Today’s News October 17, 2015

• Guest Post: The False East/West Paradigm And The End Of Freedom

  Submitted by Brandon Smith via Alt-Market.com,

  People are desperate for leaders and heroes. This is an undeniable condition of human life and of human civilization. Some historians and social observers, however, seem to think it is enough to simply point out this condition and pretend as if they have made some grand declaration; as if they have come to the root of the problem of mankind. In their laziness, they have mistaken a symptom for the cause.

  Why do people so often demand leaders and heroic figures? What drives the institutionalization of hierarchy, celebrity and geopolitical idolization? I believe this condition is caused by three factors – fear, ignorance, and apathy.

  This is not to say that there are not people throughout history that are worth looking up to, or that looking up to a particular hero figure is wrong. Heroes and sometimes leaders can act as points of reference, helping us to aspire to greater personal accomplishment and extraordinary achievement. The problem is many historical figures labeled heroic are in fact monsters in masks paraded as saviors by history writers with agendas. Real heroes (in the past hundred years in particular) are most often unsung, and remain little known.

  This is why the idolization of puppet leaders is so disturbing to those of us in the Liberty Movement. We witnessed the blind militancy of the so-called “right wing” in the support of George W. Bush after 9/11, only to be led into quagmire, economic despair, and a surveillance state based on numerous lies. We then had to witness the insane cult-like fervor of the so-called “left wing” as Barack Obama took office, only to continue and accelerate the same draconian policies of the Bush Administration while conjuring new methods for the division and destruction of American society and prosperity.

  Yes, the Liberty Movement has examined every detail and is well versed in the horrors of the false Left/Right paradigm. Again, I'll have to quote the ever useful elitist member of the Council on Foreign Relations and mentor to former president Bill Clinton, Carroll Quigley, on this particular issue, from his book 'Tragedy And Hope':

  “…The argument of two parties should represent opposed ideas and policies, one perhaps, of the Right and the other of the Left, is a foolish idea acceptable only to doctrinate and academic thinkers. Instead, the two parties should be almost identical, so that the American people can “throw the rascals out” at any election without leading to any profound or extensive shifts in policy. The policies that are vital and necessary for America are no longer subjects of significant disagreement, but are disputable only in details of procedure, priority, or method.”

  What truly disturbs me is that our movement can be so awake and aware of the false left/right paradigm while remaining astonishingly naïve and short sighted when it comes to the false East/West paradigm. And once again, I have to attribute this naivety to a desperation for heroes caused by fear and apathy.

  I have written on the reality that Eastern political interests are just as controlled by globalists as Western political interests for years. Readers can review the considerable amount of data and evidence I have collected on Russia and Vladimir Putin in particular and the ties between the East and international financiers and well known globalists in recent articles such as 'Russia Is Dominated By Global Banks, Too', 'False East/West Paradigm Hides The Rise Of Global Currency', and 'The New World Order And The Rise Of The East'.

  In fact, I predicted almost every aspect of the current Syrian crisis based on the knowledge that the East versus West dynamic was purely an engineered conflict designed to diminish American power and economic influence through the use of planned chaos, and I did this years before events were ever triggered in the region.

  I knew what was about to happen in Syria only because I understood one important fundamental – that there are no “sides” in any modern conflict, only proxies fighting on a global chessboard controlled by the same elitist interests. Syria represented a perfect catalyst for a planetary scale conflict triggered between East and West in a way that could divert attention from internationalists. Modern war, whether through kinetics or economics, is almost always theater designed to distract and terrorize the masses, which are the true target of any conflagration.

  We must set aside childish assumptions on war. Wars are not about resources. They are not about territory. They are not about the hegemony of any particular nation state. If you buy into such notions, you have been duped. No, war is about something much bigger. War first and foremost is a tool for the manipulation and molding of public psychology. As Edward Bernays, the father of modern propaganda said:

  “The great enemy of any attempt to change men's habits is inertia. Civilization is limited by inertia.”

  War is meant to forcefully change the “inertia” of civilization, and thus, forcefully change the direction of civilization in a manner that benefits the engineers of the conflict.

  One great threat to the mechanism of globalism and the elites behind it is the liberty movement, which is slowly but steadily growing in popularity and influence as America edges ever closer to economic and sociopolitical oblivion. As the U.S. is homogenized, harmonized, and brought down to third world status for the benefit of a one-world system, resistance continues to grow.

  You see, one negative side-effect of the rush towards centralization and a single global power (often referred to by the elites as the “New World Order”) is that the harder the globalists push society toward their Utopian ideal, the more individuals (not controlled governments or political puppets) wake up to the threat. Every action has an equal and opposite reaction. The Liberty Movement is the equalizing reaction to forced globalization.

  In order for the elites to neutralize the threat we present, they must either destroy us or co-opt us. I believe the East/West paradigm is being used in part to attempt the co-option of liberty elements.

  Despite the fact that many liberty analysts are beginning to understand the nature of the false East/West paradigm and the truth behind the rise of Russia, the predictable escalation in Syria is energizing a strange brand of Putin-worship once again. Liberty elements WANT to believe that Putin is somehow in opposition to globalization, that he is somehow morally superior to the Obama Administration, and that Russia is on the side of right in the fight against ISIS and the evil Western empire.

  They want to believe this because they are afraid – they are afraid that they are alone in the fight against the NWO. They are afraid that they will have to commit to personal sacrifice and struggle against a vastly technologically superior opponent. They are afraid that they alone will have to take responsibility for America's destiny and that no great leader on a white horse is coming to blaze the path ahead of them.

  Because of this fear, they sometimes commit the crime of cognitive dissonance in order to protect their false belief in a heroic Putin. They will ignore the fact that Putin is a long time friend of Henry Kissinger, the most publicly vocal proponent of the “New World Order, and that Putin describes Kissinger as his “trusted foreign policy adviser”.

  They will ignore the fact that Russia's primary economic adviser is none other than the hitman of the international banking syndicate, Goldman Sachs, and that Goldman Sachs has been deeply involved in Russia's economic affairs since at least 1992, just after the fall of the Soviet Union.

  They will ignore the fact that Putin and Russia have allied closely with the IMF (an institution supposedly dominated by the U.S.). Putin and the IMF are so intertwined that it was Putin who demanded that the IMF take over the management of Ukraine's finances after the regional crisis began, and, it was the IMF that blatantly supported Putin's call for a change in Ukraine's bond status from private to “official”. Russia also demanded that Ukraine's debts be repaid in Special Drawing Rights, the global currency basket which the IMF plans to use to replace the U.S. dollar as the world reserve mechanism.

  They will also surely ignore the fact that Putin and the Kremlin have on multiple occasion called for the IMF to take over global management of the worlds financial systems through the implementation of the SDR as the new world reserve currency.

  And of course, the fact that Russia is a member of the Bank for International Settlements and the BIS is the policy dictator of ALL central banking (do I really need to quote Carroll Quigley on the BIS yet again?) does not bode well for the affiliations and intentions of Russia as a whole, yet we are still bombarded in the liberty movement with platitudes on how Putin is “sticking it to the bankers”. No, I'm afraid not. According to the evidence, Putin is just like Obama: Yet another whore for the internationalists. Post all the pictures you want of the guy holding an uzi or finishing a judo throw, but his public persona does not fit reality.

  The mainstream media in the U.S. has for the most part run on the narrative that Putin is the next Stalin, and if you are going to perpetuate a false East/West paradigm this makes perfect sense. But there is also a separate narrative being presented to the liberty movement and the rest of the world.

  The talking points coming out of outlets like RT (Russia Today), a media machine controlled by the Russian government, has for the past few years stolen brilliant observations by American liberty proponents and repackaged them as video fluff. Most of these observations are negative in their view of U.S. government policy as well as central banking dictatorship, and they are also entirely correct. The problem is, RT does not apply the same standards of journalistic skepticism to the Russian government or its ties to the central banking cabal.

  Time Magazine publishes pro-Putin articles naming him “man of the year” in every other nation where they have distribution, but removes these stories and covers when publishing in America.

  The general American public is being sold on the idea that Putin is a calculating danger to global stability and that Western governments must become more aggressive to counter the threat. The rest of the world and the liberty movement are being sold on the image of a benevolent Putin and a Russia standing firm against the corrupt war machine of the West, but this image simply is not real.

  The danger for the liberty movement in the near future is considerable. Our blind support of the false East/West paradigm makes us vulnerable to easy co-option, for if we as a movement are tricked into closely affiliating with Russia then we lose our identity as a force for American independence and become nothing more than an “Eastern created” faux revolution. Think it can't happen? Mainstream media outlets are ALREADY building the narrative. The Atlantic was the first, with an article directly connecting “right wing” movements and “conspiracy theorists” in the U.S. with Russian influence and propaganda.

  As the false East/West confrontation grows, the real purpose of such a crisis will become apparent. ISIS agents conveniently shipped out of Syria among millions of "refugees" before Russian forces finally decided to strike will wreak havoc in Western nations. Economic chaos will become prevalent.  The U.S. will lose the dollar's petro-status as the East subsumes Eurasia.  Fear of another world war will haunt public perception. The ever uneducated and terrified mass majority will become far less tolerant of intelligent dissent. And, the Fabian Socialists infesting global institutions will suggest a clever solution to the problem they created – the dissolution of all sovereign nations and the complete centralization of governance into the hands of a select few to save humanity from such destructive divisions.

  If you understand that a primary goal of globalists is to fully remove constitutional protections in America and assert a totalitarian framework, then you have to admit that a conflict with Russia is an excellent opportunity for them.  War fever makes men delirious and malleable, and outside threats make internal despotism more tolerable.

  In the meantime, if the liberty movement refuses to treat Russia with the same x-ray vision it has used against western governments (a Russia clearly working with international financiers and globalist institutions) then we make it far easier for the elitist propaganda machine to paint us as Eastern backed traitors rather than freedom fighters down the road, thus crushing our chances at garnering increased support from the public and awakening new voices.

  Mark my words, in the end we will not only be forced to rebel against centralization under our own criminal government; we will also have to rebel against criminal puppet governments everywhere. I have no doubt that when we see the ranks of the globalist enemy, there will be Russian faces standing right alongside Western oligarchs. Maybe then people will finally admit that the East/West crisis was a carefully crafted hoax all along.

  

  

  

  

  

• "Its Not The Economy Stupid, It's The Dollar"

  "It's not the economy… it's the dollar" – That would appear to be the message from the companies of the S&P 500 who have reported in Q3. As FactSet reports, 18 of the 23 companies reporting so far have cited "the strong dollar" as having a negative impact on earnings. Not record domestic inventories (liquidation beginning), the plunge in world trade, not the economic collapse in take your pick of Brazil (depression), China (credit endgame), India (exports/imports crash), and so on…

  

  What is being missed here is that "The Dollar" is the symptom, not the cause of the problems. Capital is flowing for a reason to drive the USD stronger (or printed for a reason)… because the underlying economies are collapsing (yes and interest rate arb hopes).

  So if ever there was a reason for The Fed to NOT raise rates, the pressure from Corporate CEOs (through their various lobbying or newsletter-writing alumni) must be immense… which explains the sudden change of mind…

  

   

  *  *  *

  It appears, for now, financial engineering (buybacks) has kept the dream alive relative to the soaring USD vs Asian/EM countries (US growth opps); and "hopeful" projections have kept Forward estimates of earnings alive – even as The USD soars against the American companies' most favored growth nations…

  

   

  But at some point it's inevitable – unless there is a seismic shift in Fed Policy (QE4?) – that the USD's strength vs Asian/EM nations will crush earnings… and estimates will be unable to rise with even the biggest hockey-stick forecast.

  *  *  *

  Remember. crises often start slowly… then erupt suddenly; and equity markets are always (without exception) the last to figure it out.

  The credit cycle has well and truly rolled over…

  

  Charts: FactSet and Bloomberg

  

  

  

  

  

• US Military Tank "Intrudes" Into Bombed 'Doctors Without Borders' Hospital, Destroys Potential Evidence

  Submitted by Mike Krieger via Liberty Blitzkrieg blog,

  

  If you’re the U.S. military and you killed 22 people while intentionally bombing a Doctors Without Border hospital in Afghanistan, what do you do next?

  First, you deny all requests for an independent investigation. Check.

  Second, you go to the scene of the war crime and destroy evidence. Check mate.

  From NBC News:

  A U.S. tank “destroyed potential evidence” by forcing its way onto the ruined site of a hospital bombed by American forces in Afghanistan, the charity said.

   

  Doctors Without Borders, which ran the facility in Kunduz, said the tank’s “unannounced and forced entry” through the gates had also frightened staff and damaged property.

   

  The allegations came almost two weeks after a U.S. AC-130 gunship bombed the compound, killing at least 22 people including 12 members of staff.

   

  After the U.S. gave shifting explanations for the incident — which MSF has called a war crime — President Barack Obama apologized to the charity last week. The U.S. and Afghan governments have launched three separate investigations but MSF is calling for an international inquiry.

   

  The tank forced its way through the closed main gate of the bombed-out compound at 1:30 p.m. on Thursday (5 a.m. ET), according to the charity. MSF has since pulled out of the derelict site, but said one of its teams arrived earlier on Thursday to visit the crumbling building.

   

  It said the tank’s “intrusion” contravened an agreement between MSF and the joint investigation team that the charity would be “given notice before each step of the procedure involving the organization’s personnel and assets.”

   

  It added: “Their unannounced and forced entry damaged property, destroyed potential evidence and caused stress and fear for the MSF team.”

  

   

  So I guess now we know why Obama recently announced that he would be halting a planned troop withdrawal from Afghanistan.

  

  

  

  

  

• How To Survive The "Deep State"

  Submitted by Doug Casey via InternationalMan.com,

  A currency crisis is coming… Are you prepared?

   

  In Part 1, we detailed the powerful force that's ruining the country, what’s known as the "Deep State." In this, Part 2, we explain how to prosper during the "Deep State"… and lay out the actions you should take today…

  Almost everyone looks for a political solution to problems. However, once a Deep State situation has taken over, only a revolution or a dictatorship can turn it around, and probably only in a small country.

  Maybe you’re thinking you should get behind somebody like Ron Paul (I didn’t say Rand Paul), should such a person materialize. That would be futile.

  Here’s what would happen in the totally impossible scenario that this person was elected and tried to act like a Lee Kuan Yew or an Augusto Pinochet against the Deep State:

  First, there would be a “sit-down” with the top dogs of the Praetorian agencies and a bunch of Pentagon officers to explain the way things work.

   

  Then, should he survive, he would be impeached by the running dogs of Congress.

   

  Then, should he survive, whipped dog Americans would revolt at the prospect of having their doggy dishes broken.

  Remember, your fellow Americans not only elected Obama, but re-elected him. Do you expect they’ll be more rational as the Greater Depression deepens? Maybe you think the police and the military will somehow help. Forget it…they’re part of the problem. They’re here to “protect and serve” their colleagues first, then their employer (the State), and only then the public. But the whipped dog likes to parrot: “Thank you for your service.” Which is further proof that there’s no hope.

  Incidentally, an election year is coming up. So I’ll make a prediction, despite the fact that I don’t keep my finger on the pulse of what the Greeks called the hoi polloi and the Romans called the capite censi.

  Because we’ll be immersed in a gigantic financial and economic debacle by this time next year, the natives will be restless and looking for some real hope and change.

  They’ll clamor for an outsider who has all the answers. Therefore, Donald Trump will represent the right wing of the Demopublican Party and either Bernie Sanders or a general (yet to be identified), the left wing. I say a general because Americans both love and trust their military.

  So what should you do, based on all this? For one thing, don’t waste your time and money trying to change the course of history. Trying to stop the little snowball rolling down the mountainside might have worked many decades ago, but now it’s turned into a gigantic avalanche that’s going to smash the village at the bottom of the valley. I suggest you get out of the way.

  What, you may ask, would I do if I were dictator of the U.S. and had absolutely no regard for my personal safety? Here’s a seven-part program, for entertainment purposes only:

  1. Allow the collapse of all zombie corporations – banks, brokers, insurers, and government contractors. The real wealth they supposedly own will still exist.
  2. Abolish all regulatory agencies. Although Boobus americanus believes they exist to protect him, and that may have been an intention when they were created, they, at best, serve the industries they regulate. The U.S. Food and Drug Administration, for instance, kills more Americans every year than does the Department of Defense in a typical decade. The SEC, the Swindlers Encouragement Consortium, lulls the average investor into thinking he’s protected. They, and other agencies, extract scores of billions out of the economy to feed useless mouths in return for throwing sand in the gears of the economy.
  3. Abolish the Fed…you need a strong currency to encourage saving. Actually, you don’t need a currency at all. Gold is vastly better as money.
  4. Cut the size of the military by 90% and abolish the Praetorian agencies. In addition to bankrupting the U.S., the military is now a huge domestic danger, even while it’s mainly an instrument for creating enemies abroad.
  5. Sell essentially all U.S. government assets. Although some actually have value, they are all a drain on the economy. For instance, the U.S. Postal Service loses $5 billion a year, and Amtrak lost a total of $1.1 billion last year. The Interstate Highway System, airports and the air-traffic-control system, the 650 million acres of U.S. government land, and many thousands of other assets should all be distributed in shares or sold. This would liberate an immense amount of dead capital. The proceeds could be used to partially satisfy some government obligations.
  6. Eliminate the income tax, as a start, which will be possible if the other six things are done. The economy would boom.
  7. Default on the national debt and contingent liabilities. That’s somewhere between $18 trillion and $200 trillion. There are at least three reasons for that. First is to avoid turning future generations into serfs. Second is to punish those who have enabled the State by lending it money. Third is to make it impossible for the State to borrow in the future, at least for a while.

  I like this program from a practical point of view, because when a structure is about to collapse, it’s much wiser to conduct a controlled demolition than to just let it fall when no one expects it.

  But I also like it from a philosophical point of view because, as Nietzsche observed, that which is falling deserves to be pushed.

  There are, however, two very important reasons for optimism, science and savings.

  Science: Science and technology are the mainsprings of progress, and there are more scientists and engineers alive today than have lived in all previous history put together. Unfortunately for Western civilization, however, most of them are Asians. Most American PhDs aren’t in Rocket Science but Political Science, or maybe Gender Studies. Nonetheless, the advancement of science offers some reason to believe that not only is all this gloom and doom poppycock, but that the future will not only be better than you imagine, but, hopefully, better than you can imagine.

   

  Savings: Things can recover quickly because technology and skills don’t vanish overnight. Everybody but university economists knows you have to produce more than you consume, and save the difference, if you want to avoid starving to death. The problem is twofold, however. Most Americans have no savings. To the contrary, they have lots of debt. And debt means you’re either consuming someone else’s savings or mortgaging your own future.

  Worse, science today is capital intensive. With no capital, you’ve got no science. Worse yet, if the U.S. actually destroys the dollar, it will wipe out the capital of prudent savers and reward society’s grasshoppers. Until they starve.

  Of course, as Adam Smith said, there’s a lot of ruin in a nation. It took Rome several centuries to collapse. And look at how quickly China recovered from decades of truly criminal mismanagement.

  On the other hand, Americans love their military, and this heavily armed version of the post office seems like the only part of the government that works, kind of. So maybe the U.S. will start something like World War III. Then, the whole world can see a real-life zombie apocalypse. Talk about free entertainment…

  Action

  But let’s return to the real world. What should you do? And how will this all end?

  From a personal standpoint, you should preserve capital by owning significant assets outside your native country, because as severe as market risks are, your political risks are much greater.

  1. I suggest foreign real estate in a country where you’re viewed as an investor to be courted, rather than a milk cow. Or maybe a beef cow.
  2. Gold. It’s no longer at giveaway prices, but remains the only financial asset that’s not someone else’s liability.
  3. Look for depressed speculations. At the moment, my favorites are resource companies, which are down more than 90% as a group. And look to go long on commodities in general. Soybeans, wheat, corn, sugar, coffee, copper, and silver are probably near the bottom.
  4. Short bubbles that are about to burst. Like bonds, in general, and Japanese bonds denominated in yen, in particular. If you have a collectible car from the ‘60s that you hold as a financial asset, hit the bid tomorrow morning. Same if you have expensive property in London, New York, Sydney, Auckland, Hong Kong, or Shanghai, among other places.

  The Second Law to the Rescue

  From a macro standpoint, don’t worry too much. The planet has been here for 4.5 billion years and it has a life of its own. You don’t have to do anything to save the world. Instead, rely on the Second Law of Thermodynamics.

  There are very few laws I believe in, but this is one of them. There are many ways of stating the law, and its corollaries, but this isn’t an essay on physics. In essence, it states that all systems wind down over time. That entropy conquers all. That all systems collapse without constant new inputs of energy. And that the larger and more complex a system becomes, the more energy it requires. The Second Law is why nothing lasts forever.

  In human affairs, you can say stupidity is a corollary to the Second Law, in that it throws sand in the gears of society and accelerates the tendency of things to collapse. But stupidity doesn’t always mean low intelligence…most of the destructive sociopaths acting as top dogs have very high IQs. I want to draw your attention to more useful definitions of stupidity.

  One is an inability to predict not just the immediate and direct consequences of an action, which a typical six-year-old can do, but to predict the indirect and delayed consequences.

  An even more helpful definition is: Stupidity is an unwitting tendency towards self-destruction. It’s why operations run by bad people always go bad. And why, since the Deep State is run by bad people – sociopaths are actively drawn to it – it will necessarily collapse.

  The Second Law not only assures that the Deep State will collapse but, given enough time, that all “End of the World” predictions will eventually be right, up to the heat death of the universe itself. It applies to all things at all levels…including, unfortunately, Western civilization and the idea of America. As for Western civilization, it’s had a fantastic run. Claims of the politically correct and multiculturalists aside, it’s really the only civilization that amounts to a hill of beans.

  Now, it’s even riskier calling a top in a civilization than in a stock or bond market. But I’d say Western civilization peaked just before World War I. In the future, it will be a prestige item for Chinese families to have European maids and houseboys.

  As for America, it was an idea – and a very good one – but it’s already vanished, replaced by the United States, which is just one of 200 other nation-states covering the face of the Earth like a skin disease. That said, the U.S. peaked in the mid ‘50s and has gone down decisively since 1971. It’s living on stored momentum, memories, and borrowed Chinese money.

  Let me bring this gloomy Spenglerian view of the world to a close with some happy thoughts. You want to leave them laughing. Not everybody went down with the Titanic.

  Looking further at the bright side: Just being born in America in the 20th century amounted to winning the cosmic lottery…an accident of birth could have placed us in Guinea or Zimbabwe. On the other hand, if I wanted to make a fortune in today’s world, I’d definitely head to Africa.

  But just as the Second Law dictates that all good things, like America, must come to an end, so must all bad things, like the Deep State, in particular. That’s a cosmic certainty.

  Finally, it occurs to me that, while I hope I’ve explained why the Second Law will vanquish the Deep State, I’ve neglected to explain how whipped dogs can profit from the collapse of Western civilization. Well, it was a trick question. We all love the idea of justice, even if most people neither understand what it is, nor like its reality.

  The answer is that they can’t… parasites can only exist as long as their host. Which is actually the final piece of good news I want to leave you with.

  *  *  *

  Editor’s note: Nobody is better prepared to survive a currency crisis than Doug Casey. In his brand-new book, Going Global, Doug shares his favorite techniques, ideas, tips, and strategies…including the currencies that are in the best position to survive the coming inflationary storm (page 29)…the top U.S. bank for buying foreign currencies (page 131)…which foreign banks will let you safely open an account (page 117)…and much, much more.

  Right now, U.S. residents can get a free hardback copy of Going Global shipped to their homes. International residents will only receive the e-book. Click here to secure your copy now.

  

  

  

  

  

• The Humiliation Is Complete: ISIS Fighters Cut Off Beards And Run Away As Russia, Iran Close In

  The thing about ragtag groups of militants that display a penchant for extreme violence is that in the absence of serious opposition, they can rack up gains at an alarming pace. 

  Of course there are plenty of (possibly credible) theories out there, which suggest that some of what you see in the videos released by ISIS is for show and we won’t endeavor to assess the degree to which the group’s brutality is real versus staged, but one thing is clear: regardless of who is funding, training, and/or supporting them, there are obviously fighters on the ground in the Mid-East waving the ISIS flag and committing atrocities in its name. 

  That works well when it comes to destabilizing fragile states that are already beset with sectarian bickering on the way to claiming large swaths of territory from a defenseless citizenry.

  But you can’t intimidate a modern fighter jet by waving around a sword and if you’re a newbie on the Mid-East militant scene, you can’t scare a three decade veteran by beheading a couple of people, which is why if you’re ISIS, the combination of the Russian Air Force and Hezbollah ground troops is absolutely terrifying.

  As we documented earlier today, Hezbollah and Iranian troops are advancing on Aleppo and Moscow is backing the offensive from the sky which means that the hodgepodge of anti-regime forces that control Syria’s largest city will almost (and we say “almost” because there are no sure things in war) certainly be routed in a matter of weeks if not days, which would effectively serve to restore the Assad regime in Syria.

  After that, the Russian bear and Qasem Soleimani will turn their eyes to the East of the country and at that point, it is game over for ISIS. 

  Apparently all of the above isn’t completely lost on al-Nusra and Islamic State fighters because if you believe the Russian media (and we’re not saying you should), Sunni extremists are now shaving off their beards and running for their lives. Here’s Sputnik:

  Hundreds of ISIL fighters are fleeing Syria for Turkey, as Russia’s Defense Ministry previously said, and reports are popping up that they are leaving their beards behind.

  .2/ More Jihadi beards, shaved off in Reef #Aleppo, as they flee clean shaven 2 #Turkey, these Via @leithfadel pic.twitter.com/xOmMkhH8oY

  — Hala Jaber (@HalaJaber) October 12, 2015

  Now obviously, these are just pictures of hair on the ground with razors, so that shouldn’t be interpreted as anything that even approximates definitive evidence of a full-on ISIS retreat but put yourself in the following situation for a moment. You’re a Sunni extremist and your regional and Western backers have just abandoned you. You are now under siege by the Russian Air Force. If you survive the air strikes you will soon have to come face to face with the fiercest, most experienced Shiite militia on the planet and if you somehow manage to survive that, well then you have to fight the Quds Force (“how do you shoot the devil in the back“?).

  What would you do? 

  *  *  *

  We close with the perfect video clip analogy. The US is in the blue shirt, ISIS is in the red, star-spangled jumpsuit, and Russia, well… Russia is the bear.

  US to ISIS: “No, no, you can’t quit now, we just started. You got to give these people a show man“…

  

  

  

  

  

• American Psycho – Has The United States Lost Its Collective Mind?

  Authored by Roberts Bridges, originaslly posted Op-Ed at RT.com,

  From Ferguson, Missouri to the deserts of Afghanistan the specter of US aggression is fueling the flames of civil strife and military conflict around an increasingly volatile planet. Much of the problem may be connected to the breakdown of the American psyche.

  Before attempting to shed some light on America’s mental condition, let’s open with a pop quiz question: What is the top-selling prescription drug in the US? Nope, it’s not Viagra, not Prozac, forget the Percocet. If you don't know, take a peek in the medicine cabinet because there’s a high chance it’s lurking in there, right behind that purple people eater. Yes, you got it. The top-selling drug in the Land of the Free and Disturbed is an antipsychotic, happily named Abilify.

  Once again: The top-selling drug in America is an antipsychotic. Now some might say that’s mental.

  “To be a top seller, a drug has to be expensive and also widely used,” Steven Reidbord M.D. wrote in Psychology Today. “Abilify is both. It’s the 14th most prescribed brand-name medication, and it retails for about $30 a pill. Annual sales are over $7 billion, nearly a billion more than the next runner-up.”

  Let those numbers seep into your brain for a moment: $7.2 billion dollars. $30 per pill. Although that might make for some laugh-out-loud late-night comedy, these numbers are no laughing matter.

  This on top of the latest statistic that shows prescription drug spending in the US exploded in 2014 to nearly $374 billion, a whopping 13.1 percent increase in growth, according to a new report from IMS Institute for Healthcare Informatics.

  Aside from the fact that Americans are buying antipsychotic medication by the truckload, there’s another disturbing thing about Abilify: Nobody, not even the Food and Drug Administration (FDA), has any idea what makes it effective. According to the USPI label that accompanies each bottle: “The mechanism of action of aripiprazole… is unknown. However, the efficacy of aripiprazole could be mediated through a combination of partial agonist activity at D2 and 5-HT1A receptors and… etc, etc.”

  In other words, millions of Americans are ingesting an antipsychotic drug that not even the scientific community can say exactly what makes it work. Is that not in itself the very definition of insanity?

  So where is the uproar, the protest, the media hype over this battle for the great American brain? Behind the wall of silence, there have been a few courageous experts who have broken rank with their colleagues – not to mention the omnipotent pharmaceutical industry – to blow the whistle on the abuse of psychiatric drugs in America.

  Professional backlash

  Joanna Moncrieff, an academic and practicing psychiatrist, is a long-standing critic of psychiatric drug treatment. Her 2009 book, The Myth of the Chemical Cure, was short-listed for the 'Mind Book of the Year.' In it, Moncrieff “exposes the traditional view that psychiatric drugs correct chemical imbalances as a dangerous fraud.”

  According to Moncrieff’s landmark study, psychiatric drugs 'work' by “creating abnormal brain states, which are often unpleasant and impair normal intellectual and emotional functions along with other harmful consequences.”

  As Jay Michaelson noted in The Daily Beast, administering such a powerful drug like Abilify “makes sense for their primary use: anti-psychotics like aripiprazole are administered to seriously ill people like schizophrenics. Abilify is a close cousin of Thorazine. Yet, now it’s the most profitable drug in America.”

  Indeed, the health risks associated with taking an antipsychotic drug like Abilify can make the cure look worse than the mental disease itself. In fact, the list of possible side-effects associated with America’s top-selling prescription drug makes for some uncomfortable reading.

  Here is a description of one of the 13 serious side-effects connected to this “blockbuster” drug: “Uncontrollable movements of face, tongue, or other parts of body, as these may be signs of a serious condition called tardive dyskinesia (TD). TD may not go away, even if you stop taking ABILIFY. TD may also start after you stop taking ABILIFY.”

  And here’s another potential for a Dr. Jekyll-type transformation into Mr. Hyde: “High fever, stiff muscles, confusion, sweating, changes in pulse, heart rate and blood pressure may be signs of a condition called neuroleptic malignant syndrome (NMS), a rare and serious condition that can lead to death.”

  And they charge $30 dollars per pill for this? 'Yes, the disease has been cured, Mrs. Smith, but too bad Mr. Smith is no longer with us!'

  I was cynically waiting for Psychology Today to come out cheerleading for this exorbitant and potentially deadly antipsychotic drug, but instead Dr. Reidbord came down surprisingly hard not just on the drug, but on our national quest to find calm in a sea of prescription pills, as well as those relentless commercial forces that drive this warped behavior.

  “What does it mean to live in the Age of Abilify,” Reidbord asked. “First, that we’re still looking for happiness and peace in a bottle of pills, costs and risks be damned. Second, that there’s nearly no end to the money the U.S. health care system will spend on problems that can be addressed more economically. And third, it’s a stark reminder that commercial interests seek to expand sales and profits whenever possible.”

   

  Big Pharma makes a killing—literally: http://t.co/qVCSnQrqit #prescriptiondrugs #bigpharma #healthcare pic.twitter.com/UybZkRKZmZ

  — Reid Jenner (@TrueDiagnosis) October 3, 2015

  Ever since the introduction in the 1950s of the world’s first antipsychotic drug, Thorazine, and later with the antidepressant, Prozac, as well as hundreds of other generic knockoffs, the drug industry has been busy supplying the overstressed American consumer with the ‘magic bullet’ to cure whatever ails them.

  Chemical-laced consumerism

  The US pharmaceutical industry enjoys a rare privilege, not to mention advantage over the average, angst-riddled American consumer: With the exception of New Zealand, it is the only country that allows prescription medication ads to be aired on television 24/7.

  Julie Ross of Forcechange.com organized a petition drive to ban prescription drug commercials, and her reason makes clear-headed sense: “Drug companies spend $4 billion a year advertising… In addition to making pill popping seem like a normal necessity, prescription drug ads usually feature newer medications that have not had long term studies performed on them.

  "All too often, a drug is recalled years after it is introduced because it’s caused side effects ranging from hair loss to death.”

  According to the Centers for Disease Controls, every day in America, 44 people die from overdose of prescription painkillers. The CDC blames the overdose surge on a “dramatic increase in the acceptance and use of prescription opioids for the treatment of chronic, non-cancer pain, such as back pain or osteoarthritis (The most common drugs involved in prescription overdose deaths include: Hydrocodone (e.g., Vicodin), Oxycodone (e.g., OxyContin), Oxymorphone (e.g., Opana) and Methadone (especially when prescribed for pain).

  In 2013, nearly two million Americans abused prescription painkillers. Each day, almost 7,000 people are treated in emergency rooms for abusing the medication. Has the unbearable weight of the capitalist, dog-eat-dog system gone to America's head, or is something else at play?

  *Viewer discretion advised: Video contains mild profanity.

   

  People who take painkillers can become addicted with just one prescription, according to the CDC website. And once addicted, start packing your bags for the nearest detox center because getting unhooked can takes months, maybe years, maybe never.

  Although many prescription medications have worked miracles for millions of people, the “conundrum,” as Robert Whitaker, the author of “Anatomy of an Epidemic,” calls it, is that mental illness in American society is not showing any sign of going away. In fact, it is “skyrocketing.”

  “We should expect that the number of disabled mentally ill in the United States, on a per-capita basis, would have declined over the past fifty years… Instead, as the psychopharmacology revolution has unfolded, the number of disabled mentally ill in the United States has skyrocketed.”

  Most disturbing for Whitaker is that this “modern-day plague” of mental illness has “now spread to the nation’s children.”

   

  Ver "The Drugging Of Our Children (Full Length)" en YouTube. #health #children #kids #prescriptiondrugs #drogas https://t.co/T1IszE99WB

  — Leila Andreu (@LeilaMovil) October 1, 2015

  Despite a nationwide call for doctors to stop prescribing antipsychotic drugs for everything from schizophrenia to simple insomnia to attention deficit hyperactivity disorder [ADHD] in children, Americans just continue with their doctor-supported drug binge.

  At some point, one soberminded individual may be tempted to ask: Is turning the American populace – courtesy of the multi-billion-dollar pharmaceutical industry – into walking, talking chemical zombies, the very thing that the Pentagon is now preparing to battle?

  This is no joke or conspiracy theory: As CNN reported, the US Defense Department has devised a coordinated plan “should a zombie apocalypse befall the country.”

  “In an unclassified document titled “CONOP 8888,” officials from U.S. Strategic Command used the specter of a planet-wide attack by the walking dead as a training template for how to plan for real-life, large-scale operations, emergencies and catastrophes.”

  

  

  

  

  

• Enough About Emails?

  Enough about everything else too?

   

  

   

  Source: Investors.com

  

  

  

  

  

• "Shadow" Short Convexity: If You Short 'Fear', Be Prepared For 'Horror'

  Excerpted from Artemis Capital Management letter to investors,

  

  Pre-emptive strikes on financial risk through unconventional monetary policy amplifies ‘shadow’ short convexity leading to tail risks that are near impossible to gauge. Shadow short convexity describes an immeasurable fragility to change introduced when participants are encouraged to behave in a way that contributes to feedback loops in a complex system.

  Shadow convexity reinforces the dominant trend in a hidden non-linear way and effects all participants. The ultimate non-market example of shadow short convexity is the failure of communism and the fall of the Berlin Wall in 1989. Following decades of oppression, the wall literally and psychologically fell when crowds of East Germans gathered at checkpoints and border guards refused to use mass violence to suppress them. The wall collapsed organically and without violence after the suppressed desire for freedom became a self-reinforcing force of change that could no longer be denied.

  The ultimate market example of shadow convexity is the role of portfolio insurance in the 1987 Black Monday crash. The portfolio insurance strategy relied upon selling increasing amounts of financial futures to protect against drawdowns in equity markets. The greater the decline in the market the more financial futures were sold to offset the loss contributing to a non-linear feedback loop and causing a -20% single day decline in the S&P 500 index. 

  

  Modern markets contain many new sources of shadow short convexity stimulated by extraordinary global monetary policy.

  Examples include risk parity, volatility targeting, machine learning, and exchange traded products. All of these structural devices contain a “shadow gamma” or “shadow liquidity” by reacting to market conditions that they themselves influence resulting in self-reflexivity. Volatility targeting and risk parity strategies create feedback loops by increasing and decreasing risk exposure based on volatility observed in the recent past.

  As these strategies dominate markets they can begin to influence the same realized volatility used to make their initial risk decision. Risk parity is an example of a strategy that adds shadow short convexity to the system by leveraging short correlations between stocks and bonds.

  Machine learning technology is a tool utilized by many high frequency and quantitative trading firms, including Artemis, and relies on advanced statistical methods to recognize non-linear patterns in historical price data. There are many advanced algorithms with fancy names like “neural networks” and “random forests” but they all rely on the same limited history of financial data to make decisions.

  Quality data is always more important than the algorithm used. As machine learning gains widespread adoption the models may begin to recognize patterns in data that they themselves influence resulting in feedback loops.

  When a self-driving car uses visual pattern recognition algorithms to react to the road it does not adversely change the fundamental reality it was designed to respond to. Now imagine a fleet of self-driving cars that, upon first sign of any risk, avoid accidents by encouraging other drivers to collide with one another. Now you see the problem.

  Exchange traded products (“ETPs”) introduce self-reflexivity by creating a highly liquid security (listed stock) that tracks a potentially illiquid underlying instrument (e.g. high yield bonds, commodity futures). Exchange traded products with illiquid underlying assets remind me of a classic song from the Eagles because  “you can check out anytime, but you can never leave”. Leveraged ETPs also add to shadow short convexity by requiring non-linear exposure adjustments to linear moves in asset prices.

  When combined with a liquidity mismatch any period of sustained buying and selling becomes self-reinforcing. All of the above structures and systems introduce shadow convexity to markets that reinforce the dominant price direction in a non-linear way. This works very well when central banks are providing ample liquidity and reinforcing the status quo but it can and will cut in the other direction. Lower volatility drives lower volatility… and higher volatility drives higher volatility. Minsky once wrote that stability is the greatest source of instability. Shadow convexity is the reason.

  

  The concept of a ‘Black Swan’, defined as an extreme or rare event, has never been more relevant to markets, but the idea is so frequently abused in financial commentary that it risks becoming a cliché. The absurd meme that central banks have eliminated extreme tail risks through accommodative monetary policy, recently repeated by the head of research at a major bank, is part of the institutionalized narrative of moral hazard. By Taleb’s definition, Black Swan events are unpredictable, so how can a central bank prevent something they can’t even identify in the first place? More to this point the investment community has no consistent definition of what tail risk or high volatility even means. 

  Volatility is about fear… but extreme tail risk is about horror.  The Black Swan, as a negative philosophical construct, is when fear ends and horror begins.

  

  Fear is something that comes from within our scope of thought. True horror is not human fear in a definable world, but fear that comes from outside what is definable. Horror is about the limitations of our thinking.

  In the novella, “The Call of Cthulhu”, the horror author H.P. Lovecraft describes an ancient and malevolent entity hibernating deep within the earth the sight of which can drive a man to madness. The imprisoned Cthulhu will destroy the world upon its awakening and this is a source of subconscious anxiety for all humankind even if we are individually unaware of its existence.

  Cthulhu is a black swan. I’m sorry but the 2007-2008 financial crash was not a black swan. That is a collective lie propagated by policy makers so they don’t cry themselves to sleep at night. Many different people predicted and profited from the 2008 crisis including this author.

  A black swan is when things go from bad to uncontrollably bad, when a linear decline becomes an exponential decline. The black swan resembles what amateur screenwriters call the “all is lost moment”. It is not the first act of the horror movie when people start turning into zombies… it is the end of the second act when the hero realizes he is the only person left who is not a zombie.

  2008 was about the fear of failing banks and crashing markets… but the true horror was the impending collapse of the entire fiat money system that never came to be. That was the true black swan.

  The unpredictable horror of a black swan often occurs following a predictable period of fear. For example, the Black Monday 1987 crash was an unpredictable event that occurred within a predictable crash. In the late summer of 1987 the market was trending lower and financial stress conditions were rising rapidly. Volatility rose even before that fateful Monday increasing from 21.83 at the start of October to 36.37 the day prior to the big crash. By this point, the S&P 500 had already experienced a -14% peak-to-trough drawdown. Many investors ranging from global macro traders to systematic trend followers correctly predicted a crash. Nobody predicted the market would fall -20% in one day or that volatility would peak at 150. 

  Ironically, if the same price movement occurred today most people would short volatility and buy equities the day prior to Black Monday in anticipation of policy support.

  Most crises occur slowly and then suddenly. A devastating earthquake is a tremor that just didn’t stop… and Black Monday 1987 was a crash that just didn’t stop. To this extent sizing long volatility positions into a crisis can yield life changing returns at the right point. Today, due to the actions of central banks, everyone is doing the exact opposite…

  If you short fear you must be prepared for horror… in the Prisoner’s dilemma we are one step closer to HORROR
   

  

  

  

  

  

• Caught On Tape: John McCain "Guarantees Russia Will Not Act" In Syria

  Someone once asked Vladimir Putin what he thought of Senator John McCain’s suggestion that the Russian president would one day go the way of Muammar Gaddafi. Here’s what Putin said:

   “McCain sat in a pit in Vietnam for several years, anyone would go nuts after that.”

  
  

  And while we’re not sure if we would go so far as to call McCain “nuts” – because that would effectively exonerate him and relieve him of any responsibility for what he says – we would certainly put him the category of “uber hawk” and we don’t mean he’s angling for an FOMC hike.

  As you might recall, McCain pushed hard for the ouster of Russian-backed Viktor Yanukovych in Ukraine.

  The good Senator even went so far as to attend a rally at Maidan and proclaim that “America stands with Ukrainians”. 

  We all know how that turned out. 

  Yanukovych fled to Russia, separatists backed by The Kremlin got angry, and the hardliners from Maidan adopted a ruthless brand of nationalism on the way to forming anti-Russian militias that Kiev is completely incapable of controlling and the conflict festers to this very day.

  Oh, and Ukraine descended into economic chaos. 

  Of course McCain doesn’t have the best track record in Syria either. Rather than get into the specifics (because we’ve documented them on any number of occasions) or debate whether or not certain pictures were photoshopped, we’ll simply say that McCain adopted the same approach as he did in Kiev. That is, he openly supported “freedom fighters” without any apparent regard for how much pain and suffering the US causes when it deliberately seeks to destabilize regimes. 

  In Syria, McCain seems to have made another gross miscalculation: he assumed that US hegemony is as universally accepted today as it was two decades ago, which apparently led the Senator to underestimate The Kremlin and on that note, we present the following clip with no further comment:

  

  

  

  

  

• The Mistake Of Only Comparing US Murder Rates To "Developed" Countries

  Submitted by Ryan McMaken via The Mises Institute,

  Much of the political thinking about violence in the United States comes from unfavorable comparisons between the United States and a series of cherry-picked countries with lower murder rates and with fewer guns per capita. We’ve all seen it many times. The United States, with a murder rate of approximately 5 per 100,000 is compared to a variety of Western and Central European countries (also sometimes Japan) with murder rates often below 1 per 100,000. This is, in turn, supposed to fill Americans with a sense of shame and illustrate that the United States should be regarded as some sort of pariah nation because of its murder rate.

  Note, however, that these comparisons always employ a carefully selected list of countries, most of which are very unlike the United States. They are  countries that were settled long ago by the dominant ethnic group, they are ethnically non-diverse today, they are frequently very small countries (such as Norway, with a population of 5 million) with very locally based democracies (again, unlike the US with an immense population and far fewer representatives in government per voter). Politically, historically, and demographically, the US has little in common with Europe or Japan.

  Prejudice about the "Developed World" vs "the Third World"

   

  But these are the only countries the US shall be compared to, we are told, because the US shall only be compared to “developed” countries when analyzing its murder rate and gun ownership. And yet, no reason for this is ever given. What is the criteria for deciding that the United States shall be compared to Luxembourg but not to Mexico, which has far more in common with the US than Luxembourg in terms of size, history, ethnic diversity, and geography?

  Much of this stems from outdated preconceived and evidence-free notions about the "third world." As Hans Rosling has shown, there is this idea of "we" vs. "them." "We" are the special "developed" countries were people are happy healthy, and live long lives. "Them" is the third world where people live in war-torn squalor and lives there are nasty, brutish, and short. In this mode of thinking there is a bright shiny line between the "developed" world and everyone else, who might as well be considered as a different species.

  In truth, there is no dividing line between the alleged "developed" world and everyone else. There is, in fact, only gradual change that takes place as one looks at Belgium, then the US, then Chile, and Turkey, and China, and Mexico. Most countries, as Rosling illustrates here, are in the middle, and this is freely exhibited by a variety of metrics including the UN's human development index.

  Once we understand these facts, and do not cling to bizarre xenophobic views about how everyone outside the "developed" world is too dysfunctional and/or subhuman (although few gun control advocates would ever admit to the thought) to bear comparison to the US, we immediately see that the mantra "worst in the developed world" offers an immensely skewed, unrealistic, and even bigoted view of the world and how countries compare to each other.

  While ignorance about true global poverty, life expectancy, and family planning are no doubt a source of some of these wrong-headed comparisons, one doesn't need to be the world's biggest cynic to recognize that the US is only compared to a selective list of countries because doing so offers a biased view of the United States that makes it looks like an especially crime-ridden place.

  But, we are never allowed to compare the US to middle income countries like Uruguay, Russia, or Mexico because that would show that the US is actually a remarkably safe place in global terms on top of having many more legally owned guns than those countries.

  Nevertheless, we've all heard it too many times to count: gun laws in the United States are "insane" because countries like Sweden and Luxembourg have far more restrictive gun laws and are much safer because of it. The US has the highest murder rate in the "developed world" — presumably because of its lax guns laws —we are told again and again.

  Few people who repeat this mantra have any standard in their heads of what exactly is the "developed" world. They just repeat the phrase because they have learned to do so. They never acknowledge that when factors beyond per capita GDP are considered, it makes little sense to claim Sweden should be compared to the US, but not Argentina.  Such assertions ignore immense differences in culture, size, politics, history, demographics, or ethnic diversity. Comparisons with mono-ethnic Asian countries like Japan and Korea make even less sense.

  But for an illustration of where this sort of thinking leads, let's look at this Washington Post article titled  “The U.S. has far more gun-related killings than any other developed country.”

   

  After mistakenly using the "gun related" killings rate instead of the murder rate (see below) the author, Max Fisher, carefully construct his comparisons so as to emphasize the gun deaths rate (which is implied to be as good as the murder rate) in the US. 

   

  As usual, no reason is given as to why the US should only be compared to “developed” countries, but then Fisher proceeds to add a few non-traditional comparisons to drive home the point as to how violent the US truly is, in his view.

   

  Fisher adds Bulgaria, Turkey, and Chile, which are middle-income countries. And that lets him make this graph: 

   

  

   

  Why Turkey and Chile and Bulgaria? Well, those countries are OECD members, and many who use the "developed country" moniker often use the OECD members countries as a de facto list of the "true" developed countries. Of course, membership in the OECD is highly political and hardly based on any objective economic or cultural criteria.

  But if you're familiar with the OECD, you'll immediately notice a problem with the list Fisher uses. Mexico is an OECD country. So why is Mexico not in this graph? Well, it's pretty apparent that Mexico was left off the list because to do so would interfere with the point Fisher is trying to make. After all, Mexico — in spite of much more restrictive gun laws — has a murder rate many times larger than the US. 

  But Fisher has what he thinks is a good excuse for his manipulation here.  According to Fisher, the omission is because Mexico “has about triple the U.S. rate due in large part to the ongoing drug war.”

  Oh, so every country that has drug war deaths is exempt? Well, then I guess we have to remove the US from the list.

   

  But, of course, the US for some mysterious reason must remain on the list, so, by “developed” country, Fisher really means “ a country that’s on the OECD list minus any country with a higher murder rate than the US.”

   

  At this point, we're reminded that Fisher (and no one else I’ve ever seen) has made a case for what special magic it is that makes the OECD list the one list of countries to which the US shall be compared. 

   

  More Realistic Comparisons Involve a Broader View of the World

   

  Why not use the UN’s human development index instead? That would seem to make at least as much sense if we’re devoted to looking at “developed countries.” 

   

  So, let’s do that. Here we see that the OECD’s list contains Turkey, Bulgaria, Mexico, and Chile. So, if we're honest with ourselves, that must mean that other countries with similar human development rankings are also suitable for comparisons to the US. 

   

  Well, Turkey and Mexico have HDI numbers at .75. So, let’s include other countries with HDI numbers either similar or higher. That means we should include The Bahamas, Argentina, Costa Rica, Cuba, Panama, Uruguay, Venezuela, Russia, Lithuania, Belarus, Estonia, and Latvia. 

   

  You can see where this is going. If we include countries that have HDI numbers similar to — or at least as high as — OECD members Turkey and Mexico, we find that the picture for the United States murder rate looks very different (correctly using murder rates and not gun-deaths rates):

  

  Wow, that US sure has a pretty low murder rate compared to all those countries that are comparable to some OECD members.  In fact, Russia, Costa Rica and Lithuania have all been invited to begin the process of joining the OECD (Russia is on hold for obvious political reasons).  But all those countries have higher murder rates than the US. (I wonder what excuse Fisher will manufacture for leaving off those countries after they join the OECD.)

   

  Things get even more interesting if we add American states with low murder rates.

   

  And why not include data from individual states? It has always been extremely imprecise and lazy to talk about the “US murder rate” The US is an immense country with a lot of variety in laws and demographics. (Mexico deserves the same analysis, by the way.) Many states have murder rates that place them on the short list of low-crime places in the world. Why do we conveniently ignore them? The US murder rate is being driven up by a few high-murder states such as Maryland, Louisiana, South Carolina, Delaware, and Tennessee. In the spirit of selective use of data, let's just leave those states out of it, and look at some of the low-crime ones: 

  

   

   

  We see that OECD members Chile and Turkey have murder rates higher than Colorado. Perhaps they should try adopting Colorado’s laws and allow sale of handguns and semi-automatic rifles to all non-felon adults. That might help them bring their murder rates down a little.

   

  But you know that’s not the conclusion we're supposed to come to.Comparisons can never work in that direction. The comparisons should only be used to compare the US to countries with restrictive gun laws and low murder rates. Comparisons with countries that have restrictive gun laws (and/or few private guns) and murder rates similar to or higher than US rates (i.e., Latin America, the Caribbean and the Baltic States.)

   

  Nevertheless, we have yet to see any objective reason why only OECD countries should be included or why countries similar in the HDI to Turkey and Mexico should be excluded.

   

  But before we wrap up, let’s look at the murder rates in all these countries alongside the number of civilian guns per 100 residents. (The x axis is civilian guns per 100 residents, and the y axis is murder rates in x per 100,000.)

   

  Here’s the scatter plot:

  

   

  Obviously, the US is big outlier in terms of guns per capita. But in terms of murder rate, it’s very much in the middle of these countries. 

   

  Things look even better for some areas of the US. If I include low-crime states, we get this (The x axis is civilian guns per 100 residents and y axis is murder rate in x per 100,000):

  

   

  Of course, if I added countries like Switzerland and Sweden, you’d see many more dots here near Bulgaria with low gun totals and very low murder rates. 

   

  But as no reason has ever been given as to why we should only compare to Western Europe,. Let’s compare the US to the rest of the Americas for a more realistic picture of the world beyond the OECD. When we do that, we get: 

  

   

  By comparison, the US look downright pacific. And why should not this comparison be made?

  Indeed, it makes more sense to compare the US to other states in the  Americas than to Europe or Japan. The US and most Latin American countries were settled in similar time periods. They are frontier countries settled mostly by European immigrants that displaced a native population (to varying degrees), and most of them gained independence from European imperial nations in a similar time period. They tend to have ethnically diverse populations, and many have been impacted by the slave trade that ended in the 19^th century. 

   

  European countries share very few of these qualities in common with the US. 

   

  So, it would seem that the old diktat of “thou shalt only compare US murder rates to the approved 'developed' countries" is based on really no objective standard at all. And we should stop doing it.

   

  If we’re honestly trying to evaluate the nature of crime and violence in a comparative atmosphere, we cannot limit ourselves to a handful of countries that have very little in common with the US beyond a handful of economic indicators.

   

  *  *  *

  A Note on the Data: 

  Gun ownership levels are based on the Small Arms Survey data. This takes into account "registered" vs. "unregistered" civilian gun ownership in the countries surveyed.  Murder rates come from UNODC data.

  State by state data in the US is usually presented as a percentage of residents who are gun owners. worldwide, however, gun ownership is presented as numbers of guns per 100 residents. I attempted to make the two lists compatible by taking the percentage of gun owners and adjusting it to reflect the fact that there are about 2.8 guns per gun owner in the US (using Small Arms Survey Data for the US). Thus, in Wyoming, for example, we end up with a number of more than 130 guns per 100 residents.
   
  Now, let's address the bait-and-switch of using "gun-related killings" versus homicides, that is often used. These numbers include accidents and suicides. But of course, the reason most people are concerned about gun violence is because of homicides. Many people commit suicides with ropes and cars, but we don't talk about banning ropes and cars. Moreover, many people die from accidents involving power tools, ladders, and other items. Again, we don't talk about banning those things. The other statistic often used is "gun-related deaths." This also ignores the fact that the whole point of gun control (in the minds of most of the public) is to bring down the murder rate. It would be irresponsible to bring down gun murders and then ignore the overall murder rate.  After all, if the "gun murder" rate goes down, but the murder rate remains unchanged, then we find that little has been accomplished. It stands to reason that few murdered people think in their last moments "gee, at least I wasn't murdered with a gun."

  

  

  

  

  

• "In Fed We Trust" Is Back: Risk Soars On Hopes Economy Collapses

  After yesterday's epic squeeze ramp into OpEx, and today's hanging-by-a-thread range on no volume, we couldn't help but think of this…

   

  And with this week's rally, valuations for the S&P 500 push back towards highs (P/E >18x once again)…

  

   

  And we warned what happens next…

  

   

  As Gold, Bonds, & Stocks all rise as The Fed rate-hike disappears over the horizon… From "rate-hikes are good for stocks" to "please njo rate hikes, we are not ready"!!!

  

   

  A very mixed bag for stocks this week… Trannies ugly (down 2.4% – worst week in 2 months, after last week's best week in 13 months) but Nasdqq up for the 3rd week in a row (the first 3 week gain since Feb 2015's big squeeze)…

  

   

  On the day,  futures drifted off the late spike highs overnight, spiked into the open (thanks to opex pinning), chopped around in a narrow range on dismal data before liftoff into the close sparked by crude into NYMEX Close then USDJPY lifted futures into p[anic-buying mode..

  

   

  On the day the late-day ramp dragged all but small caps (and Trannies) into the green… on terrible volume.. Today's exuberance blamed on hope for a shitty print from China on Sunday night!!

  

   

  Here's how the ramp was achieved – Crude's ubiquituous trend reversal into NYMEX Close tehn USDJPY hyper-beta into the close…

  

   

  VIX had quite a week (most notably in VXX – the VIX ETF)…

  

   

  This dragged S&P 500 just into the green post-QE3…

  

   

  "Most Shorted" stocks have seen another rampalicious squeeze in the last 24 hours into opex but end the week lower (after last week's record-breaking surge)…

  

   

  Valeant is a great example of today's illiquid insanity in stocks…

  

   

  And TWTR…

  

   

  Treasuries end the week lower in yield (with a notable flattening in 2s10s and 2s30s)…

  

   

  2s30s dropped 3bps on the week – the biggest flattening in 10 weeks...BUT 2s10s is now the flattest since May 2013…

  

   

  The USDollar continued to drift higher against the majors (extending yesterday's gains), faded during US pm session and ended the week lower…

  

   

  The USDollar also fell for the 3rd week in a row against Asian FX, almost fully retracing the China devaluation surge…

  

   

  Commodities were mixed on the week with crude tumbling (though bid today) to its worst week in 2 months and gold and silver rising (with copper limping lower)…

  

   

  Gold had its best week in the last 5 (and is up 4 of the last 5 weeks)… closing baove its 200-day moving average…

  

   

  The biggest mover across the commodity complex was in Coffee…biggest drop in almost 8 months…

  

   

  Charts: Bloomberg

  Bonus Chart: Bad news is officially Good news…

  

   

  Bonus Bonus Chart: Philosophical thought to end the week…

  Having a bad day? At least you're not in a coma with Khloe Kardashian making medical decisions for you.

  — Dawn Kopecki (@Dawn_Kopecki) October 16, 2015

  

  

  

  

• Capital Controls Blowback? Bitcoin Surges Back To Pre-China-Currency Wars Levels

  At $267, Bitcoin has retraced the entire plunge from China's initial devaluation entry into the currency wars and the Black Monday dump. It appears, just as we warned, that China's increasing crackdown on its – until now lax – capital controls has spurred demand for alternate 'currencies' that remain out of the control (for now) of governments – like gold…

  

   

  And Bitcoin…

  

   

  As we concluded previously, while China is doing everything in its power to not give the impression that it is panicking, the truth is that it is one viral capital outflow report away from an outright scramble to enforce the most draconian capital controls in its history, which – as every Cypriot and Greek knows by now – is a self-defeating exercise and assures an ever accelerating decline in the currency, which authorities are trying to both keep stable while also devaluing at a pace of their choosing. Said pace never quite works out.

  So what happens then: well, China's propensity for gold is well-known. We would not be surprised to see a surge of gold imports into China, only instead of going to the traditional Commodity Financing Deals we have written extensively about before, where gold is merely a commodity used to fund domestic carry trades, it ends up in domestic households. However, while gold has historically been the best store of value in history and has outlasted every currency known to man, it is problematic when it comes to transferring funds in and out of a nation – it tends to show up quite distinctly on X-rays.

  Which is why we would not be surprised to see another push higher in the value of bitcoin: it was earlier this summer when the digital currency, which can bypass capital controls and national borders with the click of a button, surged on Grexit concerns and fears a Drachma return would crush the savings of an entire nation. Since then, BTC has dropped (in no small part as a result of the previously documented "forking" with Bitcoin XT), however if a few hundred million Chinese decide that the time has come to use bitcoin as the capital controls bypassing currency of choice, and decide to invest even a tiny fraction of the $22 trillion in Chinese deposits… 

  

   

  … in bitcoin (whose total market cap at last check was just over $3 billion), sit back and watch as we witness the second coming of the bitcoin bubble, one which could make the previous all time highs in the digital currency, seems like a low print.

  We bring all this up in case there is any confusion why Bloomberg just carried a huge centerfold piece explaining why CDS-inventor Blythe Masters has suddenly become the digital currency's most vocal pitchman and is betting it all on bitcoin, in "Blythe Masters Tells Banks the Blockchain Changes Everything."

  Yes, bitcoin may be slowly but surely leaving the domain of the libertarian fringe, but in exchange it is about to be embraced as the most lucrative and commercial "blockchained" way to capitalize on what may soon become the largest capital outflow in history, with "pioneers" such as Blythe front and center to capitalize on each and every outflowing Bityuan.

  

  

  

  

  

  

• Weekend Reading: Weighed, Measured And Found Wanting

  Submitted by Lance Roberts via STA Wealth Management,

  One of my favorite movies to watch with my son was "A Knights Tale" starring Heath Ledger. A rag to riches story about a boy given by his father to a Knight as a squire. However, after the Knight dies, the boy takes his place and fights his way to nobility. 

  During his adventure the villain, Adhemar, discovers William's secret identity and has him imprisoned for impersonating a knight. As William awaits his fate, Adhemar visits him in his cell.

  As I discussed yesterday, the "Fed Is Screwed"in their efforts to hike interest rates. With deflationary pressures on the rise, economic growth deteriorating and financial markets in turmoil the ability to tighten monetary policy has now passed. 

  This weekend's reading list is a compilation of views on the economy, the markets, and the Fed. Like William, it is becoming more apparent that they have each been "weighed, measured and found wanting."

  ---

  THE LIST

  1) 5 Reasons Americans Are Unhappy by Quentin Fottrell via MarketWatch

  “One reason for all the unhappiness could be that wages are stagnant, and many people are still struggling to recover from the Great Recession.

   

  'Money is a little like health, you don't want to talk about it with your friends because there's a little bit of shame around it,' says Andrew Meadows, a San Francisco-based producer of 'Broken Eggs,' a documentary about retirement, and vice president of brand and culture at Ubiquity Retirement + Savings.

   

  Two recent studies carried out by independent pollsters say that more than 60% of adults have no emergency savings or less than $1,000 in their savings account. And among those who had savings prior to 2008, 57% said they'd used some or all of it in the Great Recession, according to a U.S. Federal Reserve survey of over 4,000 adults released last year. Some people think you need to have tens of thousands of dollars to start saving and investing, so rather than save or invest a little, they do nothing, Meadows says. 'They ask if there's going to be another crash.'"

  Read Also: American's Feeling Glum About Economy by Ronald Brownstein via The Atlantic

   

  2) Deflation = Debt + Demographics + Disruption by Tyler Durden via Zero Hedge

  “Disruption: Technological innovation and disruption are driving many goods & service sector prices lower (rent & health care are two important exceptions); extending human life and the propensity to save; fostering wage and job insecurity.

   

  Demographics: The size of the working population of the developed world peaked in 2011 and will fall from 833 million to 799 million by 2025, putting downward pressure on potential growth and inflation (Chart 3). And by 2050, the world's 'Silver Generation' will increase by 885 million people, many of whom will save more in anticipation of old age.

   

  Record Debt: 'Minimal deleveraging since the GFC and a large debt overhang remain impediments to nominal growth; global debt as a % of GDP actually rose from 162% in 2001 to 211% in 2013, an all-time high.'"

  

  Read Also: Brainard Drops A Policy Bomb by Tim Duy via FedWatch

   

  3) The Fed & Government Setting Up Next Crisis by Stephen Moore via Washington Times

  “Here's the latest story line: bailouts, trillions of dollars of government spending and debt, easy money, and re-regulation of Wall Street ended the 2008 Great Recession. The myth took on new life last week when Ben Bernanke took a bow in The Wall Street Journal for in his mind saving the economy with his $3 trillion of quantitative easing and zero interest rate policy. No, actually this is what created the crisis. Don't be surprised if Mr. Bernanke receives a Nobel Peace Prize.

   

  As Peter Wallison of the American Enterprise Institute and other scholars have thoroughly documented, the crash of 2008 was caused by the Federal Reserve's easy money policies for nearly a decade, government housing policies that led to preposterous mortgage loans being issued, and massive overleverage of government, companies, and households.

   

  Why does any of this history matter? Since Washington doesn't understand what went wrong in 2007 and 2008, so the Fed, the White House and Congress are recreating the very same conditions for another financial bubble. If it pops, we could replay the same devastating effects as occurred during the first bubble in 1999 and 2000.”

  Read Also: Bernanke's Incomplete Crisis Theory by Robert Samuelson via Real Clear Markets

  But Also Read: What If The Future Is Better Than We Think? by Ben Carlson via Wealth Of Common Sense

   

  4) Debt Ceiling Fight Could Get Ugly by Gary Halbert via Advisor Perspectives

  "Last week's scare over a possible government shutdown may have been just the warm-up act for a much bigger threat that could cause the Treasury to default on trillions of dollars of debt. The latest shutdown scare was narrowly averted by a last minute deal in Congress that angered its most conservative members, and some believe prompted House Speaker John Boehner (R-OH) to step down. His presumptive replacement, House Majority Leader Kevin McCarthy (R- CA), abruptly announced Thursday that he would not seek the job for reasons that are still uncertain.

   

  Now, amid the House leadership vacuum, Congress remains paralyzed over a long list of contentious issues, from budget battles to a sweeping new trade deal. But unless Congress acts in the next few weeks to raise the government's legal borrowing limit, the Treasury will be forced to stop borrowing and paying its bills – potentially including interest on government bonds that have already been sold to investors."

  

  Read Also: Another Look At The Total Return Rollercoaster by Doug Short via Advisor Perspectives

   

  5) We Are Entering A Recession, But Not Really by Myles Udland via Business Insider

  ""'We are experiencing a profit recession without an economic recession,' Sløk wrote in an email on Thursday.

   

  'Lower energy prices and a higher dollar are hurting certain parts of corporate America at the moment, but with the China shock fading and the dollar and energy prices stabilizing it is becoming clearer that we are not about to enter an economic recession because the service sector — which makes up 85% of the US economy — is doing just fine.

   

  Or put differently, to generate an economic recession we need a much more broad-based slowdown across companies and that is not what we are seeing and hearing in the anecdotes during this earnings season.'"

  

  Read Also: It's Time To Start Talking About A Recession by Bob Byran via Business Insider

  Read Also: Revenue Recession Getting Worse by Stephanie Yang via CNBC

  ---

  Other Reading

  • Bernanke's Balderdash by David Stockman via Stockman's Contra Corner
  • When Market Trends Break by Bill Hester via Hussman Funds
  • The Collected Wisdom Of Seth Klarman via Scribd
  • The Mother Of All Feedback Loops? by Izabella Kaminska via Financial Times
  • Fed Hasn't Printed Money In Decades by Jeffrey Snider via Alhambra Partners
  • The Trouble With Economics by Clive Crook via Bloomberg
  • The Inequality Generation Of QE by David Keohane via Financial Times
  • The Contagion That Caused The Great Recession by Rob Garver via The Fiscal Times

  ---

  “Wall Street is a gambling house peopled with dealers, croupiers and touts on one side, and winners and suckers on the other” – Nicholas Darvas

  Have a great weekend.

  

  

  

  

  

• Obama Withdraws Aircraft Carrier Support From Middle East Just As Russia Unveils Its Syrian Airbase

  One glance at the map below, showing the current distribution of U.S. naval assets, reveals something that has almost never happened at any time in the past decade:

  

   

  As the map shows, US aircraft carrier, CVN 71 Theodore Roosevelt is currently on its way out of the Persian Gulf, leaving just the LHD-2 Essex Amphibious Warfare ship group to defend the Persian Gulf and more importantly, leaving the hotly contested middle east without U.S. carrier-based air support for the first time in years.

  
  

  How did this happen?

  According to USNI News, the Theodore Roosevelt Carrier Strike Group left U.S. 5th Fleet on Tuesday with no public timeline for when its replacement will reach the Middle East to continue U.S. air strikes against Islamic State in Iraq in Syria (ISIS) targets. While the CVN 71 The Harry S. Truman Carrier Strike Group is slated to be the next CSG bound for the Middle East, but the Navy would not specify a deployment time other than later this year, a service official told USNI News on Tuesday.

  “We’re not going to talk to future operations,” the official said.

  That said, the redeployment of the Roosevelt is not a surprise: two months ago the CNN Pentagon correspondent warned that this was coming:

  The U.S. Navy will not be able to keep an aircraft carrier in the Persian Gulf for much of the fall season, according to a Navy official.  The official said that’s because the Navy has to schedule needed maintenance after years of extended deployments and because of reduced spending due to mandatory budget cuts.

   

  While there have been so-called “carrier gaps” in the Persian Gulf before, this one will leave the Navy without the presence of a high-profile aircraft carrier just as a proposed nuclear deal with Iran is at center stage. It also comes as Iranian naval forces have conducted low-level harassment of U.S. and other shipping in the region.

   

  U.S. military officials insisted that there would be no impact on U.S. operations in the gulf because the Air Force can briefly send additional, land-based aircraft to the region if needed. Airstrikes against ISIS targets in Iraq and Syria are also largely undertaken by the Air Force. The Navy accounts for only about 20% of the ISIS strike missions.

  Whatever the reason, the Roosevelt is out of there, and the ship is now said to be bound for its new homeport at Naval Station San Diego, Calif.

  While in 5th Fleet, the Roosevelt CSG was the largest symbol in the U.S.-led anti-ISIS collation responsible for “1,812 combat sorties totaling 10,618 combat flight hours, taking on 14.5 million gallons of jet fuel and expending 1,085 precision-guided munitions,” as part of Operation Inherent Resolve, according to a Tuesday statement from the service.

  Which probably does not explain why in over a year, the US did less damage to ISIS then the Russian airforce has achieved in less than a month.

  As for the reason why suddenly the Persian Gulf has an unprecedented US carrier support gap in the middle east – one which could last for two months or well longer – it is because the Harry S. Truman Carrier Strike Group, which is slated to be the next CSG bound for the Middle East, has been delayed and the Navy would not specify a deployment time other than later this year, a service official told USNI News on Tuesday.

  Earlier this month the Truman CSG completed its Composite Training Unit Exercise (COMPTUEX), the complex training exercise that certifies the strike group for deployment.Previous CSG and three-ship Amphibious Ready Group deployments were often extended to meet the demand of U.S. geographic combatant commanders (COCOMs) at the expense of maintenance setbacks and crew fatigue.

  Furthermore, this may be just the beginning of key US naval “gaps” across critical geographic regions:

  As the Navy continues to implement stricter deployment tenants, more gaps in Middle East carrier presence may emerge, several service leaders told USNI News in September. Last month Rear Adm. Jeffrey Harley, assistant deputy chief of naval operations for operations, plans and strategy (OPNAV N3/5B) told the House Armed Services Committee (HASC) that it would take a directive from the Secretary of Defense to the Navy to extend the deployment of a carrier to longer than seven months.

   

  While extending a carrier is always an option, another option would be “to reduce our global input as to what we can provide [to the combatant commanders] for a designated period of time, and mitigate that presence, that carrier presence, in some other way using our joint partners, using joint aircraft to cover a gap in time in which we may not have a carrier present,” Harley told the panel.

  Whatever the future of US naval “gaps” may be, one thing is clear: the departure of the Roosevelt comes at a particularly awkward time – just as Russia is setting up its own aicraft base in Syria.

  As we reported yesterday, “The start of Russian airstrikes in Syria has given new hope to loyalist forces in their battle against a host of rebel factions, including the Islamic State. Now Russia may expand these operations into Iraq if requested to do so by Baghdad. Indeed, from its position in Latakia, Russia has the range to strike Islamic State targets in Iraq, although further deployment of resources may be required to do so effectively.”

  More importanly, Russia can now also reach the all important global “choke point” of the Suez Canal within minutes, not to mention Tel Aviv, Jerusalem, Baghdad, and – if propertly equppped – Bahrain, the headquarters of the U.S. Fifth fleet.

  

  In conclusion ,we take one final look at the map up top, and ask if on its way back to San Diego the Roosevelt will be the ship that Obama uses to send China a message as he has threatened to do, by sailing around the contested islands in the South China Sea, a move which China has warned twice it will be forced to retaliate against. Recall that yesterday China’s Global Times said that should Obama carry this out, it would be a “breach of China’s bottom line”.

  “If the US encroaches on China’s core interests, the Chinese military will stand up and use force to stop it,” the paper warned.

  In light of this upcoming showdown, one hopes that the USS Rosevelt won’t be known in history as the second coming of the USS Maddox.

  

  

  

  

  

• Germany Faces "National Disaster" Over Refugee Crisis As Hungary Slams Shut Border With Croatia

  “Border control officers are exposed to strong migratory pressures.”

  That’s a quote from Georgi Kostov, the head of the interior ministry for Bulgaria where an Afghan man was shot and killed on Thursday, marking the first fatal shooting in Europe’s worsening migrant crisis. 

  Bulgarian border guards claim a warning shot ricocheted and injured the man. He later died. Draw your own conclusions.

  The official line from Bulgaria was this: “We are deeply shocked and regret the fatal incident. We are convinced that barriers, fences and police forces cannot solve the problems of people who are in a desperate situation.”

  That’s a nice sentiment, but not everyone shares it and one person who is certainly not intent on adopting an open door policy to refugees fleeing the war-torn Middle East is Hungarian PM Viktor Orban who, as we’ve documented extensively, has gone to great lengths to close his country’s borders with razor wire fencing and protect those fences with water cannons, tear gas, and rubber bullets. 

  Here’s a quote from an interview Orban gave today which pretty much sums things up as far as he’s concerned: 

  “Spiritually, Islam was never part of Europe. It’s the rulebook of another world.” 

  Make no mistake, the back and forth Balkan border battles between the states that are on the frontlines of the crisis have been raging for months, as Serbia, Croatia, and Slovenia attempt to negotiate how to cope with Hungary’s hardline approach. Orban’s move to wall-off his country’s border with Serbia triggered an influx of asylum seekers into Croatia (remember, everyone’s trying to get to Germany), but Slovenia’s unwillingness to serve as a kind of migrant superhighway steered refugees right back into Hungary and so now, Orban is closing the border with Croatia. Here’s how we put it late last month: 

  Once it became clear that Hungary was fully prepared to turn its border with Serbia into a warm April night in Baltimore in order to defend Europe’s “Christian heritage” (to quote Orban), refugees simply rerouted through Croatia. Serbia has facilitated this noting that it simply does not have the resources to accommodate the migrants and even if it did, they do not want to settle in Serbia in the first place. Once Slovenia said it wouldn’t be a part of a migrant “corridor” to Germany, the stage was set for migrants to zigzag from Hungary’s border with Serbia into Croatia, and then back into Hungary.

  

  And here’s more from Bloomberg on Orban’s reaction after the EU failed to come to an agreement on closing off Greece to asylum seekers: 

  Hungary will seal its border with Croatia from midnight on Friday, expanding one of the European Union’s toughest set of measures to stem the influx of refugees, Foreign Minister Peter Szijjarto said in Budapest.

   

  “This is the second-best option,” Szijjarto told reporters. “The best option, setting up an EU force to defend Greece’s external borders, was rejected in Brussels yesterday.” 

   

  An EU summit on Thursday failed to reach a final agreement on recruiting Turkey to help control the flow of refugees as Russia’s bombing campaign in Syria threatens to push more people to seek safety. The bloc’s leaders also made little progress on how to redesign the system of distributing immigrants, forming an EU border-guard corps or on ensuring arrivals are properly processed.

   

  Hungary has extended an existing barbed-wire fence on its border with Serbia to cover its frontier with Croatia. Prime Minister Viktor Orban warned this week that his government would complete the barrier if EU leaders fail to agree on closing the Greek border, the main entry point for Syrian and other Middle Eastern refugees into the 28-nation bloc.

   

  

  Meanwhile, in Germany, Angela Merkel is beginning to feel the heat as lawmakers and party loyalists become increasingly impatient with the hundreds of thousands of migrants streaming into the country. More, from AFP:

  Germany’s Angela Merkel is used to owning the room when she speaks to her party faithful, but the mood turned hostile when she defended her open-door refugee policy this week.

  
  

  In a heated atmosphere, some of the 1,000-odd members at the meeting warned of a “national disaster” and demanded shuttering the borders as Germany expects up to one million migrants this year.

  
  

  “Stop the refugee chaos — save German culture + values — dethrone Merkel,” read a banner at the congress late Wednesday in the eastern state of Saxony, the home base for the anti-foreigner PEGIDA movement.

  
  

  Managing the refugee crisis has turned into Merkel’s greatest domestic political challenge since she took power almost 10 years ago, in November 2005.

  
  

  Long valued by the electorate for her level-headed leadership amid the eurozone turmoil, Merkel has scared many with her welcoming stance amid a growing sentiment that the boat is full.

  
  

  “The chancellor is walking on thin ice,” judged the conservative daily Die Welt, pointing to a “growing gap” between Merkel and the base of her centre-right Christian Democrats (CDU) who demand she stem the record influx.

  
  

  “The chancellor believes the nation can manage the crisis, but this belief is rapidly vanishing in the country,” said the newspaper.

  
  

  On Sunday, she jets off to Turkey to discuss with President Recep Tayyip Erdogan how to slow the inflow sparked by war and upheaval across the Middle East and North Africa, with almost 600,000 people arriving in Europe so far this year.

  
  

  On the home front, Merkel has bravely insisted “we can do it”, recalling US President Barack Obama’s campaign rallying cry of “Yes we can”.

  
  

  But many Germans — who in the summer greeted refugees at railway stations — are losing faith as thousands keep coming daily and improvised refugee centres are bursting at the seams, including tent cities exposed to below-zero temperatures as winter approaches.

  And here are two headlines which betray how desperate the situation is becoming:

  • SHOULD GERMANY, SLOVENIA CLOSE BORDERS, CROATIA WILL TOO: PUSIC
  • MERKEL CALLS ON EASTERN EUROPE TO SHOW SOLIDARITY OF REFUGEES

  In short, there is now a very real threat that a cascading series of border closures will completely block the Balkan route (not to mention destroy Schengen forever) leading directly to i) possibly violent confrontations between migrants and border police, and ii) a dramatic shift in the people flow through Libya, which would mark a kind of “out of the frying pan and into the fire” scenario for Syrian refugees. 

  

  As for those who have already made it to Germany and other EU countries where they intend to settle, we reiterate our warning that anti-migrant sentiment could end up creating a dangerous bout of scapegoating xenophobia and on that note, we close with the following excerpt from Bloomberg:

  In another sign of backlash in the region, Czech President Milos Zeman said migrants from Muslim countries won’t respect local laws and will follow sharia, Novinky.cz news website reported.

   

  “Adulterous women will be stoned; thieves will have their hands chopped off,” Zeman said while meeting employees of a butcher shop in eastern Czech Republic, Novinky said.

  

  

  

  

  

• Russia, Iran Begin "Promised" Assault On Syria's Largest City In Final Bid To Restore Assad

  Earlier this week, we noted that Iran had reportedly sent “thousands” of troops to Syria in preparation for an offensive aimed at retaking the city of Aleppo. 

  With a population of more than 2 million, Aleppo was Syria’s largest city prior to the war and it’s now run by a hodgepodge of rebels and militants including al-Qaeda, the Free Syrian Army, and ISIS. 

  To get an idea of the effect the war has had on the city, have a look at the following before and after nighttime light emissions images:

  

  

  The battle is also notable for the scale of Iran’s involvement. Between Hezbollah and Iranian forces, the battle for Aleppo is shaping up to be the largest ground operation orchestrated by Tehran to date. 

  Here’s more, via Reuters: 

  Syrian troops backed by Hezbollah and Iranian fighters launched an offensive south of Aleppo on Friday, expanding their counter-attack against rebels across western Syria with support from Russian air strikes.

  
  

  Aleppo, a commercial and industrial hub near the border with Turkey, was Syria’s largest city before its four-year civil war, which grew out of protests against Assad’s rule.

   

  Control of the city, still home to two million people, is divided between the government and rebels.

   

  “This is the promised battle,” a senior government military source said of the offensive backed by hundreds of Hezbollah and Iranian forces which he said had made some gains on the ground.

   

  It was the first time Iranian fighters had taken part on such a scale in the Syrian conflict, he said, although their numbers were modest compared to the army force. “The main core is the Syrian army,” the source said.

   

  Hezbollah, which has supported Assad in several battles during the civil war, said the army was carrying out a “broad military operation” with support from Russian and Syrian jets. It made no mention of Hezbollah fighters in its brief statement.

   

  Two senior regional sources told Reuters this week that Iran has sent thousands of troops to Syria to bolster an offensive underway in Hama province and ahead of the Aleppo attack.

  And a bit more from AFP:

  Russian air cover is backing offensives by Syria’s army and allied militias in the central provinces of Homs and Hama, as well as Aleppo in the north and Latakia along the coast.

   

  On Friday, the Syrian army pushed south from the provincial capital Aleppo city, where control is divided between regime and rebels forces, as Russian air strikes pounded the villages of Al-Hader and Khan Tuman and nearby localities.

   

  “The Syrian army started a new front on Friday and advanced to take control of the villages of Abteen and Kaddar” about 15 kilometres (12 miles) south of Aleppo city, said Observatory head Rami Abdel Rahman.

   

  He said “dozens” of Russian aerial attacks in the past 24 hours had struck the area, which is controlled by a patchwork of groups including rebels, Islamist fighters and Al-Qaeda’s Syria affiliate, Al-Nusra Front.

  Note also that Aleppo is near the so-called “anti-ISIS” zone that the US and Turkey humorously proposed to create a few months back, which means that Iran, supported by Russian air power, is now conducting an all-out ground assault very near territory Turkey likes to think it effectively patrols (if not controls). 

  But the real key here, is this (again from Reuters): “The assault means the army is now pressing insurgents on several fronts near Syria’s main cities in the west, control of which would secure President Bashar al-Assad’s hold on power even if the east of the country is still held by Islamic State.”

  

  In other words, if Iran and Russia manage to retake Aleppo (and you know they will because remember, thanks to Hezbollah, this isn’t a team that’s going to be confused by the vagaries of urban warfare), Assad’s rule is restored.

  Just like that. 

  From there, the situation would morph and what you would have is a kind of Wild West scenario, only in Syria “West” would mean “East” and Assad, Russia, and Iran, having secured most of the critical cities and territory, would be free to simply mount up and push east on a kind of search and destroy mission. 

  So apparently, the US and its regional allies in Riyadh and Doha have a couple of weeks to figure out what to do here or else this is going to be over and suddenly, Washington will find itself in the awkward position of having to negotiate for a transition away from an Assad government that has been fully restored. 

  

  

  

  

  

• Martin Armstrong Warns: The Loss Of All Liberty Is Coming Faster Than You Imagined

  Submitted by Martin Armstrong via ArmstrongEconomics.com,

  UK Prime Minister David Cameron reflects the serious problem we have with politicians. Politicians have zero respect for our human rights for they only think about how they are going to raid our wealth to pay for their families and retirements at our expense. Cameron actually asked, “In our country, do we want to allow a means of communication we [the government] cannot read? My answer to that question is: ‘No, we must not’.”

  These people are highly dangerous. They only see government as the solution and do not grasp that we have rights. Government wants to eliminate all encryption because they are hunting money. You have a 1000 times greater chance of dying in a car crash than by a terrorist. They use terrorism as the great excuse to collect everything we do.

  How did the world function before the internet? Did they intercept every letter in the mail or record every phone call? Why is it that with the internet these people feel they have a right to listen and read everything we communicate? This is EXACTLY the same paranoia displayed by Stalin. Human rights do not simply vanish because we have entered the internet age. We still have rights that governments need to respect, but refuse because they are always desperately in need of more taxes to pay their bankers.

  The OECD has stated, “Co-operation between tax administrations is critical in the fight against tax evasion and a key aspect of that co-operation is exchange of information.” It’s all about money any nothing else.

  In 2010, the U.S. enacted legislation known as FATCA (Foreign Account Tax Compliance Act), which is destroying the world economy and lowering economic growth globally. Effectively, FATCA requires foreign financial institutions around the globe to report account details of their U.S. customers to the U.S. tax administration. However, this requires foreign institutions to file that they do not have any American clients. The legal and cost issues of this approach imposed by the USA are being adopted by five other countries including France, Germany, Italy, Spain, and the United Kingdom. FATCA has become a model for the intergovernmental cooperation in hunting taxes. The postwar economy was built on the free flow of capital. Americans cannot open accounts overseas because the penalties are far too stiff for failure to report any American to the U.S. authorities. They will be giving up everyone to their respective countries, which will be implemented in 2017.

  If we do not eliminate taxes and transform the monetary system into a new era where the cost of government is held to 5% of GDP and money is merely created to fund the cost of government, along with abolishing career politicians, we will lose everything.

  We are heading into the direction of a total loss of all rights simply because of taxes.

  

  

  

  

  

• Obamacare's Latest Casualty: Largest Health Insurer On Colorado Exchange Abruptly Collapses

  This wasn’t supposed to happen.

  With the mainstream media, at least the majority that is left of center, flooded with story after story touting Obamacare’s success, the news coming this morning from Denver that Colorado’s largest nonprofit health insurer and participant in that state’s insurance exchange Colorado HealthOP is abruptly shutting down, forcing 80,000 Coloradans to find a new insurer for 2016, was a slap in the face for the Obama administration’s crowning achievement.

  According to AP, the health insurer announced Friday that the state Division of Insurance has de-certified it as an eligible insurance company. That’s because the cooperative relied on federal support, and federal authorities announced last month they wouldn’t be able to pay most of what they owed in a program designed to help health insurance co-ops get established.

  Wait, wasn’t the whole point behind Obamacare to subsidize health insurance for everyone, and especially the poor? Or was the whole point of the “Affordable” Care Act merely to herd as many Americans into the clutches of the few for-profits, after the non-profit cooperatives finally read the fine print and realized they have no chance of being profitable under the new regime?

  The plot thickens: in a statement announcing its closure Friday, Colorado HealthOP said it was “well on its way” to repaying some $72.3 million it has borrowed from the federal fund. The co-op reported a net loss of $23 million last year. In other words, the company burned through some $23 million in taxpayer funds and it didn’t even get a lousy shirt to show for it.

  Ironically, on the company’s website, we read the following about the Co-Op’s business model:

  if our revenues exceed our costs, the surplus will be reinvested to directly benefit members—through lower premiums, expanded benefits, or quality improvements.

  Well, no risk of that ever happening now. What the insurer failed to point out is that if costs exceed its revenues, it will be promptly liquidated and massive corporations will be the sole beneficiaries.

  Naturally, the CEO was furious: Colorado HealthOP CEO Julia Hutchins called the de-certification “irresponsible and premature.”

  She is not alone – as it turns out HealthOP was just the fifth casualty of a program which with every passing months is being exposed as nothing but a tax-backed piggy bank for the mega insurance corporations. “The Colorado announcement makes the co-op at least the fifth in the nation to collapse. Similar nonprofit insurers have already failed in Louisiana, Iowa/Nebraska, Nevada and New York. A health insurance cooperative in Tennessee announced this week that it would stop offering new policies.

  Expect even more failures ahead of open enrollment for 2016 starts on November 1. The Colorado Division of Insurance must first certify insurers before they’re allowed to sell plans, so the de-certification essentially puts Colorado HealthOP out of business.

  Back to the HealthOP CEO who added that “the Division has let local and national politics hurt Coloradans’ access to low-cost healthcare options and assessed Colorado taxpayers with significant avoidable costs,” Hutchins said in the statement.

  Actually they became unavoidable the moment the deeply compromised and ideologically partisan Supreme Court imposed the Obamacare tax on Americans, with few if any realizing the monetary implications of the new insurance regime.

  While it won’t provide much comfort to Colorado HealthOp, which is now winding down, its board of directors has requesting that the state allow a board-appointed independent consumer protection ombudsman to assist through the shut-down.

  In other words, even more millions in taxpayer funds will now be spent to liquidate the health insurer.

  And while the lame duck president hardly cared as his legacy achievement will soon be some other president’s problem, Republicans quickly took to gloating and pointed to the co-op’s closure as “a sad but predictable outcome.“

  “Taxpayers are on the hook for millions of dollars in loans given out to the CO-OP, money that will likely never be repaid,” U.S. Sen. Cory Gardner said in a statement after the announcement. “The years since Obamacare’s passage have been marked by crisis after crisis in healthcare, and it’s far past time for a new plan.“

  But wait, there’s more. Now that the numbers are being crunched, and hyperbole and propaganda are finally making way for math, someone figured out that Colorado HealthOP’s closure could be bad news for everyone shopping on Colorado’s health insurance exchange.

  A Republican state lawmaker who serves on an oversight committee that has reviewed Colorado HealthOP’s finances, Rep. Lang Sias of Arvada, said “rates for everyone are expected to go up next year. Colorado HealthOP accounted for nearly 40 percent of the exchange’s total customers.”

  “They’re all going to be paying more, on average, I would expect,” Sias said.

  And as more Americans get letters in the mail such as the one below kindly informing them their health insurance premiums are rising by 60% crushing any desire to splurge modest “gas savings” on discretionary purchases…

  

  … expect complaints about soaring health insurance prices, to hit – first in Colorado and then everywhere else.

  

  

  

  

  

• Full Metal Retard: US Launches "Performance-Based" Ammo Paradrop Program For Make-Believe "Syrian Arabs"

  On Monday, the Pentagon proudly announced that it had “successfully” delivered 50 tons (yes, tons) of ammo to rebels fighting the Assad regime in Syria. 

  Before going any further, it’s important to note that the move to publicly deliver ammunition to the groups fighting the Russians set off alarm bells even among the most mainstream of media with CNN running the following headline as though the notion that the conflict is just another proxy war were somehow “news”: “Syria’s ‘proxy war’ rages in towns near Aleppo, Syria.”

  So “all” it took was for Russia to invade and for the US to brag about handing “tons” of ammo to the very groups Moscow is fighting for the clueless public to come to the shocking realization that Washington is effectively at war with Moscow in Syria. 

  Obviously that’s not news, as it’s been clear to anyone who knows anything about geopolitics for years, but what is news is the extent to which the ammo paradrops mark a new low point for Washington in terms of countering Assad. As we put it on Monday: 

  The US has now thrown in the towel on the ill-fated (and that’s putting it lightly) strategy of training Syrian fighters and sending them into battle only to be captured and killed by other Syrian fighters who the US also trained.

   

  The Pentagon’s effort to recruit 5,400 properly “vetted” anti-ISIS rebels by the end of the year ended in tears when word got out that only “four or five” of these fighters were actually still around. The rest are apparently either captured, killed, lost in the desert, or fighting for someone else. 

   

  Because this latest program was such a public embarrassment, the Pentagon had to come up with a new idea to assist Syria’s “freedom fighters” now that they are fleeing under bombardment by the Russian air force only to be cut down by Hezbollah.

   

  The newest plan: helicopter ammo. No, really. The US has now resorted to dropping “tons” of ammo into the middle of nowhere and hoping the “right” people find it. 

  In funnier terms: The US just paradropped 50 tons of ammo on pallets into the most dangerous place on the face of the planet with no way of ensuring that it falls into the “right” hands.

  The absurdity of that wasn’t lost on Putin, who offered the following critique on Tuesday: “U.S. air drops of weapons and ammunition intended for the Syrian Free Army, which is fighting Assad’s regime, could end up in the hands of Islamic State instead.”

  And then on Wednesday, Turkey pitched a fit, with PM Ahmet Davutoglu proclaiming that “Turkey definitely can’t accept weapons aid to groups linked to PKK.” 

  Of course that declaration from Ankara seemed to come out of left field because after all, the US claimed the ammo and weapons were retrieved by the “Syrian Arab Coalition”, not the YPG. 

  Well, as it turns out, the “Syrian Arab Coalition” (which apparently didn’t even exist until last Friday) conveniently merged with the YPG over the weekend.

  Consider the following from Reuters:

  A Kurdish militia in northern Syria has joined forces with Arab rebels, and their new alliance has been promised fresh weapon supplies by the United States for an assault on Islamic State forces in Raqqa, a spokesman said on Monday.

   

  The alliance calling itself the Democratic Forces of Syria includes the Kurdish YPG militia and Syrian Arab groups, some of which fought alongside it in a campaign that drove Islamic State from wide areas of northern Syria earlier this year.

   

  The Arab groups in the new alliance are operating under the name “The Syrian Arab Coalition” – a grouping which U.S. officials have said would receive support under a new U.S. strategy aimed at fighting Islamic State in Syria.

  Got it.

  What happened here is that the US knew it couldn’t directly arm the YPG without infuriating Ankara, so Washington tried to say that the YPG had now aligned itself with various (likely fictional) “Syrian Arab groups” and so therefore, Erdogan shouldn’t mind if the US hands them a few tons of weapons. 

  So yeah, the hits just keep on coming. In July, NATO agreed to allow Erdogan to crack down on the Kurds in exchange for access to Incirlik. But because the Kurdish PKK has ties to YPG, Ankara wouldn’t be happy with the US supporting the Syrian Kurds anymore. Of course some of the sorties the US intended to fly from Incirlik were almost certainly meant to support the YPG, so it’s unclear how anyone ever thought this was going to work from the beginning unless the US intended to fly missions in support of YPG from a Turkish airbase and then lie to Turkey about who those missions were supporting. 

  Once the “train and equip” program crashed and burned, the US wanted to arm the Kurds again. Unfortunately, we’re now two weeks away from elections in Turkey so there was no way Erdogan was going risk 50 tons of weapons and ammo being channeled to a group with ties to the PKK.

  Washington’s solution: create a fictional alliance between YPG and some “Syrian Arabs” who probably don’t even exist, and then use that alliance as a front. It was a make-believe militant merger.

  If you think that sounds too far-fetched, just consider the following out yesterday from Bloomberg: 

  American and Kurdish officials and Syrian Arab opposition leaders told us this week that ammunition said to have been for the Syrian Arab Coalition, a newly announced group of Sunni Arab brigades in northeastern Syria, had largely ended up arming the Kurdish Democratic Union Party and its associated military forces, known as the People’s Protection Units or YPG. That will aid the Kurds in fighting the Islamic State and cementing their control of Kurdish territory.

   

  One senior administration official who works on the issue told us that the White House knew that the coalition was likely to pass on most if not all of the weapons to the Kurds. The official, who called the Syrian Arab Coalition a “ploy” to arm the Kurds, said the White House knew they would receive the shipments because they controlled the area where the weapons were dropped. The U.S. did not ask the Arab coalition for any guarantees the weapons would stay in Arab hands, the official said.

   

  On Thursday,  Mutlu Civiroglu, a Kurdish affairs analyst, published an interview in which the YPG commander, Sipan Hemo, acknowledged his group had received the airdrops, which he said were important to its cause. “With this new support, the cooperation we have had for a year has reached a new level. And we hope to increase our work together even more, we hope to work strategically. So what we received was not big. But it is big for a new start,” Hemo said.

  Technically then, Washington is now paradropping tons of ammo on pallets to make believe “Arabs”.

  And because the US is never content to let sleeping foreign policy mistakes lie, the Pentagon is now set to double down on the helicopter ammo drops. Here’s AFP: 

  The US military is poised to boost its supply runs to rebels fighting Islamic State jihadists in northern Syria, a US official said Thursday, days after an initial air drop of ammunition.

   

  “There will be more deliveries but only if they can demonstrate that they have used it in an effective way against ISIL,” the official said, using an alternate acronym for IS.

   

  “As they demonstrate results, the packages will get heavier and US strikes will occur in places that are advantageous to their operations.”

   

  The official described the rebel-arming program as “performance-based.”

  So let’s attempt to sum all of this up. The US sanctioned a crackdown by Turkey on the Kurds ahead of Turkish elections in exchange for access to an air base. But allying with Turkey means Ankara won’t be pleased if the US helps the Kurdish YPG in Syria because if there’s anyone Erdogan hates more than Assad, it’s the Kurds. Once every other “plan” for countering the regime in Syria demonstrably failed, the US wanted to send weapons to the YPG. To avoid angering Erdogan, the Pentagon created a fictional group of “Syrian Arabs” then pretended that the YPG had formed an alliance with the make believe fighters to give Washington an out in case Ankara got mad. US planes then dropped the weapons into the desert and prayed the Kurds picked them up. 

  Now, the US is set to paradrop many more tons of ammo into the middle of nowhere, provided the “Syrian Arab Coalition” can show “results.” 

  So ultimately, this is a “performance-based” program under which Washington provides hundreds of tons (literally) of weapons and ammo to Arabs who don’t really exist. 

  No further comment.

  

  

  

  

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