising, is that this particular bubble hasn’t burst just yet: trading in ferrosilicon peaked on Wednesday with more than 705,000 contracts changing hands. Prices surged to a record $7,726 yuan a metric ton the previous day, up 25% this month (a move which in all honesty is tame when compared what ethereum and bitcoin have done this year).

    What is also surprising, is the viciousness with which the bubble hunters swarmed this particular asset: until August, it was one of the quieter contracts on the exchange, with 22,000 contracts trading daily on average in July. Then China’s trading hordes arrived…

    A spokeswoman for the exchange declined to comment to Bloomberg on the market movements: after all what can they possible say – “we keep getting overrun by an army of momo housewives”?

    Overall, trading in steel and iron ore is the heaviest on China’s three commodity bourses, with volumes that dwarf contracts such as ferrosilicon. An average 7.9 million steel reinforcement bar futures traded on the Shanghai Commodity Exchange in July. Earlier this month, the bourse hiked fees and margins to calm trade in rebar after prices ran up to the highest in four years on speculation that China’s supply-side reforms are creating a shortage, and to cool the latest bubble mania. It failed.

    For those curious how to calculate this particular metric, which for lack of a better phrase, we dub “bubble momentum” and bloomberg calls “commodity churnover”, here is the answer:

    Analysis of aggregate open interest, volumes and trading hours illustrates the extraordinary pace at which Chinese investors are trading commodities futures.


    Dividing the average aggregate open interest at the end of each day by the aggregate volume shows the number of futures traded for every outstanding contract. Multiply that ratio by the number of hours in each trading day and you get an estimate for the average tenure of each contract. While Wednesday’s ferrosilicon contracts were held for less than an hour, the average for the month is 3.6 hours. Futures in Siliconmanganese, another alloy used in steel production, change hands at the fastest pace, with an average tenure in August of 2.7 hours. Iron ore is about 3.8 hours on average and rebar is 4.3 hours.

    The best thing about China’s bubble factory: once the locals tire of high-frequency trading ferrosilicon, or whatever is the high speed bubble du jour, they can just move on to the next one and do it all over again.

  • UVa Students Demand Racial Quotas, "Mandatory Education" On "Jefferson's White Supremacy"

    Authored by Sandor Farkas via Campus Reform,

    A statue of Thomas Jefferson on the University of Virginia's campus has become a focal point for controversy.

    Student groups at the University of Virginia have issued a list of demands that includes racial quotas and mandatory “education” about Thomas Jefferson’s connection to white supremacy.

    The Minority Rights Coalition (MRC) at UVA, a coalition of minority student groups, hosted the “March to Reclaim Our Grounds” on August 21 to “send a message to the university that we demand more from them [sic] in these times.”

    Taking that vow literally, the MRC members delivered a ten-point list of demands during the rally articulating the steps they believe UVA must take to “reclaim” the campus after it was overrun by white supremacists.

    The list begins with a demand that UVA “remove the Confederate plaques on the Rotunda,” referring to a building that stands at the center of Thomas Jefferson’s historic Academical Village. The plaques, which were erected “in memory of the students and alumni of the university who lost their lives in the military service of the Confederacy,” stand beside a series of other plaques honoring UVA alumni who perished in other armed conflicts.

    Another item on the list, conversely, asserts that the statue of Jefferson on UVA’s campus “serves as an emblem of white supremacy, and should be re-contextualized with a plaque to include that history” before going on to insist that “more buildings named after prominent white supremacists, eugenicists, or slaveholders should be renamed after people of marginalized groups.”

    In light of the recent Charlottesville riots, the students also state that “white supremacist groups, particularly UVA alumni Jason Kessler and Richard Spencer, should be explicitly denounced and banned from campus.”

    Just to be certain, though, they also ask that UVA declare its main lawn a “residential space” where concealed firearms and open flames would be prohibited.

    Campus Reform inquired with the university as to whether such a designation would allow temporary or permanent structures to be erected on the lawn, but did not receive a response by press time.

    In addition, the MRC ultimatum asserts that “all students, regardless of area of study, should have required education on white supremacy, colonization, and slavery as they directly relate to Thomas Jefferson, the University, and the city of Charlottesville,” complaining that the existing curriculum only mandates such classes for students in the College of Arts and Sciences, and even then allows them “to focus in on aspects of difference of their choice.”

    Two other items on the list demand explicit racial quotas for both the faculty and the student body, saying that the composition of each group should reflect statewide demographics.

    “As of last year, the percentage of undergraduate African American students…was 6.4%,” the students point out, saying UVA “must take action to ensure that as a public university, this number is reflective of state demographics at a 12% proportion.”

    Similarly, they argue that the “proportion of faculty for an underrepresented group should strive to match the proportion of the student population of that group at minimum,” deeming it “unacceptable” that only three percent of the faculty was African American in 2016.

    The students also want UVA to acknowledge a $1,000 gift that the school received from the KKK in 1921, saying it should highlight this “racist history” as part of the school’s Bicentennial celebrations, as well as “re-invest this amount, adjusted for inflation, into existing UVA and Charlottesville multicultural organizations.”

    The $1,000 gift, adjusted for inflation, would amount to approximately $13,000 today.

    Finally, the list concludes by asking the university to “issue a strategic and actionable diversity plan, with input sourced from minority student leadership,” which “should include a special emphasis on improving diversity and inclusion for faculty, staff, and students of color, as well as relations with the Charlottesville community.”

  • Senate Declares War On Assange

    An angry Julian Assange slammed efforts to officially classify his whistleblowing organization as a “non-state hostile intelligence service“, decrying it as an attempt to put the “Pompeo Doctrine” into law. In its annual “intelligence authorization”, the Senate Intelligence Committee proposed to effectively declare WikiLeaks a terrorist media organization.

    “It is the sense of Congress that WikiLeaks and the senior leadership of WikiLeaks resemble a non-state hostile intelligence service often abetted by state actors and should be treated as such a service by the United States,” the bill states. Published on Friday, the Senate committee passed the bill late last month on a 14-1 vote, with only Democrat Ron Wyden of Oregon voting against the measure, citing “legal, constitutional and policy implications” that the WikiLeaks provision may entail.


    In response, Assange tweeted a statement slamming the “absurd” decision to brand a media organizations in such a way.

    “It is equivalent to suggesting that the CIA is a media organization. Publishers publish what they obtain. Intelligence agencies do not.”


    Realizing the gravity of the situation of becoming a persona non grata to the US government (and CIA), Assange then siad that “it is an interesting thought experiment to consider where other media outlets lay on this spectrum. It is clear that if the ‘Pompeo doctrine’ applies to WikiLeaks then it applies equally if not more so to other serious outlets.”

    Assange became one of the most visible targets of the liberal media and Democrats, following the DNC hacking (which led to Debbis Wasserman Schultz’ resgination after it emerged that the DNC had rigged the primaries against Bernie Sanders), and the leak of John Podesta’s emails, which were then sent to WikiLeaks for publication. According to the subsequent narrative, Assange was nothing but a Russian agent, intent on destroying Hillary’s candidacy and making Trump president. Which is ironic because after praising Assange during his campaign, Trump has since abandoned the controversial Australian to his fate.

    In April, CIA Director Mike Pompeo branded WikiLeaks a “hostile non-state intelligence agency” which should not be afforded the protections of the First Amendment under the constitution.


    Assange made even more friends at Langley in March, when WikiLeaks began publishing a series of leaks titled ‘Vault 7’ which revealed the spy agency’s arsenal of hacking tools. Putin has yet to be blamed for hacking the CIA.

  • What Financial Conditions Tell Us (Two Charts & A Prediction)


    It seems every bank, including central banks, publishes a financial conditions index these days. And because financial conditions typically lead the economy, it makes sense to track them. In fact, they might contain even more information than they get credit for. They might offer the elusive “crystal ball” that foretells our economic fortunes.

    Sound far-fetched? Spend a few minutes with this week’s pictures and talk, and you’ll be well equipped to judge for yourself. We start with seven of our favorite indicators, shown in the table below:

    financial conditions aug 2017 table

    With one exception, all of the indicators measure a separate piece of the economy’s financial side. We add business earnings (the exception) because they interact closely with financial conditions. When earnings are healthy, stock prices and business credit conditions are usually healthy, too, whereas weak earnings usually weigh on stocks and credit.

    Instead of melding the indicators into a single index, though, we think it’s more revealing to treat them individually. The chart below shows each indicator in the quarter before and the quarter of the last nine business cycle (BC) peaks, although with less data for lending standards, which the Fed began surveying for the first time in mid-1990.

    fin conditions aug 2017 chart 1

    The chart gives us a dashboard-like screenshot of the circumstances that led us into past recessions:

    • The left side shows either stock or house prices or both declining in real terms at the last nine BC peaks.
    • The middle shows lending standards tightening before each of the last three BC peaks.
    • The right side shows the last nine BC peaks coinciding with either weak earnings growth or an inverted yield curve or both.

    With that history as our background (in charcoal gray), the next chart highlights the most recent data:

    fin conditions aug 2017 chart 2

    The above chart is, in our view, the best way to judge financial conditions—with a strong reminder of how current conditions compare to the conditions that shaped past recessions. As of today, that comparison looks favorable. If a recession was imminent, it would be first time in at least six decades that the economy tipped over with

    • both stock and house prices having outpaced inflation over the previous four quarters,
    • all but the smallest loan category (CRE) standing on the “easier credit” side of zero, and
    • earnings growing strongly (in this instance, rebounding from a recent swoon) while the yield curve remains upwardly sloped.

    Or, another way to look at it is to crisscross all of the indicators with all of the BC peaks, which shows only one instance (house price growth in 2001) of an indicator being clearly more expansionary at a peak than as of right now. Any statistician using only our seven indicators would conclude that further expansion is more likely now than at any of the past peaks.

    And that’s not all. Financial conditions seem even more important than before, thanks to a private-sector balance sheet that over the last six decades has approximately doubled relative to GDP. As assets and liabilities grow bigger relative to GDP, financial volatility should be more impactful. Even mainstream economists—long held back by pathologies in economic theory—may be catching on, although that’s a topic for another day.

    Of course, you may say our second chart has a limited shelf life, and we would agree. Any of our indicators could change over the coming weeks and months. They seem far enough from recession territory, though, to expect continued expansion through the rest of the year.

    The outlook’s main blemish, in our view, is that the poobahs at the Fed would like financial conditions to tighten. The past year’s loosening in conditions – even as the Fed nudged policy rates higher – seems a happy coincidence.

    Eventually, policymakers should get their wish. Financial conditions, like many things in life, don’t remain winsome, warm and welcoming forever. And as the eventual tightening comes into view, we suggest using the “dashboard” charts to weigh the consequences. You might decide that they form the crystal ball that predicts the next BC peak. And that wouldn’t be surprising—in fact, it would make ten consecutive business cycles foretold by changing financial conditions.

  • In Historic Move, Qatar Restores Diplomatic Relations With Iran

    Qatar has remained defiant throughout its unprecedented summer diplomatic crisis with Saudi Arabia and other Gulf Cooperation Council (GCC) states which have brought immense pressure to bear on the tiny gas and oil rich monarchy through a complete economic and diplomatic blockade imposed by its neighbors. However, on Thursday it unveiled a stunning geopolitical realignment when it announced the restoration of diplomatic relations with Iran in a move that is arguably its greatest act of defiance yet. The Qatari foreign ministry announced early Thursday that "the state of Qatar expressed its aspiration to strengthen bilateral relations with the Islamic Republic of Iran in all fields" and reportedly informed Iran by phone of plans to return the Qatari ambassador to Tehran for the first time since it broke relations in 2016.

    The move is significant because the chief accusation leveled against Qatar by its former GCC allies, especially Saudi Arabia, is of growing too close to Iran while sponsoring and funding terrorism. For the Sunni gulf states "funding terrorism" is more often a euphemism meaning links to Iran and Shia movements in the gulf. Ironically, there is ample evidence demonstrating that both sides of the current gulf schism have in truth funded terror groups like al-Qaeda and ISIS, especially in Syria. But Qatar's announcement sends an audacious and daring message essentially signalling that the country remains unbowed by Saudi pressure, and that the severe economic sanctions designed to bring Qatar to its knees may result in a geopolitical backfiring and new regional order as Iran stands to benefit.

    Image source: Iran's Payvand News Service

    On June 5 Saudi Arabia, UAE, Bahrain, and Egypt cut ties with Qatar in a dramatic move that resulted in a near total blockade of the small country which encompassed air, land, and sea. Even commercial airline flight paths were diverted mid-air at the time, causing multiple major regional carriers to cancel future flights to Doha's Hamad International Airport. Aggressive economic sanctions followed, including food blockages – most of which had previously been supplied by land via Saudi Arabia. While energy-rich Qatar has the highest per capita income in the world, its residents have faced a summer of empty supermarkets and long lines to get basic staples. Reports of extreme and creative ways Qataris have attempted to get around the blockade include an ongoing plan to fly thousands of dairy cows on Qatar Airways jets into the country.

    Qatari companies were expelled from Saudi Arabia, as well as individuals from diplomats (who were give 48 hours to leave) to farmers. While stock prices immediately slumped and imports plunged (by 37.9 percent in June compared with May), the government's making up the difference in rising costs through subsidies has made life bearable – and Qatar actually appears to be resilient and weathering the storm. The nation's oil and gas sector, which accounts for more than half of the country's GDP, is what is carrying the country through. Analysts have consistently characterized Qatar's oil and gas as vulnerable yet largely "unaffected" throughout the crisis – this partly because exports to Japan, China, India, and South Korea account for nearly three quarters of its total exports and have remained untouched by the boycott. The UAE, though firmly on the Saudi side of the spat, relies on sourcing 30% of its energy needs from Qatar to keep the lights on, and a major gas pipeline connecting the two countries has kept pumping all summer.

    Fresh financial data out today confirms that Qatar is set to at least in the near term persist through the crisis while avoiding collapse, with some sectors remaining surprisingly strong. No doubt its leaders are keenly aware of this and emboldened in their shots fired across the Saudi bow as they restore diplomatic relations with Iran. Qatar's former adversary across the Persian Gulf has throughout the summer shipped food supplies into the blockaded country, as well as allowed Qatari flights increased use of Iranian airspace in largely symbolic acts aimed at poking the Saudis. But it's Qatar's shared massive natural gas field with Iran – with the South Pars Field owned by Tehran and the North Field owned by Doha – that has been the biggest stabilizing lifeline of the crisis. Though Thursday's figures show that:

    Qatar is still far from restoring its imports to normal. Imports recovered by only 6.3 percent month-on-month to 6.24 billion riyals ($1.71 billion) in July; they were 35.0 percent below their level in July 2016.

    Much of the disruption appears to be to big-ticket items. Imports of aircraft parts were down 40.5 percent from a year ago at 292 million riyals in July. The diplomatic crisis has deprived Qatar Airways of two of its biggest markets, Saudi Arabia and the UAE.

    But as analysts have consistently predicted:

    Thursday's trade figures suggested the sanctions are not affecting Qatar's natural gas exports – July exports of petroleum gases and other gaseous hydrocarbons rose 7.8 percent from a year ago – and are no longer slowing other exports much.

    As a result, Qatar's trade surplus expanded 78.1 percent from a year earlier to 11.91 billion riyals in July, although it edged down 4.8 percent from the previous month.

    And though prices on basic staples continue to rise (for example food and drink prices rose 4.2 percent in July from June), even this may stabilize:

    Analysts think the sanctions damage should ease in coming months as new shipping routes develop. Qatar Navigation launched a direct Qatar-Turkey service this week after starting a container service to Kuwait last week; construction of a food processing and storage facility at Qatar's Hamad Port received $440 million of bank financing this week.

    The so-called "13 demands" presented by the quartet of Arab countries sanctioning Qatar on June 23 have unsurprisingly remained unfulfilled while today's announcement further signals Qatar's willingness to forge alternate permanent ties away from the GCC alliance which has defined much of short history as a young nation-state. The announced willingness to form fresh ties with Iran comes just days after Saudi Arabia began somewhat bizarrely and aggressively promoting an exiled Qatari royal family member and prominent businessman, Sheikh Abdullah Bin Ali Al-Thani, whose family was forced out in 1972. The Saudis would like nothing more than be in a position to hand pick their choice for the Qatari throne and reduce Qatar to a vassal state. 

    From the Saudi and GCC perspective, the list of pre-conditions for lifting the embargo remain in effect, and include (according to India's English news site The Wire):

    • Close down Al Jazeera television network and all its affiliates, plus other Qatar-funded news outlets
    • Close a military base operated by Turkey
    • Expel all citizens of Saudi Arabia, Egypt, UAE and Bahrain currently in Qatar
    • Hand over all individuals wanted by those four countries for terrorism
    • Stop funding any extremist entities that are designated as terrorist groups by the US
    • Provide detailed information about opposition figures Qatar has funded
    • Shut down diplomatic posts in Iran
    • Expel members of Iran’s elite Revolutionary Guard
    • Conduct trade and commerce with Iran only in conformity with US sanctions

    And yet surprisingly it appears Qatar is increasingly in the geopolitical driver's seat, having called the bluff of the more powerful GCC states led by Saudi Arabia and backed by Saudi allies like the US and even Israel. For now it appears tiny Qatar is defying the odds, and its potential to successfully navigate the current economic and diplomatic full frontal assault has huge repercussions for the entire region. As accurately predicted by a comprehensive report by Middle East scholar Mouin Rabbani produced earlier this summer: 

    The big winners so far are Iran, Syria, and their Lebanese ally Hizballah, who cannot but be delighted by the audible cracks in the alliance ranged against Damascus and Tehran and that may well spell the end of the GCC. Iran and Hizballah will additionally hope that Hamas has finally learned the lesson that no ally of the United States can be a true friend of the Palestinians. Turkey has also, yet again, demonstrated that in today’s Middle East it has a role to play in every crisis and that others ignore Ankara’s interests– whether in the Gulf, Syria, or Iraq–at their peril. On the flip side, there are growing noises within Riyadh and Abu Dhabi that the campaign should expand to include Turkey–which has recently been claiming that the UAE is implicated in the 2016 coup attempt against Erdogan.

    Will we all look back on this moment when future historians trace the end of the GCC? Did the Saudis finally overreach in their anti-Iran fanaticism to become the authors of their own demise? The surprising emergent Iran-Qatar alliance is sure to at least be the start of a new regional order where the Saudis can no longer dictate terms no matter how many Western powers stand at their side.

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