- Zuesse: Proof That America's "Deep State" Exists And Controls The Government
Zuesse: Proof That America’s “Deep State” Exists And Controls The Government
Authored by Eric Zuesse via The Saker blog,
Readers at the international-news site South Front tend to be technologically far more knowledgeable about the internet than most people (including myself) are, and so their responses to a news-report that I did on December 17th, titled “Former NSA Tech Chief Says Mueller Report Was Based on CIA-Fabricated ‘Evidence’”, explaining some technological details which enable a deeper understanding of how the CIA had perpetrated the ‘Russiagate’ hoax that Robert Mueller in his report as the U.S. Special Counsel had asserted to be a “Russiagate” fact (i.e., Mueller’s allegations that the Russian Government had hacked computers of the Democratic National Committee). Especially informative there was this reader-comment, which comes from one of the world’s leading experts on cyber technology, Luke Herbert-Hansen:
Luke Herbert-Hansen Peter Jennings
Well FAT may not [be] a common OS file system anymore, but it is still widely used on various removable media such as a USB sticks.
As everyone knows who has been closely following the most-reliable evidence regarding the question of how DNC emails had been copied and supplied to Wikileaks, there has been much credible, soundly-sourced, speculation that the DNC employee Seth Rich had physically copied the data from a computer there onto a thumb drive (or “USB stick”), which then was picked up in the U.S. by a Wikileaks agent, who physically delivered it to Julian Assange at London’s Ecuadorean Embassy.
The great independent investigative journalist (virtually barred since 2007 from being published in the U.S. anymore), Seymour Hersh, personally investigated the records of the murder of Seth Rich, both at the Washington DC police and at the FBI, and this is from the transcript I had made of his statement in a Web-posted phone-call [my boldfaces for emphasis]:
(2:50-) At some time in late spring, which we’re talking about in June 21st, I don’t know, just late spring early summer, he makes contact with Wikileaks, that’s in his computer, and he makes contact. Now, I have to be careful because I met Julian [Assange] in Europe ten twelve years [ago], I stay the fuck away from people like that. He has invited me and when I am in London, I always get a message, ‘come see me at the Ecuadorean’ [Embassy], and I am fucking not going there. I have enough trouble without getting photographed. He’s under total surveillance by everybody.
They found, what he had done, he [Seth Rich] had submitted a series of documents, emails from DNC — and, by the way, all this shit about the DNC, you know, was it a ‘hack’ or wasn’t it a ‘hack’ — whatever happened, it was the Democrats themselves wrote this shit, you know what I mean? All I know is that, he offered a sample, he sends a sample, you know, I am sure dozens of emails, and said ‘I want money’. Later Wikileaks did get the password [SETH RICH DID SELL WIKILEAKS ACCESS INTO HIS COMPUTER.] He had a drop-box, a [password-]protected drop-box, which isn’t hard to do. I mean you don’t have to be a whiz at IT [information technology], he was not a dumb kid. They got access to the drop-box. This is all from the FBI report. He also let people know with whom he was dealing, I don’t know how he dealt, I’ll tell you all about Wikileaks in a second, with Wikileaks the mechanism, but according to the FBI report, he shared his box with a couple of friends, so ‘If anything happens to me, it’s not going to solve your problem’, okay? I don’t know what that means. But, anyway, Wikileaks got access. And, before he was killed, I can tell you right now, [Obama’s CIA Director John] Brennan’s an asshole. I’ve known all these people for years, Clapper is sort of a better guy but no rocket-scientist, the NSA guys are fuckin’ morons, and the trouble with all those guys is, the only way they’ll get hired by SAIC, is if they’ll deliver some [government] contracts, it’s the only reason they stayed in. With Trump, they’re gone, they’re going to live on their pension, they’re not going to make it [to great wealth]. I’ve gotta to tell you, guys in that job, they don’t want to live on their pension. They want to be on [corporate] boards like their [mumble] thousand bucks [cut].
I have somebody on the inside, you know I’ve been around a long time, somebody who will go and read a file for me, who, this person is unbelievably accurate and careful, he’s a very high-level guy, he’ll do a favor, you’re just going to have to trust me, I have what they call in my business, long-form journalism, I have a narrative, of how that whole fucking thing began.
(5:50-) It’s a Brennan operation. It was an American disinformation, and the fucking President, at one point when they even started telling the press — they were back[ground]-briefing the press, the head of the NSA was going and telling the press, the fucking cocksucker Rogers, telling the press that we [they] even know who in the Russian military intelligence service leaked it. All bullshit.
In other words, besides the information from Bill Binney, who was an NSA whistleblower who took early retirement so he wouldn’t have to continue doing what people such as John Brennan demanded, Seymour Hersh there provided yet additional confirmation to this account from the also-early-retired whistleblowing UK Ambassador Craig Murray — a close friend of Assange — who claimed that he had “met” the person in DC who supplied the thumb drive (USB stick), which then was delivered (he didn’t say how) to Assange:
Here is from my news-report on 6 January 2017 which confirms and documents that:
Murray received the Hillary-campaign information on September 24th. Little over a week later, on October 7th, Wikileaks published documents from the computer of Hillary’s Campaign Chairman John Podesta, and politico announced it headlining “The most revealing Clinton campaign emails in WikiLeaks release”. That same day, Politico also bannered “Podesta: ‘I’m not happy about being hacked by the Russians’,” and the legend that ‘Russia hacked the Clinton campaign’ started immediately to compete in the day’s ‘news’ stories, and diminish focus on, the contents of that information which had been ‘hacked’.
However, the information from the DNC itself had been published much earlier, on July 22nd, and so this could not have come from the September 24th leak. Whether it came from the same person, or through the same courier (i.e., Murray), isn’t yet known. [But it is now, from what Binney has just said, and the answer is “yes.”] The Obama Administration has made no distinctions between those two data-dumps, but charges that all of the leaks from the Obama-Clinton-DNC conspiracy — both the anti-Sanders campaign during the primaries, and the anti-Trump campaign during the general-election contest — came from ‘Russian hacking’. The reason why the emphasis is upon the anti-Trump portion is that the conspirators now are trying to smear Trump, not Sanders, and so to make this a national issue, instead of only an internal Democratic-Party issue. They are trying to de-legitimize Trump’s Presidency — and, at the same time, to advance Obama’s aim for the U.S. ultimately to conquer Russia. The mutual hostility between Obama and Trump is intense, but Obama’s hatred of Russia gives had Russia in his gunsights well before he, as a cunning politician, made political hay out of Mitt Romney’s statement that “Russia, this is, without question America’s number one geopolitical foe.”added impetus to his post-Presidential campaign here. This Nobel Peace Prize winner
Only a fool trusts the U.S. government (and the U.S. ‘news’media) after ‘Saddam’s WMD’ (which despite all the lies to the contrary, didn’t exist). Like Craig Murray said, “I used to be the head of the FCO unit that monitored Iraqi weapons of mass destruction, and I know for certain, I can tell you, they knew there weren’t any.”
In my records, the politically progressive Craig Murray was the first individual to post to the Web a clear case that Russiagate was a U.S. Deep-State hoax: He headlined, on 31 December 2016, “Exit Obama in a Cloud of Disillusion, Delusion and Deceit”, and discussed the case which now is commonly called “Russiagate.” In fact, I had never found any evidence that anything he has said was false, and — especially considering the sheer number of his postings at his blog — this was a remarkable record of truthfulness (100%), which is attained by very few journalists, none of whom are publishable in the United States. These reporters are too honest, and too careful about the quality of the documentation they cite, to be publishable in the United States. They refuse to intentionally deceive their readers; and, to the exact contrary, they take great care never to deceive them. (However, I unfortunately did finally see a posting from him that included some false allegations.)
Incidentally, my December 15th news-report, “Two Huge Suppressed News-Reports in a 3-Day Period Display Corrupt U.S.-&-Allied Mainstream Press”, shows how pervasive and deeply systemic this outright lying by the U.S.-and-allied press is.
As to whom the individuals are who are America’s Deep State, that’s discussed here. In other words: the operatives (such as mainstream American journalists) are only agents for those individuals — they are not the Deep State itself. They can easily be replaced, but the Deep State is a far more deep-seated infection, in the American body-politic, and maybe cannot be removed, at all, without replacing the entire system. More-drastic measures than “reform” would therefore be needed, in order to eradicate the Deep State and restore whatever degree of democracy the United States formerly did have. (It’s now a dictatorship. In fact, that’s even been scientifically proven.) My research indicates that the Deep State took control of America starting on 26 July 1945.
* * *
Investigative historian Eric Zuesse is the author, most recently, of They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.
Tyler Durden
Sun, 12/22/2019 – 23:30 - Bannon: Trump Impeachment Will Be "Trial Of The Century"
Bannon: Trump Impeachment Will Be “Trial Of The Century”
Having blasted the liberal elites earlier in the week for “not giving a f**k” about the average joe in America:
“Look, this is what drives me nuts about the left. All immigration is to flood the zone with cheap labour, and the reason is because the elites don’t give a fuck about African Americans and the Hispanic working class. They don’t care about the white working class either. You’re just a commodity”.
Former White House chief strategist Steve Bannon pulled no punches in an interview with Fox Business Network’s Trish Regan saying that the Senate impeachment trial of President Donald Trump will be the “trial of the century.”
“I think this trial is going to be the trial of the century, and the mainstream media is going to be all over it,” Bannon said.
“That’s why I think it’s so important not just for his legacy, but for his presidency and his second term. He’s got to engage in this. He’s got to take them on. He’s got to have the whistleblower; we have to have the Bidens in front of the nation and the world. They’re going to have to stand and deliver under oath. And we’re going to get to the bottom of this. And I think that’s going to lead to an exoneration, not just an acquittal, but an exoneration of President Trump.”
Bannon said Republicans ought to “turn the tables” on Democrats and demand a full trial that will force it to go into the Democratic presidential primary.
“I think you ought to demand a full trial, where to get witnesses — and, hey, if it takes too long, it’s the Democrats to force this constitutional crisis over the Christmas holidays. If this trial goes on for a month or two into the Democratic primary, that’s a tough break for them. They’re the ones that forced this. One of the reasons they forced it is their field is so weak going in there. Nobody cares. Like I said, witness protection program. Nobody cares about their debate. They’re the ones that force this.“
Bannon went on to reiterate his belief that Hillary Clinton will “inevitably” be the Democratic Presidential nominee… but will lose… again:
“Hillary Clinton comes in at the moment that she feels that she can step in to save the Democratic Party and try to convince people that a rematch with President Trump is the best way that they have to try to defeat President Trump,” Bannon said.
“They won’t beat him. Right now, there’s nobody, including Hillary Clinton out there, that can beat Donald Trump. But they’re going to get desperate here because look at tonight. Nobody cares about this debate, this debate’s in Los Angeles.”
Finally, the former strategist raged against “the Washington Consensus”:
“…this is the managed decline of the United States. This is about the Washington consensus. The Washington Post published the Afghanistan papers last week. Two trillion dollars. 2,400 dead. Tens of thousands wounded. What’s that? That’s the inter-agency consensus in 18 years that betrayed our country. That’s what betrayed our countries. With Brennan, that’s what betrayed our country, not Donald Trump. Donald Trump has stood up. The reasons people cheer for him, it’s their sons and daughters that have died in Afghanistan. It’s their lives, their kids’ lives being thrown away, and their tax dollars.“
And that, Bannon exclaimed, is why we need a trial in the Senate to expose the swamp.
“And they understand that Donald Trump is fighting that. That’s why we need a trial, a real trial and Senate with witnesses. So, before the world, Donald Trump could get his day in court.“
Full Transcript:
Trish Regan: I do believe the president heard that she wants to run again from this show, from none other than Mr. Stephen Bannon here on set with me, who talked about Hillary Clinton getting back in potentially again. And also, you called Bloomberg as well. So, Bloomberg’s in, is Hillary going to join?
Steve Bannon: I think it’s inevitable. They had a poll out today that showed Biden at like 28, Bernie 21, Elizabeth Warren in the high teens. It looks like something that’s going to get to a — particularly with Super Tuesday, when Biden drops the nuclear weapon of his money on these in these big states. It’s going to lead to a brokered convention. Hillary Clinton, I think, is going to come in when it’s evident that none of the radical left of the Democratic Party can beat the President Trump —
[cross talk]
Steve Bannon: — A brokered convention. I think Hillary Clinton comes in at the moment that she feels that she can step in to save the Democratic Party and try to convince people that a rematch with President Trump is the best way that they have to try to defeat President Trump. They won’t beat him. Right now, there’s nobody, including Hillary Clinton out there, that can beat Donald Trump. But they’re going to get desperate here because look at tonight. Nobody cares about this debate, this debate’s in Los Angeles.
Trish Regan: They should be watching you.
Steve Bannon: Well, I’m talking about on MSNBC and CNN and their networks. They’re not they’re not running around saying, this thing is great. They understand these people, not just are boring, it’s not just about their star quality, it’s what they’re talking about is so off the mainstream, it’s not connecting with people. And they’re going to start getting desperate. Remember, their number one thing is that Donald Trump is an existential threat to the Democratic Party, to the established order and to the mainstream media, and they will do anything to take him down and destroy him. In particular, you saw last night what he’s talking about to the people; hey, they’re trying to come after you, they’re trying to come after me to get to you. We are in this together. And he saw people respond to that. That response of that audience last night for two hours, that stood out for hours in, what, 15- or 17-degree cold is quite remarkable.
Trish Regan: What I find remarkable and, you know, we can say this is a couple Irishmen — or Irishman and an Irishwoman. You think about traditional Democrats, right? And I think about my family and how my dad’s family was, historically, big Irish Catholic family and you were a Democrat like you’re Catholic. Like, it was part of your religion, right? And, you know, my — and if you were lucky enough, you got a job in the union. And so, there was a feeling that you always voted blue, and that has changed.
Steve Bannon: Last night you saw that. He’s connected with working class — listen to this. It’s the reason he won Wisconsin, Michigan, Pennsylvania, Ohio, Iowa. States they never thought we’d win again. And altogether because he went and he got, you know, Democrats, blue collar Democrats to vote for it and they believe in it. And they’re seeing — here’s the thing they’re seeing, the manifestation of his actions are making their lives better. You know, the Zogby poll today said that 53 percent of Democrats think that their party is spending too much time on impeachment instead of getting things done legislatively. It is so —
Trish Regan: And they got that right. And it’s not just, you know, we talk about Irish Americans. I mean, I look at the African American population right now and you look at some of the poll numbers there. And he’s doing extremely well in a way that you wouldn’t really think he would with that particular population, given the media.
Steve Bannon: Well that’s what the immigration policy — remember everything was to make sure that wasn’t more labor pressure on African Americans and Hispanics. That’s why you seen the approval rate — I think it’s 34 percent of African Americans approve now by Pew, and 36 percent of Hispanics. Because you’re seeing wages starting to rise. People — unemployment’s at historic lows, wages starting to rise. That’s why I think it’s so important, since they’ve smeared him in this process. He didn’t get to call any witnesses in this trial. And I think this trial will be — it’s going to be the trial of the century, and the mainstream media is going to be all over it. That’s why I think it’s so important not just for his legacy, but for his presidency and his second term. He’s got to engage in this. He’s got to take them on. He’s got to have the whistleblower; we have to have the Bidens in front of the nation and the world. They’re going to have to stand and deliver under oath. And we’re going to get to the bottom of this. And I think that’s going to lead to an exoneration, not just an acquittal, but an exoneration of President Trump.
Trish Regan: The trial of the century. Wow. You know, a lot of people are worried, well, you get John Bolton. What is he going to do? What is John Bolton going to say? And what is this one going to say? What is that one going to say? What do you say to those concerns?
Steve Bannon: The president — the call was perfect. He looked at everything that led up to it. This is why the American people heard him. And you just saw the bureaucrats that were in it that were testified. This is because that is the managed decline of the United States. This is about the Washington consensus. The Washington Post published the Afghanistan papers last week. Two trillion dollars. 2,400 dead. Tens of thousands wounded. What’s that? That’s the inter-agency consensus in 18 years that betrayed our country. That’s what betrayed our countries. With Brennan, that’s what betrayed our country, not Donald Trump. Donald Trump has stood up. The reasons people cheer for him, it’s their sons and daughters that have died in Afghanistan. It’s their lives, their kids’ lives being thrown away, and their tax dollars. And they understand that Donald Trump is fighting that. That’s why we need a trial, a real trial and Senate with witnesses. So, before the world, Donald Trump could get his day in court.
Trish Regan: And you call them all. Disruption, right? It is the decade of disruption, and you’re one of the main disruptors there, according to The Wall Street Journal. In fact, one of the most powerful people here in Washington, the power players. Can we see that? So, you’re in some pretty significant company, there Mr. Bannon.
Steve Bannon: Well, I got the disrupt look on President Trump. As President Trump says, I’m his top student and that’s where the top student got for being the top student. I got my slot.
Trish Regan: Well, listen, we appreciate you being here tonight for that.
Steve Bannon: Thank you for having me, Trish.
Trish Regan: Very interesting insight, as always, Steve Bannon. I do want to point out to everyone they can listen to you every day. You can tune into a syndicated radio show and podcast on iTunes, War Room: Impeachment. Well, that’s aptly named. It airs seven days a week. Forgive me, I was thinking weekdays. Seven days a week, you’re on the case.
Steve Bannon: Got to do it. Thank you so much for having me.
Tyler Durden
Sun, 12/22/2019 – 23:00 - The First Ever Mission To Remove Space Junk From Orbit Has Just Been Commissioned
The First Ever Mission To Remove Space Junk From Orbit Has Just Been Commissioned
Authored by Manuel Garcia Aguilar via TheMindUnleashed.com,
By September of 2013, there were already more than 500,000 pieces of debris, or “space junk” orbiting Earth and that number is still increasing.
The bits of junk travel at speeds up to 17,500 mph—fast enough for a relatively small piece of orbital debris to damage a satellite or a spacecraft. This is also potential danger to space vehicles, but especially to the International Space Station, space shuttles, and other spacecraft with humans aboard.
Pixabay.
“The greatest risk to space missions comes from non-trackable debris,” said Nicholas Johnson, NASA chief scientist for orbital debris.
As a result of this risk, the European Space Agency signed a debris-removal contract with Swiss startup ClearSpace tasking the company with de-orbiting a substantial piece of a Vega rocket left in orbit in 2013.
This mission, planned for launch in 2025, will be the first of its kind planned with the sole purpose of cleaning rather than exploring space.
The spacecraft is still unnamed and will be designed to have a “high level of autonomy.” The entire craft should weigh less than 400 kilograms.
Chemical propulsion appears to be the choice of the engineers for the first spacecraft, but future models could employ a mix of chemical and electrical thrusters.
As mentioned before, there is one main target here and it is called Vespa, the leftover remnant from ESA’s Vega rocket launch in 2013. This piece of junk weighs roughly the same as a small satellite and has a simple shape. This would make it easy for the robotic arms to grab. Once it’s in the arms of the collector, it will be dragged out of orbit and allowed to burn up in the atmosphere.
Unfortunately, this will also destroy the collector, but in the future, the agency hopes to improve this technology with future plans to de-orbit multiple objects without also destroying themselves.
“And in the coming years, the number of satellites will increase by an order of magnitude, with multiple mega-constellations made up of hundreds or even thousands of satellites planned for low Earth orbit to deliver wide-coverage, low-latency telecommunications, and monitoring services. The need is clear for a ‘tow truck’ to remove failed satellites from this highly trafficked region,” says Luc Piguet, founder, and CEO of ClearSpace.
So far ClearSpace has raised close to 2.3 million Swiss francs (close to $2.3 million USD) through a mix of investors and grants. The ClearSpace mission is set to cost $129 million.
Tyler Durden
Sun, 12/22/2019 – 22:30 - Credit Suisse Ex-Employee Says "Striking Tall Blonde" Spy Followed Her In Manhattan And Long Island
Credit Suisse Ex-Employee Says “Striking Tall Blonde” Spy Followed Her In Manhattan And Long Island
When Colleen Graham heard a story of investigators looking into Credit Suisse for spying on its recently departed head of wealth management, something sounded familiar.
She had recalled, years prior, when she was working on a JV between the bank and Palantir Technologies, a “striking tall blonde” had followed her in Manhattan after she refused to sign off on how revenue from the JV would be booked. She filed a complaint in 2017 alleging the bank had taken retaliatory measures against her, including the surveillance, according to Bloomberg.
Credit Suisse had “expressed strong frustration” about her stance on the revenue recognition, she claimed.
So she reached out to CEO Tidjane Thiam and Chairman Urs Rohner, offering up the details of her story. She also reached out to the law firm the bank hired to investigate.
However, on October 1, the lawyers came out and said they had “not identified any evidence that Credit Suisse had ordered observations of other employees.” Instead, it was COO Pierre-Olivier Bouee who had acted alone in ordering the former employee be followed. Rohner said that staff surveillance was not “part of our toolbox.”
The bank said it’s “examining the new information.”
Graham’s report didn’t make it into the lawyer’s findings. Additionally, Swiss newspaper NZZ reported on December 16 that the bank’s HR chief, Peter Goerke, was also followed for 3 days in February.
The events continue to act as a headwind for Thiam, who is focused on trying to shift the narrative to Credit Suisse’s performance – and away from the scandal that has dented the bank’s reputation. Questions continue to be raised about who was “in the know” about the behavior at the bank.
Credit Suisse said the results of its own investigation will be published on Monday.
Preliminary results show no evidence of Thiam having knowledge of the surveillance. Swiss financial regulators are also stepping up their investigation into the bank. Finma appointed an independent auditor to look into the spying allegations, according to a statement late on Friday. The activities raise “various compliance issues,” according to the regulator.
In an email to Thiam and Rohner in September, Graham says she was followed from the “lobby of my lawyer’s office into a pharmacy several blocks away and to the building where I was interviewing” at BlackRock. She also says she saw the same woman in a black Range Rover following her on Long Island. She said “the woman wanted me to know she was following me.”
She heard nothing in response to her email, so she also wrote to the law firm, Homburger. A lawyer responded, suggesting they speak by phone on September 30, one day prior to the firm releasing their report.
Graham worked as senior compliance executive at Credit Suisse before being hired to head Signac, a venture that used Palantir software to detect unauthorized trading by employees. Department of Labor investigators also looked at her allegations and dismissed the claims in April. Credit Suisse has called them “baseless”.
Recall, this is hardly the first time “business intelligence firms” or spies have been used in the world of finance. Critics of the company Wirecard were recently targeted by spies, according to the FT. Well known short seller Carson Block even caught one spy on camera after he claimed to be a WSJ reporter while digging for information.
In 2017, another “gorgeous blonde” spy was famously outed after apparently seeking counterintelligence on a controversial insurance company. She was later found to be the woman who tried to coerce information out of Rose McGowan on behalf of Harvey Weinstein and in 2019, later outed herself officially in an embarrassing apology tour.
Tyler Durden
Sun, 12/22/2019 – 22:00 - As The Fiscal Doomsday Machine Powers On, David Stockman Rages "Impeach The Congress, Too!"
As The Fiscal Doomsday Machine Powers On, David Stockman Rages “Impeach The Congress, Too!”
Authored by David Stockman via LewRockwell.com,
If bringing one’s country to fiscal ruin were an impeachable offense, you’d have to impeach the entire city of Washington.
On December 16 the gross Federal debt breached a new level to $23.1 trillion, while the net debt after $401 billion of cash weighed in at $22.71 trillion. The latter monstrous figure is notable because on June 30, 2019 it stood at $21.76 trillion.
So what has happened in the last 167 days is a $948 billion increase in the Uncle Sam’s net debt, which amounts to a gain of $5.7 billionper day – including, as we like to say, weekends, holidays and snow days.
Worse still, not a single dollar of that gain got absorbed in government trust funds. The Treasury float held by the public actually rose by $953 billion.
So why in the world do the knuckleheads on bubblevision not understand where the spiking rates and ructions in the repo market came from?
The law of supply and demand is still operative, and the US Treasury is literally flooding the bond pits with new supply. Even at the bottom of the Great Recession, Uncle Sam did not drain $5.7 billion per day from the bond market.
But nary a soul down in the Imperial City has noticed this borrowing eruption at the tippy-top of the business cycle, which now teeters on borrowed time at a record 127 months of age. Instead, this very day the Congress is busily engaged in what is a fair approximation of abolishing the election process at the heart of American democracy.
We will address today’s hideous impeachment Gong Show below. But here we note that every talking head showing up on the screen today is claiming that the market can keep on bubbling higher because the pending impeachment of the nation’s 45th president is a great big nothingburger.
Au contraire!
It’s real, deeper meaning is that the Washington end of the Acela Corridor is now morphing into a disruptive missile aimed right at the canyons of Wall Street.
Of course, the Donald won’t be “convicted” by the Republican Senate. Indeed, the House impeachment resolution my never even be sent to the Senate if Nancy and her ship of fools conclude there won’t be a real “trial” in the Senate and therefore leave the resolutions sitting on the parliamentarian’s desk as camera ready campaign fodder for 2020.
But, hey, a government which can treat the supposedly solemn and extraordinary process of impeachment as a mere exercise in campaign theatrics is a government that has given the term “dysfunctional” an altogether new definition. It means that the conduct of the actual business of the people’s government has virtually ceased.
To be sure, we would ordinarily consider a government that does absolutely nothing to be praiseworthy. After all, the route to prosperity does not extend through the halls of Congress or the vast departments inside the beltway, but stems from the genius of free enterprise and the exertions and inspiration of workers, employers, savers, investors and inventors. They require neither help nor superintendence from an activist Federal government.
Likewise, a reticent government is all we really need for national defense. The latter has been more than taken care of by the god-created ocean moats which secure our shores and our already paid for nuclear deterrent which keeps distant foes at bay. All the rest of the $900 billion of so-called national security spending and the vast and unremitting Washington machinations it funds are in behalf of Empire, not the safety and liberty of the homeland.
But the fly in the ointment is that several generations of Washington politicians have turned the Federal budget into a Fiscal Doomsday Machine. Spending for both automatic entitlements and so-called discretionary programs alike gushes higher, pulling the public debt upwards as it goes, with virtually no meaningful legislative action.
Consequently, the fractured and inflamed partisanship evident in today’s demented proceedings has become the handmaid of the nation’s impending fiscal catastrophe. That is, government must take positive and sweeping legislative action to brake the Doomsday Machine, but James Madison’s checks and balances have always made large-scale statutory enactments difficult, while today’s metastasized partisanship have made them well nigh impossible.
It is generally understood that the giant entitlements – Social Security, Federal retirement, Medicare, Medicaid, Food Stamps and the lesser income security programs – are automatic, permanently authorized payments that currently flow to upwards of 160 million Americans and will continue to do so, whether Congress does its job or not.
But what needs emphasis is that the rate of growth is accelerating – in effect, it is busting loose from the growth rate of the faltering national economy which must finance these massive entitlements.
Thus, between 1987 and 2000, total Federal entitlement spending soared from $358 billion to $778 billion or by 117%. But during those first 13 years of Greenspan’s reign, the Fed’s easy money was able to goose nominal GDP by 115%, meaning that the entitlement claim on GDP remained constant at about 7.5%.
Since then, it has been off to the races as shown in the graph below. During the last 19 years, nominal GDP (brown line) doubled again, but Federal entitlement spending (purple line) tripled, and it’s claim on GDP rose from 7.5% to 11.0%.
What this means is that every year the legislative stalemate and inaction persists is another year in which the Fiscal Doomsday Machine gathers even more momentum.
Moreover, the surge of beneficiaries behind the above divergence is by no means over. The 80-million strong Baby Boom will continue to clamber on to the Social Security/Medicare welcome wagon at a rate of 11,000 per day until the end of the 2020s.
The graph below is dispositive. The 39.7 million Medicare (and social security retirement, too) beneficiaries at the turn of the century are already more than 60 million, which total will rise to 81.5 million by 2030 and 92.4 million by 2050.
Needless to say, the rate of entitlement spending growth, which has already broken loose from GDP, will diverge to an even greater degree during the decades ahead. Quite simply, the already baked-in-the cake demographics of American society guarantee that work force and GDP growth will continue to weaken, even as the exploding retirement population gets ever older (on average) and therefore more costly to support.
Nor is the automatic entitlement the only aspect of the budget threatening a further breakout in the Turbulent Twenties ahead. Mandatory interest on the debt is fixing to soar at quadruple the rate of the last 19 years owing to the math of debt and interest rates.
To wit, the first 19 years of this century witnessed the full fury of central bank interest rate repression. The 10-year U.S. Treasury (UST) yield fell from 6.5% to a recent sub-basement level of just 1.75%.
Accordingly, even as the Federal debt erupted from $5.7 trillion to nearly $23 trillion, or 300%, during that period, the interest expense of the US Treasury crept up at a far more moderate pace.
Thus, interest outlays during Q3 2000 posted at a $353 billion annual rate, representing 6.2% of the $5.67 trillion of public debt then outstanding. But during the next 19 years of explosively growing Federal debt, interest expense crept up to just $584 billion at an annual rate during Q3 2019, representing but a 65% gain since the turn of the century.
Here’s the thing. Annualized interest expense in Q3 2019 amounted to just 2.6% of the debt outstanding – or barely one-third of the 6.2% level registered in Q3 2000.
It goes without saying that this disconnect between the debt and its cost of carry was a one-time fiscal windfall that has actually functioned to obfuscate the magnitude of the budget crisis gestating down below the top line. Yet according to the sheer math of the thing, it can’t happen again in the decades ahead because interest rates have already been pushed to sub-economic and unsustainable levels by the Fed and other central banks.
At minimum, therefore, interest expense will grow just as fast as the baked-in-the-cake growth of the Federal debt, which is heading toward well in excess of $40 trillion by the end of the 2020s. Accordingly, even at today’s average yield Federal interest expense will surge to $1.1 trillion per year during the next 10 years, and a lot more when interest rates finally normalize.
Growth of Federal Debt Versus Interest Expense, 2000-2019
Finally, even the so-called discretionary part of the budget – annual appropriations for defense and domestic programs – has succumbed to a form of de facto automaticity.
To wit, the Imperial City has been so fiscally euthanized by the Fed’s gift of unending cheap money and massive monetization of the public debt that both parties are on the same side of the budgetary boat. That is, in favor of more spending – with the GOP neocons and hawks pushing defense spending skyward in trade for equivalent levitation of domestic appropriations, as especially favored by the Dems.
Moreover, the Trumpified GOP has developed a deathly fear of being blamed for another government shutdown, which it falsely blames for its wipeout at the polls in 2018. So the GOP has essentially joined a bipartisan conspiracy in favor of a rolling suspension of the Federal debt limit and annual omnibus appropriations bills that are loaded with budget busting pork.
Crazily, the talking heads on bubblevision this AM were making the absurd argument that there is smooth sailing ahead because Congress just passed a 2300 page $1.4 trillionomnibus appropriations bill for the balance of FY 2020, even as it is in the midst of a partisan donnybrook on impeachment.
Supposedly, this means the government is still functioning. No sweat!
Well, yes, it is functioning, but to literally blow the top off from even the tiny discretionary spending corner of the Federal budget that until the Donald came along was exhibiting a modicum of restraint.
No more. The two-year budget deal being sent to the White House will blow the budget caps for FY2020-2021 by $320 billion, but even that isn’t the half of it.
Due to Congress’ crooked, self-serving scoring rules, budgetary caps become the basis for the outyear current policy baseline in subsequent years. Accordingly, for FY 2020 the existing caps were supposed to cause total defense and non-defense appropriations to drop by $125 billion – from $1.244 trillion in FY 2019 to $1.119 trillion in FY 2020.
This is shown in the solid black line in the chart below, and also shown by the dotted black line is the convention for projecting 10-year baseline spending from the old FY2020 and FY2021 caps.
Thanks to Congress’ alleged ability to “function” in the midst of partisan madness, however, those caps have now been blown away and none have been enacted for subsequent years. Hence the baseline for discretionary spending in the outyears is now plotted by the dotted blue line.
The difference over 10-year? A cool $1.7 trillion, and you can believe that the bipartisan duopoly on Capital Hill will drive every dime of this increase right into Uncle Sam’s trillion+ per year borrowing requirement.
Even then they were not done as they honed today’s impeachment brickbats. While they were at it, they repealed $375 billion of health care taxes that the one and same Pelosi-led Dem majority rammed through in 2010 in order to prove that Obamacare would not add to the public debt!
We have no particular brief for the medical taxes and are not surprised at all by the blatant Dem hypocrisy. After all, for the most part these massive taxes have never actually gone into effect because implementation has been deferred time and time again just before the effective dates.
Still, if you can’t repeal ObamaCare spending as the GOP miserably failed to do in 2017 and 2018, why do you get to repeal these financing means and brag you have made a blow for America’s taxpayers?
Not only do these actions bury taxpayers deeper in debt, they also guarantee that some day down the road even higher taxes will be imposed in order to finally stem the flood of red ink.
Besides that, $200 billion of the revenue loss buried in the Omnibus appropriations bill is attributable to permanent repeal of the so-called Cadillac Tax on ultra-high cost, gold-plated – mainly union – health care plans, which have a total cost of more than $30,000 per year.
That’s right. The bipartisan duopoly has now agreed to keep spending trillions over the next decade for ObamaCare but can’t even see its way clear to tax the excess value of health care plans which cost about the same as the average annual wage among the 170 million payroll tax filers in the US.
Nevertheless, when you add $70 billion of other tax loopholes which were extended and the associated debt service cost, the very “functional” Congress at work this week blew a $500 billion hole in the revenue collections over the next decade to fit on top of the $1.7 trillion of added discretionary spending.
So the Federal budget has indeed become a full-bore Doomsday Machine. There is not a scintilla of capacity or will on either side of the partisan divide to even brake its trajectory. As shown below, the publicly-held debt is heading toward 150% of GDP – a level which would crush what remains of US economic growth or encourage the Fed to print so much money monetizing this exploding public debt as to virtually destroy the financial system in the process.
Yet this gets us back to today’s contretemps.
Obviously, the Dem impeachment case is absurd. The meddling in the 2016 election was done by the Deep State intelligence agencies with the encouragement of partisan Obama officials, not the Russians; and Ukraine’s cesspool of corruption would not have smeared American politics in the slightest had Washington not fomented a coup in February 2014 against a government it didn’t like for being too friendly with its historic Russian neighbor and suzerain.
So the Donald had every reason of state to want the Ukraine corruption investigated. For crying out loud, the prosecutor fired by Biden has told exactly why it happened.
In early 2106, he had seized the property of the corrupt Ukrainian oligarch and owner of Burisma, who had hired Hunter Biden and the son-in-law and chief of staff to the Secretary of State, John Kerry. Then out of the blue, wham! He was removed from office at Biden’s command in exactly the quid pro quo manner Uncle Joe famously bragged about before an audience at the Council on Foreign Relations.
So how much stench do you really need in your nostrils to recognize that the Hunter Biden led crew of fortune hunters in Ukraine after February 2014 weren’t on the up and up?
But actually, the threadbare articles of impeachment arising from the stench of Ukraine are not really about the Donald’s 25 minute phone call and purported quid pro quo at all. The Dems have adopted the posture that the American election process itself is imperiled by the nefarious meddling of Russkies and other fureners, and are focused not on governance, but on this alleged threat to their ability to win office and hold power.
At the same time, the GOP has lost all sense of its fundamental missions in behalf of sound money, fiscal rectitude, free markers and homeland defense. Instead, it’s going full retard on its own fatuous version of the supposedly imperiled U.S. election process.
That’s what the Donald’s insane Wall on the Mexican border and the GOP’s increasingly shrill anti-immigration policy is all about. It opposes more immigrants and brown people because it believes they will vote Democrat and thereby deprive the GOP of its rightful claim on political power.
Needless to say, two parties fighting over alleged existential threats to the very essence of American democracy is the very opposite of the nothingburger ballyhooed by bubble vision this AM.
What the Trump impeachment is really about is a brutal, raw struggle for power that threatens the very survival of American democracy, and which could end up in a hung 2020 election that would make the hanging-chad ordeal of 2000 look like a walk in the park.
Even then, the Fiscal Doomsday Machine will power forward unrestrained.
And these fools on bubble vision want you to buy-the-dip.
Don’t you dare!
Tyler Durden
Sun, 12/22/2019 – 21:30 - AG Barr Blasts Soros For Stoking Hatred Of Police
AG Barr Blasts Soros For Stoking Hatred Of Police
“They have started to win in a number of cities and they have, in my view, not given the proper support to the police.“
That is the warning that Attorney General William Barr has for Americans, as he told Fox News’ Martha MacCallum in a recent interview that liberal billionaire George Soros has been bankrolling radical prosecutor candidates in cities across the country.
“There’s this recent development [where] George Soros has been coming in, in largely Democratic primaries where there has not been much voter turnout and putting in a lot of money to elect people who are not very supportive of law enforcement and don’t view the office as bringing to trial and prosecuting criminals but pursuing other social agendas,” Barr told Martha MacCallum.
Specifically, Barr warned that if the trend continues, it will lead to more violent crime, ading that the process of electing these prosecutors will likely cause law enforcement officers to consider whether the leadership in their municipality “has their back.”
“They can either stop policing or they can move to a jurisdiction more hospitable,” he said.
“We could find ourselves in a position that communities that are not supporting the police may not get the police protection they need.”
The Washington Post recently reported that while two Virginia prosecutorial candidates – funded by Soros’ Justice and Public Safety PAC – have never prosecuted a case in a state court, they beat candidates with more than 60 years of experience between them.
Tyler Durden
Sun, 12/22/2019 – 21:00 - Virginia AG Says 2A Sanctuaries "Have No Legal Force." But Is That Actually True?
Virginia AG Says 2A Sanctuaries “Have No Legal Force.” But Is That Actually True?
Authored by Daisy Luther via The Organic Prepper blog,
The Attorney General of Virginia stepped into the fray yesterday with an opinion on the validity of Second Amendment Sanctuaries that have sprung up across the state in response to draconian gun control legislation. He said that the Second Amendment Sanctuary resolutions have no legal force and that municipalities will have no choice but to enforce the unconstitutional laws, should the bill be turned into law in January.
But is this actually true? Or is it just a statement meant to discourage dissent? Digging into this, it seems that it’s certainly not as cut and dried as the AG would have us all believe.
This article will be filled with lots of quotes from pertinent legal documents. I’m not an attorney so I’m just laying out my findings. The emphasis throughout is mine.
You can draw your own conclusions.
The Official Statement
Let’s start out with what AG Mark Herring had to say.
The Virginia Constitution, the Code of Virginia, and established common law doctrines all bear on these questions.
First, the Constitution of Virginia provides that all local authority is subject to the control of the General Assembly. For example, Article V Il, Section 2 of the Constitution provides that “[t]he General Assembly shall provide by general law for the . powers . of counties, cities, towns, and regional governments.”[1]
Second, the Code of Virginia establishes the supremacy of state law over local ordinances and policies. Section 1-248 provides:
The Constitution and laws of the United States and of the Commonwealth shall be supreme. Any ordinance, resolution, bylaw, rule, regulation, or order of any governing body or any corporation, board, or number of persons shall not be inconsistent with the Constitution and laws of the United States or of the Commonwealth.[[2][3][4])
As the Virginia Supreme Court has explained, because local authority is subordinate to state law, “local ordinances must conform to and not be in conflict with the public policy of the State as embodied in its statutes.
Third, established common law doctrines specifically limit the authority of local governments. Virginia follows the Dillon Rule, which provides that local governments may exercise “only those powers expressly granted by the General Assembly, those necessarily or fairly implied therefrom, and those that are essential and indispensable. The Dillon Rule is one of strict construction: “[I]f there is a reasonable doubt whether legislative power exists, the doubt must be resolved against the local governing body. Thus, when a Virginia locality seeks to take any action, the Dillon Rule applies “to determine in the first instance, from express words or by implication, whether a power exists at all. If a locality cannot identify a reasonably specific source of delegated authority, “the inquiry is at an end” and the act in question is unauthorized.
These constitutional, statutory, and common law doctrines establish that these resolutions neither have the force of law nor authorize localities or local constitutional officials to refuse to follow or decline to enforce gun violence prevention measures enacted by the General Assembly.
l . By their own terms, these resolutions have no legal effect. Although the resolutions typically contain several “Whereas” clauses, the “be it resolved” clauses generally do not purport to take any concrete action. 15 Instead, the operative clauses: (a) “express[]” the “intent” of the locality’s Board of Supervisors “to uphold the Second Amendment rights of [the county’s] citizens,” (b) “express[]” the Board’s “intent that public funds of the [clounty not be used to restrict the Second Amendment rights of the [county’s] citizens,” and (c) “declare[]” the Board’s “intent to oppose” any “infringement” or “restrictions” of their residents’ Second Amendment rights using “such legal means [as] may be expedient, including without limitation, court action. These general statements do not direct or require any specific result, and any suggestion of potential future action is entirely speculative.
It also bears emphasis that neither local governments nor local constitutional officers have the authority to declare state statutes unconstitutional or decline to follow them on that basis. “All actions of the General Assembly are presumed to be constitutional. Furthermore, it has long “been the indisputable and clear function of the courts, federal and state, to pass upon the constitutionality of legislative acts. It follows from these well-established principles that all localities and local constitutional officers are required to comply with all laws enacted by the General Assembly unless and until those laws are repealed by the legislature or invalidated by the judiciary.
Nor may localities or local constitutional officers decline to enforce laws enacted by the General Assembly on the theory that requiring them to do so would “commandeer” local resources. Although the United States Supreme Court has held that “the Federal Government may not compel the States to implement . . . federal regulatory programs, that doctrine derives from the specific limitations on Congress’s legislative powers and the “residuary and inviolable sovereignty” retained by the states in our federal system. 25 In contrast, “the Constitution of Virginia is not a grant of legislative power to the General Assembly,„ 26 and, unlike Congress, [tlhe authority of the General Assembly shall extend to all subjects of legislation” not specifically “forbidden or restricted” by the State Constitution. 27 And neither the Federal Constitution nor Virginia law recognizes any “anti-commandeering” principle that allows localities or local constitutional officers to refuse to participate in the enforcement of state law.28
Conclusion
It is my opinion that these resolutions have no legal effect. It is my further opinion that localities and local constitutional officers cannot nullify state laws and must comply with gun violence prevention measures that the General Assembly may enact. (source)
You can read Herring’s entire opinion and get the citations here.
What is the Dillon Rule?
This is a rule of government embraced by 39 states.
Dillon’s Rule is derived from written decision by Judge John F. Dillon of Iowa in 1868. It is a cornerstone of American municipal law. It maintains that a political subdivision of a state is connected to the state as a child is connected to a parent. Dillon’s Rule is used in interpreting state law when there is a question of whether or not a local government has a certain power. Dillon’s Rule narrowly defines the power of local governments.
The first part of Dillon’s Rule states that local governments have only three types of powers:
-those granted in express words,
-those necessarily or fairly implied in or incident to the powers expressly granted, and
-those essential to the declared objects and purposes of the corporation, not simply convenient, but indispensable.The second part of Dillon’s Rule states that if there is any reasonable doubt whether a power has been conferred on a local government, then the power has NOT been conferred. This is the rule of strict construction of local government powers. (source)
Virginia set a precedent with Dillon’s Rule back in 1896 and is considered one of the strictest states for the rule. It has been applied consistently ever since, taking power from local governments and centralizing it at a state level.
However…
It’s important to note that Dillon’s Rule is no more a law than Second Amendment Sanctuary resolutions. It’s a philosophy, albeit one that has consistently been applied in the Virginia Supreme Court for 125 years.
The Dillon Rule was adopted by the Virginia Supreme Court 120 years after Virginia declared its independence and created its first constitution. The rule is not a law passed by the General Assembly, and it was not based on a specific section in the 1869 state constitution that was in effect when the court ruled on the Winchester arson reward lawsuit.
The Virginia Supreme Court did not violate the separation of powers and somehow create a new law when adopting the Dillon Rule. Instead, when the court cited the Iowa justice’s rulings, it created the legal framework for interpreting the legality of many laws passed by state and local governments.
The framework has empowered the General Assembly and limited the authority of local governments. Judge Dillon’s legal philosophy was based on the assumption that local government was less competent and more corrupt than state government. However, that ignores the professionalization of local government since 1896. (source)
Dillon’s Rule can be federally preempted, too.
The American University Law Review published a paper regarding the Dillon Law in regard to sanctuary states and cities that were acting in defiance of federal immigration laws.
The issue of federal preemption of state law is a complex and prevalent topic in the immigration debate today,and the issue is relevant to Dillon’s Rule because it could be argued that preempts the outcome of a Dillon analysis in this context.
Furthermore, the issue of preemption is particularly tricky here because Dillon’s Rule deals with what the law does not say, rather than an express provision of state law in conflict with federal law. Under preemption principles, where state and federal law conflict, federal law governs. However, where there is no conflict, state law applies. (source)
The question here is whether federal law would conflict with state law enough to preempt Dillon’s rule.
Does the Dillon Rule override the power of County Sheriffs?
County sheriffs are often considered the last against unconstitutional legislation, with the authority to defy even federal law.
Historically, some sheriffs have not only enforced the laws; they have also decided which laws not to enforce. They view this as protecting the people from the intrusions of the federal government.
The “constitutional sheriff” movement is comprised of current and former members of law enforcement who believe that sheriffs are the ultimate authority in their jurisdiction—even above federal law enforcement…
…While it may seem like a fringe movement, it is prevalent enough to be taken seriously. In 2013, 500 sheriffs agreed not to enforce any gun laws created by the federal government. In Utah, almost all elected sheriffs signed an agreement to protect the Bill of Rights—and fight any federal officials who tried to limit them. [Robert Tsai / Politico] (source)
In 2013, Sheriff John D’Agostini of El Dorado County, California, famously kicked a federal agency out of his county.
“The U.S. Forest Service, after many attempts and given many opportunities, has failed to meet that standard.”
The sheriff has sent a letter to the US Forestry Service stating officers will no longer be able to enforce state law in his county.
“The U.S. Forest Service, after many attempts and given many opportunities, has failed to meet that standard.”
CBS 13 in Sacramento contacted a law professor to ask him if the sheriff’s actions are legal.
“Looks to me as though the sheriff can do this,” he said. “They don’t have state powers in the first place, but essentially the sheriff can deputize individuals to have authority in his or her jurisdiction.”
Fact: federal agencies do not have state powers. Due to the Constitution’s structure of dual sovereignty, the feds have no authority to enforce state laws. Furthermore, states cannot be compelled to enforce federal laws. (source)
So does that mean that Dillon’s Rule does or does not apply to county sheriffs? It’s complicated.
This Comment argues that Dillon’s Rule, a doctrine which limits the authority of cities, towns, and other localities to act unilaterally without authorization from the state legislature, creates a barrier to the enforcement of the 287(g) agreements currently in place between sheriffs’ offices and the federal government. Specifically, Dillon’s Rule precludes sheriffs from entering 287(g) agreements without authorization from the state legislature, rendering these agreements invalid in most cases. Accordingly, when an individual is detained or otherwise deprived of liberty or due process under an invalid 287(g) agreement, constitutional protections should apply. (source)
Wouldn’t depriving gun owners of their Second Amendment rights fall under the category of something constitutionally protected?
AG Herring’s statement contradicts a 2014 opinion.
Attorney General Herring’s current opinion seems politically biased since he has previously rendered more than one opinion at odds with this statement. House Majority Leader C. Todd Gilbert (R) said:
“Attorney General Herring’s opinion is interesting, as it directly contradicts his own statements and actions regarding the supremacy of state law over the preferences of the officials who must enforce them,” Gilbert states in a news release. “In 2014, Herring declined to defend Virginia law in state court, despite a statutory duty to do so.”
Gilbert adds that Herring told the Richmond Times-Dispatch: “…If I think the laws are adopted and constitutional, (then) I will defend them…”
“His opinion today notes that ‘it has long been the indisputable and clear function of the courts … to pass upon the constitutionality of legislative acts,’” Gilbert states. “This not only conflicts with his previous statement about his own conduct, but also the position of a number of Democratic commonwealth’s attorneys regarding (the) prosecution of marijuana possession.
“I look forward to the Attorney General following up with the Commonwealth’s Attorneys and Commonwealth’s Attorneys-elect in Arlington, Fairfax, Loudoun, Portsmouth, and Norfolk about the supremacy of state law over the policy preferences of local elected officials,” Gilbert adds. (source)
Gilbert also provided another example of inconsistency.
Todd Gilbert, R-Shenandoah, the current majority leader in the House of Delegates who will serve as minority leader in the next legislative session, issued a statement Friday afternoon drawing attention to what he sees as a contradiction between the sanctuaries opinion and Herring’s previous decision to not defend Virginia’s ban on same-sex marriages when Herring concluded the prohibition was unconstitutional, despite what Gilbert argues was a statutory requirement to do so. (source)
That certainly does seem inconsistent with a “rule of strict construction.”
Virginians are unlikely to back down over the AG’s opinion.
Virginians are outraged at the prospective new laws and many gun owners are openly defiant. Counties, cities, and municipalities across the state are decrying the unconstitutional new laws and they are getting organized.
When gun owners were threatened with the National Guard to enforce compliance, it only seemed to accelerate the Second Amendment Sanctuary movement. One county officially established a militia and more sure to follow, either officially or unofficially.
This is a battle of wills that’s being watched closely around the country. Where Virginia goes, the nation will follow, whether that’s compliance or outright refusal.
Gun control advocates may have chosen the wrong state as a testing ground. The state government seems to have underestimated the unflinching resolve of rural residents. So far, despite the state government’s threats and posturing, Virginians seem unbowed and gun owners across the nation are supporting them.
Tyler Durden
Sun, 12/22/2019 – 20:30 - Steven Mnuchin Explains Why $1.5 Trillion In $100 Bills Have Disappeared
Steven Mnuchin Explains Why $1.5 Trillion In $100 Bills Have Disappeared
Last week we reported that something strange was going on at the same time that central banks are injecting $100 billion each month in electronic money to crush volatility and ramp markets: a similar amount in physical currency and precious metals was literally disappearing.
The mystery, in a nutshell, was as follows: while banks are printing more bank notes than ever, these seem to be “disappearing off the face of the earth” and nobody knows where or why, or as the WSJ notes, “central banks don’t know where they have gone, or why, and are playing detective, trying to crack the same mystery.”
And while readers can read up much more on the topic of disappearing hard assets here, a few days after, Fox Business picked up on this thread, writing that almost $1.5 trillion of the world’s physical cash, with $100 dollar bills making up the vast majority, was reportedly unaccounted for.
So what happened to the money?
To get to the bottom of this mystery, this was the question FOX Business anchor Lou Dobbs asked the man who literally signs every single US dollar bill, Treasury Secretary Steven Mnuchin. The response” “Literally, a lot of these $100 bills are sitting in bank vaults all over the world,” Mnuchin said.
Mnuchin pointed to the negative interest rates causing people to turn to American dollars as a solid investment.
The dollar is the reserve currency of the world, and everybody wants to hold dollars,” Mnuchin said on “Lou Dobbs Tonight.” “And the reason why they want to hold dollars is because the U.S. is a safe place to have your money, to invest and to hold your assets.”
Mnuchin said it’s interesting that, in a increasingly digital world, “the demand for U.S. currency continues to go up.” adding that “there’s a lot of Benjamins all over the world.”
Actually, it’s not that interesting: the world’s growing appetite for physical assets such as paper dollars and gold, coupled with the continued interest in cryptocurrencies and other traditional currency alternatives, merely confirms that faith in artificially levitated markets is approaching a tipping point. Meanwhile the world’s “top 0.001%ers” continue to quietly cash out, literally, and put their Benjamins in secret vaults in the middle of somewhere, even as central banks do everything in their power to reduce the amount of physical currency in circulation and replace it with easily trackable digital alternatives.
As we reported back in August, there are now more $100 bills in circulation than $1 bills, according to data from the Federal Reserve, which found there are more $100s than any other denomination of U.S. currency. And as an indication of just how much demand there is for physical stores of value, consider this: the number of bills featuring a picture of Benjamin Franklin has about doubled since the start of the recession.
In 2018, the Federal Reserve Bank of Chicago illustrated a correlation between low interest rates and high currency demand, though it also noted outside factors could help explain swelling demand.
The bank estimated that 80% of all $100 bills last year were actually in circulation in foreign countries, and explained that residents in other countries, particularly those with unstable financial systems, often use the notes as a safe haven.
To watch the exchange, click on the image below and fast forward to 7 minutes 30 seconds in.
Historic Trade Victories. @stevenmnuchin1 praises @POTUS for continuing to deliver on all of his trade & economic promises. #MAGA #AmericaFirst #Dobbs pic.twitter.com/K0i9jjzCHH
— Lou Dobbs (@LouDobbs) December 18, 2019
https://platform.twitter.com/widgets.js
It’s not just US dollar that are disappearing, however.
Few are as perplexed by the fate of the missing cash as the German central bank: according to the Bundesbank more than 150 billion euros are being hoarded in Germany. This has led the European Central Bank, and others, to ask the public for help.
“Everyone says that they are not hoarding cash but the money is clearly somewhere,” said Henk Esselink, head of the issue and circulation section in the ECB’s currency management division.
“People hide their money everywhere,” said Sven Bertelmann, head of the Bundesbank’s National Analysis Centre in Mainz, Germany. Sometimes bank notes are buried in the garden, where they start decomposing, or hidden in attics, where they are used by mice for building nests. “It happens again and again that people keep money in an envelope and then they shred it by mistake,” Bertelmann said. “We pick up the bank notes with tweezers and then start to put them together, like a jigsaw puzzle.”
Australia’s central bank says its best guess is that only around a quarter of the bank notes in circulation are used for everyday transactions. Up to 8% of cash is used in the shadow economy—tax avoidance or illegal payments—while as much as 10% could have been lost. That is $7.6 billion Australian dollars ($5.2 billion) missing at the beach or in couch cushions… Or simply lost in a “boating accident” to avoid the taxman until the rainy days arrive.
The biggest use of cash is as a store of wealth “in safes, under beds and at the back of cupboards, both here in Australia and elsewhere around the world,” Mr. Lowe, the RBA governor, said.
Swiss National Bank officials likewise found that hoarding of Swiss francs jumped around the year 2000, likely motivated by fear of the Y2K bug infecting computer systems, the bursting of the dot-com bubble, the September 11 terrorist attacks and introduction of the euro. The financial crisis that began in 2007 encouraged people to stash even more.
Meanwhile, with a financial crisis looming – and getting closer by the day – for some countries, such as New Zealand, making money disappear is becoming a national pastime. Around a third of New Zealand’s new bank notes headed overseas in 2017, up from 6% four years earlier. That happened around the time that tourism overtook dairy as the country’s main export money-spinner, leading officials to speculate on the role played by currency exchanges, especially in Asia.
The trail mostly ran cold after that. The bank could only identify the whereabouts of around 25% of New Zealand’s cash. The rest, of about 75%, has disappeared.
“Our sense is that we’re in the same boat as a lot of other central banks out there,” said Christian Hawkesby, assistant governor at the RBNZ. “We can’t fully explain why holdings of cash are rising and where they are going.”
Unfortunate boating accident.
Tyler Durden
Sun, 12/22/2019 – 20:10 - Bloomberg Recommends Virtue Signaling Elites Atone For Private Jet Use With Carbon Credits
Bloomberg Recommends Virtue Signaling Elites Atone For Private Jet Use With Carbon Credits
Are you a rich, virtue-signaling hypocrite experiencing ‘eco-guilt’ for bouncing all over world in a private jet while condemning others for their vastly smaller carbon footprint?
Fear not, Bloomberg News has you covered.
To atone for your carbon sins – particularly if you just can’t bring yourself to fly commercial (private jets emit as much as 20x more carbon dioxide per passenger) – simply snap up some carbon credits! In addition to convincing yourself you’re not a hypocrite, you’ll be prepared for awkward interview questions in Aspen after igniting 400 gallons of jet fuel to shuttle your entourage to next year’s film festival.
Beware of scams, however, as only Carbon credits which truly benefit the planet should only be purchased from ‘well-established NGOs.’
If you have the money, the easiest way is to pay for carbon credits. To make sure you’re investing in a project that will truly benefit the planet, look for credits from groups that well-established nongovernmental organizations support. Gold Standard, which NGOs including the WWF created, has issued more than 100 million carbon credits from about 700 projects worldwide. For example, you can offset a ton of CO2 by donating $18 to a reforestation effort in East Timor or by giving $15 to a program that provides fuel-efficient stoves for women in North Darfur. –Bloomberg
More Q&A for the curious (Via Bloomberg)
How do I know how much I need to offset?
It depends on factors such as the amount of fuel burned and the altitude reached in flight. “People are put off by the fact they can go to different calculators and get different estimates of what that footprint of their flight would be,” Leugers says. “The reality is there are different levels of calibration.” One “finely calibrated” online calculator for commercial flights is from German nonprofit Atmosfair, she says. The unique details involved with a personal jet trip mean you’ll probably need to call in your own expert.
Can I use biofuel for my jet?
If you can find it. The 15 million liters (almost 4 million gallons) of aviation biofuel produced in 2018 accounted for less than 0.1% of total aviation fuel consumption, says the International Energy Agency. The IEA noted on its website in March that only five airports have regular biofuel distribution—Bergen, Norway; Brisbane, Australia; Los Angeles; Oslo; and Stockholm. Biofuels are also costlier. The aviation industry says this might eventually be resolved with ramped-up production of biofuels from cheap and plentiful feedstocks such as agricultural waste.
Can I just buy an electric private plane?
There are already small two- and four-seater electric planes in the air. Something comfier, in the 50-seat range, might be ready for short-haul flights by 2027, says Bertrand Piccard, co-founder of Solar Impulse, a solar-powered aircraft project. “Sixty-six years after the Wright Brothers, they put people on the moon,” he says. “That shows how fast innovation can go.”
Tyler Durden
Sun, 12/22/2019 – 19:30 - A Funny Thing Happened As The Fed Cut Rates: Credit Card Rates Hit All Time Highs
A Funny Thing Happened As The Fed Cut Rates: Credit Card Rates Hit All Time Highs
Something “odd” happened as the Fed prematurely ended its rate hike cycle and cut rates 3 times starting this summer: while banks were quick to trim the interest they pay on deposits to match the Fed’s cuts (and in the case of some “retail banks” like Goldman, even cut ahead of the Fed) they pushed the rates they charge on credit cards to all time highs.
And while we are confident such stalwart defenders of Fed policy as supportive of US consumers (instead of, say, US banks) as Neel Kashkari will be quick to explain how it is that rate cuts have resulted in higher credit card interest rates, and why the Fed is doing nothing to reverse this latest handout from consumers to banks, here are some more charts from Deutsche Bank showing that after carrying the US economy for the past year (as we reported on Friday, consumption account for more than 100% of the GDP growth in Q3), this may soon be ending.
First, it’s not just credit card rates that are surging – so are auto loan interest rates, and while they have yet to hit all time highs, they have risen by a material 2% in 2018 and also are showing no signs of reversing.
Worse, while bank auto loan rates have yet to hit cycle highs, when it comes to rates charged by finance companies, they are back to levels seen when the Fed Funds rates was about 3% higher.
One explanation for the relentless creep higher in rates banks charge consumers is that delinquency rates are also rising, and sure enough, that’s exactly what’s going on, although one would think that the 75bps cut this year would find at least some pass through to end markets. Alas, that is not the case.
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Meanwhile, despite the recent surge in car loan delinquencies which is also fast approaching record levels, finance companies are allowing increasingly broke US consumers to take out ever longer loans and leases in order to make the monthly payments smaller while tacking on mandatory payments to the tail end, which has risen to as much as five and a half years.And as maturities get ever longer, so total loan sizes rise to new all time highs, allowing OEMs to keep hiking average prices to new records. After all, why comparison shop and look for deals when one can just charge it and worry about the price the next billing cycle, and the next, and the next… with compounding interest.
Shifting away from cars, and looking at the broader consumer loan category, something ominous is taking place here too: after hitting an all time low 3 years ago, the number of defaults has spike, even as the increasingly unreliable and seasonally adjusted unemployment rate remains near all time lows.
Finally, while the big banks – which carefully season and select their portfolios have barely seen their credit card delinquency rates increase, the same can not be said for most US commercial banks that are not among the 100 largest: it is here that the next American delinquency crisis will hit first, because as noted here previously, delinquency rates among America’s small and medium banks are effectively at all time highs.
Tyler Durden
Sun, 12/22/2019 – 19:11 - The Fake Impeachment: Pelosi's Botched Ploy Helps Trump Towards Victory
The Fake Impeachment: Pelosi’s Botched Ploy Helps Trump Towards Victory
Authored by Joaquin Flores via The Strategic Culture Foundation,
And so it came to pass, that in the deep state’s frenzy of electoral desperation, the ‘impeachment’ card was played. The hammer has fallen. Nearly the entirety of the legacy media news cycle has been dedicated to the details, and not really pertinent details, but the sorts of details which presume the validity of the charges against Trump in the first place. Yes, they all beg the question. What’s forgotten here is that the use of this process along clearly partisan lines, and more – towards clearly partisan aims – is a very serious symptom of the larger undoing of any semblance of stability in the US government.
The fact that the impeachment is dead in the water, by Pelosi’s own admission, is evident in Trump’s being adamant that indeed it must be sent to the Senate – where he knows he’ll be exonerated. But even if it doesn’t go to the Senate, what we’re left with still appears as a loss for Democrats. Both places are his briar patch. This makes all of this a win-win for team Trump.
Only in a country that produces so much fake news at the official level, could there be a fake impeachment procedure made purely for media consumption, with no real or tangible possible victory in sight.
For in a constitutional republic like the United States, what makes an impeachment possible is when the representatives and the voters are in communion over the matter. This would normally be reflected in a mid-term election, like say for example the mid-term Senatorial race in 2018 where Democrats failed to take control. Control of the Senate would reflect a change of sentiment in the republic, which in turn and not coincidentally, would be what makes for a successful impeachment.
Don’t forget, this impeachment is fake
Nancy Pelosi is evidently extraordinarily cynical. Her politics appears to be ‘they deserve whatever they believe’. And her aim appears to be the one who makes them believe things so that they deserve what she gives them. For little else can explain the reasoning behind her claim that she will ‘send the impeachment to the Senate’ as soon as she ‘has assurances and knows how the Senate will conduct the impeachment’, except that it came from the same person who told the public regarding Obamacare that we have to ‘We have to pass the bill so that you can find out what is in it.”.
In both cases, reality is turned on its head – for rather we will know how the Senate intends to conduct its procedure as soon as it has the details, which substantively includes the impeachment documents themselves, in front of them, and likewise, legislators ought to know what’s in a major piece of legislation before they vote either way on it. Pelosi’s assault on reason, however, isn’t without an ever growing tide of resentment from within the progressive base of the party itself.
We have quickly entered into a new era which increasingly resembles the broken political processes which have struck many a country, but none in living memory a country like the US. Now elected officials push judges to prosecute their political opponents, constitutional crises are manufactured to pursue personal or political vendettas, death threats and rumors of coups coming from media and celebrities being fed talking points by big and important players from powerful institutions.
This ‘impeachment’ show really takes the cake, does it not? We will recall shortly after Trump was elected, narrator for hire Morgan Freeman made a shocking public service announcement. It was for all intents and purposes, a PSA notifying the public that a military coup to remove Trump would be legitimate and in order. Speaking about this PSA, and recounting what was said, would in any event read as an exaggeration, or some allegorical paraphrasing made to prove a point. Jogging our memories then, Freeman spoke to tens of millions of viewers on television and YouTube saying:
“We have been attacked. We are at war. Imagine this movie script: A former KGB spy, angry at the collapse of his motherland, plots a course for revenge – taking advantage of the chaos, he works his way up through the ranks of a post-soviet Russia and becomes … president.
He establishes an authoritarian regime, then he sets his sights on his sworn enemy – the United States. And like the KGB spy that he is, he secretly uses cyber warfare to attack democracies around the world. Using social media to spread propaganda and false information, he convinces people in democratic societies to distrust their media, their political processes, even their neighbors. And he wins.”
This really set the tone for the coming years, which have culminated in this manufactured ‘impeachment’ crisis, really befitting a banana republic.
It would be the height of dishonesty to approach this abuse of the impeachment procedure as if until this moment, the US’s own political culture and processes were in good shape. Now isn’t the time for the laundry list of eroded constitutional provisions, which go in a thousand and one unique directions. The US political system is surely broken, but as is the case with such large institutions several hundreds of years old, its meltdown appears to happen in slow motion to us mere mortals. And so what we are seeing today is the next phase of this break-down, and really ought to be understood as monumental in this sense. Once again revealed is the poor judgment of the Democratic Party and their agents, tools, warlords, and strategists, the same gang who sunk Hillary Clinton’s campaign on the rocks of hubris.
Nancy Pelosi also has poor judgment, and these short-sighted and self-interested moves on her part stand a strong chance of backfiring. Her role in this charade is duly noted. This isn’t said because of any disagreement over her aims, but rather that in purely objective terms it just so happens that her aims and her actions are out of synch – that is unless she wants to see Trump re-elected. Her aims are her aims, our intention is to connect these to their probable results, without moral judgments.
The real problem for the Democrats, the DNC, and any hopes for the White House in 2020, is that this all has the odor of a massive backfire, and something that Trump has been counting on happening. When one’s opponent knows what is probable, and when they have a track record for preparing very well for such, it is only a question of what Trump’s strategy is and how this falls into it, not whether there is one.
Imagine being a fly on the wall of the meeting with Pelosi where it was decided to go forward with impeachment in the House of Representatives, despite not having either sufficient traction in the Senate or any way to control the process that the Senate uses.
It probably went like this:
‘We’ll say we impeached him, because we did, and we’ll say he was impeached. We’ll declare victory, and go home. This will make him unelectable because of the stigma of impeachment. ‘
Informed citizens are aware that whatever their views towards Trump, nothing he has done reaches beyond the established precedent set by past presidents. Confused citizens on the other hand, are believing the manufactured talking points thrown their way, and the idea that a US president loosely reference a quid pro quo in trying to sort a corruption scandal in dealings with the president of a foreign country, is some crazy, new, never-before-done and highly-illegal thing. It is none of those things though.
Unfortunately, not needless to say, the entirety of the direct, physical evidence against Trump solely consists of the now infamous transcript of the phone call which he had with Ukrainian president Zelensky. The rest is hearsay, a conspiracy narrative, and entirely circumstantial. As this author has noted in numerous pieces, Biden’s entire candidacy rests precisely upon his need to be a candidate so that any normal investigation into the wrongdoings of himself or his son in Ukraine, suddenly become the targeted persecution of a political opponent of Trump.
Other than this, it is evident that Biden stands little chance – the same polling institutions which give him a double-digit lead were those which foretold a Clinton electoral victory. Neither their methods nor those paying and publishing them, have substantively changed. Biden’s candidacy, like the impeachment, is essentially fake. The real contenders for the party’s base are Sanders and Gabbard.
The Democratic Party Activist Base Despises Pelosi as much as Clinton
The Democratic Party has two bases, one controlled by the DNC and the Clintons, and one which consists of its energized rank-and-file activists who are clearer in their populism, anti-establishment and ant-corporate agenda. Candidates like Gabbard and Sanders are closest to them politically, though far from perfect fits. Their renegade status is confirmed by the difficulties they have with visibility – they are the new silent majority of the party. The DNC base, on the other hand, relies on Rachel Maddow, Wolf Blitzer, and the likes for their default talking points, where they have free and pervasive access to legacy media. In the context of increased censorship online, this is not insignificant.
Among the important reasons this ‘impeachment’ strategy will lose is that it will not energize the second and larger base. Even though this more progressive and populist base is also more motivated, they have faced – as has the so-called alt-light – an extraordinarily high degree of censorship on social media. Despite all the censorship, the Democrats’ silent majority are rather well-informed people, highly motivated, and tend to be vocal in their communities and places of work. Their ideas move organically and virally among the populace.
This silent majority has a very good memory, and they know very well who Nancy Pelosi is, and who she isn’t.
The silent majority remembers that after years of the public backlash against Bush’s war crimes, crimes against humanity, destruction of remaining civil liberties with the Patriot Act, torture, warrantless search – and the list goes on and on – Democrats managed to retake the lower house in 2006. If there was a legitimate reason for an impeachment, it would have been championed by Pelosi against Bush for going to war using false, falsified, manufactured evidence about WMD in Iraq. At the time, Pelosi squashed the hopes of her own electorate, reasoning that such moves would be divisive, that they would distract from the Democrats’ momentum to take the White House in ’08, that Bush had recently (?) won his last election, and so on. Of course these were real crimes, and the reasons not to prosecute may have as much to do with Pelosi’s own role in the war industry. Pelosi couldn’t really push against Bush over torture, etc. because she had been on an elite congressional committee – the House Intelligence Committee – during the Bush years in office which starting in 2003 was dedicated to making sure that torture could and would become normalized and entirely legal.
It seems Pelosi can’t even go anywhere with this impeachment on Trump today, and therefore doesn’t even really plan to submit it to the Senate for the next stage. The political stunt was pulled, a fireworks show consisting of one lonely rocket that sort of fizzled off out of sight.
Trump emerges unscathed, and more to the point, we are closer to the election and his base is even more energized. Pelosi spent the better part of three years inoculating the public against any significance being attached to any impeachment procedure. Pelosi cried wolf so many times, and Trump has made good on the opportunities handed to him to get his talking points in order and to condition his base to receive and process the scandals in such and such way. This wouldn’t have been possible without Pelosi’s help. Thanks in part to Pelosi and the DNC, Trump appears primed for re-election.
Trump energizes his base, and the DNC suppresses and disappoints theirs. That’s where the election will be won or lost.
Tyler Durden
Sun, 12/22/2019 – 18:30 - Here's Why The Reflation Trade Is Doomed And Will Die Some Time Around April
Here’s Why The Reflation Trade Is Doomed And Will Die Some Time Around April
One of the big “hopes” heading into 2020 and the new decade, is that the reflation trade is once again coming back to life as the yield curve has steepened rather dramatically in recent months, commodity prices have quietly strengthened in the last few weeks, with US breakevens rising, cyclical stocks (modestly) outperforming, and China PMI rising to about 50.
Then again, not everyone is buying it. We noted on Friday that as part of Charlie McElligott’s near-term outlook, the quant is fading the reflationary groupthink, largely for tactical, if also several secular reasons.
Then there is the risk of too much reflation. As we noted in a recent article discussing Morgan Stanley‘s cross-asset take on markets in 2019 and its near-term outlook, the bank warned that it was not that long ago, in 2018, when markets viewed a rise in inflation as more problematic. In 2019, every asset has rallied. But in 2018, almost every asset declined, and markets began to worry that excess capacity in the global economy was being used up, or as the bank summarized, “Inflation is a risk to that we need to watch”, which we then paraphrased that “for all those hoping that reflation emerges in 2020 as a dominant theme, be careful what you wish for – you just may get it…”
Others are similarly skeptical: in a note sent out on Friday by Nomura’s “other” quant, Masanari Takada, writes there are three specific things investors should focus on before wading into the Reflation trade.
The first thing is the state of global geopolitical uncertainty, noting that “since the middle of this decade, increased global political uncertainty has put downward pressure on the economy and prices.” Takada thinks the present disinflationary tendency is an extension of this, “with political uncertainty playing a greater role than any concern over the economy itself.” From this angle, Nomura notes that while the first-stage trade deal between the US and China is good news for risk sentiment, there are a number of major political events coming up in 2020, including a prospective second-stage US-China trade deal and the US presidential election. As such, Takada concludes that “the question of whether the first-stage trade deal brings leads to reflationary conditions without a hitch cannot be considered in isolation from these future events.”
The second trigger for jumping into a reflation trade according to Nomura is a more pragmatic one: namely whether trend-chasing CTAs are joining in the reflation trade… which they aren’t. While most CTAs are backing out of disinflation trades (such as long positions in bond futures or short positions in commodities), they have yet to go any further. So unless CTAs start accumulating reflationary trade positions in earnest, “any rises in interest rates or gains in commodity prices that come along may turn out to be short-lived.”
Looking at the benchmark of reflationary inflection points, US Treasuries, CTAs have closed out the bulk of their long positions in major government bond futures markets. If nothing else, Takada thinks that trend-chasing investors no longer have any incentives to continue making disinflation trades that assume downtrending long-term interest rates. That said, CTAs have not yet taken to staking out short positions in bond futures.
Furthermore, currently, CTAs have “square” market-neutral positions in both COMEX copper futures and WTI crude oil futures (and although CTAs have fully liquidated their short positions, they have from that point switched into wait-and-see mode). Of these two CTA positions, the aggregate net position in COMEX copper futures in particular has historically been strongly correlated with global manufacturing momentum (as measured by manufacturing sector PMI readings for the US & China). Although the manufacturing economy does appear to have found a floor, Nomura thinks that CTAs’ present position in copper futures is premised on quicker economic growth than there is currently evidence for.
Last, but certainly not least, Nomura believes that investors thinking of wading into the reflation trade should check whether China is pursuing credit expansion (as we have shown recently, China has nearly given up on an endogenous credit boom). As we have noted repeatedly in previous years (recall the thesis that China’s credit impulse is all that matters for the world originated on this blog), peak periods for the reflation trade have historically tended to be preceded by the proactive expansion of credit by China’s policy authorities (and vice versa). One can think of the performance of long-term holdings in terms of the 24-month Sharpe ratio (risk-adjusted return) for the performance of value over growth (buying value and selling growth) in global equities (MSCI ACWI).
The data show that this Sharpe ratio has been linked to China’s “credit impulse” (change in new credit issued as a percentage of GDP). What becomes apparent here is that the policy response of China’s authorities since the GFC has had a substantial impact on the global credit cycle. It may be difficult to even speak coherently about reflationary conditions taking shape in 2020 without an active effort by China to expand credit. And what is most troubling, is that as the yellow line below demonstrates, China’s credit impulse has barely stirred above its post-crisis lows for two simple reasons: China has too much debt and its financial system is constantly on the edge, and facing a barrage of defaults as a result.
And since any sustainable global reflationary impulse – beyond the initial burst traditionally catalyzed by central banks – always comes from China, anyone hoping that the meager push higher in China’s credit impulse over the past year will be sufficient, will be greatly disappointed.
One final point.
As the following DoubleLine chart shows, the recent curve steepening – for many a proxy of the reflation trade and evidence that it is working – is nothing more than another Fed-created artifact, and the only reason the 3M10Y curve has steepened substantially in recent months is because of the Fed’s
QE 4“NOT QE” has sent the Fed’s balance sheet higher by nearly $400 billion.And while the return of QE – sorry, never, ever call it QE, the injection of up to $1 trillion in liquidity in 5 months is just to “fix” the broken repo market, pinky swear, cause everything else is just peachy – has once again stirred reflationary animal spirits, there will come a time in early 2020, when the Fed will end this latest gargantuan balance sheet expansion (absent a market crash of course). In fact, according as Morgan Stanley’s Rate Strategists expect, “the Fed will expand its balance sheet through April/May. After that, markets may once again have to confront a world with limited trade progress and no further Fed support.”
In other words, without a Chinese pillar of support, without validation from CTAs, and with the Fed’s “NOT QE” set to end in April, the reflation trade is nothing more than another Fed-created headfake, and has at most another 4 months before financial gravity, and a record $255 trillion in global debt, unleash the deflation trade.
Tyler Durden
Sun, 12/22/2019 – 18:00 - California's Accounting System Cost Taxpayers $1.1 Billion And Still Can't Produce A State Checkbook
California’s Accounting System Cost Taxpayers $1.1 Billion And Still Can’t Produce A State Checkbook
Authored by Adam Andrzejewski via Forbes.com,
California State Controller Betty Yee admits to paying 49 million bills last year. Yet, she won’t produce a single transaction subject to our public records request for line-by-line state spending.
Out of the 50 states, California is the only one that refuses to produce its state checkbook to our auditors at OpenTheBooks.com. Even though it’s home to Silicon Valley, the state government isn’t letting tech drive transparency when it comes to its own records.
It shouldn’t take subpoenas and litigation to force open the books.
Last year, Yee paid 49 million bills for about $320 billion in payments. If you can make the payment, then you can track the payment. The state controller’s office – whose job it is to stop waste, fraud, corruption, and taxpayer abuse – may be in violation of transparency laws.
In 2013, then-California State Controller John Chang rejected our public records request for the state checkbook telling us: stop asking because the records can’t be located. Today, six-years later – Yee is still parroting the same answer.
So, how is the controller even doing her job without access to the records she helped create? We reached out to Yee for comment, and will update the piece if she responds.
She’s charged with tracking “every dollar spent by the state.” Her duties include paying the bills and all state accounting, bookkeeping, payroll, and auditing– including financial and compliance audits and attestations.
Our objective is to empower citizens, watchdogs, media, politicians, researchers, academics – everyone – with the ability to give oversight to the massive budget. Here are just three critical issues facing the Golden State:
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Homeless populations: a 2014 state proposition taxed millionaires to provide funds for mental health services. Did San Francisco – home to 7,500 homeless people – receive its fair share? Last summer, we published an interactive map featuring 130,000 instances of human waste in the public way, which is in part connected to the state’s homeless problem.
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Unsustainable public employee pay and pensions: five-years ago, we opened the books and have captured 2 million public employee salary and pension records annually in California. The data shows that lifeguards in Los Angeles County make up to $365,000 per year. There are 10,000 employees in University of California higher education earning more than $200,000.
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Corruption: Controller Yee claims that she’s identified more than $4.35 billion in waste, abuse, and fiscal mismanagement of public funds since 2015 – about $1 billion per year. However, state government spent about $1.5 trillion during this period. Yee found only 34 pennies of waste for every $100 spent.
Just 34 pennies of every $100 spent by CA state government was identified as waste, fraud, abuse, or corruption by CA Controller Betty Yee since 2015. OPENTHEBOOKS.COM
It’s time to open the state checkbook.
Since 2005, the state has invested $1.1 billion in accounting software costs. Using this platform, a state agency, Financial Information System For California (FISCAL), promises to publish by September 2020 a full year of state checkbook on a rolling basis – minus approximately $100 billion in spending. When completed, 65-percent of what’s taxed and spent by the state will be online.
It’s a start. However, the FISCAL website will never contain the spending for ten major units of state government including colleges and universities, the California Public Employees’ Retirement System, the state legislature, California State Teachers’ Retirement System, and the office of legislative counsel.
Furthermore, another ten major business units are deferred for years to come. These substantial departments include corrections, rehabilitation, health and human services, the lottery, justice, motor vehicles, water resources, and transportation.
That’s totally unacceptable. We are based in Illinois, which, sadly, is famous for corruption. Our experience tells us that government can hide a lot of taxpayer abuse in $100 billion of non-transparent spending.
In 2012, our organization at OpenTheBooks.com sued then-Illinois Comptroller Judy Baar-Topinka (R) for the state checkbook. In 2018, we sued then-Wyoming State Auditor Cynthia Cloud (R).
Because of our litigation, today, the books in these states are open.
California spends an enormous sum of money. The state spends more than $320 billion per year with federal taxpayers funding $106 billion of it. If we can’t follow the money, then it’s tough to stop the schemes and other public swindles.
Every state across America can produce a complete checkbook of public expenditures. And taxpayers aren’t just dreamin’ to believe that California can produce a full record too.
Tyler Durden
Sun, 12/22/2019 – 17:35 -
- "This Pattern Is Unusual": Why Morgan Stanley Thinks 2019 Was One Of The Most Bizarre Years Ever
“This Pattern Is Unusual”: Why Morgan Stanley Thinks 2019 Was One Of The Most Bizarre Years Ever
After a dismal 2018, when the worst December since the Great Depression capped a year for markets when not a single asset class managed to beat inflation, 2019 has been a mirror image, and showed that a lot can change with just one phone call and one Fed capitulation.
Indeed, as Morgan Stanley’s cross-asset strategist Andrew Sheets writes in his year-end review, “2019 will go down as one of the strongest years for global stocks in the last thirty” and adds that “as we head into the holidays, a time full of market retrospectives, we except this raw strength to dominate the narrative”, especially with Trump reminding his tens of millions of followers virtually every day that the S&P has hit all time highs at least 135 times since the 2016 election.
Yet classifying 2019 as simply “strong” is misleading, Sheets explains, noting the year’s gains mask a host of oddities, from the outperformance of defensive assets in a roaring market, to hedge funds getting clobbered and massively underperforming broader equity indexes, to a five-month period that saw no gains for stocks even as interest rates dropped, to an outsized number of 3-sigma moves.
The last point stands in contrast to the false conventional wisdom that 2019 was a “strong, calm, central bank supported year”; instead, 2019 contained quite a few surprises, suggesting underlying liquidity may be more temperamental than currently expected; worse, as Bank of America pointed out last week, “The World’s Most Liquid Stock Market Is Now As Illiquid As It Was In The 2008 Crisis.”
In short, 2019 was one of the most bizarre years ever.
In listing out the ways in which 2019 was a stranger year, Sheets first notes that 2019 was…
The Backwards Year.
The first oddity of 2019 is that both cautious and aggressive investors will likely claim victory. Bulls, because of huge gains in stocks, credit, and Emerging Market fixed income. Bears, because bonds also rallied sharply, and the “alpha”of much of 2019 was in strategies that work when the world is a difficult place. Consider:
Overall, 20yr+ US Treasuries nearly matched the performance of the S&P 500 for the 12 months leading up to December 12, 2019. Through August of this year, long-dated bonds were significantly outperforming stocks. Well into 2019, allocators could have been underweight equities, overweight duration, and outperformed.
In equities, US large caps outperformed small caps by ~7%, defensives outperformed cyclicals by ~1%, and in Europe, utilities, healthcare and “quality” stocks all outperformed in a market that climbed ~23% overall. In fixed income, US BBs outperformed lower-quality CCCs by ~655bp in excess return (i.e., duration-hedged), and ~740bp in total return. In securitized credit, senior CLO tranches outperformed more junior ones. In Emerging Markets, higher-rated sovereigns are generally tighter relative to recent history than their lower-rated counterparts.
This pattern is, as Morgan Stanley says, unusual. In the next chart, Morgan Stanley shows the annual performance of the S&P 500 against the average of four “bullish” strategies: Cyclical vs. defensive equities, small vs. large cap equities, high yield vs. investment grade (total return), and BBs vs. CCCs (excess return). What happened in 2019, is that despite one of the best returns in the S&P in history, bullish strategies underperformed…
… which whiplashed virtually all hedge funds, resulting in the biggest equity outflows on record, and the fewest hedge fund launches since the start of the Millennium.
Or, as Morgan Stanley politely puts it: “In the last 30 years, there are not many that look like 2019.”
2019 Was Also the Year Of Multiple Expansion
Consider this: in 2019, global corporate earnings were down (both abroad and in the US), yet the MSCI ACWI is up 24% and the S&P500 is up almost 30%. Why? Two words: multiple expansion.
Here are the facts: since January 1, 2019, the forward P/E multiple for global equities (MSCI ACWI) has risen ~24%. That’s despite worsening global PMIs, an outright decline in 2019 earnings, and increases in US-China tariff rates over the time period. For the S&P 500, the multiple also increased ~24%.
The narrative this year (with more than a little bit of hindsight) has been that these valuation gains were supported by how much yields declined, as the lack of investment alternatives pushed money into stocks. But history shows the risks to this logic. In exhibit 8, Morgan Stanley has plotted the annual change in global equity valuations against the annual change in US 10yr yields. There is little (if no) correlation.
Meanwhile, equity fund flow show that record amounts of money came out of stocks in 2019!
And while the second higher forward PE multiple expansion on record did miracles for stocks in 2019…
… next year will be payback time. As Sheets puts it, “multiple expansion matters because it raises the pressure for companies to deliver on estimates in 2020.”
Which brings us to what has become somewhat of a trademark for Morgan Stanley in recent years: the bank’s unrepentant bearishness. Because while the bank believes that outside the US, “a combination of better macro and micro trends will help earnings for stocks in Korea, Japan, Brazil, Spain and the UK meet or beat expectations, fundamental improvement that can support or even expand current valuations”, for US equities, however, the bank believes that its 0% EPS forecast for 2020 growth “will disappoint expectations, prevent further multiple expansion, and ultimately drive a modest contraction in the multiple, leaving the S&P 500 at ~3,000 by 4Q20.“
* * *
If that’s not enough, another way to look back at 2019, is that it was “a year in three acts”, or as Sheets puts it, there really were three distinct phases. Considering global equities:
- 1. Act I: A powerful rally from depressed valuations and sentiment, as the Federal Reserve made a dramatic reversal to its policy guidance (January 1 – April 30)
- 2. Act II: A volatile period of no gains for five months, as the market worried about a lack of trade progress and continued weakness in global data (May 1 – September 30)
- 3. Act III: A “year end” rally driven by hope that at least ‘phase one’ of the US-China trade deal could be completed, and balance sheet expansion from both the Fed and ECB
Charted, these acts look as follows:
Why are the three acts important?
Because as Morgan Stanley explains, it’s common to hear that equities and credit will be well supported as long as interest rates are low. But “Act II” demonstrates a clear, and very recent, threat to this notion, showing that markets can certainly stall given low rates if earnings growth disappoints and central banks offer little in the way of new policy.
In fact, one can argue that only the “troubles in the repo market” which started in September, and triggered a nearly $400 billion expansion in the Fed’s balance sheet, including the launch of QE4, permitted the recent surge in stocks. More on that later.
Going back to “Act II”, Morgan Stanley finds ominous similarities between this phase and its own 2020 forecast, in which it sees no S&P 500 earnings growth, no incremental progress on trade after phase one, and no incremental easing measures by G4 central banks (beyond what is already announced).
That sounds a lot like “Act II”, and we note that our forecasts for next year (-6.0% to our year-end S&P 500 target of 3000), credit spreads (+123bp to our year-end high yield target) and range-bound US Treasury yields have some broad similarities to this phase of 2019.
A slightly more optimistic take can be extracted from Act III, which helps quantify risks around trade…: With “Act III” driven in part by increased confidence about a US-China trade deal, Sheets thinks rolling back the performance of “Act III” is a reasonable way to think about levels if trade tensions re-emerge. While the recently announced “phase one” deal was a bit better than the bank’s (if not Goldman’s) expectations, it was a little worse than what the market was expecting, and still contains key unknowns. Importantly, the bank’s Public Policy team remains skeptical about further progress, noting a significantly higher degree of difficulty in the issues that remain.
…and central bank policy: Trade optimism was one driver of the market’s rally since October. Central bank easing was another. The ECB ramped up its bond purchases, but more importantly, the Fed began expanding its balance sheet again to address a perceived shortage in system reserves.
And here is the $64 trillion question: Morgan Stanley expects the Fed to expand its balance sheet through April/May. “After that, markets may once again have to confront a world with limited trade progress and no further Fed support.” As Sheets concludes, “given the importance that markets have assigned to both trade and Fed policy this year, “sell in May and go away” could be very relevant in the year ahead.
One final risk looking ahead, and as hinted by “Act III” is that “reflation” could become “inflation”, as commodity prices have quietly strengthened in the last few weeks, with US breakevens rising, cyclical stocks outperforming, and China PMI rising to about 50.
For now, investors remain skeptical of a sustained rise of G3 inflation, or would welcome it as it would be seen as a sign of better growth and returning normality. Our economic forecasts also have inflation rising in 2020, but central banks effectively embracing that rise with no change in policy. But as Sheets reminds us, “it is not that long ago, in 2018, when markets viewed a rise in inflation as more problematic. In 2019, every asset has rallied. But in 2018, almost every asset declined, and markets began to worry that excess capacity in the global economy was being used up. Inflation is a risk to that we need to watch.” In other words, for all those hoping that reflation emerges in 2020 as a dominant theme, be careful what you wish for – you just may get it…
Tyler Durden
Sun, 12/22/2019 – 17:10 - Caitlin Johnstone: Why Everything Is F**ked
Caitlin Johnstone: Why Everything Is F**ked
Authored by Caitlin Johnstone via Medium.com,
We all slid out of the womb an itty bitty helpless information sponge into a world full of mentally ill giants who couldn’t wait to fill our tiny skulls with all of their inner demons. And now everything, understandably, is fucked.
That’s basically our whole entire situation in a nutshell. You can add on as many extra details as you like — plutocracy, corruption, mass media propaganda, billionaire wine cave fundraisers, whatever — but ultimately our plight is due to the fact that every single human showed up on this planet completely helpless and knowing nothing, forced to trust crazy giants to give them the grand introductory tour.
Why were those giants crazy? Well you see, they got here the same way you did: small, slippery and completely clueless, surrounded by enormous gibbering lunatics who were all in a mad rush to teach them how to be insane.
And those giants came into the world under the exact same circumstances, as did the giants who came before them, and the giants who came before them, and so on.
It’s a grand old tradition of ours, ultimately stretching all the way back to our own evolutionary birth in this world and the emergence of a massive cerebral cortex in a mammal who up until that point had been primarily concerned with sneaking in a snack and a quick shag in between mad sprints away from sharp-fanged predators. This newfound capacity for complex abstract thought burst onto this frantic, confusing scene and was quickly seized and manipulated by the cleverer primates.
And thus human madness was born.
The most powerful early humans were the cleverest humans, the ones who understood how to use this new capacity for language and abstract thought to their own advantage. They realized that by simply saying something is true in a sufficiently confident way, they could persuade the less clever humans to treat it as true.
Those clever humans used this newfound ability to place themselves in charge, and to make a bunch of rules to be passed down from generation to generation proclaiming that the less powerful humans must submit to the more powerful humans. Over the generations these rules became more and more numerous and complex, weaving in moralism, codes of filial piety, and insane, power-serving religions glorifying meekness, obedience and poverty.
These power-serving rule sets were picked up and used to justify highly traumatizing behavior in the service of the powerful, from wars to genocides to institutionalized torture and brutal executions of the disobedient, and just within domestic power structures the institutionalized normalization of spousal rape and physical abuse in households all around the world.
This eons-long tidal wave of deep trauma and power-serving rules structures passed from generation to generation to generation picking up more and more demented flotsam and jetsam as it went along, to ultimately come crashing down upon your crowning head as you emerged from your mother’s body.
That is your legacy. That is everyone’s legacy. Countless generations of cumulative madness, washed into the present moment on a current of eons of exploitation and senseless cruelty stretching all the way back to the dawn of our species on this planet.
This heritage of madness is funneled straight into our sponge-like brains from the moment we emerge from the womb and all the way through an extremely traumatic and confusing ordeal known as childhood, after which we are handed the keys to the world and told “You’re an adult now. You’re in charge. See if you can figure out how to run this place better than we did.”
And we’re just like:
We never stood a goddamn chance. None of us did. The deck was stacked against us long before we got here.
And now you get political commentators constantly railing on about “Gosh, if only we could get people to stop listening to their televisions and vote third party and read World Socialist Website and turn up to demonstrations and take back the power of the people from our oppressors, we could turn this thing around!” Not realizing that everyone else in their country went through the same traumatic, confusing ordeal that they went through at the beginning of their lives, the only difference being that most of them got a lot less lucky in sorting out reality from madness. And not realizing that they themselves are still quite mad.
This is ultimately the answer to every question about why things are fucked right now. Why does it seem like nothing changes no matter who wins the election? Why do the wars keep expanding instead of ending? Why is the news man always lying? Why are they locking up that white-haired fellow for publishing facts? Why are those nuclear superpowers hurtling closer toward direct confrontation? Why are the rainforests vanishing? Why are the whales dying? Why are the mass shootings increasing? Why is everyone so miserable?
Because every adult on this planet started off tiny, helpless, impressionable, and surrounded by gargantuan madmen, and it made it almost impossible to be sane. That’s why.
Notice I said “almost”. It is still possible to find one’s way into a relationship with reality that is guided by truth and untainted by madness, but you’ve got to start way, way, way back at the beginning and deeply re-examine even your most fundamental assumptions about what’s true and real. Because it turns out that while the mad giants gave us information that was very useful for interacting with other mad giants, it was almost entirely useless for learning how to navigate through life in a wise and truthful way.
And that’s what I’m pointing to here: it’s important to get clear on just how far back the crazy goes and how fundamentally interwoven it is with the situation in which we now find ourselves. If you begin with the assumption that our problem is simply due to humans not voting and mobilizing correctly in alignment with the correct ideology, you’ll miss the real obstacle entirely. You’ve got to zoom the camera out much, much further to see the full picture.
Can you become a deeply sane individual, untainted by your ancient heritage of madness? With a lot of work and uncompromising self-honesty you can.
Can all humans become deeply sane and untainted by their ancient heritage of madness? It would take a miracle. A whole lot of miracles. Billions, to be precise.
But then, I believe in miracles.
* * *
Thanks for reading! The best way to get around the internet censors and make sure you see the stuff I publish is to subscribe to the mailing list for my website, which will get you an email notification for everything I publish. My work is entirely reader-supported, so if you enjoyed this piece please consider sharing it around, liking me on Facebook, following my antics on Twitter, checking out my podcast on either Youtube, soundcloud, Apple podcasts or Spotify, following me on Steemit, throwing some money into my hat on Patreon or Paypal, purchasing some of my sweet merchandise, buying my new book Rogue Nation: Psychonautical Adventures With Caitlin Johnstone, or my previous book Woke: A Field Guide for Utopia Preppers. For more info on who I am, where I stand, and what I’m trying to do with this platform, click here. Everyone, racist platforms excluded, has my permission to republish or use any part of this work (or anything else I’ve written) in any way they like free of charge.
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Tyler Durden
Sun, 12/22/2019 – 16:45 - Trump Has Quietly Appointed 25% Of Circuit Court Judges As Smug Liberals Celebrate 'Merry Impeachmas'
Trump Has Quietly Appointed 25% Of Circuit Court Judges As Smug Liberals Celebrate ‘Merry Impeachmas’
While the smug left clinks champagne for “Merry Impeachmas” after the House passed articles of impeachment against President Trump, they’re fast losing the battle when it comes to America’s judicial landscape.
Even if 20 GOP Senators somehow flipped on Trump and he was removed from office, he’s already appointed 25% of sitting US circuit court judges, not to mention given us a conservative Supreme Court – after Senate Republicans stalled in 2016 on confirming Obama’s choice to replace the late justice Antonin Scalia, Merrick Garland.
🚨🎄: You didn’t think @SenateMajLdr would leave town without confirming more judges, did you?
Since 2017:
Supreme Court: 2
Circuit courts: 50
District courts: 133
U.S. Court of International Trade: 2
Grand Total: 187Merry Christmas America! pic.twitter.com/26xIBaHjke
— Senate Republican Communications Center (@SRCC) December 20, 2019
https://platform.twitter.com/widgets.js
According to the Washington Post:
In total, Trump has installed 187 judges to the federal bench. –Washington Post
And as the Post notes, “Trump’s mark on the judiciary is already having far-reaching effects on legislation and liberal priorities.”
For example, last week a Trump appointee on the 5th Circuit court of Appeals was one of two judges to strike down a key provision of the Affordable Care act. The case could move next to the Supreme Court, where two of the nine justices are Trump-appointed conservatives.
The 13 circuit courts are the second most powerful in the nation, serving as a last stop for appeals on lower court rulings, unless the case is taken up by the Supreme Court. So far, Trump has appointed 50 judges to circuit court benches. Comparatively, by this point in President Obama’s first term, he had confirmed 25. At the end of his eight years, he had appointed 55 circuit judges.
Trump’s appointments have flipped three circuit courts to majority GOP-appointed judges, including the U.S. Court of Appeals for the 2nd Circuit in New York. The president has also selected younger conservatives for these lifetime appointments, ensuring his impact is felt for many years. –Washington Post
Spearheading the effort to fill benches with conservatives is Senate Majority Leader Mitch McConnell (R-KY) – who is “almost singularly focused on reshaping the federal judiciary,” having fast-tracked two Senate rule changes which speed up the confirmation process, despite objections from Democrats.
“Leave no vacancy behind,” McConnell has publicly stated.
McConnell has bragged that blocking Garland in the off-chance Trump won the 2016 election was one of his greatest achievements. Consequently, Trump appointed conservative Justice Neil M. Gorsuch to fill Scalia’s seat.
“I’ve always heard, actually, that when you become President, the most — single most important thing you can do is federal judges,” said Trump at a November White House event to celebrate his “federal judicial confirmation milestones.”
“Now, President Obama was very nice to us. He gave us 142 empty positions. That’s never happened before,” Trump joked in the Oval Office on Thursday. “But, as you know, that’s said to be the most important thing that a President has.”
What’s more, “There is only one circuit court vacancy left for Trump to fill, but more could open up next year. And if Trump wins in November, there will certainly be vacancies in his second term. There’s also the potential for additional openings on the Supreme Court. Ruth Bader Ginsburg, appointed by President Bill Clinton in 1993, is 86 and has had health problems. Justice Stephen G. Breyer, another Clinton pick, is also over 80,” according to the report.
This is not going well for the resistance.
Tyler Durden
Sun, 12/22/2019 – 16:20 - The Human Cost Of The EV Revolution
The Human Cost Of The EV Revolution
Authored by Anes Alic via OilPrice.com,
There’s a chance that the iPhone you’re about to get for Christmas contains cobalt mined by a six-year-old. There’s also a chance that that six-year-old has been killed or maimed in the processes of mining in the Democratic Republic of Congo, where the lion’s share of the world’s cobalt comes from.
Or, maybe, for those whose Christmas lists are more upscale, you’ll be driving around in a new Tesla next week, with a battery containing cobalt from that same mine.
Our luxuries are necessarily someone else’s sacrifice – and sometimes that sacrifice is the ultimate one.
The EV and electronics revolutions have come at a steep human cost: a boom in child labor in the DRC as child cobalt miners offer battery makers and Big Tech cheap labor.
That’s the focus of the first-ever lawsuit targeting giant tech firms as end-users of cobalt from mines in which young children have died.
Having failed to bring down giant miners of cobalt in DRC, such as Glencore, this time lawyers are going after the end users themselves.
The first reports about child labor in the cobalt mines in the DRC emerged several years ago. And while no one likes to hear that their Tesla, lithium battery, smartphone, or fitness tracker has cost a child his health—or worse, his life—this is the reality of cobalt mining today.
This week, International Rights Advocates filed a lawsuit against Tesla, Apple, Dell, Microsoft, and Alphabet for knowingly benefiting financially from child labor in the DRC.
The suit was filed on behalf of 13 families whose children died or were seriously injured while mining for cobalt. The suit also seeks damages from miners Glencore and Zhejiang Huayou Cobalt, which supply cobalt to the tech majors and to Tesla.
The DRC is home to 3.4 million tons of cobalt: a grey metal that was once used for making bright blue pigment. Now, cobalt is an essential component of lithium ion batteries. This 3.4 million tons is more than half of all the cobalt in the world.
The second-largest cobalt reserves are found in Australia, at 1.2 million tons.
The DRC is also one of the poorest and most politically unstable countries in the world, creating the perfect environment for cheap labor—and even cheaper child labor. With many analysts pegging cobalt to soon slip into a shortage, cheap labor is a crucial advantage—an advantage that has trumped ethics, at least until the media shone a light on the human cost of the EV/Big Tech revolutions.
Carmakers were quick to react, pre-empting a more targeted attack from the media and human rights organizations. Earlier this week, before the news of the lawsuit against Tesla broke, a number of large carmakers formed what they are calling the Responsible Sourcing Blockchain Network. Members include Volkswagen, Ford, Volvo and, the most recent addition, Fiat Chrysler. Interestingly enough, Glencore, which is a defendant in the International Rights Advocates case, is also a member of the network.
“The Responsible Sourcing Blockchain Network is going to help us focus on the problems and give us enough visibility, which we could not do in the past,” according to Sai Yadati from IBM, which will power the blockchain network.
Essentially, the network should enable carmakers and their cobalt suppliers to track the metal from the mine to the battery factory and ensure there was no child labor involved in mining it.
The effectiveness of the network, however, only reaches as far as its members. If a mine joins it, the network would track the cobalt produced in it. Smaller mines, however, could still remain under the ethical radar and continue exploiting children.
In a further effort to distance themselves from the child labor stigma, some carmakers are investing in educational and farming initiatives in the DRC, to provide an alternative to working in the cobalt mines that so often results in death or serious maiming. However, what is moral is often unprofitable, which is how Big Tech and Tesla ended up in court.
One logical question to ask in the context of cobalt mining is: why keep getting it from DRC when there are reserves elsewhere? Well, because it is cheap and abundant there. Miner wages in Australia—which has the second-largest cobalt reserves—are probably light years away from miner wages in the DRC, where one child laborer who Fortune interviewed last year said he made $9 “on good days”.
Taking care to source your cobalt ethically is certainly the right thing to do for carmakers who plan to transform into EV makers in the future. Yet it is also the more expensive thing to do. Carmakers need the cobalt for EV batteries. Batteries are already the costliest component of an EV, and everyone in the industry is working hard to bring these costs down to make the EVs more affordable and ensure higher sales. Ethical mining is unlikely to bring these costs down: health and safety standards carry their own costs. This, in turn, may compromise future profits.
Of course, there is no question that the ethical sourcing of cobalt or any other battery raw material for that matter is more important than profits. Yet this only holds true from a human, moral perspective. Businesses are not humans and they tend to be motivated by factors other than basic human morality. It will be wonderful to see a responsible car industry that foregoes much of its profits to ensure no children are laboring in the cobalt mines of the DRC. What we may actually see is a car industry scared into foregoing much of its EV profits to ensure it doesn’t end up in court on child labor aiding and abetting charges. In either case, carmakers may have to prepare for higher-for-longer prices for their batteries.
Tyler Durden
Sun, 12/22/2019 – 15:55 - Hong Kong Riot Cops Clash With Protesters Following Rally For China's Oppressed Muslims
Hong Kong Riot Cops Clash With Protesters Following Rally For China’s Oppressed Muslims
Riot police in Hong Kong forcefully broke up a pro-democracy rally in solidarity with millions of Uighurs – Chinese Muslims living under oppressive conditions, many in so-called ‘re-education camps.’
Around 1,000 protesters gathered near Hong Kong’s harbor, waving pro-Uighur posters and flags – in what appears to be the latest grievance between the pro-democracy movement and China’s influence. While largely peaceful, police used pepper spray to disperse the protesters. In response, protesters threw glass bottles and rocks.
“We shall not forget those who share a common goal with us, our struggle for freedom and democracy and the rage against the Chinese Communist Party,” said one protester holding a megaphone.
China runs Hong Kong under a “one country, two systems” model that grants the financial capital expanded freedoms not enjoyed on the mainland. Many Hong Kongers view China as encroaching on these freedoms and fear mainland policies will come to the city.
What started as a movement against Chinese meddling has morphed into broader calls for greater democracy and police accountability following months of often violent protests.
The huge scale of the surveillance and prison system in Xinjiang has been closely watched in Hong Kong, with many fearful that similar measures could befall the city. –DW
The United nations and human rights organizations have widely condemned China’s treatment of Uighurs. Approximately 1 million have been forced to live in internment camps in the northwestern Xinjiang region. While Beijing calls them “vocational training centers” required to combat Islamic terrorism, those who have escaped tell shocking tales of torture and control.
“The Chinese government are control freaks; they can’t stand any opinions they disagree with,” a civil servant and protester named Kathrine told AFP before riot police moved in.
“In Xinjiang they are doing what they are doing because they have the power to do so. When they take over Hong Kong, they will do the same.”
Tyler Durden
Sun, 12/22/2019 – 15:30 - Michael Moore On 'Useful Idiots': "If The Election Were Held Today, Trump Would Win"
Michael Moore On ‘Useful Idiots’: “If The Election Were Held Today, Trump Would Win”
Authored by Matt Taibbi via RollingStone.com,
In the first episode of Michael Moore’s new podcast, Rumble, he tells a story of being given a gift of a new reel-to-reel tape recorder as a child, kicking off his media career. He taped everyone in sight, produced his own ad-hoc version of The Tonight Show before nap time, and went on to launch his own newspaper at school. In an amusing precursor of future events, the paper would be shut down almost right away after criticism of school sports programs.
More than half a century later, Moore is still going against the grain. His career arc is unique in the modern media landscape, being one of the very few figures to achieve commercial success and broad audience share without the full support of one or the other wing of the blue/red news media ecosystem.
Moore came to prominence as a critic of corporate sociopathy in Roger and Me, and became a liberal icon in the Bush years with Fahrenheit 9/11 and Bowling for Columbine, but his anti-corporate, anti-war, pro-labor message has never aligned exactly with the Democratic Party, either. Most recently he’s been a pointed critic of Democratic policies that opened the door for Trump’s election in 2016, while also voicing criticisms of the cult of Robert Mueller and Barack Obama’s contribution to the Flint water crisis.
He now feels the urgency of the political moment is such that he won’t wait to put out another movie, say, after next Election Day. The Rumble podcast will be a way for him to chime in all year long, and get out a message that is wholly his own, without having to go through studios or editors. “I’m going to say what I want to say,” he says. “I don’t have backers. I don’t have investors.”
In 2016, Moore was one of the few people in the media who correctly predicted Trump’s success in the vital swing states of the Midwest. He was ignored. This time around, it might be worth listening earlier. In a visit to Rolling Stone, Moore sat with Katie Halper and me to talk about about the presidential race, how his new podcast scratches the same independent-media itch he had as a kid with a tape recorder, pedophile coffee shops in Utah, and other topics.
Some highlights:
On asking Donald Trump to fix the Flint water crisis . . .
Trust me . . . if the water had been poisoned in Bloomfield Hills, or Grosse Point, or Ann Arbor, this would have been fixed within 30 days. And somebody would have gone to prison. . . . It’s such a heartbreaker for me, I don’t know what to do about it. I even thought, I should just see if Trump would privately meet with me. And I would say, “Look, you and I are about as opposite as things can get, and my mission is to remove you from this house that you’re currently occupying, but if you’d like to be remembered for something good, if there’s one thing you know, it’s construction. I even have a belief that you could operate a backhoe. You should come to Flint and fix the water.”
On Barack Obama drinking a glass of water in Flint . . .
I’ll have [Trump] meet the people who will tell him and show him that the water Obama drank in Flint came off Air Force One. … Do you think the Secret Service are going to let the president of the United States drink poisoned water? It was all a show. The number-one question that I do not have the answer to, and I hope to talk to him someday, is “Why? Why do that?”
On being targeted by mail bomber Cesar Sayoc . . .
He had a big picture of me on the side of his van with a bull’s-eye over it. . . . Frankly, to be honest, out of respect to him, while everyone else had a bull’s-eye over the face, he put mine over the shoulder. And I thought, OK . . . two things. Number one, that’s a really good picture of me! It’s hard to find a decent picture of me. And he didn’t put the bull’s-eye over [my face], he put it over here. …
I said to [my producer], “I wonder if he’s been to any of the Trump rallies that we went to. Maybe we filmed him.” And we started going through the footage, and damn if he wasn’t right there in front of the rope line, screaming for Trump, and “make America great,” right into our camera.
On his unsuccessful attempt to inject humor into the Clinton campaign in 2016 . . .
I’ll tell you a story I probably shouldn’t tell. I won’t mention any names, other than Hillary’s. I thought the way to win this in part would be during the debates . . . if Hillary just had a comedy shiv, just something that she could use to go under [Trump’s] thin skin, to have him implode on national TV. People would go, “He is unhinged…”
We offered this to Hillary and her people that we would do this quietly, nobody would know we would write lines for her, we would help with debate prep. She had political people helping her with lines — how about from myself or some of the top satirist-comedian types? And all she’s gotta do is land one or two of these…
They turned us down. They were afraid if it ever got out, because this comedian is dirty, and that comedian said that once . . .
On the Clinton campaign not wanting to distribute its own signs in Michigan in 2016 . . .
Because, I spent a lot of time at my other apartment in Michigan. Trump signs were everywhere. More than Hillary signs. I found out the campaign in Brooklyn wouldn’t send signs. They were afraid if too many people saw it, it would inflame the Trump people, make them go out and vote. That actually happened.
On New York’s culpability in inflicting Trump on the country . . .
Something I never understood as a Midwesterner is why New York never took care of Trump. . . . If that guy, with the way he is, was from Pittsburgh or Detroit or Milwaukee, he never would have been foisted on the rest of you. He would have been dealt with. The fact that he got away with so much for so many years, and all he was was tabloid entertainment to the people of New York. He was a punchline. The Donald.
On his brief tenure as editor of Mother Jones . . .
The left liberals, whatever you want to call it, they’re not always friends of the working class. … I don’t know how you guys would describe it, that part of the so-called left. … They’re really centrists. They’re not really left. These centrists? These liberals? They love humanity, they just hate people. … I was fired on Labor Day 1986.
The owner asked me to come in. They did not like this [column Moore commissioned by an autoworker], he did not like that I refused to publish things by these neo-liberals about Nicaragua that weren’t true. I wouldn’t participate in that.
But the thing that really upset them … One day I’m sitting in my editor’s office. . . . Fifteen or 20 women came in and shut the door. They were unionized…. They say, “We’re going to go on strike, we’re going to do a wildcat, we’re walking out.” I say, “Whoa, what happened?” They say, “The publisher harasses women. We’re not respected, we’re hit on.
I went to the owner’s house …. he cut me off. He said, “All right, what are you doing listening to these women? They’re always complaining.” [I say], “Are you saying it’s not true?” He said, “What I’m saying is, the publisher is getting help. … And your job is, you’re management. You’re editor. And you’re not to take their side.
Side? It’s Mother Frigging Jones! I couldn’t believe it. I was booted, within the week.
On pedophiles and coffee . . .
The pedophile priests, the real criminals are the bishops. … They should all be in jail. The priests are sick. They have a really bad mental illness. But we don’t know how to fix that in our society. We don’t know the science, how to stop pedophilia. So I would propose we just find a chunk of land out in Utah … so they’re contained there. There are some people who are going to hurt other people, especially kids, and we can’t have that. We pay for the science to try to help them, and contain them in the city. It should be a nice city. You should go to the Cineplex. There should be a pedophilia Starbucks. I’m just saying, why should they be denied their Starbucks?
On the 2020 election . . .
This is going to be the biggest mess. We’re not even prepared for what we’re going to see. … I think if the election were held tonight, Trump would win. Not in the popular vote. Oh, no. Hillary won by 3 million votes? Whoever the Democratic nominee is, is going to win by 4 or 5 million votes. The gap will be even larger. … The popular vote is going to be huge. But Trump has not lost his base. They’ve gotten bigger, and angrier, and whiter, and madder.
Tyler Durden
Sun, 12/22/2019 – 15:05
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