Today’s News 26th March 2016

• Was This The Worst Economist Forecast Of All Time

  When it comes to predicting the future, there has traditionally been a stealthy contest between economists and weathermen as to who is the worst predictor of coming events. Lately, there was some confusion when economists – this includes central bankers and market “strategists” –  tired of being humiliated in public for their terrible predictions, decided to become Monday Morning weathermen (ironically, none more so than those who competed with Groundhog Phil and lost) and blame their lack of foresight on the weather.

  This led to even more humiliation for said economisseds (sic) and entertainment for everyone else.

  But there is little confusion about what may have been the worst economic forecast of all time. For the answer go to Japan, and back 30 years in time, just after Japan’s mega asset bubble burst when in their desperation to preserve the myth that “all is well”, economists were “predicting” how little Japan’s growth would be impacted as a result of the burst bubble.

  They were all wrong.

  As HSBC’s Stephen King points out, nowadays, Japan’s “lost decades” are seen to be a blindingly-obvious consequence of the bursting of Japan’s late-1980s stock market and land price bubbles (ahem China). At the time, however, few managed to predict what was apparently so obvious in hindsight.

  Which brings us to what probably is the worst economic forecast of all time: in the mid-1990s, the forecasting consensus had every confidence that nominal Japanese GDP would rise 25% over the next five years. Consensus was wrong: by 2000, nominal GDP was more than 24% lower than had been projected five years earlier.

  

  Did the forecast humiliation end there? Oh no. 

  The gap between forecast and reality got bigger and bigger thereafter. In fact, over 30 years later, Japan’s nominal GDP and GDP per capital now is where it was 30 years ago even as Japan has piled up a total debt load that is now over 400% of GDP.

  

  Finally, as a consequence, bond yields fell further and further, continuously undershooting forecasts.

  

   

  Does this look familiar? If not, recall this chart?

  

  And this:

  

  Comical economists aside, “Japanification” is precisely what is happening to the rest of the “developed world” as global growth continues to deteriorate, global debt grows and the only short-term resolution is to keep rates as low as possible… and now, negative across 28% of the entire world.

  This weekend we will lay out HSBC’s thoughts on what “turning Japanese” means for the rest of the world. Spoiler alert: only bad things.

  In the meantime we ask, when will “economists” be finally laughed off the global stage for the charlatan comedians they all are?

  

  

  

  

• "Satanic Cocktail" Of Nails And Acetone Used In Devilish Brussels Bomb Design

  Nearly four days have passed since four men detonated explosives-laden belts and luggage in the Brussels airport and metro killing nearly two dozen people and injuring hundreds and there’s still quite a bit of ambiguity regarding who exactly is dead, who’s still at large, and who was at the scene in the first place.

  Part of the confusion stems from the fact that the attackers who died in the blasts were strewn all over the crime scene in pieces, but authorities did manage to determine that among those who blew themselves up were brothers Khalid and Ibrahim El-Bakraoui, one of which was the subject of an Interpol red notice and the other was flagged by Turkey as a “foreign fighter” and deported. Also thought to have been killed in the airport bombings: bombmaker Najim Laachraoui, who is said to have played an instrumental role in building the explosives used in the Paris attacks.

  Following the bombings, the taxi driver who delivered Ibrahim Bakraoui, Laachraoui, and a third assailant to the airport called the police. The driver became suspicious when the men were reluctant to let him assist with their luggage which he described as exceptionally heavy. The driver then led police back to the apartment in Schaerbeek (the site of Friday’s sweeping police operation) where he had picked the three men up. On the fifth floor, authorities found 33 lbs of explosives, 180 liters of chemicals, guns, a suitcase full of nails, and an Islamic State flag. Nothing suspicious about that.

  Apparently, the apartment was a bomb making factory and in it, the Bakraouis (possibly with the help of Laachraoui or another bombmaker), built the TATP-based explosives used in Tuesday’s attacks. TATP, or triacetone triperoxide, has become an ISIS favorite and for those unlucky enough to find themselves in close proximity when it’s detonated, it’s bad news. Dubbed “the mother of Satan” by Palestinian militants, the white powder is cheap to make and the ingredients are impossible to trace, making it ideal for the clandestine activities of the Islamic State cells operating under the radar of European anti-terror police.

  “Used in the 2005 London bombings and the Nov. 13 Paris attacks, and found in a series of foiled bomb attempts in Europe since 2007, TATP appears to be Islamic State’s explosive of choice,” Reuters writes. Here’s more:

  Making a TATP bomb, although a more lengthy process than the fertilizer-based explosives used by other European militants, is cheap and simple and recipes and videos by chemistry buffs abound on the Internet. It was discovered by a 19th century German chemist and is very powerful, even in small quantities.

   

  All the ingredients – acetone found in cleaning products, hydrogen peroxide found in wood bleach and sulphuric acid used to unblock kitchen pipes – were available at one Brussels hardware store this week for less than 40 euros ($45).

   

  Nails and bolts can be added to increase the bomb’s impact and afterwards stuffed into bags and taped into suicide belts.

   

  It goes undetected by airport scanners, leaving authorities to rely on sniffer dogs. Though the bombs can have a strong smell — the bombers’ taxi driver said he smelled chemicals on the ride to the airport — there were few such dogs in the Brussels’ airport check-in area on Tuesday when the men detonated the explosives hidden in holdalls on baggage trolleys, according to several witnesses, including an airport worker.

  Ehud Keinan, an Israeli scientist who has spent 35 years studying TATP, said that as little as 4 kg could produce the kind of devastation seen in Brussels.

   

  “It is very easy to make, not like a conventional bomb,” said Keinan, the dean of chemistry at Technion-Israel Institute of Technology in Haifa.

   

  “You don’t need to be part of a large organization or need training to do this.”

   

  Still, one of the three Brussels suspects, Najim Laachraoui, a 25-year-old Belgian who blew himself up in the airport attack and is suspected of making suicide vests for Paris, had studied engineering at university and excelled in lab work.

   

  Within two weeks of the July 2005 London attacks, the British chemical industry and British hardware stores stepped up their reporting of suspicious or large purchases of chemicals.

   

  However, in France, the explosive precursor hydrogen peroxide is sold legally as a way to clean private swimming pool water and no one is considering banning nail varnish remover.

   

  “If you go into any pharmacy in Brussels, you can buy 50 ml of acetone. If you go into a hundred pharmacies, you can get that much more,” said Peter Newport, the chief executive of Britain’s Chemical Business Association, which sits on the European Commission’s expert group on regulating precursors.

  “There are actually very few bombmakers in the grand scheme of things,” Brian Castner, a former Air Force explosive ordnance disposal technician and author of the book “All the Ways We Kill and Die,” tells The Washington Post. “Once one finds a successful way to construct these things, they [can] mass produce.”

  “While there are bomb-building manuals available on the Internet, Castner added that a competent terrorist cell would not rely on them; instead, recruits apprentice with master bombmakers in places such as Syria and Iraq before returning to their home countries,” WaPo continues. “And in Afghanistan and Iraq, the United States has targeted bombmakers.”

  For the scientifically inclined, here’s a detailed description of “mother of Satan” from Tech Insider: 

  One reason TATP is difficult to detect is because it does not contain nitrogen, a key component of homemade “fertilizer” bombs that security scanners are now very good at finding.

   

  Each molecule contains only hydrogen, oxygen, and carbon — some of the most common elements on Earth — shaped in a ring.

   

  The explosive power of TATP has puzzled scientists since its discovery in 1895. Unlike nitrogen-based bomb materials, which store up energy as they’re cooked into explosive form, TATP can be made at room temperature — no flames required.

   

  So where does it get its explosive energy, if not by heating?

   

  
  

   

  It wasn’t until 2005 that Keinan figured out detonating TATP is more like a massive air blast than a fire bomb. When a crystal of the explosive is rattled hard enough, each solid molecule instantly breaks into four gas molecules.

   

  “Although the gas is at room temperature, it has the same density as the solid, and four times as many molecules, so it has 200 times the pressure of the surrounding air,” according to the release about Keinan and his colleagues’ 2005 study of TATP.

   

  “This enormous pressure — one-[and-a-half] tons per square inch — then pushes outward, creating an explosive force” on par with TNT, states the release.

   

  “In a TATP explosion, the gas molecules give up their energy of motion to the surroundings, in the process creating the shock wave that does the damage.”

  So an extremely powerful (if unstable) explosive powder that’s easily synthesized from cheap, readily available, not to mention completely legal ingredients. “There are so many valid uses by the public of these substances,” the aforementioned Peter Newport admits. Right, but there aren’t a lot of uses for 40 gallons of acetone and eight gallons of hydrogen peroxide (the quantities found in the Schaerbeek hideout) and as The New York Times notes, US officials are curious as to “how the terrorists were able to elude detection” while obtaining those quantities of precursors – “especially during a manhunt for Salah Abdeslam.”

  The answer, of course, is that Belgian authorities have proven themselves to be completely incompetent and, as we wrote earlier today, have now simply resorted to arresting people first and asking questions later in an increasingly desperate attempt to get out ahead of the next attack which we imagine was probably planned weeks ago in a Molenbeek apartment amongst empty bottles of nail polish remover, loaded Kalashnikovs, and half-empty pizza boxes. 

  As for the public, we implore you to do your part by following the advice that’s prominently displayed on signs plastered all over New York’s Grand Central Station: “If you see something, say something.” In this context we suppose that means that if you see the guy shown below buying a bottle of nail polish remover (or worse, a can of Nutella), call the police immediately…

  

  

  

  

  

  

• The Slow, Inevitable Collapse Of The Two-Party System

  Submitted by Russell Whitehouse via OrientalReview.org,

  In this election year, it’s clear that a seismic political shift is rumbling through America.  Widespread discontent for the status quo is surfacing from both the left and right.  A year ago, it would have been impossible to envision a card-carrying socialist and a pre-WWII style populist mounting legitimate presidential campaigns (much less without Super PACs).  Now, far-left and far-right sentiments are emerging from the underground as perfectly palatable options to Middle America.  Establishment darlings like Hillary Clinton, Jeb Bush & Marco Rubio have faced extreme pressure from the New Normal in their respective political tents.

  It has become clear that the traditional 2-party system in America is starting to erode.  Sanders’ supporters view Clinton as too untrustworthy & beholden to Big Business.   Meanwhile Trump’s blue-collar base has rejected rank-and-file Republicans as being too unsympathetic to their economic concerns, while his surprising chunk of the evangelical contingent is refuting the Bush-flavored puritanism of Ted Cruz.  Conversely, Clinton’s supporters reject Sander’s bold platform as delusional and Cruz’s base is increasingly being filled by #NeverTrump neocon purists and Romey-ite country club Republicans.

  One can see political parallels across the pond, in the UK’s 2015 Parliamentary elections.  The two main parties in Westminster Palace, Conservative and Labour (roughly equivalent to the GOP and Democrats), were shaken up by two popular insurgencies.  UKIP, the UK Independence Party, rose up from the rising flames of the relatively conservative British heartland’s fears of free trade in the EU and immigration, winning an eighth of the popular vote in England. To the north, SNP, the Scottish National Party, won 95% of Scotland’s seats by inspiring among other things, record youth turnout and social media support (sound familiar?), with a message of social democracy and defiance against the British status quo.

  

  Intra-party schisms are also forming in the two Anglophone democracies.  The Tories are tearing themselves apart over the Brexit, austerity and jockeying to succeed Cameron as Party Leader, while the American neocons are assessing the fallout of Trump’s ascendance while in free fall.  Labour officials are debating whether to follow their insurgent leader Jeremy Corbyn to the far Left after 20 years of Tony Blair’s New Labour movement, which moved the party to the center to win back the support of big business and blue-collar voters.  The New Labour centrist putsch coincided with Bill Clinton (and later Obama’s) similar efforts as the face of the Democrats.   Now, Democratic voters are beginning to second-guess this political realignment, spearheaded by the presumptive Democratic nominee’s husband.  Her opponent Bernie Sanders is siphoning away the youth vote and blue-collar moderates from the Democratic establishment, two of the Party’s traditional constituencies, by railing against neoliberal policies like free trade and social welfare cuts.

  Given the rise of social-democratic populism and nativist-protectionist populism to either flank of American politics, it would make sense to look at the formation of entirely new parties.  Bernie Sanders can form a Stars-and-Pinstripes version of SNP; he too has the momentum of a more secular, progressive generation reaching political maturity as the more religious, conservative Baby Boomers begin to die out.  Assuming Trump completes his takeover of the Grand Old Party at July’s convention, the neocon brain trust can form a new conservative movement; this is already being planned by members of the #NeverTrump triad. Evangelical and free market diehards can unite to mount a serious challenge to Trump’s right by fielding a Texas crusader like Ted Cruz or Rick Perry, or Mormon elder statesman Mitt Romney.

  Regardless of how Trump and Sanders fare in their respective conventions, they could still operate a serious race for the White House.  Both New York loudmouths boast a gigantic wave of rabid new voters, as well as a wellspring of working-class Americans desperate to reverse Wall Street’s increasingly oligarchical dominance, mass layoffs/underemployment, stagnant wages, crumbling infrastructure & the other byproducts of the neoliberal-neoconservative economic policy alliance.  Sanders could march into November as the nominee of the new Democratic Socialist Party, with a trail of young, idealistic future leaders tweeting and live-streaming behind him. 

  Depending on July’s RNC, we could see a Make America Great Again Party (MAGAP, for short) trumpeting Trump’s message of putting power back in the hands of the American working class or a Romney-Cruz True Conservatives Party ticket touting Christian piety and Wall St fiscal policy.

  Get used to Sanders, Clinton, Trump & Cruz.  You may see all 4 of them, come November…

  

  

  

  

  

• Is Trump Starting To Get To Cruz: "I Don't Want To Copulate With Him"

  The GOP presidential nominee campaign just went from the sublime to the utterly ridiculous. In what appeared to a prepared remark, Ted Cruz just explained to holiday-weekend-crowd of reporters that he “has no desire to copulate with Donald Trump.”

  Compare this:
  

  “Let me be clear, Donald Trump may be a rat, but I have no desire to copulate with him.”

  Which oddly seems to imply that Cruz may enjoy the company of rats (just not Donald Trump size ones).

   

  To this:

   

  Simply put, the so-called establishment has absolutely no idea how to cope with The Donald and as “Lyin’ Ted” just illustrated, are out of their class when it comes to fighting the ‘controlled chaos’ that is Trump.

  One can only imagine how Hillary will cope with any of this sheer madness. Actually, one can’t.
  

  

  

  

  

  

• Thanks Obamacare: This Is What Americans Spent Most Money On In 2015

  We have been covering the consumption tax, pardon, endless spending black hole that is Obamacare for over a year, so we doubt it will come as a surprise to anyone that in 2015 healthcare was the second biggest use of US consumer funds, soaking up a record $1.9 trillion in real dollars, and more importantly for US economic “growth”, the single biggest source of incremental spending by nearly a factor of two.

  Incidentally, with spending on healthcare (courtesy of the Supreme Court’s Obamacare tax) soaring, while outlays on the traditionally most consumption-intensive category, housing and utilities, going nowhere for the past several years, it is only a matter of 2-3 quarters before Healthcare surpasses Housing as the biggest use of American cash.

  Putting this in context, a recent report from Freedom Partners Health found that health insurance premiums have increased faster than wages and inflation in recent years, rising an average of 28 percent from 2009 to 2014 despite the enactment of Obamacare, or rather “because of.” Obama signed the Affordable Care Act into law on March 23, 2010, and Wednesday is the law’s sixth anniversary.

  So, without further ado, this is what drove American consumer spending in the officially concluded, for GDP purposes, 2015. We show this just in case there is still any confusion why US households are unable to channel more spending into “discretionary”, non-mandatory purchases unlike Obama’s “health insurance” tax, pardon, noble venture.

  

  

  

  

  

  

• How to Destroy ISIS Propaganda and Wipe Out Its Ability to Recruit

  The Little-Known Secret to Destroying ISIS Propaganda

  I'm not opposed to killing every ISIS member and recruit. After all, they're trying to kill us.

  But Russia and the U.S.-led coalition haven't been able to wipe out ISIS with bombs.

  Why not?

  Military history shows that you usually cannot defeat your enemy unless you understand him at least a little bit.

  For example, the great Chinese military strategist Sun Tzu wrote in the Art of War:

  It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle.

  Part of why we haven't won the battle against ISIS is we don't understand why their recruitment has been so successful.

  Specifically, ISIS pitches itself to ignorant, naive, unemployed, young Muslims as the group which will stop the Christian and Jewish "occupiers" from stealing their lands.

  (That's obviously no excuse for joining a terrorist group. Like I said, I have no problem killing everyone in ISIS.)

  But if the actual truth – that ISIS kills far more Muslims than Christians or Jews – were publicized, ISIS' propaganda and recruiting success would collapse.

  In other words, ISIS ability to recruit fighters and supporters would evaporate, and the group itself would quickly wither.

  “Between 82 and 97% of Terrorism-Related Fatalities” Are MUSLIM

  The U.S. National Counterterrorism Center – the United States government organization responsible for national and international counterterrorism efforts – reported in 2011 (page 14):

  In cases where the religious affiliation of terrorism casualties could be determined, Muslims suffered between 82 and 97% of terrorism-related fatalities over the past five years.

  The State Department commented:

  NCTC [i.e. the National Counterterrorism Center] maintains its statistical information on the U.S. government's authoritative and unclassified database on terrorist acts, the Worldwide Incidents Tracking System (WITS).

   

  ***

   

  Muslims continued to bear the brunt of terrorism ….

  • In cases where the religious affiliation of terrorism casualties could be determined, Muslims suffered between 82 and 97 percent of terrorism-related fatalities over the past five years.
  • Muslim majority countries bore the greatest number of attacks involving 10 or more deaths ….

  According to a 2009 report published by the Counter Terrorism Center at the United States Military Academy at West Point, Al-Qaeda kills over seven times more Muslims than non-Muslims.

  The UN reported last year that Muslims are the largest victims of ISIS in Iraq.

  In 2013, the National Consortium for the Study of Terrorism and Responses to Terrorism's Global Terrorism Database – joint government-university program on terrorism, hosted at the University of Maryland noted that between 2004 and 2013, about half of all terrorist attacks, and 60% of fatalities due to terrorist attacks, took place in Iraq, Afghanistan and Pakistan – all of which have a mostly Muslim population:

  

  The head of the Global Terrorism Database told BBC:

  While she doubts that 95% of terrorism victims are Muslim, she thinks the truth might not be far off.

   

  "It's not out of the realm of possibility, given the extreme concentration of attacks in majority-Muslim countries," Miller says.

  In other words, the vast majority of Muslims not only condemn ISIS … but they are actually bearing the brunt of ISIS’ cruelty.

  One American Muslim writes at Daily Beast:

  We Muslims despise these crazy people more than anyone else does.

   

  Denounce ISIS? Muslims despise ISIS. (At least those who aren’t pathological.)

   

  True, ISIS is compromised of people who claim to be Muslims. But the number one victim of this barbaric terror group is Muslims. That’s undisputed. ISIS has killed thousands of Muslims across the Middle East, including beheading Sunni Muslims in Iraq for failing to pledge loyalty to them, executing Imams for not submitting to them, and even killing an Imam in Iraq for simply denouncing them.

  (Muslims are also being slaughtered by ISIS for standing up and publicly opposing the terrorist group’s persecution of Christians. And as a sidenote, a 2013 study by Duke University showed that Muslim Americans helped catch more terrorism suspects and perpetrators than the United States government itself.)

  Indeed, if we want to stop ISIS, one of the most important things we can do is publicize the fact that ISIS is killing more “fellow” Muslims than any other victims. This will destroy ISIS propaganda that they are focused on a jihad or "holy war" against Christian and Jewish "occupiers".

  As Daily Beast pointed out in 2014:

  The group’s killing of Westerners gets attention. But ISIS has killed far more Muslims, and publicizing that fact would harm it more.

   

  Last Thursday, the United Nations released a report that could provide us with one of the keys to defeating ISIS. Unfortunately, it received almost zero media attention.What makes this 26-page report (PDF) so powerful is that it describes to us the gruesome circumstances in which ISIS has killed fellow Muslims. We are talking beheadings, killing of women for objecting to ISIS’ policies, and executing Sunni Muslim clerics for refusing to swear allegiance to ISIS.

   

  Why is this important? This information can hopefully help dissuade other Muslims from joining or financially supporting ISIS. And it may even persuade other Muslim countries to join or increase their efforts in fighting ISIS. The reason being that slaughtering fellow Muslims is seen as universally wrong across the Muslim world and as a violation of Islamic values. In fact, Al Qaeda has even publicly criticized ISIS for this very conduct.

   

  ***

   

  The leaders of ISIS are very aware that the killing of fellow Muslims—especially Sunnis- could hurt their cause in attracting support from the Sunni Muslim world. In fact, ISIS is so concerned about the possible backlash that the group’s leaders addressed this subject (PDF) in the latest issue of its online magazine.

   

  ***

   

  I wish the media would give more coverage to ISIS’ crimes against Muslims. The publicity would hurt the group’s cause tremendously, and it could also make the case to my fellow Americas that this fight is not Islam versus the West. Rather, it’s everyone who doesn’t want to live under ISIS’ brutal dictatorship versus ISIS.

   

  And those Muslims who gave their lives fighting against or refusing to give into ISIS in our common struggle should be recognized in the media for their bravery. It would be very powerful to see images in our media of the Muslims killed by ISIS, not just Westerners.

  How to Stop ISIS

  Unfortunately, Western governments are increasing the threat from terrorism (all of the countries we’ve “regime changed” have descended into brutal chaos, allowing ISIS and other terrorists to spread) … instead of doing the things which will stop terrorism.

  One of those things is to publicize the fact that most of ISIS' victims are Muslim, as it will destroy ISIS propaganda.

  Even the folks who want all Muslims to wipe each other out might wish to recognize that failing to publicize that fact is allowing ISIS recruitment to explode.  While Armageddon might sound exciting to some, I'd rather punch holes in the inflating ISIS balloon, and then bump off the remaining ISIS fighers.

  Postscript: Despite the feeling we get from watching the MSM that we are all about to be killed by terrorists, the truth is that we are much more likely to die from a boring or bizarre accident than at the hand of a terrorist … even the fear of terrorism is arguably more dangerous than terrorism itself.

  

  

  

  

• How America Works (In 1 Uncomfortable Cartoon)

  This won’t end well…

   

  

   

  Source: The Burning Platform blog

  

  

  

  

  

• America's Top Rogue Mercenary – Blackwater's Erik Prince Is Under Federal Investigation

  Submitted by Mike Krieger via Liberty Blitzkrieg blog,

  Just weeks before Blackwater guards fatally shot 17 civilians at Baghdad’s Nisour Square in 2007, the State Department began investigating the security contractor’s operations in Iraq. But the inquiry was abandoned after Blackwater’s top manager there issued a threat: “that he could kill” the government’s chief investigator and “no one could or would do anything about it as we were in Iraq,” according to department reports.

   

  –  From the post: New York Times Reports – Blackwater Threatened to Kill a State Dept. Official and the U.S. Government Did Nothing

  A little over two years ago, I published a post titled, How Erik Prince, Founder of Blackwater, Will Help China Subjugate Africa. Here’s what we learned at the time:

  Shares of DVN Holdings, controlled by Hong Kong businessman Johnson Ko Chun-shun and state-owned Citic Group, surged 7.3 per cent after it appointed Erik Prince – former owner of controversial US security firm Blackwater – as chairman, and granted him more share options.

   

  Prince last November sold to DVN a company that plans to build a pan-Africa provider of aviation, logistics, risk management, security services and exploration support services, needed by many Chinese businesses active in Africa. He received US$3 million plus the first batch of options.

   

  Prince has logistics, aviation, manufacturing, resources and energy business interests in Africa, the Middle East and North America, and is the founder of Frontier Resource Group, a private equity firm active in African aviation, exploration, mining and logistics, DVN said.

   

  The firm subsequently paid US$42 million in fines for hundreds of violations of US export rules, to avoid criminal charges, The New York Times reported.

  The writing was on the wall back then, and it appears the Department of Justice has finally picked up on the shadiness of it all.

  Earlier today, The Intercept published a detailed account of the ongoing investigation into America’s number one mercenary, Erik Prince. Here are a few excerpts:

  Erik Prince, founder of the now-defunct mercenary firm Blackwater and current chairman of Frontier Services Group, is under investigation by the U.S. Department of Justice and other federal agencies for attempting to broker military services to foreign governments and possible money laundering, according to multiple sources with knowledge of the case.

   

  What began as an investigation into Prince’s attempts to sell defense services in Libya and other countries in Africa has widened to a probe of allegations that Prince received assistance from Chinese intelligence to set up an account for his Libya operations through the Bank of China. The Justice Department, which declined to comment for this article, is also seeking to uncover the precise nature of Prince’s relationship with Chinese intelligence.

   

  The Intercept interviewed more than a half dozen of Prince’s associates, including current and former business partners; four former U.S. intelligence officers; and other sources familiar with the Justice Department investigation. All of them requested anonymity to discuss these matters because there is an ongoing investigation. The Intercept also reviewed several secret proposals drafted by Prince and his closest advisers and partners offering paramilitary services to foreign entities.

   

  In 2010, amid public scandals and government investigations, Prince began to sell off his Blackwater empire. Using new vehicles, he continued to engage in controversial private security ventures, including operations in Somalia and the United Arab Emirates. Eventually, the former Navy SEAL and self-proclaimed American patriot began building close business ties with powerful individuals connected to the Chinese Communist Party. In January 2014, Prince officially went into business with the Chinese government’s largest state-owned investment firm, the Citic Group, and founded Frontier Services Group, which is based in Hong Kong. Citic Group is the company’s single largest investor, and two of FSG’s board members are Chinese nationals.

   

  Working with a small cadre of loyalists — including a former South African commando, a former Australian air force pilot, and a lawyer with dual citizenship in the U.S. and Israel — Prince sought to secretly rebuild his private CIA and special operations enterprise by setting up foreign shell companies and offering paramilitary services, according to documents reviewed by The Intercept and interviews with several people familiar with Prince’s business proposals.

   

  Since 2014, Prince has traveled to at least half a dozen countries to offer various versions of a private military force, secretly meeting with a string of African officials. Among the countries where Prince pitched a plan to deploy paramilitary assets is Libya, which is currently subject to an array of U.S. and United Nations financial and defense restrictions.

   

  Prince engaged in these activities over the objections of his own firm’s corporate leadership. Several FSG colleagues accused him of using his role as chairman to offer Blackwater-like services to foreign governments that could not have been provided by the company, which lacks the capacity, expertise, or even the legal authority to do so.

   

  “He’s a rogue chairman,” said one of Prince’s close associates, who has monitored his attempts to sell mercenary forces in Africa.

   

  That source, who has extensive knowledge of Prince’s activities and travel schedule, said that Prince was operating a “secret skunkworks program” while parading around war and crisis zones as FSG’s founder and chairman. “Erik wants to be a real, no-shit mercenary,” said the source. “He’s off the rails exposing many U.S. citizens to criminal liabilities. Erik hides in the shadows … and uses [FSG] for legitimacy.”

  I get that FSG claims no part in this, but seriously, what did you expect when you went into business with this guy? It’s not as if his past was some big secret.

  The Libyan proposal, reviewed by The Intercept, was code-named Operation Lima. It offered the Libyans an array of military equipment and services — including weaponized vehicles, helicopters, boats, and surveillance airplanes — to help stabilize eastern Libya. The ground force, according to a person involved with the plan, would consist of a troop of former Australian special operations commandos. Given the instability of the government and Prince’s inability to navigate complex Libyan factions to vet potential partners, he had trouble finding the right power brokers to help sell the proposal.

   

  “Money laundering for Libyan officials using a Chinese bank — that is the issue that pushed it over the edge” for the Justice Department, said the second former intelligence official.

   

  The U.S. spies monitoring Prince soon discovered that he had traveled to the Chinese-controlled peninsula of Macau in an effort to open a bank account, according to two people familiar with the investigation. A well-connected source within the Macau banking community told The Intercept that Prince first attempted to open an account at the Macau branch of a European-connected bank, but was denied after a review by the bank’s European headquarters.

   

  Later, Prince traveled to Beijing, where he met with Chinese agents from the Ministry of State Security, according to the second former intelligence official and a source familiar with the meeting.

   

  In January, Prince returned to Macau and opened an account at the Bank of China, according to several sources, including the second former intelligence official and the source with close connections to Macau’s banking community.

   

  “It was not a personal account,” said the former U.S. intelligence official briefed on the investigation. “He was doing it for the purpose of what is considered now — in the investigation — money laundering on behalf of the Libyans.”

   

  Toensing, Prince’s lawyer, confirmed that Prince successfully opened an account with the Bank of China. “He opened an account on behalf of a business,” she said. Toensing declined to say for which business he opened the account, but said that it complied with U.S. banking regulations. “This is not an FSG bank account,” a spokesperson for FSG told The Intercept.

   

  While Prince’s re-invented Libya “border security” proposal was framed as a means of stopping migration, sources with knowledge of Prince’s business strategy allege that he had greater ambitions in that country. One person involved in Prince’s plan said the anti-migration force was seen as a vehicle for Prince to build a “backdoor” for so-called kinetic, or lethal, operations in Libya — a form of mercenary mission-creep. “During the day, you do interdiction of migrants — not kinetic,” said the person involved in the plan. “But those routes are used by weapons smugglers and drug traffickers at night. Insurgents too. Erik’s guys can then be offered to the Libyans to help with their other problems. That’s how you get kinetic.”

   

  The plan called for a series of “border security” bases housing intelligence centers, helicopters, surveillance airplanes, and weaponized vehicles. Prince proposed a fully equipped, contemporary military force to be staffed in part by foreign mercenaries.

   

  Among the concerns of government investigators is that Prince’s attempts to provide defense-related services to Libya and other countries violate U.S. defense export regulations. Under federal law, U.S. citizens seeking to offer military services or technologies to Libya must have a license certifying that the services or articles are approved under the International Traffic in Arms Regulations, or ITAR. “Many of these services and articles are designed to kill people or defend against killing people,” said John Barker, a former deputy assistant secretary of state for export controls. “To protect U.S. national security and foreign policy as well as that of its allies, the U.S. requires prior authorization.”

   

  An FSG official said the company did not know if Prince obtained a license for his activities in Libya, but noted that he did not have one in his capacity as FSG’s chairman. One of Prince’s Libya proposals reviewed by The Intercept lists FSG as the commercial vendor for the project.

   

  Prince has run up against ITAR in the past. In 2010, Prince sold most of his equity in the companies that fell under the Blackwater umbrella. Claiming that left-wing activists, Democratic politicians, and lawsuits had destroyed his companies, he left the United States and became a resident of Abu Dhabi. The remnant of his network was renamed Academi LLC. Federal prosecutors eventually attempted to prosecute Prince’s former companies, culminating in a 2012 deferred prosecution agreement to settle a lengthy list of U.S. legal and regulatory violations committed from 2005 through 2008 when Prince was in charge, including ITAR violations.

   

  A senior official involved with the Blackwater-related litigation, who has since left the government, told The Intercept that the Obama administration’s continued willingness to award contracts to former Blackwater entities while the case was active was a fatal impediment to a successful prosecution. The official, comparing the former Blackwater empire to a drug syndicate, added that prosecutors could not get anyone under Prince to testify against him personally. “This is very much the concern,” the former official told The Intercept. “You push the buttons on the company, but the main bad guy gets away and does it again.”

  Remarkable. “Mr. Liberal” Obama was cheerfully awarding Erik Prince and Blackwater corporate offshoots government contracts despite an ongoing investigation.

  No criminal charges were filed against Prince. 

   

  In federal court filings, Prince’s former companies admitted to providing — on numerous occasions during Prince’s tenure — defense goods and services to foreign governments without the required State Department licensing. In some cases, they admitted to providing services even after failing to obtain a license from the State Department.

   

  As part of their settlement with the government, Prince’s companies ultimately agreed to pay nearly $50 million in fines and other penalties and to implement compliance procedures to ensure such illegal activities did not continue. In September 2015, the deferred charges were dismissed after the U.S. government certified that the companies had “fully complied” with all of its conditions.

  Right, because fining a mercenary sociopath is such an effective deterrent. This is what you get when you use deferred prosecutions on these people. They get right back at it. Same exact thing happened with the banks. The U.S. justice department is not just worthless, it’s dangerous.

  At that point, Prince was already deep into creating new companies registered outside of the United States and appeared poised to return to the conduct that had marked his time at the helm of Blackwater.

   

  An internal document from Prince’s inner circle, reviewed by The Intercept, shows his team openly discussing the need to avoid U.S. and international defense export regulations and to mask the involvement of Prince and his cohort in efforts to provide mercenary services and military equipment to foreign governments. “Erik is always pressing the limits as to what is possible,” said the close associate of Prince’s.

   

  According to multiple sources familiar with Prince’s activities, as well as documents reviewed by The Intercept, Prince is considering an invitation to speak at a conference later this month in China sponsored by the country’s main domestic security organization, the Ministry of Public Security.

   

  Internally, FSG executives determined that any presentations by the company’s U.S. citizen personnel at the conference could potentially violate U.S. laws against providing defense advice to China. Smith issued a directive that no U.S. personnel from FSG were authorized to attend. Erik Prince, Smith told his staff, would need to make his own decision.

  There’s only one way to stop a guy like this — lock him up.

  For once, do your job Department of Justice.

  

  

  

  

  

• The Dirty Dozen – Meet The Republicans That Will Vote For Hillary

  Members of the GOP foreign policy establishment are open to supporting Hillary Clinton for president if that’s what it takes to prevent Donald Trump from becoming commander in chief. As The Hill reports, a number of prominent Republicans who signed a scathing open letter denouncing Trump said they aren’t wavering from their opposition to him…"Donald Trump is not a Republican. … He is a caricature of classless wealth. … He is a caricature of the ugly American."

   “What’s happening is you have a lot of people who are desperate to get anybody in there other than Trump. … People are going to go for Cruz, because at the end of the day they think he’s considerably less bad than Trump,” said Eliot A. Cohen, a former adviser to Sen. Marco Rubio (R-Fla.) who also served in the George W. Bush administration.

   

  Cohen, along with Bryan McGrath, organized an open letter opposing Trump that was signed by more than 120 members of the Republican foreign policy establishment. The letter declared that Trump is unfit to be president because his views of American power are “wildly inconsistent and unmoored in principle.”

  The Hill contacted 13 of the people on the letter and heard back from all but two of them…

  “Donald Trump is not a Republican. … He is a caricature of classless wealth. … He is a caricature of the ugly American,” said McGrath, the deputy director at the Center for American Seapower at the Hudson Institute who is now working with the Cruz campaign.

   

  Still, some say the fact that more supporters of Bush and Rubio haven’t joined Cruz shows how unenthusiastic many are about him.

   

  “All the palatable choices are gone,” said a senior Republican congressional staffer who wished to remain unidentified in order to speak freely.

   

  …

   

  Stephen Rodriguez, a former Bush adviser and managing partner at One Defense who is now supporting Cruz, called Trump “amoral,” a “fraud” and a “dangerous demagogue.”

   

  “I don’t know what’s worse — having Trump say all those ridiculous things and being totally clueless, or having him say all those things and actually mean it?” said Rodriguez, who signed the letter.

   

  “At the end of the day, he has done nothing to earn my vote. He doesn’t have the character or the values that would qualify him to be president of the United States and commander in chief, nor is he a conservative or a Republican,” said Roger Zakheim, a visiting fellow at the American Enterprise Institute, who advised Rubio and also signed the letter.

  Some members of the Republican foreign policy establishment are “shell-shocked” by what has happened in the primary race, the GOP staffer said, and are just planning to stay on the sidelines going forward. Some of them are hoping for a third-party candidate from the GOP.

  “If indeed it comes down to Hillary versus Trump as the nominees … then I’m certainly interested in whether or not we’ll see a third party, but I can’t support Trump’s candidacy,” Zakheim said.

   

  John Noonan, a former Jeb Bush adviser, said he would write in Washington Redskins quarterback Kirk Cousins for president if Trump is the GOP nominee and then vote Republican down the rest of the ballot.

   

  “Cousins isn’t any less experienced than Trump, and at least Cousins has never bankrupted a casino,” he said. But, he added, “I’d like to see Cruz beat Trump or a third-party conservative come in, in that order.”

  Several admit that if absolutely forced to choose between Trump and Clinton, they would pick the former secretary of State.

  “I’ll never support Trump, period. If the only choices I’m offered is between Hillary and Trump, I’ll go for Hillary,” said Cohen, who said he’s hoping for a third possibility or a write-in.

   

  One pointed to Clinton’s speech earlier this week at the American Israel Public Affairs Committee, saying it was relatively well received and could have been delivered by Rubio.

   

  McGrath said he would vote for Clinton if he “got a gun held to my head” and was forced to choose only between her and Trump. He added that in reality, however, he would write in a name.

   

  But, he added, “on foreign and defense policy, I at least trust Hillary’s judgment.”

   

  McGrath isn’t alone.

   

  “If it’s between Trump and Clinton, I will vote for Clinton,” Drezner said.

   

  “I think there are others who will make that determination, even if you don’t like Hillary Clinton, if you dislike her domestic agenda,” he added.

   

  Max Boot, a Council on Foreign Relations senior fellow and former Rubio foreign policy adviser who also signed the letter, said he would choose Clinton over both Trump and Cruz.

   

  "I would consider a conservative third party but would vote for Hillary over Trump — not a close call," he said. "Cruz [versus] Clinton is a closer call but on foreign policy grounds I would probably vote for Hillary."

  So – to sum up – 120 GOP establishmentarians question Trump's choices of foreign policy advisors and would vote for Hillary because "on foreign and defense policy, I at least trust Hillary’s judgment." Given that utter denial and totally non-democratic perspective, perhaps The GOP deserves exactly what it gets. What a farce!!

  

  

  

  

  

• The "Restaurant Recovery" Is Over: Casual Dining Sales Tumble For Fourth Straight Month

  While the US manufacturing sector has been in a clear recession for the past year as a result of the collapsing commodity complex, so far the stable growth in low-paying service jobs – at least according to the BLS’ statistical assumptions – such as those of waiters and bartenders have kept the broader service economy out of contraction (even though recent Service PMI data has been downright scary). 

  

   

  This is now changing: as we showed a month ago, according to the lagged effect of the collapse of the Restaurant Performance Index, that party is over:

  

   

  … just like it was in 2008;

  

   

  But while such macro indices suffer from the same calendar and statistical aberrations which the BLS is all too famous for, a confirmation of the troubling restaurant downward trend was provided yesterday by company-level channel checks, courtesy of Sterne Agee, which show that same store sales trends at America’s casual dining restaurants – those which cater to the vast majority of the US middle class – have suffered a fourth consecutive month of declines, something not observed since the first financial crisis, sliding a whopping 3% in March.

  From Sterne Agee’s March 24 channel checks:

  Our channel checks for casual dining suggest a decline in casual dining same store sales (SSS) trends in the first half of March. While it is too early to determine if this is a trend, it appears that a fourth month in a row of negative SSS may occur, which we believe would be a disappointment to investors.

   

  Casual Dining Stocks are Under Pressure in Recent Trading: On a month-to-date basis, we note that casual dining stocks have been under pressure, with an average price decline of -3.1%, including bottom-tier performers: Buffalo Wild Wings -10.2%, Red Robin -8 4% and Brinker -8.3.

  

  To be sure, Sterne Agee tries to spin this disturbing trend as faborably as posible:

  While there is much debate on whether the discounting/promotional environment in the quick service (QSR) space is affecting casual dining, we think it is too early to call this a shift in consumer behavior or change in trend.

  However, it is becoming all too obviouos that not only has the great gas price collapse of 2015/2016 done anything to boost consumer spending on such core discretionary items as dinner, but that the purchasing power of the US middle class continues to deteriorate with every passing month – having troughed so far in March – and that economists are clueless to explain the reason behind this.

  And the worst news is that with gas prices set to anniversary their 2015 lows in a few months at which point they will start rising due to the base effect, suddenly the great “gas tax savings” which did nothing to boost spending, is about to go into reverse, and lead to the next even sharper leg lower in US household spending. We are confident economists will be very confused about the reasons why the US economy is about to deteriorate substantially in the second half, however surely they will find some climatic anomaly to blame it on.

  

  

  

  

  

• New Eye-Opening Documentary Completely Exposes Barbaric Saudi Regime

  Submitted by Michaela Whitton via TheAntiMedia.org,

  A British television crew recently filmed an undercover documentary in Saudi Arabia in an attempt to penetrate the world’s most secretive and murderous regime. Working with a team of undercover Saudi cameramen, the one hour eye-opener, Exposure: Saudi Arabia Uncovered, was broadcast by ITV on March 22. It reveals the hidden side of the regime, which buys billions of pounds worth of British arms, accepts training from British security forces, sells oil back to the U.K., and enjoys nothing less than red carpet treatment from the British royal family.

  After setting up a fake company, the crew flew into Riyadh posing as businessmen, wielding carefully concealed hidden cameras. For cover, they said they were in the country to attend a business conference on cyber-security. What they discovered was a state that beheads — and even crucifies — its citizens; where women lack basic human rights and its children are indoctrinated. Patrolled by religious police, citizens are tortured, imprisoned, and sentenced to death for writing blogs and questioning authority. It sounds like the Islamic State, but it’s not — it’s the Kingdom of Saudi Arabia. And it is fully propped up by Europe and the United States.

  The mind-boggling documentary reveals how Saudi Arabia’s money and Wahhabi ideology has helped drive terrorism around the world. Shining a light on Britain’s shoulder-rubbing with the ruling royals, the production has pushed the U.K. government to admit they have provided more than 300 Saudi police officers with training since 2012.

  “A necessary evil”

  In January 2015, the Union Jack flew at half-mast at Westminster as a mark of respect for the death of Saudi ruler, King Abdullah. During the same month, young Saudi blogger Raif Badawi received 50 lashes in public. Convicted of insulting Islam after blogging about his government and religion, quoting Albert Camus, he wrote:

  "The only way to deal with an unfree world is to become so absolutely free that your very existence is an act of rebellion.”

  Comments like this earned the father of three 1,000 total lashes and ten years in prison.

  “We don’t approve of what Saudi Arabia does, we don’t like what they do, but they are a necessary evil in combating other regimes,” former Head of International Terrorism, Colonel Richard Kemp, told ITV.

   

  “And of course, ultimately they have a lot of oil,” he added.

  Undercover cameraman Yasser is from an underground network of Saudi activists. He risked life and limb to provide a window into the brutal and secretive country where the King is all powerful, journalists cannot operate without a minder, and dissent is a cardinal sin. In the country, which is home of some of Islam’s holiest sites, the Saudi state oil company is worth £7 trillion. The royal family is worth billions. In contrast, an estimated quarter of the population lives in poverty, and numerous women were filmed begging and being beaten in the streets.

  It is estimated that only one in five Saudi women of working age are employed. They are banned from driving and struggle to perform simple tasks, such as going to the doctor without a male guardian. But some are fighting back, and prominent human rights activist Loujain Hathloul has become the face of the Saudi women’s rights movement.

  Moments after uploading videos of herself driving — as part of a campaign to change the ban against it — the activist was arrested for trying to enter Saudi Arabia from the United Arab Emirates while behind the wheel. Imprisoned for 73 days without trial, she remains banned from traveling. Terrorism charges also were filed against her. Facing persistent death threats towards her and her family, for some she is a hero. For others, she is a hate figure.

  The Committee for the Promotion of Virtue and Prevention of Vice

  The religious police, officially known as the Committee for the Promotion of Virtue and Prevention of Vice, patrol streets and shopping malls enforcing strict Islamic laws. Yasser films himself and his friend as they are violently stopped from playing a lute outside. Playing music in public is forbidden, and their instrument and hidden camera are smashed. In other instances, religious police force women to cover themselves and drive people out of cafes to pray.

  This strict form of Sunni Islam is known as Wahhabism, and it is the religion on which Saudi Arabia was founded. It is thought that the majority of Saudis support the state ideology, and the activists film a preacher spreading hatred of other religions and the Shia minority. Children are shown being indoctrinated by school textbooks, made in Saudi Arabia and exported to the world.

  “No country is the perfect ally, perfect partner, without any reservations whatsoever. Welcome to the real world, welcome to the premier league,” said former CIA Director, General David Petraeus.

  Director of the Institute for Gulf Affairs, Ali al-Ahmed, said the Saudi education system was created as a security measure to protect the ruling family and mislead millions of students into hatred of other religions and cultures. Some say the state has made progress in removing some of the worst examples of hatred from its textbooks, but the books can still be found in mosques and schools around the world.

  Al-Ahmed added, “It’s no wonder that thousands of Saudis joined ISIS and other terror groups because they were trained in Saudi schools.”

  “Chop Chop Square”

  In 2015, Saudi Arabia executed 157 people. Traditional punishments are employed, and executions are often carried out in public by one sword blow to the neck. Headless bodies are sometimes displayed publicly, and the documentary shows harrowing footage of a Burmese woman screaming for mercy as she is beheaded in the street.

  Yasser says many Saudis are angry but cannot speak out due to fear of imprisonment, adding that the regime relies on secrecy; criticism of the government is considered an act of terror. The film crew visits one of Saudi Arabia’s most notorious landmarks, known as Chop Chop Square. It is the scene of many of the regime’s public executions and has drains in the ground for blood.

  Since 9/11, Saudi Arabia has attempted to show the world they are tackling terrorism. The regime has clamped down on private donations to extremists from inside the Kingdom and carried out airstrikes against ISIS. They deny they are supporting the terror group, but many feel it is the underlying Wahhabi Salafi ideology that is the wider problem.

  Former Director of Political Islam of the CIA, Emile Nakleh told ITV:

  “The ideology of ISIS is not much different from the ideology that Wahabi Salafi Islam in Saudi adheres to. Unless the Saudis deal with this issue, we are going to constantly fight yesterday’s wars. Even if we defeat ISIS there will be another terrorist organisation, perhaps with a different name, as long as they have this ideology.”

  Unwilling to tolerate dissent and fiercely opposed to sharing power, Saudi Arabia executed 47 people in January of this year — its largest mass execution since 1980. Some were convicted terrorists, but others were political activists. Footage smuggled out by activists has revealed that the executions sparked the largest public protests since the Arab Spring.

  Since the mass executions, Yasser has stopped filming undercover. He claims it is just too risky continue, which, of course, is exactly what these public displays of punishment are all about. Although activists are being forced underground, the spread of mobile phones and cameras means it is becoming impossible for the regime to control what the world sees.

  While in the country pretending to be traders, the filmmakers’ website was hacked, leading them to believe their cover was blown. As a result, they promptly left the country.

  The documentary ends with a statement from the Saudi authorities condemning the covert filming by ITV:

  “The kingdom of Saudi Arabia utterly rejects the partisan nature and sensationalist tone of this documentary which sets out to portray the country in a negative and unbalanced light. The Kingdom’s legal system is based on the due process of Islamic Sharia Law. The Kingdom is at the forefront of international efforts to combat terrorism and will pursue anyone who supports and funds terrorist activities. To suggest otherwise is a slur. In keeping with its biased agenda, ITV chose to undertake covert filming when they could have applied for and received a journalistic visa, like many of their counterparts.”

  The full documentary, Exposure: Saudi Arabia Uncovered, can be viewed here.

  

  

  

  

  

• Foreigners Dumped More Japanese Stocks This Week Than Ever Before

  USDJPY just had its best week in 2 months, funding bullish momentum and carry trades around the world in the midst of dismal economic data everywhere and tumbling earnings expectations. This "bullish" Yen strength, however, amid China's biggest weekly devaluation in almost 3 months, was ironically driven by drastic investment outflows – record sales of Japanese stocks by foreigners (sell JPY), and record purchases of foreign bonds by Japanese investors (sell JPY). Sooner, rather than later, it is obvious that the investment outflows will dominate the carry trades (see Thursday and Friday) and Kuroda and Abe will have a major problem.

  Yen was dumped all week…

  

   

  Which provided just enough juice for carry trades to lift Japanese stocks (despite the weakness in data and China's biggest weekly Yuan devaluation in almost 3 months)

  

  But notice that the last two days have seen Japanese stocks decouple from USDJPY, perhaps the first glimpse of the investment outflows overwhelming any casino-based carry trades flows.

  And this is why… Foreigners sold a record amount of Japanese stocks last week… (implicitly meansing Yen was sold)

  

   

  And Japanese investors fled the insanity of record low yields in JGBs, buying a record amount of foreign bonds last week (implicitly selling Yen again)…

  

   

  So the Yen weakness – which was so bullishly supportive of global equity markets via carry – was in fact a signal of massive investor anxiety fleeing the sinking ship. Peter Pan-ic indeed.

  Abe and Kuroda will soon face a major problem as a weaker Yen will signal the exact opposite trade that has been so active since 2012 – weakness means weak Japanese economy means sell Japanese assets.. and we will soon see capital controls in the world's largest debtor nation.

  And remember – the devaluation of The Yen has done nothing – NOTHING – to improve exports for Japan…

  

   

  “The tailwind from the weak yen has gone. We can’t help but hold a pessimistic view on the outlook for exports,” said Atsushi Takeda, an economist at Itochu Corp. in Tokyo, said before the figures were released. “Domestic demand won’t be dependable at all, and the same goes for exports. I can’t deny the possibility of another economic contraction this quarter.”

  

  

  

  

  

• Easter Weekend Reading: Bears Battered But The Buyback Bounce Is Over

  Submitted by Lance Roberts via RealInvestmentAdvice.com,

  At the beginning of this month, I discussed the monthly statistics for March. To wit:

  “It is often the case that the month following a negative return month will post a positive return as markets bounce from oversold conditions. However, as shown below, this is not always the case.

   

  The chart below shows both February and March returns going back to 1957. During that period, the month of March has posted gains following a February loss 15 times, and losses following a February decline 13 times. Again, at 53.6%, the odds aren’t much better than a coin toss at best.”

  

  One interesting note about the chart above is the sharp increase in monthly market volatility since the turn of the century as computers, online-trading, and algorithms took over the markets. Also, QE programs accelerated returns during the post-financial crisis period which has positively skewed the statistical analysis.

  While the month is not over as of yet, the current 5.37% advance is within the context of previous market rallies since 1997.

  

  With the majority of short-covering appearing to be complete, and volume on a steady decline, we may have seen a bulk of the reflexive bull rally already. As noted by Dana Lyons earlier today:

  Always useful to observe behavior on days like yest: e.g. Rydex traders covered signif % of shorts;bear assets not low, but lowest since 2/1

  — Dana Lyons (@JLyonsFundMgmt) March 24, 2016

   

  With April wrapping up the seasonally strong period of the year, the seasonal adjustment boost to economic data coming to an end, and earnings growth remaining elusive – the summer months could prove to be problematic. For now, we will have to wait and see what develops.

  With that, I just want to wish you all a very happy, safe and joyful Easter weekend.

  ---

  CENTRAL BANKING

  • How To Rob A Central Bank by Bloomberg
  • New Rules For The Monetary Game by Raghuram Rajan via Project Syndicate
  • Fed Funds Fanaticism Will Keep Failing by Louis Woodhill via RCM
  • Central Banks Are Doing The Unthinkable by Mehreen Kahn via The Telegraph
  • Why Janet Yellen Is Toast by Pater Tenebrarum via Acting-Man
  • The Biggest Short by Robert Gore via The Burning Platform

  ---

  MARKETS

  • April Will Decide Markets Fate by Avi Gilburt via MarketWatch
  • Here’s Why Nobody Believes This Rally by Tyler Durden via ZeroHedge
  • Dividend Cut List Continues To Grow by Ironman via Political Calculations
  • It’s Time – The Rally Is Finished by Macroman 
  • 2016-2018 Looking A Lot Like 2007-08 by Doug Kass via Real Clear Markets
  • Profits Gap Is A Warning To Investors by Alex Dumortier via Motley Fool
  • Odey: “No Longer A Market But A Battlefield” by Julia LaRoche via BI
  • Clark: The Nikkei Leads The Bust In The S&P 500 by Tyler Durden via Zerohedge

  ---

  OIL

  • Saudis Won’t Let Oil Stay Above $40 by Panos Mourdoukoutas via Forbes
  • How Bad Will Losses To Banks & Investors Be? by Yves Smith via Naked Capitalism
  • Why Oil Prices Are About To Plunge by Tyler Durden via ZeroHedge
  • Don’t Be Fooled By Spike In Oil Prices by Matt Egan via CNN Money

  ---

  OTHER GOOD READS

  • Americas’s Retirement Crisis Getting Worse by Philip Moeller via Money
  • Why A 100% Stock Portfolio Could Hurt You by John Coumarianos via MarketWatch
  • Market Remains Obscenely Overvalued by John Hussman via Hussman Funds
  • Yellen – Armed, Dangerous & Lost by David Stockman via Contra Corner
  • Mind The Gap by Salil Mehta of Statistical Ideas
  • It’s Hard Being A Bear by Joe Calhoun via Alhambra Partners
  • Bollinger Band Squeeze Signaling A Change? by Steve Deppe via SeeItMarket
  • 3 Critical Things To Know Before Investing by Capitalist Exploits via ValueWalk
  • The Wealth Effect Could Shift Into Reverse by Jesse Felder via The Felder Report
  • Stock Rally Getting Too Complacent via Dana Lyons via Tumblr

  ---

  “Successful preservation of capital must overcome the handicaps of socialistic governments, supposedly to help the masses.” – Gerald Loeb

  

  

  

  

  

• Deutsche Bank's Dire Warning On Global Trade: "The Currency War Is Futile"

  “It’s almost like the timing belt on the global growth engine is a bit off or the cylinders are not firing as they should.”

  That’s from WTO chief economist Robert Koopman, and it’s a quote we’ve used on a number of occasions. Koopman is referring to the fact that for several years in a row, the rate of growth in global trade has lagged GDP growth. That’s a problem for two reasons: 1) GDP growth is hardly robust as it is, and 2) before the recent downturn, the last time trade growth underperformed the rate of economic expansion was two decades ago.

  As WSJ noted last autumn, trade growth has averaged just 3% per year. That’s half of the 1983-2008 average.

  “It’s fairly obvious that we reached peak trade in 2007,” Scott Miller, trade expert at the Center for Strategic and International Studies, a Washington, D.C., think tank told the Journal.

  Since then, the evidence has continued to pile up that global trade has flatlined. Freight volume in the US fell for the first time in three years in November, while monumental declines for Class 8 truck sales vividly demonstrate the extent to which commerce is simply grinding to a halt across the US economy. As for global trade, well, the Baltic Dry speaks for itself.

  

  “It is worse than in 2008. The oil price [is low] and freight rates are lower. The external conditions are much worse,” Maersk CEO Nils Andersen said, just last month. Maersk Line – the company’s golden goose and the world’s largest container operator – racked up $182 million in red ink last quarter alone.

  In this environment the “answer” has been competitive devaluation – i.e. a currency war. Although this is, in the end anyway, a zero sum game, until recently there was still some hope that key EMs could rely on devlaued currencies to help cushion their current accounts from the slowdown and restore some semblance of balance and competitiveness.

  However, it would appear that, as outlined above, the link between output and trade growth might have been severed sometime in the post-crisis world. If that’s the case, the FX wars may be largely futile and what looks like an undervalued currency might have much, much further to fall – or could simply decline in virtual perpetuity. That’s a rather disconcerting proposition to say the least. Especially for EM.

  Below, find excerpts from a new note out of Deutsche Bank where FX strategist Gautam Kalani believes the fundamental relationships officials all take for granted and use to justify the whole “devalue our way to propsperity” line may no longer hold. 

  *  *  *

  From Deutsche Bank

  1) Is the currency war futile? It looks increasingly so.

  The fundamental currency-current account relationship is as follows: large currency undervaluation current account improvement currency appreciation. The first link describes the ‘currency war’ argument, whereby a weaker currency leads to an exports pickup and thus a boost to growth. The second link underlines how current account improvement in response to a large undervaluation is an important channel through which large undervaluations can trigger FX appreciation.

  There is a concern that this competitive devaluations channel (the first link) may have broken down (to a large extent) because of the collapse in global trade. Global growth today is generating much less trade growth than in the past (chart below). As a result, currency adjustment is not enough to spur growth significantly because global trade is increasingly less important to the overall makeup of GDP. This raises the possibility that the currency war is largely futile, as currency depreciation does not give much of a boost to exports/growth, and certainly much less impetus than in the past.

  

  2) What is the implication of a futile currency war for EM FX? Beware of going long currencies purely on the basis of fundamental undervaluation.

  Focusing on EM, lingering growth concerns further increase the perceived need for currency depreciation. However, since currency depreciation does not translate easily into exports improvement, more currency adjustment is probably required than in the past to obtain the same growth/current account impetus; currencies must be more undervalued before substantially improving the current account. In sum, a significant undervaluation of an EM currency may not be sufficient to drive appreciation via the current account channel; rather, even more currency adjustment may be required for some undervalued currencies.

  Current accounts, especially in LatAm but also in high-yielding EMEA, still reflect excessive domestic absorption. Improvements have been limited despite large scale FX depreciation. Further, what current account improvement has taken place has been mainly on account of import compression rather than exports – perhaps FX weakness has played some role in this as imports become more expensive with a weaker currency, but a majority of it reflects demand slowdown in EM. Therefore, for currencies running large current account deficits, more FX adjustment may be on the cards before undervaluations start providing material support.

  

  3) Which currencies to be wary of going long purely on the basis of fundamental undervaluation? In EMEA, ZAR stands out as an example.

  If global trade growth has collapsed and the currency war is futile, a currency that is heavily undervalued on a fundamental model like BEER or PPP could easily become more undervalued. In this context, the FEER model, which estimates misalignments based purely on the distance of the cyclically- adjusted current account balance from its long-term average, could provide an appropriate warning signal. That is, one should be wary about long a currency on the basis of BEER undervaluation if it is also showing FEER overvaluation, as FEER overvaluation signals that the current account balance is still below its long-term average and therefore has not adjusted by ‘enough’.

  *   *   *

  We’ve said it before and we’ll say it again: central banks better figure out how to print trade, and fast.

  

  

  

  

  

• Trump Aide "Spills The Beans" On Heidi Cruz As Media Goes Crazy Over #CruzSexScandal

  The “wife” feud, which initially many though was merely a sideshow between Donal Trump and Ted Cruz, has taken a quick turn for the ugly and is escalating dramatically with every passing day, and now that even the National Enquirer has entered the fray, has rapidly devolved to nothing less than the surreal twilight zone.

  For those who need a primer of what is rapidly becoming the biggest “issue” in the presidential race, here is a reminder, courtesy of our post from last night “Tough Guy Ted Warns “Sniveling Coward” Trump: “Leave My Wife Alone“:

  • Phase 1: Cruz Reps “Cross The Line”, when a “SuperPAC” run by a Cruz supporter launched a Trump ad campaign showcasing a naked posing Melania Trump
  • Phase 2: Trumps Warns Cruz: “Lyin’ Ted Cruz just used a picture of Melania from a G.Q. shoot in his ad. Be careful, Lyin’ Ted, or I will spill the beans on your wife!”
  • Phase 3: Cruz firez back, warning Trump: Don’t Do The Same Thing To Me That [My Reps] Just Did To You (Or Else!).
  • Phase 4: Trump Goes There, retweeting an image “comparing” Heidi Cruz and Melania Trump
  • Phase 5: Cruz Goes Full Rambo, says  ‘Donald, you’re a sniveling coward and leave Heidi alone.’

  Or, as we summed up, “a Cruz fan uses naked images of Trump’s wife to disparage him to saintly ‘Utah-ans’; Trump pissed; Cruz warns Trump not to reciprocate; Trump shows ugly picture of Cruz’s wife; Cruz unleashes inner Hulk as Trump dares to do what Cruz reps did to him.”

  That was just the last few days.

  And then the tabloids jumped on board.

  Overnight, Trump-linked National Enquirer, alleged that the Texas senator is “hiding five different mistresses.” According to its source, identified as a “Washington insider,” “private detectives are digging into at least five affairs Ted Cruz supposedly had,” and “the leaked details are an attempt to destroy what’s left of his White House campaign.” The supposed affairs are detailed in the Enquirer’s most recent print issue.

  National Enquirer: Ted Cruz had 5 affairs – Idk if true (but they did break the Tiger Woods affairs). pic.twitter.com/Olof2tPJA8

  — Secular Talk (@KyleKulinski) March 25, 2016

  Though unconfirmed, the rumor sparked chatter across social media Friday with the hashtag #CruzSexScandal, with reactions, as expected, ranging from one end of the spectrum to the other. 

  

  Considering the source, we doubt there is much veracity to the alleged “Cruz sex scandal”, although the tabloid has had its share of “broken” news stores in the past.

  As was to be expected, Cruz immediately denounced the article as “garbage, complete and utter lies” and accused his opponent Donald Trump of being the source of the story as Reuters reports.

  “It’s tabloid smear, and it is a smear that has come from Donald Trump and his henchmen,” a clearly perturbed Cruz told reporters at a press conference in Wisconsin, as the battle for the Republican presidential nomination reached new levels of personal rancor.

  Trump issued a statement saying he was not responsible for the article.

  “I have nothing to do with the National Enquirer and unlike Lyin’ Ted Cruz I do not surround myself with political hacks and henchman and then pretend total innocence,” Trump said in the statement. “Ted Cruz’s problem with the National Enquirer is his and his alone, and while they were right about O.J. Simpson, John Edwards, and many others, I certainly hope they are not right about Lyin’ Ted Cruz.”

  In other words, just as Cruz had “nothing” to do with the first naked photo of Melania that started off this latest scandal, so Trump had “nothing” to do with the Enquirer article.

  Alas, the damage for Cruz may already have been done: the article exploded on Twitter overnight on Thursday. By Friday morning #CruzSexScandal was a worldwide trending topic on Twitter.

  And while Trump has distanced himself from the Enquirer article, very much the same way Cruz distanced himself from the original attack ad, an aide to Donald Trump on Friday did fulfil the businessman’s threat to “spill the beans” on Republican presidential rival Ted Cruz’s wife, Heidi.

  As The Hill first reported, Trump spokeswoman Katrina Pierson rattled off a list of attacks three days after Trump first made the threat. 

  “Spilling the beans is quite simple when it comes to Heidi Cruz,” Pierson said in an interview with MSNBC’s Steve Kornacki. 

  “She is a Bush operative; she worked for the architect of NAFTA, which has killed millions of jobs in this country; she was a member on the Council on Foreign Relations who — in Sen. Cruz’s own words, called a nest of snakes that seeks to undermine national sovereignty; and she’s been working for Goldman Sachs, the same global bank that Ted Cruz left off of his financial disclosure,” Pierson said. 

  “Her entire career has been spent working against everything Ted Cruz says that he stands for,” she added. 

  Cruz spokeswoman Alice Stewart responded to the remarks in a statement to The Hill, saying, “There’s no low the Trump campaign won’t go.”

  Earlier in the MSNBC interview, Pierson said “this isn’t about Heidi Cruz, this is about Melania Trump. Melania Trump was the one that was attacked.”

  Incidentally, she is right, even though that means that this most hypnotic scandal in the republican presidential primary race – and perhaps any US presidential race yet – is nowhere close to over as neither candidate can possibly concede defeat on a topic that is “near and dear” to the heart as one’s wife.

  

  

  

  

• Is ISIS Faithful To Islam?

  Submitted by Patrick Buchanan via Buchanan.org,

  “We are not at war with Islam,” said John Kasich after the Brussels massacre, “We’re at war with radical Islam.”

  Kasich’s point raises a question: Does the Islamic faith in any way sanction or condone what those suicide bombers did?

  For surely the brothers and their accomplice who ignited the bombs in the airport and set off the explosion on the subway did not do so believing they were blasting themselves to hell for all eternity.

  One has to assume they hoped to be martyrs to their faith if they slaughtered infidels to terrify and expel such as these from the Islamic world and advance the coming of the caliphate of which the Prophet preached.

  And where might they have gotten such ideas?

  Kasich’s word, radical, comes from the Latin “radix,” or root.

  And if one returns to the roots of Islam, to the Quran, does one find condemnation of what the brothers did — or justification?

  Andrew McCarthy was the prosecutor of the “Blind Sheikh” whose terrorist cell tried to bring down a World Trade Center tower in 1993, and plotted bombings in the Holland and Lincoln tunnels.

  The U.S. government depicted the sheikh as a wanton killer who distorted the teachings of his faith.

  Yet, McCarthy discovered that Sheikh Omar Abdel Rahman was no imposter-imam, but “a globally renowned scholar — a doctor of Islamic jurisprudence who graduated from al-Azhar University in Cairo, the seat of Sunni Islamic learning for over a millennium.”

  Seeking to expose the sheikh as a fraud who had led his gullible followers into terrorism, against the tenets of their faith, McCarthy discovered that “Abdel Rahman was not lying about Islam.”

  “When he said the scriptures command that Muslims strike terror into the hearts of Islam’s enemies, the scriptures backed him up. When he said Allah enjoined all Muslims to wage jihad until Islamic law was established throughout the world, the scriptures backed him up.”

  “[T]he Blind Sheikh’s summons to Islam was rooted in a coherent interpretation of Islamic doctrine. He was not perverting Islam,” writes McCarthy in the Hillsdale College letter Imprimis. McCarthy goes on:

  “Islam is not a religion of peace. … Verses such as ‘Fight those who believe not in Allah,’ and ‘Fight and slay the pagans wherever ye find them, and seize them, beleaguer them, and lie in wait for them in every stratagem of war’ are not peaceful injunctions….”

  In its formative first century, Islam conquered the Middle and Near East, North Africa and Spain with sword and slaughter, not persuasion and conversion.

  Undeniably, there are millions of Muslims in America who love this country and have served it in every walk of life, from cops, firemen and soldiers, to doctors, scholars and clergy.

  Yet when “moderate, peaceful Muslims” were called to testify as defense witnesses, says McCarthy, they could not contradict the Blind Sheikh’s claim that he had correctly interpreted the Quran.

  The questions that arise are crucial.

  When we call Islam a “religion of peace,” are we projecting our own hopes? Are we deceiving ourselves? Are the Muslims we respect, admire and like, as friends and patriots, assimilated and “Americanized” Muslims who have drifted away from, set aside, or rejected many core beliefs of the Quran and root teachings of their own faith?

  Are they simply secularized Muslims?

  When the Afghan regime we installed sought to cut off the head of a Christian convert, was that un-Islamic? Or does Islam teach that this is the way to deal with apostates?

  Is the hate spewing forth from the Ayatollah toward Americans and Jews un-Islamic? Is the Saudis’ cutting off of heads and hands of adulterers and thieves and suppressing of women un-Islamic?

  Or is that what the Quran actually teaches?

  Have the Islamists of al-Shabab in Somalia, Boko Haram in Nigeria, Hezbollah in Lebanon, al-Qaida and ISIS in Syria and Iraq — who daily die fighting in the name of Islam — misread their sacred texts?

  Are they all heretics who fail to understand the peaceful and loving character of their Islamic faith?

  Or is the West deluding itself? Is it possible we are the ones misreading the sacred books of Islam and what the triumph of Islam would mean for our civilization — because we lack the courage to face the truth and do what is necessary to avoid our fate?

  Islam is rising again. Of its 1.6 billion adherents worldwide, many are returning to the roots of their faith, seeking to live their lives as commanded by the Prophet, the Quran and Sharia.

  Western survival would seem to dictate a halt to all immigration from lands where this deadly virus we call “radical Islam” — with which Kasich concedes we are at war — is rampant, just as we would halt immigration from lands where the bubonic plague was rampant.

  That would surely contradict the cherished beliefs of Western liberals.

  But, then, as James Burnham reminded us, “Liberalism is the ideology of Western suicide.”

  

  

  

  

  

• "There Is No Word To Describe This" – The Energy Forward P/E Multipe Is Now Off The Charts

  Back in January 2015, when we looked at the utterly disconnected fundamentals of the energy sector, we were stunned to note that the forward 12-month P/E for the Energy sector has risen above 22.4, the first time it had done so since April 8, 2002. On that date, the closing price of the Energy sector was 225.15 and the forward 12-month EPS estimate was $10.05.

  Our amazement was contained in the following summary: “using the S&P Energy Sector Index data, the sector’s forward multiple is now an absolutely ridiculous, mindblowing 23x.“

  This was 14 months ago. Where do we stand now?

  The snapshot answer comes courtesy of the latest Factset weekly earnings insight, according to which as of this moment, the forward P/E of the Energy sector is no longer “an absolutely ridiculous and mindblowing 23x“…. it is, in fact, more than double that at 58.7x, which also happens to be more than four times higher than the 15 year average.

  There is no longer a word to describe the lunacy where the forward P/E multiple was literally “off the chart” until the Y-axis was doubled.

  

   

  Where it gets even more surreal is when looking at the forward energy sector P/E (as defined by Bloomberg) charted over time. Yes, we laughed long and hard.

  

   

  What is beyond strange is that while forward earnings have imploded in just the past three months, prices of energy companies have actually gone up as the next Factset chart shows! In other words, the market’s discounting mechanism is not onlyl broke but is now going in reverse, where the worse the projected earnings, the better for stock prices.

  

   

  However, this type of disconnect – especially when it is as glaring as this – never lasts.

  In that vein, one year ago, when oil had first crashed hard and when the S&P energy sector was trading at 550, we calculated that “Either Oil Soars Back To $88, Or Energy Stocks Have To Tumble By Over 40%” Energy stocks indeed tumbled, and at one point the drop was nearly 40% as predicted, but have since jumped higher on more artificial central bank manipulation of prices.

  

   

  Unfortunately for those buying, this rebound won’t last because while central banks may have goosed asset prices, they have failed to stimulate the price of the one all important commodity, the one which flows through to earnings: oil.

  Which leads us to a redo of the simple calculation we did one year ago: what does the current disconnect between the price of oil, energy stock prices and valuations mean? The answer, like last January, is simple: either the long-term PE multiple is now null and void, and the “New Normal” forward PE of not only 20x+, but almost 60x, is “realistic”, which of course is ridiculous, or there are two alternatives:

  • Energy sector earnings have to surge by 275%, implying oil prices have to more than triple to $148, for the forward P/E multiple to return to normal, or
  • The Energy sector price has to crash from 461 today to 123 where it would trade down to its historic forward 14x P/E multiple, suggesting a price drop of over 70%!

  This is shown visually on the table below:

  

  We’ll let the algos decide which option works.

   

  

  

  

  

  

• Who's Anti-American?

  Submitted by Bill Bonner of Bonner & Partners (annotated by Acting-Man/com's Pater Tenebrarum),

  Who’s Anti-American?

  Maryland!
  The Old Line bugle, fife, and drum,
  Maryland!
  She is not dead, nor deaf, nor dumb.
  Huzza! She spurns the Northern scum!
  She breathes! She burns! She’ll come! She’ll come!
  Maryland! My Maryland!

  – Maryland’s State Song

   

  

  J’accuse…

  Guilty as Charged

  Yesterday, one dear reader wrote in to say we were “cynical” and “anti-American.”

  Today, we rise to defend our reputation… such as it is. Cynical? Nah… We’d need a big dose of positive thinking and earnest optimism to be cynical. According to the Oxford English Dictionary, people who are cynical are “suspicious,” “doubting,” and “skeptical.”

  We’re way beyond that. We’re pretty sure that the system is rigged… and rotten. Elections are exercises in solemn deceit. And the Fed’s management of the economy is a mixture of delusion and self-serving scam. We don’t have much doubt about it. That’s just the way it is.

  As for “anti-American,” our accuser needs to clarify the allegation. Is he talking about the Deep State? The empire? Or is he talking about the 50 sovereign states… and the Old Republic? Or the language? The culture? Reality TV… the Kardashians… NASCAR racing… Old Faithful and the mighty Mississip’?

  No one can be anti-America; America is too many things to too many people. But if he’s talking about the federales who control half our national output… tie us in knots with Obamacare, National Labor Relations Board rules, and all their other dopey programs… and stomp around the world trying to justify their trillion-dollars-a-year security budget…

  …if he’s talking about Hillary, Bernie, The Donald, the Bushes, et al… and all the 535 members of the U.S. Congress… and the 2,783,000 zombies on the U.S. payroll…

  …if he’s talking about the connivers who pump out phony credit… stifle real savings… sabotage real wealth creation… and shift trillions of dollars from the people who earned it to the cronies favored by the Establishment…

  If he’s talking about THAT America, he’s right. We’re agin’ it. Guilty as charged. And we’re not alone. Apparently, about half the country is “anti-American.” Here’s our friend and Black Swan author Nassim Nicholas Taleb explaining The Donald phenomenon:

  The “establishment” composed of journos, BS-vending talking heads with well-formulated verbs, bureaucrato-cronies, lobbyists in training, New Yorker-reading semi-intellectuals, image-conscious empty suits, Washington rent seekers and other “well-thinking” members of the vocal elites are not getting the point about what is happening and the sterility of their arguments. People are not voting for Trump (or Sanders). People are just voting, finally, to destroy the establishment.

   

  

  Nassim Taleb explains the Donald and the Bern – and he’s right.

   

  The Failure of NIRP

  Yesterday, stocks took a little rest. The Dow went approximately nowhere. At first glance, things don’t look bad. U.S. crude oil is back over $40 a barrel. And U.S. stocks are back in the black for the year.

  But China is on a debt binge that is bound to end in a blowup. And U.S. corporate earnings are falling, leaving only borrowing and share buybacks to hold up prices.

  Frackers are still operating at a loss. Auto and student debt are going into default. Global trade – as measured by freight indexes – is still sinking.

  And Japan – the pacesetter in the race to the bottom – is proving that negative interest rates have an effect exactly opposite to what the meddlers intended. NIRP (negative-interest-rate policy) is supposed to spur lending and spending. In Japan, it has done neither – the yen is strengthening as the economy weakens.

   

  

  Total NIRP fail in Nippon – click to enlarge.

   

  NIRP was always an “experimental” policy. Central banks in Sweden, Denmark, Switzerland, the euro zone, and Japan have all pushed their target lending rates into negative territory. All that has been learned so far (apart from that this doesn’t work) is that sales of home safes go up, as people take out cash and keep it at home.

  Negative interest rates amount to a tax on savings. You pay to save instead of being paid to save. Whether the people hoarding cash are worried about the prospect of paying a negative interest rate tax on their bank deposits, or anticipating some more awful crisis…we don’t know.

  More to come on QE and negative rates and why they really are old-fashioned “money printing” after all –  tomorrow. For now, let us return to the “anti-American” allegation.

   

  Anti-American… in Maryland

  We’re fond of the place we grew up – the Maryland Tidewater. At least, we are fond of it as it was when we grew up in it. But it has changed. Last week, the Maryland State Senate voted to change the words of the state song, bringing it more in line with the spirit of the Empire.

   

  

  Sheet music of the old song – the one that still said “northern scum”. Huzzah!

   

  The song recalls the period – in the early 1860s – in which Maryland was attacked… by the United States of America. “Northern scum,” is how our state song describes its historic enemies. Maryland was a “border” state, not sure how it felt about the secession movement.

  Then the Yankees invaded, cutting off civilized discussion on the matter. They arrested Baltimore’s mayor, the city council, the police commissioner, and the entire board of police. All were held without charges. Habeas corpus was suspended.

  Then when the Supreme Court ruled that the feds had no power to ignore constitutional protections, Abe Lincoln simply ignored the Supreme Court. He continued to hold his prisoners in the “American Bastille” – Fort McHenry. One of the prisoners – held without charges – was the grandson of Francis Scott Key, who had written the American national anthem.

   

  

  Francis Scott Key – his grandson found out who the “real Lincoln” was.

   

  He must have seen the black humor of his situation. In 1814, during Britain’s attack on Fort McHenry, his grandfather had wondered whether the flag still flew “o’er the land of the free and the home of the brave.”

  In 1861, Lincoln gave the answer: No.

   

  

  

  

  

  

• US Kills ISIS Second-In-Command For 3rd Time In 2 Years

  While Russia and Iran are busy liberating whole cities from ISIS in Syria, the US is sticking with the “one raid at a time” approach and it apparently paid dividends on Thursday morning when Abu Alaa Afri, also known as Abd al-Rahman Mustafa al-Qaduli and Haji Imam was killed in Syria.

  US Defense Secretary Ash Carter and Joint Chiefs Chairman Gen. Joe Dunford are set to make the announcement this morning at a press conference and the Pentagon is thrilled. Al-Qaduli had a $7 million bounty on his head, higher than Omar the Chechen (who was killed earlier this month) and Abu Mohammed al-Adnani who is arguably more influential than Bakr himself.

  A physics teacher by trade, Mosul-born al-Qaduli was ISIS before ISIS was ISIS. He served as a deputy to Abu Musab al-Zarqawi (Islamic State’s “godfather”) and was jailed by the US in Iraq in 2012. Upon his release, he joined ISIS and reportedly was Bin Laden’s choice to lead the group after Abu Omar al-Baghdadi and Abu Ayyub al-Masri were killed in 2010. He was, however, passed over for Abu Bakr al-Baghdadi, whose family can be loosely traced to the Prophet.

  

  Al-Qaduli is no stranger to being dead.

  He died last April for instance, in a strike on a mosque in Iraq. “Al-Qaduli was one of several people killed in a strike that hit a mosque where Islamic State leaders were meeting,” WSJ reported at the time. He was also killed in September of 2014. Here’s the airstrike that killed him last year:

  In any event, if al-Qaduli is indeed no more, it means that ISIS has lost two of its top brass in the space of just three weeks (al-Shishani being the other).

  And if US SpecOps did indeed kill him, it just goes to show that the CIA has indeed served a burn notice on the entire chain of command. After all, Russia and Hezbollah are pushing uncomfortably close to Deir ez-Zor and Raqqa and dead men, as they say, tell no tales.

  

  

  

  

  

  

  

  

  

  

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