• Trump Derangement Goes International

  Authored by Raul Ilargi Meijer via The Automatic Earth blog,

  Dirk Kurbjuweit, deputy editor-in-chief of Germany’s Der Spiegel magazine for the past 4 years, unwittingly put his foot a mile deep in his mouth this week when he reacted to a letter written by US Ambassador to Berlin Richard Grenell. His reaction presents perhaps the most perfect example of the downfall of news, journalism, the media in general, that we’ve seen so far. Most perfect among very stiff competition.

  

  After Der Spiegel itself this week ‘outed’ its award-winning star reporter, Claas Relotius, as someone who had made up many of his lauded articles from scratch, Grenell suggested the magazine, and especially its editorial staff, shouldn’t think they can get away with putting all the blame on just this one guy. He tweeted:

  We value policy criticism. We love a free press. But @Spiegel literally fabricated stories saying people (Americans) were racist & xenophobic. They made up events, details, & lies – and no editor checked the stories. Every real journalist should be outraged by this.

  And he wrote a letter to Der Spiegel, albeit addressed at the ‘wrong’ editor, Steffen Klussman, who won’t be in the post until after Jan. 1:

  The recent revelations of completely fabricated stories, completely fictional people and fraudulent details in Spiegel over the last seven years are very troubling to the US Embassy. These fake news stories largely focused on US policies and certain segments of the American people. It is clear we were targeted by institutional bias and we are troubled by the atmosphere that encouraged this recklessness.

  While Spiegel’s anti-American narratives have expanded over the last years, the anti-American bias at the magazine has exploded since the election of President Trump. We are concerned that these narratives are pushed by Spiegel’s senior leadership and reporters are responding to what the leadership wants.

  This is where Dirk Kurbjuweit’s foot enters his mouth, stage left, and starts its long journey down:

  It is true that one of our reporters in large part fabricated articles, including reports from the United States. We apologize to all American citizens who were insulted or denigrated by these articles. We are very sorry. This never should have happened. In this case, our safeguarding and verification processes failed. We are working hard to clarify these issues and improve our procedures and standards.

  I would, however, like to counter you on one point. When we criticize the American president, this does not amount to anti-American bias – it is criticism of the policies of the man currently in office in the White House. Anti-Americanism is deeply alien to me and I am absolutely aware of what Germany has the U.S to thank for: a whole lot. DER SPIEGEL harbors no institutional bias against the United States.

  Of course, first of all, Grenell is right, if you let someone write fake stories for 7 years and your editors, which included Kurbjuweit himself, don’t catch one single lie, it looks like you’re letting the fabrications ‘slip through’ on purpose. As Grenell implies, it looks like the entire magazine is/was trying to fabricate the news, not report on it.

  But that’s not where Kurbjuweit’s foot is in his mouth. That comes in the second paragraph . Where he effectively says that criticizing America and Americans, including through fully fabricated stories, does not constitute an anti-American bias. Instead, he says, Der Spiegel simply suffers from Trump Derangement Syndrome. In other words, not an anti-American bias, but an anti-Trump bias.

  And that, in his view, is apparently fine. And though it is of course not, certainly for an editor of a magazine that has (make that had) a reputation to uphold, who can really blame him? In the American press, all he sees is Trump Derangement Syndrome all the time, in at least 90% of the media. So how can anyone blame a German editor for doing what the New York Times and CNN do 24/7?

  The problem with all of this obviously is that all these news outlets are supposed to report the news, and none of them do anymore. They ‘report’ the opinions of their editors and ‘journalists’, and if these people don’t like whoever it is the American people elect as their president, it’s open season.

  American media has made it acceptable for foreign media to write fake articles about the US president, which means ridicule of the Office of the President is fine too, and thereby the process by which he was elected. Re-read Kurbjuweit’s statement, that is what he says.

  This is a sort of new normal that may well be the main legacy of 2018. It’s where the surge of social media and the internet in general have led us. In the process, they’ve swallowed the truth whole, and we may never see it again.

  The truth is not a winning proposition. Fabricating stories and narratives and using them to string readers and viewers along like a modern version of the Pied Piper is a much bigger winner than the truth, and they’re all waking up to this new reality.

  Der Spiegel’s response to being exposed as liars is to pretend to be open about it, but only by blaming one individual, while sparing the editors who let him roam free for 7 years.

  The Guardian, which ran a fabricated story about meetings between Paul Manafort and Julian Assange in London’s Ecuadorian embassy a few weeks ago and was also exposed, has chosen a different approach: they attempt to smother the truth in silence. Both the writers of the story and editor-in-chief Kathy Viner, responsible for publishing blatant lies and fabrications are still on the payroll, there’s been no retraction and no apologies.

  But there’s a flipside to this kind of thing. If you try to get away with murdering the truth the way Der Spiegel and the Guardian have done in these two instances, who’s going to read you next time around if they want to know what really happens, and take your words as true? No-one in their sound mind. So it’s necessarily a short term strategy.

  Still, while it lasts, it’s profitable. And it’s mighty contagious too. If and when the foreign press no longer feels any qualms about admitting they suffer from Trump Derangement Syndrome, that is because US media have paved that road for them. Before the internet fueled its (dis-)information explosion, this would have been impossible.

  It makes you wonder where this will go in 2019. What’s already evident is that you can’t believe your trusted news sources anymore. And it’s not a matter of some articles being true and some not; nothing published by Der Spiegel and the Guardian can be taken for granted as true from here on in, both are done as reliable news sources. Because they’ve been exposed as having lied on purpose, and only once is enough.

  Same goes for many of the formerly trusted US MSM. And that should really, really make you wonder where this will take us in 2019. Truth is eroding faster than you can keep up with, and it’s your once trusted voices that lead the erosion. Where are you going to get your news? What and who can you trust?

  Here’s a thought: follow the Automatic Earth. And good thing is, you don’t have to like Trump to not like where this is going. We don’t particularly like him either. We just dislike lies and fake news a whole lot more.

  

• Visualizing The Relationship Between Money And Happiness

  Can money buy you happiness?

  It’s a longstanding question that has many different answers, depending on who you ask.

  But, as Visual Capitalist’s Jeff Desjardins notes, today’s chart approaches this fundamental question from a data-driven perspective, and it provides one potential solution: money does buy some happiness, but only to a limited extent.

  MONEY AND HAPPINESS

  First, a thinking exercise.

  Let’s say you have two hypothetical people: one of them is named Beff Jezos and he’s a billionaire, and the other is named Jill Smith and she has a more average net worth. Who do you think would be happiest if their wealth was instantly doubled?

  Beff might be happy that he’s got more in the bank, but materially his life is unlikely to change much – after all, he’s a billionaire. On the flipside, Jill also has more in the bank and is likely able to use those additional resources to provide better opportunities for her family, get out of debt, or improve her work-life balance.

  These resources translate to real changes for Jill, potentially increasing her level of satisfaction with life.

  Just like these hypotheticals, the data tells a similar story when we look at countries.

  THE DATA-DRIVEN APPROACH

  Today’s chart looks at the relationship between GDP per capita (PPP) and the self-reported levels of happiness of each country. Sources for data are the World Bank and the World Happiness Report 2017.

  

  Courtesy of: Visual Capitalist

  According to the numbers, the relationship between money and happiness is strong early on for countries. Then later, when material elements of Maslow’s hierarchy are met, the relationship gets harder to predict.

  In general, this means that as a country’s wealth increases from $10k to $20k per person, it will likely slide up the happiness scale as well. For a double from $30k to $60k, the relationship still holds – but it tends to have far more variance. This variance is where things get interesting.

  OUTLIER REGIONS

  Some of the most obvious outliers can be found in Latin America and the Middle East:

  

  In Latin America, people self-report that they are more satisfied than the trend between money and happiness would predict.

  Costa Rica stands out in particular here, with a GDP per capita of $15,400 and a 7.14 rating on the Cantril Ladder (which is a measure of happiness). Whether it’s the country’s rugged coastlines or the local culture that does the trick, Costa Rica has higher happiness ratings than the U.S., Belgium, or Germany – all countries with far higher levels of wealth.

  In the Middle East, the situation is mostly reversed. Countries like Saudi Arabia, Qatar, Iran, Iraq, Yemen, Turkey, and the U.A.E. are all on the other side of the trend line.

  OUTLIER COUNTRIES

  Within regions, there is even plenty of variance.

  We just mentioned the Middle East as a place where the wealth-happiness continuum doesn’t seem to hold up as well as it does in other places in the world.

  Interestingly, in Qatar, which is actually the wealthiest country in the world on a per capita basis ($127k), things are even more out of whack. Qatar only scores a 6.37 on the Cantril Ladder, making it a big exception even within the context of the already-outlying Middle East.

  Nearby Saudi Arabia, U.A.E., and Oman are all poorer than Qatar per capita, yet they are happier places. Oman rates a 6.85 on the satisfaction scale, with less than one-third the wealth per capita of Qatar.

  There are other outlier jurisdictions on the list as well: Thailand, Uzbekistan, and Pakistan are all significantly happier than the trend line (or their regional location) would project. Meanwhile, places like Hong Kong, Ireland, Singapore, and Luxembourg are less happy than wealth would predict.

  

• Nikkei Crashes 1000 Points, Tumbles Into Bear Market

  Update: Japan’s Nikkei and the broader Topix indices fell over 1,000 points, or 5% in Tuesday morning trading to a 20-month low on the heels of the worst S&P 500 Christmas Eve crash on record. The Nikkei average hit an intra-day low of 19,138.88, or -5.09%, while the broader Topix was also around 5% lower. 

  

  ***

  A few hours after the S&P tumbled over 2.7%, sliding into a bear market for the first time in a decade, Japan’s Nikkei 225 – which had been sliding gradually for the past week – dropped sharply by over 3.2% at the open…

  

  … becoming the latest index to tumble into a bear market, sliding over 20% from its October 2 peak.

  

  Meanwhile, the broader Topix index – which had already entered a bear market from its January 2018 highs – plunged even more, dumping over 4.3% and was trading at levels last seen in November 2016, as more than 2 years of gains have been largely wiped out in just the past 3 months as the Christmas Eve rout launched in the US goes global.

  

  

• A Horrified Wall Street Reacts To The Mnuchin Massacre

  Heading into December, a majority of traders still quietly hoped that the volatility observed in October and November would finally fade, and give way to the traditional Santa rally allowing them to escape what in just two months had mutated into a devastating year for most, unscathed: after all, in the past century, December has not only been the month with the highest average stock market return, but the month which has closed in the green on 74% of instances, the most of all other months of the year.

  

  It was not meant to be.

  Instead of being the best month of the year, this December has been the worst month for the stock market since the Great Depression – the average one-day drop in the S&P this month has been 1.6% –  and was appropriately capped with a Christmas Eve crash which not only saw it plunge almost 3% – the biggest pre-Christmas plunge on record – closing at a 20-month low, but in the frenzied liquidation which saw more than 1.7 billion shares changing hands in the painfully illiquid half-day session which deepened losses after the worst week since 2011, as it closed, the S&P triggered a bear market, sliding 20% from the Sept 20 all time highs, and putting an end to the longest bull market in history.

  While the reasons for the relentless three month selloff are legion, starting with the “renormalization” (i.e., bursting) of the biggest asset bubble blown in history by the Fed and other central banks, and continuing through trade war tensions, rising and/or falling interest rates, political gridlock and instability in the US and elsewhere, peak profit fears, and economic slowdown concerns, the immediate catalysts for today’s plunge are two: Trump’s ongoing feud with the Federal Reserve (which today we learned, can’t putt) and its Chairman, Jerome Powell, who may or may not be fired soon, and Mnuchin bizarre, crisis-era announcement that bank liquidity is fine, even though not a single person in the market doubted that not to be the case, prompting a chill down traders’ spines that bank liquidity was not, in fact, fine.

  So while we got the market’s verdict loud and clear to what will forever be known as the “Mnuchin Massacre”, here is a sample of what analysts, investors and pundits are saying:

  Cowen & Co.’s Jaret Seiberg

  • “None of these controversies are positive,” the senior policy analyst wrote. “All of them put the economy at risk, which is negative for financial firms and housing. And all three incidents are unforced errors,” Seiberg wrote, referring to Trump’s discussion of Fed Chairman Jerome Powell’s ouster, the partial government shutdown and Mnuchin raising questions about financial stability.
  • “Our broad concern is that Team Trump might trigger the very downturn it wants to avoid.”

  Amundi Pioneer Asset Management’s, Paresh Upadhyaya

  • Mnuchin’s statement about banks “clearly backfired,” Upadhyaya said. “It smacks of desperation and nervousness. I found it odd that he spoke to them about liquidity when it’s obvious that banks would be aware of it. I’m not sure what they planned to achieve with this plunge protection team since none of the agencies involved have legal authority to intervene in the equity markets.”
  • The portfolio manager sees little risk of Powell being ousted. He said that Trump’s undermining of the Fed could reduce the appeal of the U.S. dollar. What’s more troubling is the selloff in bank stocks, which signals distress in the credit market.

  MRV Associates Inc.’s Mayra Rodriguez Valladares

  • “The timing is terrible” amid thin markets before a holiday, said Valladares, a former Fed foreign-exchange analyst who conducts training for bankers and regulators. “It’s going to make people in the markets even more nervous.”
  • “When you have a president treating Powell as a pinata, it’s really terrible and undermines the credibility of the central bank as an independent authority.”

  Whalen Global Advisors’ Christopher Whalen

  • Mnuchin’s tweet about his talks with bank CEOs was “not helpful,” Whalen said.
  • “It is normal for a secretary of the Treasury to talk to banks privately, but not on Twitter,” he said, citing a “near disaster” in 2008 when markets cratered after then-Treasury Secretary Henry Paulson discussed buying bad bank assets.

  Sullivan & Cromwell LLP’s Rodgin Cohen

  • Cohen was at the center of the bank bailouts during the 2008 financial crisis. He said he didn’t field calls from finance executives over the weekend, an indication that the industry isn’t facing the same concerns it was a decade ago.
  • “If you ever get contagion, that could sweep away reality and logic,” Cohen said in an email. “But today, we just don’t have anything like 2008. You’ve got banks which have two to three times the capital, and even more importantly — what really brings banks down — is a liquidity shortage. And these banks are incredibly liquid.”

  Last but not least, here is Maxine Waters, soon to be the Chair of the House Committee on Financial Services:

  • “The financial markets need certainty, and a Federal Reserve that can independently set monetary policy. The recent actions of the President and the Treasury Secretary, however, have been erratic and are creating uncertainty and instability in the markets. It would be in our nation’s best interest if they stopped what they are doing.”

  And the scariest news: there are 3 more trading days in 2018, and at this rate we may be looking at a 1-handle in the S&P as we usher in the new year.

  

• Mattis Is Out, And Blackwater Is Back: "We Are Coming"

  Authored by Tara Copp via MilitaryTimes.com,

  Secretary of Defense Jim Mattis is out.

  Mattis’ resignation comes amid news that President Donald Trump has directed the drawdown of 2,000 U.S. forces in Syria, and 7,000 U.S. forces from Afghanistan, a U.S. official confirmed to Military Times, a story first reported by the Wall Street Journal.

  This month, in the January/February print issue of the gun and hunting magazine “Recoil,” the former contractor security firm Blackwater USA published a full-page ad, in all black with a simple message: “We are coming.”

  

  Is the war in Afghanistan – and possibly elsewhere – about to be privatized?

  If Blackwater returns, it would be the return of a private security contractor that was banned from Iraq, but re-branded and never really went away. By 2016 Blackwater had been re-named and restructured several times, and was known at the time as Constellis Group, when it was purchased by the Apollo Holdings Group. Reuters reported earlier this year that Apollo had put Constellis up for sale, but in June the sale was put on hold.

  A representative for Constellis told Military Times late Friday that while it had acquired the former Blackwater training center in the 2016 purchase, it has no affiliation with the former security firm. It did not retain Blackwater’s founder and former CEO Erik Prince and has no current connection to him, or the firm’s former management structure.

  The Recoil ad suggests Blackwater is making a resurgence on its own, but it was not clear in what form. The public affairs firm that handles Prince’s media engagements told Military Times Friday that he would not be able to speak beyond what was in the media “at this stage.”

  Prince has courted President Donald Trump’s administration since he took office with the idea that the now 17-year Afghan War will never be won by a traditional military campaign. Prince has also argued that the logistical footprint required to support that now multi-trillion dollar endeavor has become too burdensome. Over the summer and into this fall Prince has engaged heavily with the media to promote the privatization; particularly as the Trump administration’s new South Asia Strategy, which was crafted with Mattis, passed the one-year mark.

  Constellis, which had maintained a footprint at Camp Integrity by the Kabul Airport through its previous iteration as “Academi.” The firm no longer trains there, the Constellis spokesman said.

  The news of a leaning on a smaller number of privatized forces, instead of a larger U.S. military footprint — and contracted support for U.S. forces that knew few bounds and at times included coffee shops, base exchanges, restaurants, a hockey rink and local vendor shops — may be welcomed by current U.S. military leadership on the ground. That includes former Joint Special Operations Command chief Army Lt. Gen. Scott Miller, a source familiar with Miller’s approach told Military Times. Miller replaced Gen. John Nicholson as the head of all U.S. and NATO forces in Afghanistan in September.

  In an previous exclusive interview with Military Times, Prince said he would scrap the NATO mission there and replace the estimated 23,000 forces in country with a force of 6,000 contracted personnel and 2,000 active-duty special forces.

  The potential privatization of the Afghan War was previously dismissed by the White House, and roundly criticized by Mattis, who saw it as a risk to emplace the nation’s national security goals in the hands of contractors.

  “When Americans put their nation’s credibility on the line, privatizing it is probably not a wise idea,” Mattis told reporters in August.

  But Mattis is out now, one in a series of moves that has surprised most of the Pentagon.

  Drastic change would “be more likely” now, one DOD official said.

  

• The Longest Bull Market In History Is Over As S&P Suffers Worst Christmas Eve Crash On Record

  The S&P crashed to 2,351.10, closing below its bear market level of 2352.7 – the lowest since April 2017 – ending the longest bull market in history

  

  It was the worst Christmas Eve drop and the worst December for the S&P 500 on record (technically, since The Great Depression although this is interpolated as back then there was no S&P500)

  

  “Risk aversion is now extreme; even though the Street may point to a ‘less dovish’ FOMC and concerns about a U.S. government shutdown as possible reasons for the selloff, the apparent lack of positive drivers and headlines has curbed risk appetite,” Nomura strategist Masanari Takada wrote in a note.

  “While sentiment looks to be skewed towards fear, most market participants seem to be looking for a plausible excuse to sell.”

  Steve Mnuchin epicly failed to calm the market over the weekend…

  As Michael O’Rourke, JonesTrading’s chief market strategist, said:

  “…nothing says don’t panic like saying ‘I’m calling the plunge protection team tomorrow.’ I honestly think that’s the type of event that’s going to startle markets and create more panic and fear when it’s meant to create confidence.”

  And sure enough, the plunge protection team’s best efforts utterly failed to stem the tide…

  

   

  A bloodbath…

  

   

  As waves of selling hit the market… (very notable for such a normally quiet day – volume was almost double the recent average)

  

   

  S&P volume set to be almost triple that of the past 9 pre-Christmas sessions

  

   

   

   

  Bank stocks suffered…

  

   

  And just the mention of the word ‘liquidity’ sent bank credit risk soaring…

  

  Even the supposed safe-haven stocks were pummelled… The S&P 500 utilities index drops as much as 4.6% intraday, most since August 2011, amid the broader market rout and continued threat of higher interest rates in 2019.

  

   

  And along with stocks, the dollar was dumped wholesale…

  

   

  And credit markets were monkeyhammered…to their widest since Brexit

  

   

  Bonds were bid (with 30Y back below 3.00% intraday)…

  

   

  And inflation breakevens were clubbed like a baby seal…

  

   

  Yuan strengthened…

  

   

  Cryptos soared since Friday, with Ethereum up 36% and Bitcoin back above $4,000…

  

   

  Despite the dollar weakness, crude prices collapsed further as PMs rallied…

  

   

  Gold soared (in dollars) on the day…

  

   

  Breaking above its 200DMA…

  

   

  And gold in yuan broke out of its channel…

  

   

  WTI tumbled to almost a $43 handle…

  

   

  Finally, since The Fed hiked rates and Powell didn’t back down on auto-pilot, the S&P is down 8%, the dollar is down over 1%, and gold and the long bond are up around 1%…

  

  And,@IvanOnTech provides a little context for just how bad this bloodbath is…

  “This is not ICOs, this is NASDAQ % drop from ATHs. Scam? GOPRO -95% FIT -92% LC -91% SNAP -83% P -80% ZNGA -77% HIVE -73% TRUE -66% TWTR -63% SONO -60% DBX -57% Z -57% PS -50% FTCH -49% PSTG -48% SPOT -48% BOX -46% DOCU -45% SVMK -45% FB -42%”

  And the odds of a rate hike in 2020 are now the same as the odds of rate-cut.

  

   

  

• The Best Places In America For Christmas Celebrations

  Authored by Adam McCann via WalletHub.com,

  It’s the most wonderful time of the year – or at least it can be, depending on where you celebrate Christmas. That’s because America’s favorite holiday is also one of the most expensive. From decorations and food to gifts and travel, there’s a long list of expenses to check twice and save up for during the year.

  

  In 2018, Americans are projected to spend up to $720 billion over the holidays, according to the National Retail Federation. The average person plans to spend $1,007.24. If you don’t have a reasonable holiday budget — or enough self-control — then your Plan B should definitely include celebrating in the cheapest Christmas destinations. Overspending is a common mistake committed by consumers during the Christmas shopping season and one of the top sources of holiday stress.

  But beyond ensuring its affordability, a successful holiday also hinges on a location’s Christmas-friendliness. Typical Christmas activities include shopping, dining out and attending holiday events, so the availability of such options can make all the difference. Many people also are likely to attend church services, considering Christmas is a Christian holiday. The more churches around, the less likely each is to be crowded.

  WalletHub considered all of those factors to determine where you’re guaranteed to enjoy a holly jolly Christmas whether you’ve been naughty or nice. More specifically, we compared the 100 biggest U.S. cities based on 31 key indicators of a festive and affordable Christmas, such as traditions, shopping and costs.

  Main Findings

  Source: WalletHub

   

  Best Cities for Christmas

  

   

  Worst Cities for Christmas

  

  *  *  *

  Full methodology here…

  

• Is China Getting Too Close To Israel?

  Authored by Richard Ehrlich via The Asia Times,

  Two multi-billion dollar Chinese seaports near critical Israeli sites are raising concerns over potential security issues and relations with Washington …

  

  China is constructing seaports at two sites where the US 6th Fleet deploys, in Haifa next to Israel’s main naval base and Ashdod near Tel Aviv, prompting concerns about China’s military potential in the Mediterranean Sea and Middle East.

  “The civilian [Chinese] port in Haifa abuts the exit route from the adjacent [Israeli] navy base, where the Israeli submarine fleet is stationed and which, according to foreign media reports, maintains a second-strike capability to launch nuclear missiles,” Israel’s Haaretz media reported.

  “No one in Israel thought about the strategic ramifications,” Haaretz said in September.

  The guided-missile destroyer USS Arleigh Burke visited Haifa on October 25 in support of the 6th Fleet which is headquartered in Naples, Italy.

  Shanghai International Port Group (SIPG) signed the Haifa contract in 2015, began construction in June, and is to operate the Bayport Terminal for 25 years starting from 2021.

  SIPG signed memorandums of understanding with U.S. ports in Seattle, Washington in 2006 and Georgia Ports Authority in 2004, plus Barcelona, Spain, in 2006.

  SIPG also works with European ports in Rotterdam, Hamburg and London, and two ports in Japan, its website said.

  China Harbor Engineering, one of China’s biggest government-owned enterprises, is meanwhile constructing a port at Ashdod, 25 miles (40 kilometers) south of Tel Aviv.

  “At $3 billion, this is one of the biggest overseas investment projects in Israel, ever, and also one of the biggest for the Chinese company, China Harbor Engineering,” wrote Arthur Herman, senior fellow at the Washington-based Hudson Institute think tank in November.

  “Ashdod on the Mediterranean coast is the destination of fully 90 percent of Israel’s international maritime traffic,” Herman said.

  Ashdod’s current port hosted the USS Ross guided-missile destroyer in October which also supports “U.S. national security interests in the U.S. 6th Fleet area of operations,” a USS Ross public affairs officer said on the Navy’s website.

  “This is an historic moment,” Israeli Prime Minister Benjamin Netanyahu said in 2017 when he joined Chinese officials to lay the cornerstone of the Ashdod port.

  Israel’s Transportation Ministry and the Ports Authority permitted construction of the Chinese ports at Haifa and Ashdod “with zero involvement of the [Israeli] National Security Council and without the [Israeli] navy,” Haaretz said.

  “The first [concern] is over Chinese control of strategic infrastructure and the possibility of espionage,” the London-based Economist magazine reported in October.

  “Israeli submarines, widely reported to be capable of launching nuclear missiles, are docked there [at Haifa]. Yet the deal with the Chinese firm was never discussed by the cabinet or the national security council, a situation one [Israeli] minister described as astonishing,” the Economist said.

  Trading routes

  “There are skeptics in several Israeli political parties and among former national security officials, who warn of potential security issues and possible friction with the United States resulting from Chinese involvement in Israeli infrastructure projects,” wrote Elliott Abrams, senior fellow for Middle Eastern studies at the Washington-based Council on Foreign Relations and former deputy national security advisor to President George W Bush.

  The ports form part of China’s international, multi-billion dollar Belt and Road Initiative.

  The Belt and Road project would link China with countries elsewhere in Asia, the Middle East and Europe along lucrative trading routes across land and sea, with Ashdod serving as a crucial port for seaborne trade with Europe,  Abrams said.

  China’s Haifa and Ashdod ports are part of “an ambitious trans-Asian strategy to pursue three key resources for China’s future greatness: petrochemicals, consumer markets, and advanced technology,” he said in his 2018 brief. Middle East oil and gas fuels China’s growth.

  The Middle East would also offer a huge commercial market for purchasing Chinese exports, including consumer goods, electronics and other items. Gilad Cohen, the Israeli Foreign Ministry’s deputy director general for Asia and the Pacific, is bullish on Chinese investments in Israel. “Recently there have been increasing warnings against allowing China to participate in projects and investments in Israel.”

  Cohen said in October.

  “There are some who go as far as to deem any Chinese economic involvement in our region as a threat to our interests and a danger to our economic independence. These statements are damaging to relations between the countries.

  “We are a country with confidence in its capabilities, unafraid of exposure to new markets, while we safeguard our security and strategic interests,” Cohen wrote in a published opinion piece headlined: “How Close to China is Too Close for Israel?”

  Prime Minister Netanyahu meanwhile hosted China’s Vice President Wang Qishan along with Jack Ma, CEO and founder of the e-commerce giant Alibaba, in Jerusalem in October.

  Their summit “reflects the growing ties between our countries, our economies, our peoples,” Netanyahu said.

  In 2017, Netanyahu visited Beijing and met Chinese President Xi Jinping.

  China established diplomatic relations with Israel in 1992 when Deng Xiaoping and Yitzhak Rabin were in power, and continues to support Israel during votes in the United Nations.

  

• Sydney High-Rise Evacuated After Residents Hear "Cracking" Sounds

  Some 3,000 residents of Sydney’s Opal Tower, an apartment in the city’s Olympic Park, are facing the possibility of spending Christmas in an emergency evacuation shelter after the building – and all buildings within a 1 kilometer “exclusion zone” – was evacuated following signs of “cracking” in the 33-storey building that have stoked fears about a possible collapse.

  Emergency responders were called to the building Monday morning after residents on the tenth floor reported hearing loud “cracking” noises. An initial investigation determined that the building had moved one or two millimeters, according to the Guardian. Laser monitors are being used to scan for any additional movement in the building.

  Though details about the evacuation are still trickling out, the Associated Press reported that police had to use heavy equipment to force open doors to allow residents to escape. Neighboring buildings have also been evacuated.

  

  The tower has almost 400 one, two, three and four bedroom apartments, with two bedrooms selling for nearly $1 million. The tower is situated over the central site of the 2000 Sydney Olympics.

  Fire officials in the city said it was “too soon” to tell on Monday whether the building was in danger of collapse. Acting Superintendent Greg Wright said his department couldn’t offer a time estimate for how long the inspections would take. Water, gas and electricity service to the building has been shut off.

  “We don’t know that until the engineers assess the building and have a look at what caused the issue and if there is a major issue with the building…It’s not going to be done in minutes. Hopefully it doesn’t take much longer than hours,” he said.

  Residents had been taken to the Royal Agricultural Society Hall, but many have now been rehoused. Meanwhile, trains will skip the Olympic Park stop that runs near the building. Buses will serve the area instead, according to Channel 9 News.

  The engineering firm that helped build the tower released a statement after the evacuation describing a potential complication that may have contributed to the “cracking” sounds.

  Wood & Grieve Engineers, who worked on the building, said online: “The large structural offsets at the base of the towers created a particular challenge. The difficulty was in the coordination of transferring sewer and storm water services through the deep transfer beams and large transfer slabs.”

  “Due to the height of the building which imposes excessive pressures on the pipework and fittings installed on the lower half of the building, the WGE team came up with a unique dual stage pressure control concept and conducted a series of experimental tests to simulate the real working condition of the system before specifying it for installation in the building.”

  Roads have been blocked around the building, including both sides of Australia Avenue. But one event that hasn’t been canceled is a BBL cricket match between Sydney Thunder and the Sydney Sixers, which will be held at Spotless Stadium. Fans have been asked to travel to the stadium by bus and enter through a side entrance.

  

Digest powered by RSS Digest

• Otto Warmbier's Parents Sue North Korea For $1.05 Billion (2.5% Of Total GDP)

  The parents of Otto Warmbier, the student who was imprisoned and tortured in North Korea before slipping into a coma and dying, have filed a wrongful death lawsuit against the North Korean government for more than $1 billion, or about 2.5% of the country’s entire GDP.

  The family, that lives in Wyoming, Ohio, filed the lawsuit in federal court last April. North Korean authorities had arrested their son in January 2016 for attempting to steal a propaganda poster. He was later sentenced to 15 years in prison and subsequently died last year, days after he was released from North Korea to the United States in a coma. He had been tortured and in captivity in a North Korean labor camp for more than 17 months.

  

  In October, a motion in the lawsuit was filed that seeks $1.05 billion in punitive damages on top of $46 million for the family’s suffering. North Korea has repeatedly denied that it tortured the 22-year-old. The family’s lawsuit claims that North Korea was in violation of international laws and forced their son to confess to carrying out an act of subversion on behalf of the United States.

  If the dollar amount of the lawsuit pops out at you, it is for good reason. The motion includes language clarifying that the amount is intended to prevent North Korea from such unlawful behavior in the future. In federal court in Washington this week, the family of Warmbier said that they only wanted closure and justice on behalf of their son.

  

  Fred Warmbier, Otto’s father, said last week:

  “We’re here because we don’t fear North Korea anymore”.

  The family was blindsided not only when their son did not return from his trip to North Korea when he was supposed to, but also after he was brought home more than a year later in a coma – after North Korea described his condition as “good”.

  President Trump has repeatedly said that Warmbier “did not die in vain” and has credited Otto and his family, whom Trump calls “good friends” of his, for the denuclearization pact signed with North Korea this past summer. 

  “Otto Warmbier is a very special person and he will be for a long time in my life,” Trump said over the summer. 

  

• Why Trump Can't Be Airbrushed Out Of The Picture

  Authored by Amir Taheri via The Gatestone Institute,

  • President Donald Trump has put a number of burning issues back on the agenda. These include the widening income gap in the United States, the unintended and unexpected consequences of outsourcing, and the disequilibrium created by signing trade agreements with countries with different labor laws and environmental, health and safety standards.

  • In foreign policy, Trump has managed to pass on an important message: don’t take American heavy lifting for granted! More importantly, Trump has persuaded millions of Americans excluded or self-excluded from the political arena to end their isolation and demand a meaningful place in collective decision-making.

  • Thus, for the time being at least, air-brushing Trump out of the picture is a forlorn task.

  

  (Image source: Ryan Johnson/City of North Charleston/Wikimedia Commons)

  As the American political elite head for Christmas holidays, the buzz in Washington circles is that 2019 will start with fresh attempts at curtailing the Trump presidency or, failing that, preventing Donald Trump’s re-election in 2020. Amateurs of the conspiracy theory may suggest that the whole thing may be a trap set by the Trump camp to keep the president’s opponents chained to a strategy doomed to failure.

  By devoting almost all of their energies to attacking Trump personally and praying that the Mueller probe may open the way for impeachment, the president’s opponents, starting with the Democrat Party leadership, have shut down debate about key issues of economic, social and foreign policy — issues that matter to the broader public. Reducing all politics to a simple “Get Trump!’ slogan makes them a one-trick pony that may amuse people for a while but is unlikely to go very far.

  Despite sensational daily headlines furnished by the Mueller soap opera, there is little chance of the impeachment strategy to get anywhere close to success. And even if the pro-impeachment lobby succeeds in triggering the process, it is unlikely that this would lead to Trump’s removal from office. In fact, out of the 45 men who have served as President of the United States only two, Andrew Jackson and Bill Clinton, faced formal impeachment procedures, but neither was driven out of office.

  Two others, Richard Nixon and John Tyler, came close to being impeached but managed not to face the music in the end. Nixon resigned and Tyler dodged by not seeking re-election. With impeachment unlikely, Trump’s opponents may be looking for other ways of terminating his tenure at the White House. One way is to exert so much psychological pressure that he decides to regain his tranquility by resigning. However, apart from Nixon’s special case, the resignation has never been a feature of the American presidential history.

  In any case, Trump looks like the last man on earth to opt for the humiliation of entering history as a quitter. A third way to get rid of Trump is to persuade the Republican Party not to nominate him for a second term. At first glance that may look like a credible option if only because the main body of the Republican Party has never warmed up to Trump.

  In fact, calling Trump a Republican president may be more of a verbal conceit than an accurate depiction of reality. In the mid-term elections in November, some Republican senators and congressmen insisted that Trump should stay away from their campaigns. Some who did lose their seats may have regretted their decision, as Trump proved to be in command of his own support base beyond the Republican Party.

  The anti-Trump section of the US media is desperate to find at least one Republican figure capable of challenging the incumbent president in the coming nomination contest. So far, however, none of the putative knights-in-shining-armor fielded by the anti-Trump media has succeeded in making an impression.

  In any event, there are only five cases in which an incumbent president failed to win re-nomination by his party. Of these, four were men who had inherited the presidency after the death of the president.

  One was the already mentioned — John Tyler, who became president in 1841 after the death of President William Henry Harrison. Another was Millard Fillmore, who entered the White House after the death of President Zachary Taylor.

  The third on the list was the already mentioned Andrew Jackson, who not only failed to secure re-nomination but also narrowly escaped impeachment. The fourth was Chester Arthur, who took over after the assassination of President James Garfield. He was ditched when he launched an anti-graft campaign that alienated many within his own party.

  Only one sitting president who had won the first term failed to secure re-nomination by his party. He was Franklin Pierce, whose demise came in exceptional circumstances created by the division over the issue of slavery as the nation moved towards the War of Secession. Today, none of those conditions obtains in the United States and the Republican Party, and the possibility of a palace revolt against the incumbent seems remote. Some of Trump’s opponents publicly pray that he might forswear a second term because of poor health. Although he has entered his eight-decade, however, Trump shows no signs of physical fatigue let alone serious illness leading to possible incapacitation. During the mid-term elections, this septuagenarian was capable of flying from one end of the continent to the other in a single day to address half a dozen public meetings.

  That political power may act as an aphrodisiac and doping agent has been known at least since the time of the great Xerxes, whose only regret was that, in 100 years, none in his million-man army would be alive. There is no doubt that Trump thrives on power and, despite the extra kilos he has gained in the past two years, still sees himself as a long-distance runner. The mistake that Trump’s opponents made from the start, and some still continue to make, is to underestimate him and dismiss his appeal to wide segments of society as an aberration.

  Trump has, however, managed to question the political agenda by questioning the so-called Washington Consensus that led to globalization with all its benefits and drawbacks. In his unorthodox manner, Trump has put a number of burning issues back on the agenda.

  These include the widening income gap in the United States, the unintended and unexpected consequences of outsourcing, and the disequilibrium created by signing trade agreements with countries with different labor laws and environmental, health and safety standards. In foreign policy, Trump has managed to pass on an important message: don’t take American heavy lifting for granted! More importantly, Trump has persuaded millions of Americans excluded or self-excluded from the political arena to end their isolation and demand a meaningful place in collective decision-making. Thus, for the time being at least, air-brushing Trump out of the picture is a forlorn task.

  

• Is This The Military Technology Used To Defeat The Gatwick Drone?

  The mystery behind the ‘drone incident’ that paralyzed air traffic at Sussex’s Gatwick airport for 36 hours this week – interrupting the holiday travel plans of some 140,000 people and cancelling more than 1,000 flights – is getting more bizarre by the day. After police revealed they had arrested two individuals – a middle-aged man and woman from Crawley – on Friday night – both suspects have reportedly been cleared of their involvement in the crime and released, according to the BBC.

  Police are now continuing their search for the mysterious pilot who disrupted plane traffic by flying drones over the Gatwick runway, piloting them within feet of a control tower and even flashing lights at police who had gathered at the scene in what appeared to be a taunting. One detective who has been assigned to the case told reporters that police had recovered a damaged drone near the airport. Investigators will be working with “the forensic opportunities that the drone presents.”

  “Our inquiry continues at a pace to locate those responsible for the drone incursions, and we continue to actively follow lines of investigation,” the detective said.

  Gatwick is offering a 50,000 pound ($63,000) reward via the UK’s Crimestoppers for any information that might lead to the arrest and conviction of whoever is responsible for piloting the drones. The culprit will ultimately face up to 5 years in prison if found and convicted.

  Meanwhile, the army and police have released few details about the techniques they used to resolve the drone issue. But after photographs of three unidentified devices spotted on the airport’s roof surfaced in the media…

  

  

  …some experts are beginning to develop theories about what the devices are and how they were used.

  Many have suggested that the Israeli-developed “Drone Dome” was used to jam communications and down the drone, according to the BBC.

  It is believed that the Israeli-developed Drone Dome system, which can jam communications between the drone and its operator, was used.

  However, experts have said it does not enable the person responsible to be tracked down and captured.

  John Murray, professor of robotics and autonomous systems at the University of Hull, said it could only “take the drone out of the sky”.

  The Telegraph published a guide to three systems its experts believe may have been used (text courtesy of the Telegraph):

  1. Drone detection device

  Gatwick deployed Metis Aerospace’s Skyperion, counter drone system, that detects drones and tracks their flight. The device can also track the drone’s operator, in theory allowing authorities to trace the drone pilot.

  The company is based in Lincoln and arrived on site at Gatwick on Thursday evening. The equipment takes minutes to set up and can track an in-flight drone from about three miles away in seconds.

  Two Skyperion detectors were deployed at Gatwick giving coverage across the entire airport. Detection equipment attempts to locate a controller by “triangulating” the signals between the controller and the drone to pinpoint where they are geographically.

  The Skyperion consists of six panels with round, white faces giving 360 degree detection for radio frequencies used by the operators to direct and control the drones. The Skyperion was successfully tested at London Southend airport in May.

  2. Drone tracker

  Working in tandem with the Metis Aerospace Skyperion is the ‘military grade’ Falcon Shield counter-drone system developed by Leonardo, one of the key players in the aerospace, defence and security industry.

  The Falcon Shield system can “reliably find, fix, track, identify and defeat the security threat posed by low, slow and small drones,” according to its manufacturer.

  The Falcon Shield consists of two cameras, one for infra-red night-time detection and the other, smaller lens for regular daytime observation. The third lens – the square lens on the right – is a laser range finder.

  Falcon Shield claims to be able to take control of a rogue drone and land it safely if needs be.

  3. Drone jamming device

  Obscured by police officers, the third piece of kit seen on the Gatwick airport roof is possibly a jamming device, used to disrupt the signal between the ground operator and the drone. A well-placed source said a jamming device was deployed at Gatwick and which was supplied by the British military. The source suggested the drone jammer was to be used as backup and as a last resort. Authorities had placed Army and police snipers around the perimeter of the airport and had hoped to shoot the drone down or else trace it back to its operator – rather than jam the signal. “We want to capture the drone not destroy it,” said the source.

  Jamming technology disrupts the radio frequencies being used by the controller to direct the drone. Experts describe it as like using a huge blast of targeted noise to block the signals between the controller and the drone.

  The jamming device resembles a gun developed by the US military nicknamed the “dronekiller” that can also jam signals and knock drones out of the sky.

  

  Whatever the technology used, we imagine airports across Europe are taking notes: Though the Gatwick drone incident isn’t believed to be a terror attack, the massive disruptions caused by a simple drone – something that doesn’t require much in terms of capital investment – will inevitably stoke fears of copycat attacks.

  

• The Daily Caller's List Of 2018's Worst 'Fake News' Stories

  Authored by Amber Athey via The Daily Caller,

  As 2018 comes to a close, it’s time to review the year’s worst cases of media misquotes, misleading narratives, major corrections and straight-up fake news…

  While last year’s fake reporting largely occurred during the media’s relentless pursuit to prove Russian collusion, this year’s list is much more varied. However, some themes emerged: stories about then-Supreme Court nominee Brett Kavanaugh and the U.S. border were routinely flagged for misinformation.

  Without further ado, here is the list of 2018’s worst examples of fake news:

  1. WAPO BLAMES BORDER PATROL FOR DEATH OF 7-YEAR-OLD MIGRANT

  The Washington Post published a story in December focusing on a 7-year-old migrant child from Guatemala who died in border patrol custody.

  Despite WaPo’s misleading headline suggesting border patrol was to blame for the girl’s death, the full timeline of events and statements from the girl’s father praising border agents revealed a different story.

  2. CNN AND THE HILL SPREAD RETRACTED SEXUAL ASSAULT CLAIM AGAINST KAVANAUGH

  CNN and The Hill both reported on a sexual assault claim against Supreme Court nominee Brett Kavanaugh in late September without ever mentioning that the claim had been quickly retracted.

  

  WASHINGTON, DC – SEPTEMBER 27: Judge Brett Kavanaugh testifies to the Senate Judiciary Committee during his Supreme Court confirmation hearing in the Dirksen Senate Office Building on Capitol Hill September 27, 2018 in Washington, DC. Kavanaugh was called back to testify about claims by Christine Blasey Ford, who has accused him of sexually assaulting her during a party in 1982 when they were high school students in suburban Maryland. (Photo by Win McNamee/Getty Images)

  Jeffrey Catalan apologized for making a “mistake” in leveling the false claim against Kavanaugh, but CNN and The Hill’s initial reports on the claim failed to note the retraction. The Hill later retracted a tweet bolstering the claim and CNN updated its misleading report.

  3. BOSTON GLOBE CORRECTS LIZ WARREN STORY — MAKES HER LESS NATIVE AMERICAN

  Democratic Massachusetts Sen. Elizabeth Warren released a DNA test in October seeking to prove her repeated claims that she has Native American ancestry.

  The Boston Globe initially reported on the DNA test by explaining that Warren was somewhere between 1/32 and 1/512 Native American. However, the paper eventually issued two corrections that damaged Warren’s ancestral claims even further.

  “The generational range based on the ancestor that the report identified suggests she’s between 1/64th and 1/1,024th Native American,” The Globe admitted.

  4. NYT ACCUSES NIKKI HALEY OF PURCHASING EXPENSIVE CURTAINS

  The New York Times initially tied U.S. Ambassador to the UN Nikki Haley to expensive curtains hanging in the ambassador’s apartment in New York, writing, “Nikki Haley’s View of New York Is Priceless. Her Curtains? $52,701.”

  

  US Ambassador to the UN Nikki Haley addresses the UNSC during a United Nations Security Council meeting on Ukraine November 26, 2018 at the United Nations in New York. (Photo by DON EMMERT/AFP/Getty Images)

  However, NYT’s own article later admitted that the curtains were approved in 2016 and that Haley had no say in the matter.

  5. MEDIA STILL BLAMING REPUBLICANS FOR STEELE DOSSIER

  CNN’s Jim Sciutto, MSNBC’s Katy Tur, and MSNBC’s Ari Melber were all responsible for falsely claiming that Never-Trump Republicans were responsible for initial funding of the salacious Steele dossier.

  Washington Free Beacon founder Paul Singer did pay Fusion GPS for standard opposition research, however, he stopped paying Fusion GPS well before they contracted Christopher Steele to create the dossier. That research was paid for solely by the DNC and the Clinton campaign.

  This falsehood has been shared so many times that even former FBI director James Comeyhas repeated it.

  6. NBC SAT ON INFORMATION THAT CONTRADICTED KAVANAUGH ALLEGATIONS

  While NBC’s story is not incorrect, its choice to sit on evidence that contradicted a serious sexual assault allegation against Supreme Court nominee Brett Kavanaugh earned them a spot on this list.

  Celebrity porn lawyer Michael Avenatti claimed he knew a second woman who could back up gang rape allegations made against Kavanaugh by his client, Julie Swetnick.

  That second woman actually contradicted the allegations in a phone interview with NBC News on September 30. Mysteriously, NBC chose not to publish this information until weeks later and after Kavanaugh had already been confirmed to the Supreme Court.

  7. MCCLATCHY CLAIMS MUELLER HAS EVIDENCE THAT CORROBORATES PIECE OF DOSSIER

  McClatchy reported in April that special counsel Robert Mueller had evidence that former Trump attorney Michael Cohen had been in Prague in the summer of 2016. The report appeared to corroborate a key part of the largely unverified Steele dossier.

  US President Donald Trumps former attorney Michael Cohen leaves US Federal Court in New York on December 12, 2018 after his sentencing after pleading guilty to tax evasion, making false statements to a financial institution, illegal campaign contributions, and making false statements to Congress. (Photo by TIMOTHY A. CLARY/AFP/Getty Images)

  But no other news outlets came forward to confirm McClatchy’s reporting and a spokesperson for Mueller’s team hinted to The Daily Caller News Foundation that the report may be false.

  Cohen’s attorney, Lanny Davis, emphatically denied in December that Cohen had ever been in Prague as the dossier alleges.

  8. JIM ACOSTA SAID ILLEGAL IMMIGRANTS WOULDN’T CLIMB BORDER

  CNN Chief White House Correspondent Jim Acosta got into an ugly, public battle with President Donald Trump over immigration in November. During the testy exchange, Acosta claimed that illegal immigrants would “not be” trying to climb over the U.S.-Mexico border wall.

  

  TOPSHOT – US President Donald Trump points to journalist Jim Acosta from CNN during a post-election press conference in the East Room of the White House in Washington, DC on November 7, 2018. (Photo by JIM WATSON/AFP/Getty Images)

  Unfortunately for Acosta, images a week later revealed that immigrants were doing exactlywhat he claimed they wouldn’t.

  9. WAPO RAN KAVANAUGH STORY WITH KNOWINGLY FALSE INFORMATION

  The Washington Post ran a story in October suggesting that Georgetown Preparatory School was hiring a new employee to deal with fallout from the Kavanaugh hearings.

  The author of the report was informed by a spokesperson for Georgetown Prep that the new position was actually listed well before the Kavanaugh hearings. Somehow, that information didn’t make it into the report and WaPo had to issue a correction.

  “This was a completely unintentional error-I read right over the date in haste. Story was corrected and correction is noted. Have a great weekend, all!” reporter Emily Heil wrote in response to backlash.

  10. ANDREA MITCHELL SAYS DISGRACED FL ELECTION OFFICIAL IS A REPUBLICAN

  Allegations of voter fraud and electoral misconduct in Florida during the 2018 midterms brought Broward County Elections Supervisor Brenda Snipes into the spotlight.

  Snipes, a Democrat, had been accused of misconduct in the past and was slammed again for violating Florida election law.

  NBC’s Andrea Mitchell bafflingly said on air that Snipes is a Republican and “hardly a Democratic official, or someone doing the bidding of the Democratic candidates there.”

  11. WAPO FORCED TO CORRECT NIKKI HALEY MISQUOTE

  The Washington Post had to issue a correction after falsely attributing a quote about poverty to U.S. Ambassador to the UN Nikki Haley.

  After multiple requests by Haley for WaPo to issue a correction, the paper admitted that the quote in question was actually said by The U.S. Permanent Mission to the United Nations and International Organizations in Geneva.

  12. MEDIA CLAIMS TRUMP CALLED THE FBI A ‘CANCER’

  President Donald Trump referred to corruption and bias within the FBI, particularly related to the Russia probe, as a “cancer” during a September interview with The Hill.

  The media repeatedly misquoted the president and claimed he called the FBI itself “cancer,” despite clarification from the two people who interviewed him.

  13. RACHEL MADDOW ACCUSES WH OF EDITING PUTIN TAPE

  MSNBC anchor Rachel Maddow opened a show in July by insisting that the Trump administration edited a tape of the president’s meeting with Russian President Vladimir Putin on July 16 in Helsinki.

  The Washington Post’s Phillip Bump pointed out that the error was made by reporters too and was due to a change “between the feed from the reporters and the feed from the translator.”

  14. NBC’S BRIAN WILLIAMS BUNGLES HIT PIECE ABOUT TRUMP AND DOGS

  MSNBC anchor Brian Williams — also a noted survivor of a helicopter attack during the Iraq war — thought he exposed the president for being a dog-hater in an August segment.

  Williams claimed his team “launched an extensive web search” and only found one photo of President Donald Trump with a dog.

  The Daily Caller revealed, with the help of a quick Google search, multiple photos of the president holding dogs.

  15. NPR: DONALD TRUMP JR. COMMITTED PERJURY

  NPR published a report in November insisting that Donald Trump Jr. lied to Congress about efforts to build a Trump Tower in Moscow because his statements conflicted with those of former Trump attorney Michael Cohen.

  However, NPR failed to realize that the piece of Trump Jr.’s testimony they quoted was about a different project.

  “Trump Jr.’s statements about work on a Trump Tower Moscow that ended in 2014 referred to negotiations with Aras Agalarov,” The Daily Caller News Foundation’s Chuck Ross explained. “Felix Sater, a businessman with links to Cohen and Russian officials, tried to make a Trump Tower Moscow happen in 2015.”

  16. TIME MAGAZINE’S FAMILY SEPARATION COVER FEATURING CRYING HONDURAN CHILD

  Time Magazine published an infamous cover in June that showed a Honduran child crying at the U.S. border, apparently after she had been separated from her mother. The image quickly became the face of the “issue of family separations at the border,” despite the fact that the child in question was never separated.

  

  An AFP journalists reads a copy of Time Magazine with a front cover using a combination of pictures showing a crying child taken at the US Border Mexico and a picture of US President Donald Trump looking down, on June 22, 2018 in Washington DC. (Photo by ERIC BARADAT/AFP/Getty Images)

  Later reports also revealed that, in contrast to common left-wing talking points, the mother and her child were not fleeing violence, and the mother had been previously deported from the U.S. In addition, the mother left three other children in Honduras and allegedly paid a smuggler to help her and her daughter cross the border illegally.

  17. MIC WRITER CLAIMS RUSSIAN SPY WAS IN THE OVAL OFFICE

  Shortly after it was revealed that a Russian spy was attempting to infiltrate right-wing networks, Mic writer Emily Singer claimed that same Russian spy was present during an Oval Office meeting with Russian diplomat Sergey Lavrov.

  Singer claimed Russian spy Maria Butina was spotted in a photo of the meeting, citing the fact that she has red hair like the woman in the photo.

  The woman in the photo is actually NSC staffer Cari Lutkins.

  18. NEW YORKER PUBLISHES KAVANAUGH ACCUSATION WITH ZERO CORROBORATION

  The New Yorker’s Jane Mayer and Ronan Farrow — generally known for their sharp reporting on sexual harassment — made a major blunder with their report on Deborah Ramirez’s allegations against Supreme Court nominee Brett Kavanaugh.

  Ramirez claimed Kavanaugh thrust his penis in her face at a college party, but The New Yorker was unable to produce any firsthand witnesses or even confirm that Kavanaugh was at the party in question.

  The New York Times even opted not to run the same allegation because they were unable to corroborate it. Ramirez herself admitted she had significant memory gaps about the incident and she told former classmates that she wasn’t even sure if Kavanaugh was the offender.

  19. DAILY BEAST CLAIMS MIGRANTS IN CARAVAN DON’T HAVE DISEASES

  The Daily Beast claimed that there is “zero evidence” that members of the migrant caravan were bringing HIV and TB into the United States.

  The Tijuana Health Department reported a handful of cases of tuberculosis, HIV and chickenpox among the caravan. Officials with the Mexican state of Baja California disputed that there have been cases of tuberculosis, but confirmed that some migrants are carrying HIV and chickenpox.

  20. MEDIA CLAIMS OBAMA DIDN’T SEPARATE FAMILIES AT THE BORDER

  Several reporters claimed during the uproar over President Donald Trump’s family separations at the border that President Barack Obama never separated families.

  However, reports from McClatchy and statements from former Obama administration officials revealed that, yes, Obama did separate some families who crossed the borderillegally.

  

  MCALLEN, TX – SEPTEMBER 08: A girl from Central America rests on thermal blankets at a detention facility run by the U.S. Border Patrol on September 8, 2014 in McAllen, Texas. The Border Patrol opened the holding center to temporarily house the children after tens of thousands of families and unaccompanied minors from Central America crossed the border illegally into the United States during the spring and summer. (Photo by John Moore/Getty Images)

  “ICE could not devise a safe way where men and children could be in detention together in one facility,” Leon Fresco, a deputy assistant attorney general under Obama, said. “It was deemed too much of a security risk.”

  …

  *  *  *

  This is the just the Top 20… See the rest of The Daily Caller’s full list of incredible ‘fakest’ mews stories here…

  

• The Exodus Continues: Tesla Gigafactory VP Leaves For Softbank-Backed Startup

  The revolving door of executives at Tesla simply knows no bounds.

  Just days after it was reported that the company lost investor relations manager Aaron Chew, Tesla is now reportedly losing Jens Peter Clausen, one of their Gigafactory Vice Presidents who was heading up battery manufacturing.

  

  This also rounds out, according to CNBC, over 40 executives that have left the company this year. That list includes Doug Field, once slated to possibly be the company’s obvious choice for COO, and general counsel Todd Maron.

  Clausen is moving to Zymergen, a synthetic biology company that has backing from Softbank. When interviewed by CNBC, the CEO of Zymergen stated that they were growing “at a pace that I’m not sure has been seen in life sciences”. Of Clausen, he said that he was sought out due to his experience “designing and improving largely automated manufacturing environments”.

  

  At Tesla, Clausen was in charge of the rapid expansion of battery manufacturing at the company’s Gigafactory outside of Reno, Nevada. Tesla manufactures batteries using an amalgam of both automated and manual manufacturing processes alongside of Panasonic, its main supplier and partner at the facility. Prior to joining Tesla in 2015, Clausen worked in manufacturing at Lego. His tenure at Tesla barely lasted over three years, which surprisingly probably puts him above the median executive tenure at the company.

  Clausen had previously been reported to be on leave. Gigafactory workers had told CNBC during the summer that they weren’t sure whether or not he would be returning to the company. As part of promotions Tesla made on September 7, it announced Chris Lister as its new Gigafactory Vice President. Despite promoting somebody else to his position, the company stated then that “Clausen had no plans to leave”.

  Like many other things the company says, this may have not been the case.

  His official start date at his new job is January 3, right around when the year to date clock for departures at Tesla will reset and the company will again get a chance to break what appeared to be a record year for its executive revolving door.

  

• LA Doubled Homeless Budget, Doubled Homeless Crime

  Authored by Daniel Greenfield via Sultan Knish blog,

  It wasn’t all that long ago that the nation watched transfixed in horror as fires tore apart California, destroying homes and claiming lives. In all the debates about global warming and forestry management, one singular cause of the fire was left unaddressed.

  Global warming wasn’t starting the fires. People were.

  Last December, the 422-acre Skirball Fire that forced the evacuation of 700 homes and took 10 days to put out was started by illegal cooking in a homeless encampment. The Leo Baeck Temple in Bel-Air, which celebrates “social justice”, even sued Los Angeles (both city and county) over fire damage for ignoring multiple complaints about the homeless encampment and the fire hazard that it posed.

  This November, the Los Angeles Zoo had to evacuate its animals over a fire in yet another homeless encampment. That fire not only endangered lives, but diverted resources from fighting the much more serious fires in Ventura County.

  But instead of shutting down the encampments, Mayor Garcetti, who has done more to legalize and subsidize homelessness in Los Angeles than any of his predecessors, sent “outreach workers” from the expanding behemoth of the LA Homeless Services Agency to ask them to please move.

  

  That worked about as well as expected.

  Orange County Supervisor Todd Spitzer blasted Garcetti for condoning campfires and refusing to arrest “homeless firebugs” and “vagrants” because there weren’t enough “No Trespassing” signs. “It’s unclear to me how many signs Mayor Eric Garcetti thinks he would need to cover the Santa Monica Mountains behind Bel Air and the Getty Museum,” he angrily wrote.

  Brush fires are just one of the wages of the legalization and subsidization of the homeless. And while these fires are spectacular, they are not the most dangerous consequence.

  Los Angeles had doubled its homeless budget to $450 million. Despite that its homeless population had only dropped to 39,826, a reduction of only 256 people. The only surprise in those statistics is that the population dropped at all. Homeless spending has the notorious effect of increasing homeless populations rather than diminishing them as vagrants swarm in and agencies inflate their numbers.

  But while doubling its homeless budget didn’t significantly diminish the homeless population in Los Angeles, it did have another spectacular statistical effect on the wellbeing of city residents.

  LAPD statistics showed that homeless crime actually increased by nearly 50%, jumping from 5,976 crime reports of homeless perpetrators in most of 2017 to 8,906 crime reports in most of 2018.

  Los Angeles had doubled its homeless budget and doubled the amount of homeless crime.

  Homeless advocates like to claim that the police wrongly arrest the homeless for quality of life offenses that other people get a pass on. If ordinary people aren’t arrested for public urination or campfires, why should the homeless?

  That argument fueled the legalization of homelessness which allowed vagrants to urinate and defecate in public, resulting in businesses fleeing the affected areas, and Hepatitis outbreaks among homeless populations in Los Angeles and other major California cities, and it also allowed them to start fires.

  Several epidemics and fires later, not to mention an outbreak of shoplifting and tents being set up in residential areas and outside small businesses, the full scale of homeless legalization looks even worse.

  It’s not just the “quality of life” offenses or broken windows policing whose accomplishments helped bring back American cities in the 90s, but which the pro-Crime progressives have been reversing.

  LAPD statistics showed that while the homeless were suspects in 4.3% of all crime in Los Angeles, they were the suspects in 12.6% of aggravated assaults. The footprint of homeless crime was three times as high when it came to aggravated assaults compared to the whole general geography of crime.

  And that’s not surprising.

  Despite the echo chamber of public officials and media talking heads claiming that the homeless are just “ordinary folks” who are down on their luck, the most visible homeless population is the one that stays outside the shelter system, that aggressively camps in public areas and that is mentally ill.

  Drive around Los Angeles for a few hours and you will quickly encounter Third World street scenes. Ragged men and women stomp down deserted streets, threatening, cursing and violently gesticulating in the air. Legions of schizophrenics hang out in even the most expensive areas having angry debates with unseen antagonists. And sometimes they take a break from fighting ghosts to punch passerby.

  Talk to enough people and the anecdotal stories of being threatened, punched or otherwise assaulted by the homeless population pile up. Most of these assaults aren’t serious and aren’t reported to the police. But they have frightened residents and made them more willing to shovel money into a homeless services system that only encourages and enables the very problem they are hoping to end.

  The real story of the homeless crisis is not about economics, it’s about mental illness. And the way it has played out is another demonstration of how leftist activism can manage to wreak havoc on a city, a state or a country on behalf of an incrementally tiny and dysfunctional population.

  LAPD statistics show 8,906 crime reports among a homeless population which has been measured at 39,826 people. The crime rate per population in Los Angeles is a little over 3%. Among the homeless, it’s 22%.

  Out of 4 million people, 39,826 homeless are responsible for 12.6% or one eight of aggravated assaults.

  Less than 1% of the population commits one eight of the aggravated assaults in a city of four million. Meanwhile 4.5% of a budget meant to serve those 4 million is going to 1% of the population.

  As it turns out, there is a 1% that is responsible for many of the problems. It’s just the other 1%.

  It’s not the people who work harder, who achieve more and who produce more that are the problem. Nor is it the people who have fallen on hard times, but are still looking to get back on their feet.

  It’s the people who are wrecking everything.

  The greatest lie that leftists have ever told is that they seek to help the less fortunate. They don’t. If they are accidentally helped, that’s collateral assistance. Instead they elevate the most disruptive elements, economically, politically, socially and culturally, in order to wreck cities, states and countries.

  Lefty activism insists that everything stop to help that 1% which can’t stop dealing drugs, complaining about microaggressions or urinating in doorways. It inflates their numbers, their suffering and their significance to prop up a narrative of an uncaring society that must be taken over and reformed.

  By the Left.

  The opposite is true.

  It’s not that we care too little. We care too much. The Left took over by playing on that empathy.

  Our empathy often overpowers our common sense. We do what feels good, rather than what is good. But our good deeds don’t lead to good outcomes. We legalize homelessness and Hepatitis outbreaks follow among the very people we tried to help. The more money we spend on the homeless, the more homeless there are. And then violence, crime and brush fires break out because we listened to the Left.

  The Left wants us to enable criminals and the mentally ill. But when we do that, it not only harms us, it harms them. Mental illness and crime are not social problems. They are individual problems. They only become social problems to the extent that we lose the ability to meaningfully address them. And that not only means that we can’t help ourselves, it also means that we can no longer help them.

  

  California’s homeless crisis is a tragic demonstration of a society losing its values and its sense. The Hepatitis outbreaks, violent assaults and brush fires are just symptoms of what happens when the 99% allow the 1% and its progressive protectors to get away with anything in the name of social justice.

  

• New Cold War? WikiLeaks Reveals US Embassies Stockpiling Spy Gear And Hacking Tools

  WikiLeaks has released a new batch of documents dubbed the “US Embassy Shopping List” which reveals American embassies around the world have been busy upgrading their spy capabilities on a massive scale. Some 16,000 documents reveal embassies abroad have been purchasing an assortment of James Bond style personal spy devises including tiny spy cams embedded in pens, buttons, caps, ties, and watches. 

  

  The documents published Friday were previously an “open secret” given they are available through government archives, yet WikiLeaks made them easier to access by created a searchable database after US embassies stopped linking their routine procurement requests to their websites.  

  One list of items sought by the US embassy in El Salvador includes items described as “tactical spy equipment.” Among more common items like binoculars and hidden cameras, the procurement request includes almost 100 spying devices masquerading as everyday objects such as pens, lighters, watches, and glasses. 

  In El Salvador and Colombia, the US embassy was shopping for spy cameras disguised as ties, caps, shirt buttons, watches, USB drives, lighters, and penshttps://t.co/fzcwoZskYVhttps://t.co/adxkW7R70S

  What is the nearest US embassy up to? Look for clues:https://t.co/ecyLrZrJQD pic.twitter.com/BliRzrdMSn

  — WikiLeaks (@wikileaks) December 21, 2018

  https://platform.twitter.com/widgets.js

  A number of similar lists were uncovered in Latin American countries, where there appears to be an uptick in US clandestine activity of late, given the seemingly ubiquitous presence of such spy and surveillance items on documents for embassies in El Salvador, Columbia, and Panama.

  Of particular note featured in media coverage of the WikiLeaks publication, one document revealed that the embassy in Panama is seeking a contract with an Israeli company which develops Universal Extraction Devices (UFEDs), or small, portable computers capable of extracting the entire contents of a cellphone.

  Der Spiegel: “Hard Working US Diplomats in Frankfurt”. WikiLeaks release shows central role of Frankfurt consulate. Shopping list includes devices to crack mobile phones in Armenia and analyse data.

  Search the shopping lists of an US embassy near you: https://t.co/NYqyCmg1kZ pic.twitter.com/JDfxd51zWC

  — WikiLeaks (@wikileaks) December 21, 2018

  https://platform.twitter.com/widgets.js

  And elsewhere State Department staff at the consulate in Frankfurt  requested a forensic tool “necessary for extraction of existing and deleted communication data” and other hacking tools for use at the US embassy in Montenegro. The US Embassy in Ukraine has sought and obtained surveillance devices including 15 covert radios and 20 specialized voice recorders. 

  Given that in the past few years some US defense officials have framed US tensions with Russia as one of a “new Cold War,” it’s somewhat to be expected that US embassies abroad continue stocking up on spy equipment and gear in preparation for the next hostile covert environment reminiscent of the mid-20th century. 

  

• Ethereum Soars As Lubin Calls "The Cryptobottom"

  Ethereum is up 30% from Friday’s ‘close’ (and Bitcoin back above $4000) after Joseph Lubin, co-founder of the cryptocurrency, declared that he is “calling the cryptobottom of 2018” in a tweet.

  I am calling the cryptobottom of 2018. This bottom is marked by an epic amount of fear, uncertainty, and doubt from our friends in the 4th and crypto-5th estates.

  — Joseph Lubin (@ethereumJoseph) December 21, 2018

  https://platform.twitter.com/widgets.js

  After a strong week last week, all major cryptos are up again, with Ether leading the way…

  

  Driving Ethereum up to one-month highs, erasing almost all the post-Bitcoin-Cash hard-fork losses…

  

  And Bitcoin back above $4,000…

   

   

  As CoinTelegraph reports, according to Lubin, the crypto market’s bottom “is marked by an epic amount of fear, uncertainty, and doubt,” specifically from industry media and social commentators, which he refers to as “our friends in the 4th and crypto-5th estates.”

   

  image courtesy of CoinTelegraph

  Continuing in a Twitter thread, the founder of Ethereum blockchain-focused software firm ConsenSys then evidently addressed his firms recently reported major layoffs:

  “ConsenSys remains healthy and is engaging in a rebalancing of priorities and activities which started about nine months ago.”

  He stated that Consensys continues investing in projects — in its role as a blockchain tech incubator and venture firm — and hiring for internal projects that “remain core to our forward looking-business.”

  In the same thread, Lubin complained about “an epic amount of conjecture and preemptive paranoia” concerning “situations journalists and bloggers don’t have real data for, actual insight into, or understanding of.”

  Concluding, Lubin reiterated his optimism about the future of ConsenSys and Ethereum, stating:

  “The sky is not falling. From my perspective the future looks very bright. […] Peaking [sic] into 2019, if you could see the landscape through my eyes, you’d have to wear shades.”

  Reports surfaced this week — citing sources familiar with the matter — that ConsenSys is spinning out startups it previously backed, some of them without financial support. The sources reported that the number of employees to be laid off could be anywhere between 50 and 60 percent of ConsenSys’ 1,200 person workforce.

  This past week, Cointelegraph reported that in comparison to more significant job cuts in various industries globally, the current slump in the cryptocurrency markets and ensuring job cuts in associated companies seem relatively benign.

  In September, Ethereum’s other co-founder Vitalik Buterin had pointed out that there is no chance that the cryptocurrency and blockchain space will see “1,000-times growth” again.

  

• 2018 Summed Up In One Picture

  Presented with no comment (because we wouldn’t want offend anyone)…

   

  

  Source

  

Digest powered by RSS Digest

• Sorting Out The Brexit Chaos

  Authored by Kai Weiss via The Mises Institute,

  “Everything is happening, nothing has changed,” Alex Massie wrote over at CapX last week, perhaps summing up best the political situation in the UK right now. What has happened in the Brexit debate in the last few months, but in the last week in particular, has caused much astonishment around the globe – indeed, it has left almost everyone with the question of what in the world is going on in Britain.

  

  Just looking back at the at the beginning of last week, Parliament was still debating on Theresa May’s Withdrawal Agreement from the EU. Should the House of Commons accept the Prime Minister’s deal in the so-called “meaningful vote” on Tuesday, or rebuke what May sees as the best she can get from Brussels? Instead, the Prime Minister, having been cornered from all sides, called off the vote, which subsequently led to the threshold of 48 Conservative Members of Parliament needed for a no-confidence vote being reached. May won her party’s confidence, but a shocking 117 MPs turned against her. In the end, May’s position has mostly stayed the same, though, having neither been particularly strengthened nor weakened, since her leadership can’t be challenged again for the next year.

  The same might be true for her deal with the EU, which will now be voted on in the Commons in January. By some described as the best compromise that was possible, by (most) others however described as a disaster which would, say the critics, chain the UK to Brussels as a vassal state, it has undoubtedly been a controversial agreement.

  Critics have mostly pointed to the so-called “backstop.” That the border between Ireland and Northern Ireland stays undeterred for movement and trade has been essential for all parties involved — risking a hard border could lead to conflict at a border which has often been wrecked by strife. At the same time, though, one of the major goals of Brexiteering has been to leave the EU’s customs union, which would enable Britain to decide on its own trade policy (and thus, make its own trade agreements). This vision has often been called one of a “Global Britain.”

  With the current agreement, the UK would stay in the customs union for the remainder of the transition period, which currently is set to end in December 2020. Not only that this deems it impossible for Britain to pursue its own course until then, the backstop could cause havoc in the Kingdom afterwards. The concept is as follows:

  When Britain finally leaves in 2020, there will hopefully be in place a comprehensive trade agreement with the EU. But if not, there would once more be border controls between Britain and mainland Europe (and, importantly, Ireland). To prevent a hard border between Northern Ireland and Ireland, through the backstop, Northern Ireland would stay both in the common market as well as the customs union, while island Britain merely leaves the common market, while staying in the customs union.

  There are two major consequences from this: while the backstop is in place, the UK could still not do anything on its own as of trade policy. In addition, Northern Ireland and the rest of the UK would be separated, and there would then be border controls between Northern Ireland and Britain, splitting apart the union (in return for there not being any controls on the Irish island). Worst for many pro-Brexit voices, the Withdrawal Agreement does not say whether the backstop is only temporary or indefinitely. Indeed, they fear, the EU could trap the UK in this middle-of-the-road state in which Britain is sort of outside the EU, but in many respects still part of it (like trade policy).

  The EU has played a rather precarious role in all of this: while ensuring in public again and again that the backstop is temporary, it has also refused (so far) to revise the agreement to include this little detail.

  For Theresa May, this has created a complicated situation to say the least: the agreement cannot be passed in Parliament — that is also why she cancelled the vote, hoping that the EU will give her a little more leeway. For one, so-called “hard Brexiteers,” mostly Tory backbenchers, want to leave the customs union once and for all — and as soon as possible. They argue that a good deal with the EU would be beneficial — but if they can’t get one, then Britain should just leave. This is the “no deal” scenario, where Britain would fall back on WTO rules. The backstop then is the reason why they are completely opposed to May’s deal.

  Then there is the Democratic Unionist Party (DUP) from Northern Ireland. The Tories are only in government at the moment because they are supported by the DUP. And for the DUP, as its party name already says, the further existence of the union has first priority. For them, the backstop is a grave danger for Northern Ireland staying in the union. This is why they are completely opposed (to put it mildly) to May’s deal (and May needs them stay in power).

  Finally, even Labour, the Scottish Nationalist Party (SNP), as well as the Liberal Democrats are opposed to the deal. There are different reasons here. Many are hoping that by the agreement being blocked, the exit on March 29, 2019, would have to be postponed, thus opening up the possibility for a second referendum – a “People’s Vote,” as they call it (regardless of how undemocratic it would be). But especially Labour is of course also hoping that if the deal falters, the current government would, too; potentially triggering new elections – elections, they hope, which would put Chavismo Jeremy Corbyn in power.

  What is a possible way out? Free-marketeers have often pointed out that simple unilateral free trade from the UK’s side could be the solution (I have argued this, too, on several occasions). But regardless of whether this is the best idea in theory, one also needs to realize that it is detached from political reality at the moment: next to the major disruptions it would cause at first and that it could possibly completely destroy any relationship the UK still has with Europe (which is still, yes, important for its economy), this vision also simply has nowhere close to a majority in the population. Pulling this off could easily lead to a Corbyn administration, leading the UK down the dumpster.

  The same is true for those arguing for a “People’s Vote:” there is simply no majority for this, and it would put the final nail in the coffin for the British political class by ignoring the momentous vote of 52 percent of the country in 2016. Meanwhile, for those wanting the “Norway option” — i.e., a membership in the EEA or EFTA like Norway or Switzerland, time is running out (and once again, it is not clear whether there is a majority in Parliament for this either).

  Thus, all opponents of May’s deal have one more thing in common other than thinking her deal is a disaster: namely, that none of them has a majority and for now, a realistic chance to implement their own vision (and subsequently still win elections for a while). Could May’s deal not be the worst of all worlds, but maybe the only world which could realistically lead the UK out of the EU then (which it does)?

  At this point, no one seems to know anymore – I certainly don’t. What I know is that the Brexit vote shows one thing ever clearer: that simple ‘yes’ or ‘no’ votes veiled as supposedly democratic referendums have some major problems. In 2016, there was a vote asking the people of the UK whether they, ‘yes,’ want to leave the European Union, or, ‘no,’ want to remain. But as the aftermath of this vote shows ever more clearly by the day, it is much more difficult than that: there are a thousand ways to Brexit. Which one Britain will ultimately take, still no one knows yet – and the vote in 2016 doesn’t give an answer to that.

  To repeat Massie’s quote from the start, in the last few months “everything has happened, nothing has changed.” In 2019, everything will continue to happen. Just how much will actually change at some point will determine the future relationship between Britain and the EU.

  

• Global Happiness: Which Countries Are The Most (And Least) Miserable?

  How much happier would you be if were given a 10% raise?

  While money can be a crucial indicator of happiness at lower income levels, Visual Capitalist’s Iman Ghosh notes that studies have found that as incomes rise, money becomes a less important part of the overall happiness equation.

  In fact, researchers see happiness as a complex measure that involves many variables outside of material wealth, including social support, freedom, and health.

  MEASURING GLOBAL HAPPINESS

  Today’s chart uses data from the World Happiness Report 2018 to measure and understand which countries report feeling the most and least happy.

  

  Courtesy of: Visual Capitalist

  WHAT CONTRIBUTES TO HAPPINESS?

  The six key variables used by researchers in this report on global happiness include:

  1. GDP per capita

  2. Healthy life expectancy

  3. Social support

  4. Freedom of choice

  5. Generosity

  6. Perceptions of corruption

  While average income and life expectancy definitely carry their weight in explaining happiness levels, what’s more interesting are the Gallup World Poll (GWP) questions about the other, more subjective variables.

  • Social support
    “If you were in trouble, do you have relatives or friends you can count on to help you whenever you need them?”

  • Freedom to make life choices
    “Are you satisfied or dissatisfied with your freedom to choose what you do with your life?”

  • Generosity
    “Have you donated money to a charity in the past month?”

  • Perceptions of corruption
    “Is corruption widespread throughout the government or not?”
    “Is corruption widespread within businesses or not?”

  HOW HAPPY IS THE WORLD?

  The top tier of happiest countries happen to be Nordic, with Finland, Norway, Denmark, and Iceland making it into the top five. Aside from having a common geographic location, these countries are also well-known for their social safety nets, using a high tax burden to fund government services such as education and healthcare.

  A surprising entry near the top of the list might be Costa Rica. It’s the happiest country in the Latin American region, despite persisting income inequality issues. Although it has a lower GDP per capita than other high-ranking entries, the country has more than made up for it through social support; Costa Rica has invested significantly in education and health as a proportion of GDP, and the nation is also known for housing a culture that forms solid social networks of friends, families and neighborhoods.

  On the other hand, 18 of the least happy countries are concentrated on the African continent. GDP per capita varies intensely among the bottom countries, and many report a lack of freedom overall. A silver lining is that social support is relatively stable, and there have been steady improvements over time.

  Finally, the aftermath of the 2008 financial crisis has had a ripple effect on global happiness. The report demonstrates where the most and fewest advances have been made.

  • Togo
    Happiness is on the upswing, as the West African nation climbs 17 places to demonstrate the most improvement.

  • Venezuela
    Meanwhile, the South American country plummeted even further, in part from socio-political changes and dramatic hyperinflation.

  Where does your country fare on this scale?

  

  Eudaimonia [happiness] is the meaning and the purpose of life, the whole aim and end of human existence.

  -Aristotle

  

• If Truth Cannot Prevail Over Material Agendas We Are Doomed: PCR

  Authored by Paul Craig Roberts,

  Throughout the long Cold War Stephen Cohen, professor of Russian studies at Princeton University and New York University was a voice of reason. He refused to allow his patriotism to blind him to Washington’s contribution to the confict and to criticize only the Soviet contribution. Cohen’s interest was not to blame the enemy but to work toward a mutual understanding that would remove the threat of nuclear war. Although a Democrat and left-leaning, Cohen would have been at home in the Reagan administration, as Reagan’s first priority was to end the Cold War. I know this because I was part of the effort. Pat Buchanan will tell you the same thing.

  In 1974 a notorious cold warrior, Albert Wohlstetter, absurdly accused the CIA of underestimating the Soviet threat. As the CIA had every incentive for reasons of budget and power to overestimate the Soviet threat, and today the “Russian threat,” Wohlstetter’s accusation made no sense on its face. However he succeeded in stirring up enough concern that CIA director George H.W. Bush, later Vice President and President, agreed to a Team B to investigate the CIA’s assessment, headed by the Russiaphobic Harvard professor Richard Pipes. Team B concluded that the Soviets thought they could win a nuclear war and were building the forces with which to attack the US.

  

  The report was mainly nonsense, and it must have have troubled Stephen Cohen to experience the setback to negotiations that Team B caused.

  Today Cohen is stressed that it is the United States that thinks it can win a nuclear war. Washington speaks openly of using “low yield” nuclear weapons, and intentionally forecloses any peace negotiations with Russia with a propaganda campaign against Russia of demonization, villification, and transparant lies, while installing missile bases on Russia’s borders and while talking of incorporating former parts of Russia into NATO. In his just published book, War With Russia?, which I highly recommend, Cohen makes a convincing case that Washington is asking for war.

  I agree with Cohen that if Russia is a threat it is only because the US is threatening Russia. The stupidity of the policy toward Russia is creating a Russian threat. Putin keeps emphasizing this. To paraphrase Putin: “You are making Russia a threat by declaring us to be one, by discarding facts and substituting orchestrated opinions that your propagandistic media establish as fact via endless repetition.”

  Cohen is correct that during the Cold War every US president worked to defuse tensions, especially Republican ones. Since the Clinton regime every US president has worked to create tensions. What explains this dangerous change in approach?

  The end of the Cold War was disadvantageous to the military/security complex whose budget and power had waxed from decades of cold war. Suddenly the enemy that had bestowed such wealth and prestige on the military/security complex disappeared.

  The New Cold War is the result of the military/security complex’s resurrection of the enemy. In a democracy with independent media and scholars, this would not have been possible. But the Clinton regime permitted in violation of anti-trust laws 90% of the US media to be concentrated in the hands of six mega-corporations, thus destroying an independence already undermined by the CIA’s successful use of the CIA’s media assets to control explanations. Many books have been written about the CIA’s use of the media, including Udo Ulfkotte’s “Bought Journalism,” the English edition of which was quickly withdrawn and burned.

  The demonization of Russia is also aided and abeted by the Democrats’ hatred of Trump and anger from Hillary’s loss of the presidential election to the “Trump deplorables.” The Democrats purport to believe that Trump was installed by Putin’s interference in the presidentail election. This false belief is emotionally important to Democrats, and they can’t let go of it.

  Although Cohen as a professor at Princeton and NYU never lacked research opportunities, in the US Russian studies, strategic studies, and the like are funded by the military/security complex whose agenda Cohen’s scholarship does not serve. At the Center for Strategic and International Studies, where I held an independently financed chair for a dozen years, most of my colleagues were dependent on grants from the military/security complex. At the Hoover Institution, Stanford University, where I was a Senior Fellow for three decades, the anti-Soviet stance of the Institution reflected the agenda of those who funded the institution.

  I am not saying that my colleagues were whores on a payroll. I am saying that the people who got the appointments were people who were inclined to see the Soviet Union the way the military/security complex thought it should be seen.

  As Stephen Cohen is aware, in the original Cold War there was some balance as all explanations were not controlled. There were independent scholars who could point out that the Soviets, decimated by World War 2, had an interest in peace, and that accommodation could be achieved, thus avoiding the possibility of nuclear war.

  Stephen Cohen must have been in the younger ranks of those sensible people, as he and President Reagan’s ambassador to the Soviet Union, Jack Matloff, seem to be the remaining voices of expert reason on the American scene.

  If you care to understand the dire threat under which you live, a threat that only a few people, such as Stephen Cohen, are trying to lift, read his book.

  If you want to understand the dire threat that a bought-and-paid-for American media poses to your existence, read Cohen’s accounts of their despicable lies. America has a media that is synonymous with lies.

  If you want to understand how corrupt American universities are as organizations on the take for money, organizations to whom truth is inconsequential, read Cohen’s book.

  If you want to understand why you could be dead before Global Warming can get you, read Cohen’s book.

  Enough said.

  

• Forbes' Richest Celebrities Collectively Have More Wealth Than Iceland 

  Forbes has published its annual list of America’s wealthiest celebrities, and “Star Wars creator George Lucas leads this year’s ranking of America’s richest celebrities with a net worth of $5.4 billion thanks largely to the fortune he pocketed when his Lucasfilm production company sold to Disney for $4.1 billion in 2012.”

  Lucas ranks higher than filmmaker Steven Spielberg (No. 2; $3.7 billion) and media mogul Oprah (No. 3; $2.8 billion). Michael Jordan (No. 4; $1.7 billion) has been steadily climbing the list with a $400 million net worth increase derived from his sneaker empire and a 90% stake in the Charlotte Hornets.

  

  Forbes says America’s ten wealthiest celebrities hold a combined wealth of $18.7 billion, more than the GDP of Iceland. On a year-over-year basis, the net worths of the most powerful celebrities collectively jumped 4% from 2017’s $18 billion.

  The new addition for 2018 was Kylie Jenner, whose $900 million net worth places her on course to become the youngest billionaire ever. The millennial operates Kylie Cosmetics, “which has shifted more than $630 million in makeup since its launch two years ago by targeting her 168 million-plus social media followers,” said Forbes.

  

  “Social media is an amazing platform,” Jenner says of the medium that granted her success. “I have such easy access to my fans and my customers.”

  The largest wealth increase among existing listees is Jay-Z ($900 million), who ties with Jenner for the fifth spot. His net worth jumped $90 million from last year’s figures after his investment stakes in businesses including Armand de Brignac champagne and D’Ussé cognac, and holdings in his entertainment empire Roc Nation and streaming service Tidal, have exploded in value. 

  “That was the greatest trick in music that people ever pulled off, to convince artists that you can’t be an artist and make money,” Jay-Z told Forbes in 2010, foreshadowing the success of his ancillary businesses. “When you’re in the studio, you’re an artist, you make music, and then after you finish, you market it to the world. I don’t think anything is wrong with that. In fact, I know there’s nothing wrong with that.”

  

  The list is comprised only of celebrities who are American citizens, and only people who have become wealthy thanks to their fame. 

  “This list uses net worth earnings previously published for the Forbes 400, Billionaires list and ranking of America’s Richest Self-Made Women. Celebrities not on those lists were valued through private company stakes and publicly traded assets. Real estate, art and other assets were also factored in where applicable. For entertainers without such holdings, we based estimates on net lifetime earnings after taxes and spending. Eligibility was limited to American citizens who’ve gotten rich off their fame, rather than become famous for their wealth,” Forbes explained.

  Here is the full list of America’s Wealthiest Celebrities 2018: 

  1. George Lucas

  Net worth: $5.4 billion

  2. Steven Spielberg

  $3.7 billion

  3. Oprah Winfrey

  $2.8 billion

  4. Michael Jordan

  $1.7 billion

  5. (tie) Kylie Jenner

  $900 million

  5. (tie) Jay-Z

  $900 million

  7. David Copperfield

  $875 million

  8. Diddy

  $825 million

  9. (tie) Tiger Woods

  $800 million

  9. (tie) James Patterson

  $800 million

  

• Did Someone Slip Donald Trump Some Kind Of Political Viagra?

  Authored by James George Jatras via The Strategic Culture Foundation,

  This has been an extraordinary week…

  

  After two years of getting rolled by the Washington establishment, it seems that President Donald Trump woke up and suddenly realized, “Hey – I’m the president! I have the legal authority to do stuff!”

  • He has announced his order to withdraw US troops from Syria.

  • His Defense Secretary James Mattis has resigned. There are rumors National Security Adviser John Bolton may go too. (Please take Secretary of State Mike Pompeo with you!)

  • He announced a start to withdrawing from Afghanistan.

  • He now says he will veto a government funding bill unless he gets $5 billion for his Wall, and as of 12:01 AM Washington time December 22 the federal government is officially under partial shutdown.

  All of this should be taken with a big grain of salt. While this week’s assertiveness perhaps provides further proof that Trump’s impulses are right, it doesn’t mean he can implement them.

  The Syria withdrawal will be difficult. The entire establishment, including the otherwise pro-Trump talking heads on Fox News, are dead set against him – except for Tucker Carlson and Laura Ingraham.

  Senator Lindsey Graham is demanding hearings on how to block the Syria pullout.  Congress hardly ever quibbles with a president’s putting troops into a country, where the Legislative Branch has legitimate Constitutional power. But if a president under his absolute command authority wants to pull them out – even someplace where they’re deployed illegally, as in Syria – well hold on just a minute!

  We are being told our getting out of Syria and Afghanistan will be a huge “gift” to Russia and Iran. Worse, it is being compared to Barack Obama’s “premature” withdrawal from Iraq (falsely pointed to as the cause of the rise of ISIS) and will set the stage for “chaos.” By that standard, we can never leave anywhere.

  This will be a critical time for the Trump presidency. (And if God is really on his side, he soon might get another Supreme Court pick.) If he can get the machinery of the Executive Branch to implement his decision to withdraw from Syria, and if he can pick a replacement to General Mattis who actually agrees with Trump’s views, we might start getting the America First policy Trump ran on in 2016.

  Mattis himself said in his resignation letter, “Because you have the right to have a Secretary of Defense whose views are better aligned with yours on these [i.e., support for so-called “allies”] and other subjects, I believe it is right for me to step down from my position.”

  Right on, Mad Dog! In fact Trump should have had someone “better aligned” with him in that capacity from the get-go. It is now imperative that he picks someone who agrees with his core positions, starting with withdrawal from Syria and Afghanistan, and reducing confrontation with Russia.

  Former Defense Secretary Chuck Hagel complains that “our government is not a one-man show.” Well, the “government” isn’t, but the Executive Branch is. Article II, Section 1: “The executive Power shall be vested in a President of the United States of America.” Him. The President. Nobody else. Period.

  Already the drumbeat to saddle Trump with another Swamp critter at the Pentagon is starting: “Several possible replacements for Mattis this week trashed the president’s decision to pull out of Syria. Retired Gen. Jack Keane called the move a “strategic mistake” on Twitter. Republican Sens. Lindsey O. Graham (R-S.C.) and Tom Cotton (R-Ark.) signed a letter demanding Trump reconsider the decision and warning that the withdrawal bolsters Iran and Russia.” If Trump even considers any of the above as Mattis’s replacement, he’ll be in worse shape than he has been for the past two years.

  On the other hand, if Trump does pick someone who agrees with him about Syria and Afghanistan, never mind getting along with Russia, can he get that person confirmed by the Senate? One possibility would be to nominate someone like Acting White House Chief of Staff Mick Mulvaney specifically to run the Pentagon bureaucracy and get control of costs, while explicitly deferring operational decisions to the Commander in Chief in consultation with the Service Chiefs.

  Right now on Syria Trump is facing pushback from virtually the whole Deep State establishment, Republicans and Democrats alike, as well as the media from Fox News, to NPR, to MSNBC. Terror has again gripped the establishment that the Trump who was elected president in 2016 might actually start implementing what he promised. It is imperative that he pick someone for the Pentagon (and frankly, clear out the rest of his national security team) and appoint people he can trust and whose views comport with his own. Just lopping off a few heads won’t suffice – he needs a full housecleaning.

  In the meantime in Syria, watch for another “Assad poison gas attack against his own people.” The last time Trump said we’d be leaving Syria “very soon” was on March 29 of this year. Barely a week later, on April 7, came a supposed chemical incident in Douma, immediately hyped as a government attack on civilians but soon apparent as likely staged. Trump, though, dutifully took the bait, tweeting that Assad was an “animal.” Putin, Russia, and Iran were “responsible” for “many dead, including women and children, in mindless CHEMICAL attack” – “Big price to pay.” He then for the second time launched cruise missiles against Syrian targets. A confrontation loomed in the eastern Med that could to have led to war with Russia. Now, in light of Trump’s restated determination to get out, is MI6 already ginning up their White Helmet assets for a repeat?

  Trump’s claim that the US has completed its only mission, to defeat ISIS, is being compared to George W. Bush’s “Mission Accomplished” banner following defeat of Iraq’s army and the beginning of the occupation (and, as it turned out, the beginning of the real war). But if it helps get us out, who cares if Trump wants to take credit? Whatever his terrible, horrible, no good, very bad national security team told him, the US presence in Syria was never about ISIS. We are there as Uncle Sam’s Rent-an-Army for the Israelis and Saudis to block Iranian influence and especially an overland route between Syria and Iran (the so-called “Shiite land bridge” to the Mediterranean).

  For US forces the war against ISIS was always a sideshow, mainly carried on by the Syrians and Russians and proportioned about like the war against the Wehrmacht: about 20% “us,” about 80% “them.” The remaining pocket ISIS has on the Syria-Iraq border has been deliberately left alone, to keep handy as a lever to force Assad out in a settlement (which is not going to happen). Thus the claim an American pullout will lead to an ISIS “resurgence” is absurd. With US forces ceasing to play dog in the manger, the Syrians, Russians, Iranians, and Iraqis will kill them. All of them.

  If Trump is able to follow through with the pullout, will the Syrian war wind down? It needs to be kept in mind that the whole conflict has been because we (the US, plus Israel, Saudi Arabia, Qatar, Turkey, UAE, the United Kingdom, etc) are the aggressors. We sought to use al-Qaeda and other jihadis to effect regime change via the tried and true method. It failed.

  Regarding Trump’s critics’ claim that he is turning over Syria to the Russians and Iranians, Assad is nobody’s puppet. He can be allied with a Shiite theocracy but not controlled by it; Iran, likewise, can also have mutually beneficial ties with an ideologically dissimilar country, like it does with Christian Armenia. The Russians will stay and expand their presence but unlike our presence in many countries – which seemingly never ends, for example in Germany, Japan, and Korea, not to mention Kosovo – they’ll be there only as long and to the extent the Syrians want them. (Compare our eternal occupations with the Soviets’ politely leaving Egypt when Anwar Sadat asked them, or leaving Somalia when Siad Barre wanted them out. Instead of leaving, why didn’t Moscow just do a “Diem” on them?) It seems that American policymakers have gotten so far down the wormhole of their paranoid fantasies about the rest of the world – and it can’t be overemphasized, concerning areas where the US has no actual national interests – that we no longer recognize classic statecraft when practiced by other powers defending genuine national interests (which of course are legitimate only to the extent we say so).

  What happens over the next few days on funding for the Border Wall – which is fully within the power of Majority Leader Mitch McConnell to deliver – and over the next few weeks over Syria and Afghanistan may be decisive for the balance of the Trump presidency. If he can prevail, and if he finally starts assembling an America First national security team beginning with a good Pentagon chief, he still has a chance to deliver on his 2016 promises.

  Anyway, if this week’s developments are the result of someone putting something into Donald’s morning Egg McMuffin, America and the world owe him (or her) a vote of thanks. Let’s see more of the wrecking ball we Deplorables voted for!

  

• "F*ck Management, F*ck This Job, & F*ck Walmart!": 5 Disgruntled Employee Resignations That Went Viral

  Just because jobs data is coming in at what appears to be a great looking clip doesn’t mean that workers are not growing more and more disgruntled as wages lag inflation, number of hours worked rises and the quality of benefits deteriorates. Case in point is a group of several employees who decided to make notable public exits from their jobs, as was highlighted in a recent CNBC article.

  According to data from the Bureau of Labor Statistics, approximately 3.5 million Americans quit their job every month. As the article points out, some submit or tender a respectful and typical resignation – others, instead, simply don’t.

  For example, on December 6 of this year, 17 year old Jackson Racicot posted a video to a social media site called “How I Quit My Job Today”. The post has gone viral and has been viewed over 700,000 times so far. The video is of him quitting his job at the Walmart in Alberta, Canada by reading a speech that he had prepared over the store’s intercom.

  After making it clear that he didn’t like his benefits being cut – and being treated as a part time worker despite working 40 hours a week, he stated:

  “Attention all shoppers, associates and management, I would like to say to all of you today that nobody should work here, ever. Our managers will make promises and never keep them. I’m sick of all the bullshit, bogus write-ups and my job. Fuck management, fuck this job and fuck Walmart.”

  Another public resignation that went viral was in 2010, when Steven Slater left his job as a flight attendant for JetBlue. You may remember the story of him arguing with a passenger before getting on the plane intercom and exclaiming “I’ve been in this business for 28 years! I’ve had it! That’s it!”.

  He then took two beers from the plane’s beverage cart and exited the plane in grand fashion – on its emergency slide. The incident garnered him respect from his peers in the business despite eventually resulting in him being charged with criminal mischief, reckless endangerment and trespassing.

  A fellow flight attendant told the Washington Post at the time: “He took a stand for not only flight attendants but everyone.”

  

  And then there’s the story of Marina Shifrin, who gained popularity on the internet after she quit her job as a video producer by making a video of her self dancing to the song “Gone” by Kanye West in 2013.

  The text on the screen of the video read:

  “It’s 4:30 a.m. and I am at work. For almost two years I’ve sacrifice my relationships, time and energy for this job. And my boss only cares about quantity and how many views each video gets. So I figured, I’d make ONE video of my own. To focus on the content instead of worry about the views. Oh, and to let my boss know… I quit.”

  The video of her resignation, which was eventually removed by YouTube for including copyrighted material, wound up with 19 million views before being taken down.

  Then there was the Twitter employee who wound up deleting Donald Trump‘s Twitter account before leaving his job at the company. Bahtiyar Duysak recalled his last day at work as uneventful up until his final hour, when he received a notification that President Trump’s Twitter account had been reported for violating Twitter’s terms of service. He put the wheels in motion to deactivate the account before shutting down shop and leaving the building one last time.

  

  After the incident, Duysak was remorseful:

  “It was definitely a mistake, and if I am involved in this I really apologize if I hurt anyone. I didn’t do anything on purpose. I love Twitter and I love America.”

  And finally there was the story of Charlo Greene, who was a local news reporter in Anchorage, Alaska that had decided to leave her position to become an advocate for the cannabis industry. After having the station run footage of an edited news package about the debate regarding legalizing recreational marijuana in the state of Alaska, she then revealed herself as the leader of the Alaska Cannabis Club and quit her job live on the air.

  While live, she stated: 

  “I, the actual owner of the Alaska Cannabis Club will be dedicating all of my energy toward fighting for freedom and fairness which begins with legalizing Marijuana here in Alaska. And as for this job, well, not that I have a choice, but fuck it. I quit.”

  View this post on Instagram

  September 22, 2018 is the 4 year anniversary of “F it, I quit.” To celebrate, I’m giving away 5,000 copies my bestselling book “F It: A Guide to Letting Go & Living Free” from Sept 21 – Sept 25. Link in bio/head to charlogreene.com/giveaway to grab your free copy. AND tag a friend you shared this video with when you first saw it. Boy has it been a loooooong four years!

  A post shared by Charlo x Business Inspiration (@charlogreene) on Sep 21, 2018 at 12:29pm PDT

  

• David Collum's 2018 Year In Review: "The Year Everything Changed"

  Authored by David B. Collum, Betty R. Miller Professor of Chemistry and Chemical Biology – Cornell University (Email: dbc6@cornell.edu, Twitter: @DavidBCollum),

  “Dave: You are roundly tolerated.”

  ~Danielle Dimartino Booth, former Fed advisor and founder of Quill Intelligence

  2018 Year In Review: “The Year Everything Changed”

  The whole beast can be downloaded as a single PDF Here…

  Contents

  • Introduction
  • Background: The Author
  • Sources
  • My Personal Year
  • Investing
  • The Economy
  • Valuations
  • Broken Markets
  • The FAANGs
  • Gold
  • Bitcoin: Tales from the Crypt
  • Real Estate
  • Pensions
  • Debt
  • Corporate Debt
  • Personal Debt
  • Sovereign Debt
  • Inflation versus Deflation
  • Banks
  • The Fed
  • Human Achievement
  • Nature
  • Middle East
  • Syria
  • Nerve Gas Poisoning
  • Kavanaugh versus Blasey Ford
  • Political Correctness–Adult Division
  • Political Correctness–Collegiate Division
  • Political Correctness–Youth Division
  • Conclusion
  • Acknowledgments
  • Books

  Introduction

  Every December, I write a Year in Review that’s first posted on Chris Martenson & Adam Taggart’s website Peak Prosperity and later at ZeroHedge. This is my tenth, although informal versions go back further. It always presents a host of challenging questions like, “Why the hell do I do this?” Is it because I am deeply conflicted for being a misogynist with sexual contempt—both products of the systemic normalization of toxic masculinity perpetuated by an oppressively patriarchal societal structure? No. That’s just crazy talk. More likely, narcissism and need for e-permanence deeply buried in my lizard brain demands surges of dopamine, the neurotransmitter that drives kings to conquer new lands, Jeff Bezos to make even more money, and Harvey Weinstein to do whatever that perv does. The readership has held up so far. Larry Summers said he “finished the first half.” Even as a fib that’s a dopamine cha-ching.

  “If you think you are too small to make an impact, try spending the night in a room with a mosquito.”

  ~African proverb

  A non-pejorative justification for writing this beast is that life, with the aid of the digital world, hurls information at us so fast we cannot process it. Who could forget when Knight Capital Group launched an algorithm that sent them into bankruptcy within 45 minutes? What ever came of the Vegas shootings? Will David Hogg’s 10 minutes of fame as a world-class douche be forgotten? (If not, please euthanize me.) It seems a shame to simply let these fragments of life drift into the void without trying to find an underlying meaning to the human folly. I mostly ponder broken markets and the antics of bankers looking for signs of unintelligent life. The markets have been well over the historical fair value marks for 15 years. I have been a bear long enough to earn my permabear merit badge. The always-chipper Mark Dow called me a “bunker monkey.” John Hussman referred to some of my ideas as “bloodthirsty,” although I prefer the term “ghoulish.” The odds that I understand what has already happened are vanishingly small. I don’t know if markets are going up or down, only that they will move from left to right. None of what I say should be taken as investment advice; channel George Costanza and do the opposite.

  “I would have written a shorter letter, but I did not have the time.”

  ~Blaise Pascal, French mathematician, 1656

  What’s with the trite “matrix” metaphor? (I swear I will not refer to naked swimmers, rhyming history, or kicking cans.) I’m not even sure the puzzle pieces are real, fake, or as Ben Hunt calls them, “counterfeit.” It is deeper than that. I have like-minded friends sharing seemingly common interests who look at events—think Brett Kavanaugh, for example—and extract from them unrecognizably different messages because our perspectives are not similar; they are profoundly different. If you shuffle a deck of cards, the odds that the resulting order has ever before been created is zero (52! = 8 × 1067). What are the odds all of us share common websites, read the same articles or blogs, or have the same Twitter feed? Zero. It is preposterous to think that we are looking at the same world through similar lenses. The viral audio in which some hear “Yanny” and others hear “Laurel” is metaphorical.ref 4 This document is what I saw and heard described as fact-based hyperbole. It is the Year According to Dave.

  “I want to thank everybody who made this day necessary.”

  ~Yogi Berra

  Background: The Author

  When reading Dave’s Year In Review
  You’ll note one conclusion rings true
  His odd observations
  And strange contemplations
  Have proven he’s missing a screw

  @TheLimerickKing

  By way of introduction—despite a knowledge and understanding of economics, finance, and politics that one would expect from a lifetime of studying organic chemistry—I am 1/1,024th economist. There is absolutely no substitute for a genuine lack of preparation. I’ve managed to get cameos in the most improbable of venues including the Wall Street Journal, Russia Today (RT), the Guardian, and even Rolling Stone (but not “on the cover”). With some regularity and little forethought, I routinely manage to risk career and what’s left of my tattered reputation by getting embroiled in international incidents, which included brawling publicly with the American Federation of Teachers in 2017ref 5 and locking arms with Nassim Taleb in defense of Nobel Prize winner Tim Hunt in 2015.ref 6 This year was no exception. I risked an international incident by being the only chemist in the world calling bullshit on the Sergei and Yulia Skripal Novichok poisoning story. That gets its own section.

  Aristotle noted that an educated man can entertain an idea without endorsing it. I also have a penchant for entertaining any idea until it dies of SIDS or gets legs, and I have to chase it down. I am, in short, a conspiracy theorist. We all should be conspiracy theorists because men and women of wealth and power conspire. If some ideas make you uneasy, just shut up. Pejoratively denouncing the rest of us as “conspiracy theorists” is intentionally shutting down uncomfortable discussions. If you do this in the current political climate, I get to smack you to get you to agree with me. If you wish to discuss dicey topics, quit apologizing by saying, “I am not a conspiracy theorist but . . .” because you are one.

  

  Figure 1. Jeff Macke (@JeffMacke) original. CNBC’s Fast Money and chartist-artist extraordinaire.

  I can’t control what topics go on and off my radar; they just do it. Hardly a shot was fired this year in the War on Cash. Some issues are huge but change on geologic timescales. We’re all doomed to burn in eternal hell, but I can only say that so many years in a row before it starts getting old. I got the most email complaints for not discussing the opioid crisis. I still haven’t gone there, but I’m about to read Beth Macy’s Dopesick. Energy has been a hot topic and had moments of hilarity this year, but my bandwidth limitations and lack of investment exposure left me bored.

  There is a tractor beam that pulls economic blogs into the political realm. I have saved more notes and links and destroyed more gray matter than I thought possible trying to understand Russian collusion, the politics of Trump and Trump haters, and criminal behavior inside the FBI and CIA. I could write a book, but I just can’t do these topics justice in this forum. I’m letting them go for now, concluding that we desperately need a wall . . . around the Beltway.

  If I have offended you already—I guarantee that at least a few readers are—it’s time to stop reading. Although no puppies were killed writing this blog, trust me: I am just warming up.

  

  Sources

  I sit in front of a computer 16 hours a day gerrymandering my brain, at least three of which are dedicated to non-chemistry pursuits. I’m a huge fan of Adam Taggart and Chris Martenson (Peak Prosperity), Tony Greer (TG Macro), Doug Noland (Credit Bubble Bulletin), The Automatic Earth, Grant Williams (Real Vision and Things That Make You Go Hmmm), Raoul Pal (Real Vision), Bill Fleckenstein (Fleckenstein Capital), Mike Krieger (Liberty Blitzkrieg), Demetri Kofinas (Hidden Forces), James Grant (Grant’s Interest Rate Observer), Campus Reform, and any nonsense spewed by Twitter legend @RudyHavenstein. There are so many others, many of whom I consider friends that I am simply waiting to meet. ZeroHedge is by far my preferred consolidator of news; it’s an acquired taste and requires a filter, but I think those rogues are great. Twitter is a window to the world if managed correctly—especially for a chemist attempting to connect with the finance world. Warning: the Holy Grail of maximizing follower counts is an illusion; it produces a counterproductive hyperconnectivity that makes extracting signal from noise difficult. So much flow, so little time.

  My Personal Year

  My emergent role as a Roosky apologist (pronounced “Roo-ski”) brought in a wave of interviews including two each with British provocateur George Galloway, RT,ref 7,8,9 Lee Stranahan and Garland Nixon on Fault Lines,ref 10 and Scott Horton.ref 12 Other interviews focusing on economics, markets, and the absurdity we call “college” included Crush the Street,ref 11 Jason Burack (Wall St. for Main Street),ref 13 Chris Martenson (Peak Prosperity),ref 14 several with Lance Roberts,ref 15,16 and several on local radio.ref 17 Last year’s write-up on pensions was reproduced verbatim in the Solari Report on pensions.ref 18

  A three-hour dinner with Jonah Goldberg. I’ll remember vividly. I also played a role in coaxing one of my favorite economists, Stephen Roach, and one of my readers and friend, Tony Deden, to do RealVision interviews purely out of self-interest: I wanted to hear what they had to say. This much heralded two-part Deden interview was his first interview ever.ref 19 In return, I got to spend 10 hours sitting on my deck chatting with Tony about the meaning of everything. Y’all are now free to eat your hearts out.

  On the chemistry front. Somebody recorded a chemistry lecture I gave in Portugal in which you can hear my Yankee-dog jokes bomb.ref 20 Halfway through dinner that night, I remembered that one of my three compatriots had won the Nobel Prize in chemistry six months earlier. Another was six months shy of winning this year’s prize. (Congrats, Frances) In 2017 I had two NIH grants hit the same study section. Any academic will tell you that was guaranteed to be a “Sophie’s choice” moment at best. I only needed a few stitches—I got one of them funded—and it looks like the other is coming back in the spring. (Phew!)

  Investing

  My investing acumen has been pretty lucky, with one notable bad streak. From 1980 to 1987, I was all long-dated bonds. Those suffering acute equityphilia may not realize that bonds were great. The ’87 dip prompted me to switch to equities, which I held until mid-1999. Here’s a dark secret that I’ve never told anybody: I had tech stocks on leverage. Ding! Ding! Ding! They ring bells at the top! I woke up in time, sold everything, and held only cash, gold, and a token short position from late 1999 forward, dumping the short position during the ’02–’03 recession. From around 2003 through 2010 it was gold, cash, and energy-based equities with a pinch of tobacco. That was my best decade, relatively speaking, cranking out >10% annually compounded returns like a boss in an otherwise brutal environment. Yahtzee! Then we get to 2010 through the present, and Mr. Smarty Pants got a ’tude adjustment. Energy, gold, and cash hoisted me by my own petard and put me headfirst through a wood chipper. As explained last year, my employer booted me out of my entire (15%) energy position after the beatings. Thanks. I’ve been sitting on gold and cash witnessing an epic equity ’roid rage accumulating skid marks in my boxers.

  Precious metals, etc.: 28%
  Energy: 0%
  Cash equivalent (short term): 63%
  Standard equities: 9%

  For me, however, investing is all about valuations. The section on “Valuations” will explain why I didn’t buy equities when they were dirt cheap—hint: they were never dirt cheap—and where I think it all goes from here. I have one overarching goal: don’t fuck up. If I hit this goal, I will retire in comfort. The one variable I have no control over, however, is time, and that is why the chronostrictesis of sitting on the sidelines for nearly a decade caused me to start cutting myself again. Let me show you a foreshadowing chart that should give you pause (Figure 2):

  

  Figure 2. Peak-to-peak or trough-to-trough (full cycle) inflation-adjusted capital gains of 1.8–2.2% per annum since 1870.

  If you negate timing—if you measure peak-to-peak or trough-to-trough—your inflation-adjusted capital gains will average about 2%. If you get caught holding your life savings in equities at the wrong time, you will not recover in your lifetime. Hold that thought until “Valuations.”

  “But there is one course of action – one classic mistake – that I most strongly feel is wrong: reaching for return.”

  – Howard Marks, founder of Oaktree Capital

  How’d I do in 2018? Large physical gold and much smaller silver investments went moderately down (–5% and –15%, respectively). Fixed income finally offered returns without a zero preceding the decimal point, but they’re still pyrrhic gains at best. My TIAA retirement account returns 3.6% per year guaranteed (unless the zombie apocalypse arrives). I am also laddering 2-year treasuries and CDs; reaching any further for yield makes sense only if you’re a diehard deflationist because the yield curve is dangerously flat. To my joy, my former energy position would have cost me another –10% loss had it not been liquidated by my employer. I will get it back when I’m ready—when the next recession is making headlines. All this compares with a –10% return on an S&P index fund.

  Here is my maxim: Save to retire, and invest to combat inflation. I have prided myself on saving 20–30% of my gross salary per year, but for the first time ever (including the college tuition years!), my spending exceeded earnings. Adult children are expensive as hell, especially when the youngest spawn is trying to be a non-starving musician and starting a new venture—buying and selling violins.ref 21 (You wanna buy a violin?) You could call the money loans, but that means you’ve never loaned money to your children. Also, being married to a grandmother of three who is armed to the teeth with credit cards and digitally linked to point-and-click purchases of toys and kid’s clothing (Amazon) is quite the experience. I bought her a Jacuzzi for our deck overlooking Cayuga Lake (Figure 3) knowing that she can’t order toys and clothes while while in the tub. I plunged into the antique furniture bear market after a multi-decade hiatus by buying some nice pieces at seriously low prices; those in Figure 4 are emblematic. They will be in my estate, but I’m still hoping they don’t get seriously cheaper. Did I mention the dental implant, which seems almost metaphorical? To top it all off, I got an altogether unexpected 30% hit on annual gross income, which appears to be a one-off event. I see a return to profitability in Q1 2019—the ol’ first-half recovery story.

  

  Figure 3. Hot tub city, and I am the mayor.

  

  Figure 4. (a) Mid-19th century tiger maple drop-leaf dining room table; (b) Circa 1770 century Boston highboy.

  The Economy

  “In our current framework the economy is singularly brittle.”

  ~Larry Summers (@LHSummers), former secretary of the Treasury

  “Absolute blowout number for ISM Manufacturing Index in August. 61.3 is a 14-year high. While many keep pointing to threats, this economy is Kevlar.”

  ~Brian Wesbury (@wesbury), chief economist, First Trust Portfolios

  “I am not playing this down at all. I think we have a very serious global synchronized downturn.”

  ~Lakshman Achuthan (@businesscycle), Economic Cycle Research Institute (ECRI)

  It is instructive to ponder the meaning of wealth creation. It’s about making our collective lives better. The U.S. built an empire founded on strong property rights, a growing populace with a gritty work ethic, a resource-rich continent with seemingly limitless room for expansion, and global European competitors hobbled by relentless tribal fighting. How many of these factors are still intact? The first industrial revolution was about converting enthalpy (heat) obtained from fossil fuels into negative entropy (order we call civilization). I keep wondering what will drive the gains over the next 100 years. We are told FAANGs are replacing the smokestack industrial juggernauts. We’ll see.

  Heady questions aside, how about this year? This time last year I was writing about downturns in housing and autos, and now I’m hearing about downturns in housing,ref 22 autos,ref 23 lumber,ref 24 retail,ref 25 trucking,ref 26energy,ref 27 and semiconductors (chips ’n’ dips).ref 28 Did we have a boom I missed? Yes and no. Assuming inflation corrections using “substitution” and “hedonic improvements” are accurate—I don’t—and assuming GDP corrections using these inflation numbers are accurate—I don’t—then the GDP grew a paltry 2% off the ’09 bottom, quite literally tracking the Great Depression from 1931 to 1939.ref 29 BLS employment numbers are generated by a trend-cycle statistical modelref 30 (read: making shit up). Nonetheless, even Helen Keller could’ve seen the help wanted signs on the lowest economic rung (retail). Personal consumption expenditures (PCEs) are said to be soaring relative to GDP despite stagnant wages and no personal savings.ref 31

  “It doesn’t take even 10 minutes’ worth of investigation to show that the BLS tightness gauge—the U-3 unemployment rate—is not worth the paper it’s printed on.”

  ~David Stockman (@DA_Stockman), former Reagan economic advisor and former Blackstone group partner

  In 2018 we somehow witnessed a couple quarters of 3–4% GDP growth. I am so dark that I wonder whether the numbers have been jiggered explicitly to provide cover for the Fed to raise rates. Even so, more balanced individuals than I wonder whether we are creating real wealth or witnessing economic activity stimulated by yet another credit bubble. Luke Gromen (FFTT, LLC) notes that the 4% GDP print was suspicious in light of a 6.5% year-over-year drop in tax receipts and a 1.8% drop in gasoline demand.ref 32 (Fuel consumption and economic activity go together like Starsky and Hutch.) Something is amiss. David Stockman says that “these goal-seeked numbers are notoriously unreliable at cyclical turning points like late 2007 and early 2018.” He also notes that S&P profits haven’t grown for over three years.ref 33 In a really engaging interview,ref 34 economist Mariana Mazzucato seems to contradict Stockman, noting that “this is the sharpest post-recession rise in reported EPS in history.” She goes on to say that the “sharp increase in earnings did not come from revenue.” Stephen Roach, former executive director at Morgan Stanley asks, “Are the fundamentals really that sound? For a U.S. economy that has a razor-thin cushion of saving, nothing could be further from the truth.”ref 35 He notes the anemic personal savings rate of 2.4%—the lowest in a dozen years and one-fourth of the historical norm—cannot support a strong economy. The scholarly market historian and market maven Lacy Hunt calls the economy “very weak.” Let us not forget the obvious: The views are always the best from the summit.

  “Today’s economic boom is driven not by any great burst of innovation or growth in productivity. . . . The global economy is now awash in debt.”

  ~Steven Pearlstein, Washington Post

  “If it’s debt financed, you cannot increase GDP. You can only increase components of GDP.”

  ~Lacy Hunt, economist

  The main problem is that growth, whether tepid or strong, was driven largely by a doubling of global debt over the decade,ref 36 which I am tempted to call 7% annualized inflation. The debt-to-GDP ratio in the third world—called “emerging markets” on Wall Street and “shitholes” inside the Oval Office—created a mania of mergers and share buybacks while the real economy sputtered. Debt is consumption pulled forward. The bill for that hamburger you eat today is coming due on Tuesday, Wimpy.

  Pre-pubescent Paul Volcker: “Why can’t we have a boat like those people?”

  Momma Volcker: “They have mortgages; we don’t.”

  

  Figure 5. Popular plot asserting that federal debt is losing its stimulatory effect.

  The real story of the 2018 economy appears to be that it was juiced by several large, one-time stimuli. Hurricane repairs holding over from the 2017 carnage lifted GDP while creating no additional net wealth.ref 37 (One could argue trashing the old and replacing with new brings minor benefits.) The 14% Trump tax cuts and massive one-time tax repatriation of overseas earnings—one time since the last one in 2004ref 38—is said to have contributed significantly to the economy. The bulk was preordained to go to share buybacks despite blathering by corporate chieftains. Even so, that is said to represent a new slug of coin pulsing through the economy somewhere—but maybe not. That money wasn’t just parked in a vault in Zurich; it was in the multinational banking system already juicing economies worldwide.

  “For now, we estimate that the U.S. economy has peaked—the powerful expansionary cocktail of unfinanced tax cuts, repatriation of capital, and fiscal spending ramped up growth in the U.S., but these one-off effects will peter out as the year ends.”

  ~Steen Jakobsen (@Steen_Jacobsen), chief economist and CIO at Saxo Bank

  Meanwhile, corporate debt grew way faster than GDP.ref 39 Of course, some debt for pump ’n’ dump schemes (share buybacks) was offset by cash waiting for repatriation, but debt is the lifeblood of a leveraged system (Ponzi finance), and it grew. The IMF suggests that the benefits of the one-time boluses should wear off soon, leaving a 2.5% growth rate by 2019.ref 40 (I’m looking for contraction, but that’s just me.) Before moving to the last one-off stimulus, let me add that these routine overseas tax repatriations rot the system by giving advantage to slow-growing multinationals while providing no benefit to rapidly growing smaller companies. Look at it this way: If you can make money overseas and then get a tax jubilee every decade or so to “make America great,” where will you build your plants? Where will wily corporate bean counters declare all their earnings? Of course, the share buybacks don’t stimulate the economy at all because these monetary ’roids never left the system, so they can’t return to it. Shares and money just change hands. The real point is that since taxpayers will have to fill the void left by the tax jubilee, then what we just witnessed were taxpayer-funded corporate share buybacks.

  The third one-time bolus for the economy this year was the looming trade war with China. Scrrrrratch! Come again? Are you nuts? Stay with me here as I digressively peel back a few layers of this onion. First, some claim that there has been a trade war on slow burn for decades and that the U.S. is finally starting to fight back. Obama fired the first shot with a tariff on rolled steel in 2014ref 41 to garner union support while, according to Roach (personal communication), it merely shifted business to higher cost producers. Trump then took the tariff debate to 11 on the dial. (He had been talking about doing this years before the election.)ref 42 One can squeal that this is a tariffying repeat of the Smoot–Hawley tariffs. The Smoot–Hawley Tariff Act was a political football for Roosevelt during the 1928 election, causing the putative damage from the bugger-thy-neighbor tariffs to be overplayed in the history books. The tariffs also conveniently take the blame off central bankers for creating a ginormous credit bubble in the ’20s as promulgated by the 500+ economists on the Fed’s payroll. Hoover’s failure to get authority to change the tariffs without Congressional approval may have left a destructive rigidity—an unresponsiveness—in the Smoot–Hawley Act (see “Books”). Through the auspices of the “United States Fair and Reciprocal Tariff Act”—yes, the U.S. FART Act—Trump requested the same authority.ref 43 Somehow giving the Donald discretionary power to do anything important makes people nervous. He is rumored to be a little volatile.

  Do you have a point here, Onion Boy? Sure, but drop the ’tude, ya punk. Tariffs were GDP positive in 2018 as industry scrambled to make hay while the pre-tariff sun was still shining. The Atlanta Fed claimed that up to 60% of U.S. economic growth stemmed directly or indirectly from industry front-running the tariffs by stockpiling and accelerating exports.ref 44 Of course, billions of dollars of subsidies are already budgeted to offset the negative effects on farmers with presumably more to come.ref 45 The savvy reader will notice that the consumer will pay more for imported goods and higher taxes for the subsidies—a one-two punch to the groin. In the short run, the tariffs generated a little wiggle in the economy this year and may even be a powerful bargaining chip to get concessions during a period of Chinese vulnerability, but they will be a problem if they linger.

  “What does it say about productivity when the retail sector reportedly hires 50k in the same month when sales dip 0.1%. Or maybe the payroll number was completely bogus.”

  ~David “Rosie” Rosenberg (@EconguyRosie), chief economist and strategist at Gluskin Sheff

  We hear how employment is tightref 46—said by Alan Greenspan to be the tightest labor market ever—while 100 million working-age Americans are not working and while inflation-adjusted wages have been stagnant since the 1980s. The law of supply and demand says there’s something wrong with this picture. Indeed, we have a system in which 100 million are incented not to work even if jobs are aplenty. The other problem is that rising wages (oh thank the Lord. Finally!) will create what economists call “negative externalities” or, as the rest of us say, “shit happens.” What comes next is predictable. First, the wage pressures will cut into corporate profits—real wage growth conflicts with bubble-level corporate profit margins—driving equity valuations skyward or equity prices earthward. Second, the rising wages will be labeled “inflation,” which will cause the bean counters to correct for it declaring, “inflation-adjusted wages are stagnant.” Third, the Fed will get their thongs in knots and slay the inflation dragon by stepping on the economy. Just as consumers are trying to pull themselves up from the precipice, our Fed overlords will be stepping on their fingers.

  “We have abolished the idea of failure—nature’s cleansing mechanism. As a consequence, we’ve lost real economic vitality. We’ve substituted finance for industry as the locomotive of economic growth. In GDP terms, it looks terrific. But it is neither enduring nor real.”

  ~Tony Deden, founder of Edelweiss Holdings

  That’s a great segue into a chat about wealth inequality, a topic that is causing even the gazillionaires living in modern-era Versailles palaces to get nervous. I submit that a healthy economy naturally distributes wealth with a Machiavellian fairness. As you grow an economy that is firmly founded on wealth creation—making and moving goods and services—it is not a zero-sum game; all boats rise, albeit to different levels. (It will never be fair; get over it.) The natural tension between the cost of labor and the cost of labor-saving technology is dealt with by the supply–demand curve. When you have to redistribute wealth at a wholesale level to keep the mobs from charging the Bastille, however, something got out of whack. As you financialize the economy—as the GDP becomes a measure of how much money is being moved around or what economists call “rent seeking”—it is a reverse Robin Hood wealth distribution. The rich accumulate wealth at the expense of the poor because nobody is actually creating wealth. It becomes a zero-sum game with winners and losers. Rockefeller, Carnegie, and Vanderbilt got fabulously wealthy building an empire. I remain unconvinced that Zuckerberg, Bezos, and What’s His Name at Apple will be able to make such claims. David Tepper, Ray Dalio, Stevie Cohen, and Warren Buffett create none of the Wealth of Nations. They are wealth aggregators, much to the joy of their adherents.

  “The greatest economic recovery the top 0.1% has ever seen.”

  ~@RudyHavenstein, legend

  One more point. Economic models assume dislocated workers will just move, but they don’t. The impacts of “rolling industry recessions” is to leave workers behind and instill social instability owing to epidemic levels of cognitive dysphoria slathered with some serious hysteresis (lingering negative externalities!). The gutting of the middle class is setting up to be emblematic of the gutting of the American empire. What role did the Fed play? Their fake-it-till-you-make-it monetary policies financialized the economy. What do you think?

  Valuations

  “We’re probably only 10 years into another 50-year bull-market cycle.”

  ~Andy Sieg, head of Merrill Lynch Wealth Management

  Jeepers. How long was Andy floating in the harbor when they found him? I recall sitting in a room with friends when the Nasdaq had just crept over 5,000 for the first time and proclaiming it would be back to triple digits. They laughed. I missed by <200 points. Benjamin Graham, the most legendary investor of the twentieth century and mentor of Warren Buffett, lost 70% in the ’29–’33 bear market. Failing to exit the highway before hitting the traffic jam taught him about risk. Every year I talk about valuations, but I will lay it out in detail so that, in the end, I can sleep knowing that you’ve been warned.

  Let’s first illustrate the consequences of buying at secular highs. Many analyses show how long it has taken those fully invested at tops to break even. Of course, you must inflation-adjust to even approximate capital gains and losses. I have taken a slightly different tack by asking how long it takes to go from a secular high to that same value for the last time (Figure 6).

  

  Figure 6: Inflation-adjusted S&P capital gains. Blue arrows show time required to return to the peak valuation for the last time (hopefully).

  “So imagine valuations never see their norms, or 2009 levels again, and this cycle completes at 2002 levels—the highest level of valuations ever seen at a cycle low. That would still be more than enough to wipe out every bit of S&P 500 total return above T-bills since 2000.”

  ~John Hussman (@hussmanjp), Hussman Funds

  The blue arrows illustrate four instances in which investors caught holding equities at the peaks paid profoundly. In each case, the big dip is followed by a recovery—the break-even point—followed by an extension of the rally that eventually fails. As though pulled by a tractor beam, the price revisits the original peak for the third and final time. Those arrows representing zero capital gains—treading water during the biblical flooding before finding terra firma from which to launch new gains—are 40–75 years! Let me repeat: on four separate occasions over the last 140 years, investors obtained zero inflation-adjusted capital gains for periods spanning half to three quarters of a century. The entire gains during those periods came from dividends eroded by a host of taxes and fees (see below). You will, however, get participation trophies too.

  Don’t be deceived by analyses in which you start investing at the peak and invest throughout the ebbs and flows. These are calming words valid for millennials and Gen Zers. If you are a boomer with >80% of your lifetime savings already banked, however, there is little cost averaging in your future. Full return analyses in which dividends are included are less scary (Figure 7) but almost never account for the massive erosional costs discussed below.

  

  Figure 7. Inflation-adjusted total return with dividend reinvestment by Mike Lebowitz uncorrected for fees and taxes.

  “First law of finance: In the long run, returns must revert to the average.”

  ~Jason Zweig (@jasonzweigwsj), columnist at the Wall Street Journal, in 1997

  You can keep your support lines and technical indicators. You can keep your crash fears too; they are rare technical events. All I care about are valuations. It has been said that “record-high equity valuations don’t mean poor returns are imminent, only inevitable.” The big risk is buying poor assets during good times. Although 2007–09 was painful, the 2007 market wasn’t even an equity bubble but rather a real estate and credit bubble caused by the Fed keeping rates too low for too long. The Mullahs of Macro’s response to the collapse was to keep rates way lower for way longer. Paradoxically, it seems both moronic and, for now, effective, but is it? Or are we in another bubble? Before answering these questions, let’s take a quick peek at what one can expect out of equities ignoring valuations.

  “Anyone who says stocks are guaranteed to outperform bonds or cash is an ignoramus.”

  ~Benjamin Graham, mentor of Warren Buffett and author of The Intelligent Investor

  Last year, I obsessed over why stocks persistently return several percent more than U.S. treasuries and concluded it must be the awesome power of the State—rules forcing government debt into portfolios of compliant victims. My back-of-the-envelope calculations suggested that equities would sustainably provide 4–5% inflation-adjusted returns—not 7–8%—over many cycles spanning many decades. Headline-grabbing nominal returns must be corrected for fees, taxes on real and inflated gains, disasters (full-cycle, not partial-cycle, analysis), survivorship bias within indices, and demographics (1.4% growth in pie sharers). With that bug still buzzing, the Baader–Meinhof phenomenonref 47—the tendency to notice things only after the initial awakening—ushered in some new confirmation bias.

  A stupendous paper by retired economist Edward McQuarrie shows how claims of 6.6% inflation-adjusted returns over the long term—100–200 years—are profoundly deceptive because they hide nasty periods of many decades in which returns are disastrous.ref 48 McQuarrie does not account for taxes, fees, and demographics, all of which will conspire to bring that 6.6% much lower; others have attempted such corrections.ref 49 Mark Spitznagle takes 2% more off reported headline indices because of highly “non-ergodic” compounding.ref 50 In an article from 1999, Marty Zweig noted that “funds charge annual expenses of 1 percent or so; then it costs them another 1.5 percent to 2 percent to buy and sell their stocks each year.”ref 51 I assumed 1% total. He also said the oft-stated 9–11% compounded returns is “guano” and that small caps sustainably beating large caps is “a crock.” Rob Arnott, eight-time Graham and Dodd Award winner managing over $200 billion and said by Howard Marks to be “one of the real thinkers in our field,” calculates a sustainable 3.1% annual inflation-, tax-, and fee-adjusted return.ref 52 Graham-Buffett-Zweig, in the latest Intelligent Investor (see “Books”), put the long-term gains at 4% before taxes and fees. It would appear, therefore, that folks claiming much higher returns have carried out incomplete analyses or are serving up the surf ’n’ turf combo platter (fishy analysis slathered with bullshit).

  “I love equities, I’m not a weirdo, and I don’t live in a bomb shelter. But in a very real sense, the compounding of stock returns over long periods is a fraud. It really is. No one has ever gotten those returns.”

  ~Ted Aronson, January 1999, Aronson and Partners

  You may have noticed that none of these analyses assume corrections for valuations. Changes in valuations can offer up an additional +4% compounded gains above the norm, providing a tailwind pushing investors up the Wall of Worry to the valuation summit during a secular bull market. Shrinking valuations can hit investors with  gale-force –4% compounded losses, representing a headwind as investors take the express elevator to the gates of hell pistol whipping themselves the whole way during the secular bear market. Thus, valuations matter a lot. According to Buffett’s iconic 1999 must-read article,ref 53 multi-decade periods of collapsing valuations correlate with secular rises in interest rates, whereas the coveted valuation expansions are fueled by secular drops in interest rates. Thus, interest rates matter a lot too. Once rates have plumbed the lows or highs, you are at a turning point. Market extremes occur when it becomes “too expensive in the short-term to play the long-term.” Cliff Asness seems to contest this model by noting that falling rates do not justify high valuations,ref 54 but he notes that “to pay higher prices as a result of lower interest rates to avoid a very painful outcome requires that interest rates remain low indefinitely.” I infer that Asness and Buffett agree.

  “Exponentially rapidly rising or falling markets usually go farther than you think, but they do not correct by going sideways.”

  ~Bob Farrell, former Merrill Lynch legend

  Let’s ponder what some of the contenders for the Wall Street Fat Bear Championship have to say. Many focus on the awkward evidence suggesting the ’roid rage of ’09–present was largely a growth in valuations and profit margins. The market über-bears all use essentially the same assumptions: (1) normal growth in GDP and no catastrophic events (no world wars), (2) regression to the mean, a force of nature, will do its thing while largely ignoring the inevitable regression of valuations through the mean, and (3) investors will hold for 7 or 10 years. They include corrections for inflation, but none include corrections for taxes and fees. Note that using longer durations (up to 20 years) allows assumed 3% GDP growth to cosmetically mask the bad optics of negative compounding while investors consume 50% of the approximately 40-year investing life expectancy.

  • Rob Arnott’s estimated +3.1% return does not include valuation changes. Regression from current valuation to historic norms predicts –3% compounded losses over a decade.ref 55

  • Jeremy Grantham sees a precipitous drop of –48% or, if spread over 7 years with standard GDP growth, a drop of –5% compounded losses over the next 7 years (a 30% correction with positive GDP growth overlaid).ref 56 His most sanitized version points to small positive annualized returns over the next 20 years.

  • John Hussman sees a –57% loss in the Nasdaq, which is somewhat less than his expected losses in the S&P 500 (–64%), Russell 2000 (-68%), and Dow (–69%) over this cycle.ref 57 He also sees dead people.

  • Robert Shiller cautions that he is not predicting major calamity for the market but rather a much lower level of returns, in the 2.6% annual range over the next 10 years.ref 58 But this estimate appears uncorrected for anything except mean-regressing valuations. Any correction would be “probably not as bad as 1929, but it could be disruptive.”

  • Goldman’s “bear market indicator” suggests –3% per annum prospective total returns for 5 years, placing it in the optimistic camp.ref 59

  • Mike Lebowitz of 720Global projects a drag of –7% per annum on capital gains over the next 10 years, leaving GDP growth and dividends to mitigate the damage.ref 60

  “According to the Buffett yardstick, stocks are currently priced to deliver an annualized return of –3% over the next decade including dividends. Compare this to the 3% yield on the 10-year Treasury note and you’re looking at a –6% differential.”

  ~Jesse Felder (@jessefelder), former hedge fund manager and author of The Felder Report

  “I expect the S&P 500 to lose approximately two-thirds of its value over the completion of this market cycle.”

  ~John Hussman

  There are a gazillion valuation metrics. On the optimistic end you have peak idiocy and fibbing when price-to-earnings (P/E) ratios are quoted using non-GAAP forward earnings. Since markets are forward looking, why not five-year forward earnings? Why not ten? These are just Wall Streeters and corporate chieftains looking for bonuses. Let’s look at the ones that make the bears so fearful. What you’ll notice is that all metrics are normalized by dividing something (usually price) by something else (a metric of value) to give you a number that, unless you have good reason to think otherwise, should flop around some historic mean without trending up or down. Many will show that the last time we touched the historic mean was in ’09, and it stayed marginally below it for about 15 minutes. The last time we emerged from a protracted stay below the historic mean—we should reside below the mean half the time if my sixth grade math hasn’t failed me—was many years earlier (the early 90s). Bear in mind the latest edition of The Intelligent Investor confirmed that stocks were still overvalued after the 2000–2003 bear market, suggesting they had more correcting to do. As we shall see, the 2009 low was, by historical standards, near the historical mean, and the run from ’09 to ’18 was largely about elevating valuations. Regression through the means will take you into the dark mind of John Hussman. As I bang through some graphical measures of valuation, don’t lose sight of the fact that a 2× overvaluation requires a 50% correction to the mean and a 100% gain to recover. A 75% correction requires a 300% rally to recover. If you keep this arithmetic straight, it starts to get a bit ugly.

  “The price of the market is ‘highly dubious’ right now . . . the next recession will be frightening.”

  ~Paul Tudor Jones, former hedge fund legend

  The most deceptive and quite viral plot of the year (below) makes it look like you should never sell. Stocks almost always go up and a lot more than down. This little artifact derives from the non-linearity of the downside—100% down means you’re broke and need infinite returns to get even. The more conventional subsequent plot shows problems, but the normalization to the mean is obscured just like McQuarrie discusses (see above).

  

  

  “We are at the top of the valuation range by any measure except for interest rates.”

  ~Stan Druckenmiller, former chairman and president of Duquesne Capital, compounding 30% returns over 34 years

  The Shiller P/E with 10-year smoothing of earnings and analogous Crestmont P/E show >2× overvaluation relative to historic norms. Some say these will get tame looking as ’08–’09 earnings roll off the back end. Others did the mathref 61 and say the effect will be marginal because 10 years is a decent sample size. . . .

  

  

  “If the Fed keeps on tightening, or if inflation breaks out and bondholders take fright, this latest and perhaps greatest of bubbles will also come to burst.”

  ~Edward Chancellor, author of Devil Take the Hindmostref 62

  Doug Short’s composite valuation metric is parked at >100% overvaluation…

  

  “It is a source of some concern that asset valuations are so high.”

  ~Janet Yellen, former chair of the FOMC, as the door is hitting her in the ass

  Tobin’s Q, essentially a measure of price-to-book value, is approximately 2× the mean, sitting at a level commensurate with only the highest peaks and exceeded only by the 2000 bubble. The market cap-to-GDP (Buffett) indicator for the Wilshire 5000 is in the 99th percentile and sets a new world record. . . .

  

  

  “Equities are currently more overpriced on dependable valuation measures, such as total market value to GDP and on a replacement cost basis (Tobin’s Q), than at any time save for the 2000 dot-com bubble. American corporations have also been borrowing like there is no tomorrow.”

  ~Edward Chancellor

  Price-to-revenues and price-to-sales reached all-time highs. . . .

  

  

  “A 40% crash looks justifiable . . . effectively a retracement to prior technical support levels, the S&P 500 highs of 2007 and 2000.”

  ~Scott Minerd (@ScottMinerd), CIO at Guggenheim Partners

  Price-to-PEG and price-to-EBITDA (earnings with all bad stuff excluded) have exceeded the 2000 high-water marks. . . .

  

  

  “Equity exposure today on U.S. personal balance sheets has only been exceeded once before and that was in the late-1990s tech craze. I just don’t get it. But if you’re still long U.S. equities, please have a different reason than this drivel about this being a hated and under-owned asset class.”

  ~David “Rosie” Rosenberg

  Corporate profit margins are soaring and said to be notoriously mean regressing. Hussman’s valuation model is a profit-margin-adjusted CAPE. Crudely speaking, if mean reversion occurs for both the profit margins and the CAPE, we are looking at a >60% correction. . . .

  

  

  “Every market cycle in history has taken the most reliable valuation measures we identify (those best correlated with actual subsequent S&P 500 market returns) to less than half of current levels.”

  ~John Hussman

  The number of stocks trading above 10× revenues for both the S&P and the Russell 2000 are at extremes. These are the same levels that Sun Microsystem CEO, Scott McNealy, was prompted to say about his investors, “What were they thinking?”

  

  

  “The biggest market disasters happen when both leverage and securitization get mixed up with the same clever scheme.”

  ~Ben Hunt (@EpsilonTheory), former hedge fund manager and founder of Epsilon Theory

  Price-to-corporate profits-GDP ratio (analogous to Hussman) suggests that Hussman is an optimist. The ratio of financial assets to real assets indicates a pronounced financialization of the indices. . . .

  

  

  “The S&P 500 is trading at about a 93% premium to the long-run median. Falling to median therefore involves a 48% fall.”

  ~Jeremy Grantham, founder of Grantham, Mayo, van Otterloo & Co. (GMO) asset managers

  Household equity ownership versus disposable personal income seems like good news until it mean reverts. Hours of work needed to purchase the S&P is also extreme. . . .

  

  

  “Assuming you have the requisite capital and nerve, the big and relatively easy money in investing is made when prices are low, pessimism is widespread, and investors are fleeing from risk . . . this is not such a time.”

  ~Howard Marks, Oaktree Capital Management

  Financial sector assets as a percent of GDP and margin debt versus GDP illustrate the financialization of the economy and the role of margin debt to achieve it. . . .

  

  

  “There are two bubbles. We have a stock market bubble and a bond market bubble. At the end of the day, the bond bubble will be the big issue.”

  ~Alan Greenspan, former chair of the FOMC, January 2018

  Some of these graphics come from the Big Brokerages who make tons of money marketing stocks and pension accounts. Figure 8 shows a table that nicely summarizes valuation metrics. They look awfully tame—so much so that you should just keep buying the dips.

  

  Figure 8. Sanford Bernstein’s valuation models.

  “And although I read recently that bull markets don’t die of old age or collapse of their own weight, I think sometimes they do.”

  ~Howard Marks

  David Rosenberg estimates that >13 million worker bees have entered the finance industry since the ’09 bottom.ref 63 They have never actually been through a “bear market” cycle. The boomers have; the next will be their third. They could get pretty skittish. For now, they are all-in for the ride.

  

  Bloomberg’s Alix Steel: “Is there a magic-hedge that would help you if you owned the S&P 500?”

  Mark Spitznagel: “Own less of it.”

  On the off chance there are young ’uns reading this, I have altogether different advice. Save your asses off. Pick an asset allocation that smells right: I would think 60:40 or even 70:30 equities-to-fixed income sounds good. Allocate at that level. At the end of each year, don’t try to rebalance your portfolio immediately: Selling winners and buying losers is psychologically too hard. Simply change your allocation to bring it back to your set proportion. If bonds outperform, allocate to stocks. Make allocation changes once a year. The boomers’ risks are not your risks.

  “The lapse of time during which a given event has not happened is . . . alleged as a reason why the event should never happen, even when the lapse of time is precisely the added condition which makes the event imminent.”

  ~George Eliot in Silas Marner

  Broken Markets

  JP Morgan’s top quant warns next crisis to have flash crashes and social unrest not seen in 50 years

  ~Headline, CNBC

  “Stocks could surge 19% this year because investors are the right kind of cautious.”

  ~Bank of America Merrill Lynch

  “When reward is at its pinnacle, risk is near at hand.”

  ~John Bogle, Vanguard and creator of index funds

  “We are in the throes of a burgeoning financial bubble. If I had a choice between holding a U.S. Treasury bond or a hot burning coal in my hand, I would choose the coal.”

  ~Paul Tudor Jones, founder of Tudor Investment Management

  Central banks dumped $20 trillion of backstop into the markets over the last decade; what do you expect to happen? I honestly can’t say because nothing like this has ever happened before. Unlike the mortgage crisis, which many of us saw coming from years back, I don’t know anybody who knows anybody who saw this level of central bank intervention—the Bernanke Put—adopted by every central bank. It is instructive to simply look at what did happen.

  “The recent divergence in the performance of U.S. equities versus the rest of the world is unprecedented in history. . . . This has never happened before . . . this is a market condition that will not persist.”

  ~Marko Kolanovic, JPM

  Not even King Canute will be able to hold back the next bear when it’s time. Somebody calls in a bomb scare, panic starts, cashless (cushionless) exchange-traded funds (ETFs) sell immediately, and leveraged speculators are right behind. The markets are narrowing, with many domestic equities and most global markets considerably off their highs. As I am typing, tremors are undeniable. When they start shooting the generals—selling the increasingly rare market leaders—which they did in the early spring and again starting in September, it’s time to get nervous. We are also in a rate-hiking cycle, and history shows that the Fed will continue pulling on that trigger until they blow somebody’s head off.

  @StockCats: How do they get these trendlines so perfect?
  @RampCapitalLLC: Because we all draw the same ones.

  

  Frothy Markets. The markets have been riding bareback—condom-free—for a decade now, and bull markets do die of old age—platitudes and an interesting and oddly Bayesian analysis by Larry Summers aside.ref 64 We went a decade off the ’09 lows without a single 20% correction. How could investors not buy into the euphoria? The fact that this run has been supported by an annualized 2% GDP growth doesn’t matter when shares are rising. Hedge funds shorting and snorting trying to time the top—good luck with that one—keep getting squeezed (like in May). When legends like David Einhorn lose for several years in a row and massively this year (–28% year to date), what is the message? Are these former geniuses now garden-variety idiots for doubting one of the greatest runs in history? They should have watched this hilarious and must-see commercial for “Hindsight Capital.”ref 65

  “The market is cyclical, and given the extreme anomaly, reversion to the mean should happen sooner rather than later; we just can’t say when.”

  ~David Einhorn, founder of Greenlight Capital

  “It has been one giant short-squeeze market.”

  ~Jim Chanos (@WallStCynic), Kynikos Associates (short seller)

  The euphoria creates the fear of missing out (FOMO), causing a wave of articles explaining what a dumbass you are for not jumping on board. History shows the big gamblers during the bull—the twenty-somethings—get hurt the most at the inevitable conclusion, but these guys have never read the dusty archives so cannot fathom the chapter about to be written about them. Some random top-calling headlines:

  “Stock Market Bears Are the Dumbest Thing on Wall Street”

  ~TheStreet.com

  “Value’s for chumps as market puts momentum ETFs into overdrive”

  ~Bloomberg

  “Are you missing out on the great market melt-up?”

  ~Bloomberg

  “The stock market never goes down anymore”

  ~Bloomberg

  “Market trends: bull run could last 20 years, optimists say”

  ~USA Today

  “Stop freaking out about the Dow”

  ~@CNBC

  What about all those corporate profits? Only the old guys remember the 1960s when 71% of IPOs paid a dividend. (Those senile old coots probably don’t either.) Some profits reported this year may be legit, albeit floated on huge mean-regressing profit margins and from tech companies that tend to have higher profit margins (for now, at least.) Margins are also riding the wave of cheap capital and stagnant wages. Regression of margins to historic means could stem from rising rates (check) and wage inflation (check). The huge profit repatriations from offshore are also blurring our beer goggles.

  “We have intentionally constructed Berkshire in a manner that will allow it to comfortably withstand economic discontinuities, including such extremes as extended market closures.”

  ~Warren Buffett, 2017 annual report

  What is stalling this day of reckoning besides recency bias observed at all market tops? Passive investing keeps a wall of money bidding up—not flowing into—markets. (Money doesn’t “flow,” contrary to what 99% of pundits say.) The Swiss National Bank keeps putting bids under shares with freshly printed Swiss francs, which is insanely anathema to the concept of free markets.ref 66 The numbers don’t seem that large, but share prices are determined at the margins and every little bid helps. The storyline behind this particular bull run—central banks and their gargantuan interventions have our backs covered in perpetuity—is the most pathetic and insane bubble narrative in history, but it is now deeply ingrained in the market’s psyche. The late-cycle tax cuts and repatriations from abroad have probably stalled Armageddon (although to argue this money was sitting dormant, not influencing asset prices, is putty-headed). At the end of November, Jerome Powell blinked. The Powell Put was born when our new Fed chair kowtowed to nervous markets (or Trump).

  “Interest rates are already doing damage; people just haven’t noticed. Leverage in the U.S. is grotesque for this stage of the cycle. At the moment, you’ve got peak leverage at peak prices. It’s not like you have to dig deep to find a problem.”

  ~Andrew Lapthorne, head quant at Société Générale (SocGen)

  Buybacks. Share buybacks are hailed as a tax-friendly way to return profits to investors. They broke records this year and were often used to goose share prices the way announced stock splits did in the late 90s. Some say that the share buybacks are hoarding capital from the economy.ref 67 In defense of buybacks, Cliff Asness cogently notes that this argument is nuts.ref 68 It’s not like the money was sitting dormant. However, the claims that repatriation of overseas profits this year would boost the economy by facilitating construction of factories and jobs in the US are equally nuts. They already had access to capital and weren’t doing that. Some would like to get those repatriated profits as worker compensation. Indeed, that, too, was already possible and not happening. You won’t be getting ponies for Christmas either.

  “Market sell-off is about 80 percent over and will be reversed by share buybacks.”

  ~JPM analyst, October 17, 2018

  Buybacks are like stock splits: What they giveth in share reduction, they taketh back in shrunken balance sheets. Efficient markets would recognize the trade-off. The companies are merely pair-trading their diversified investment portfolio for their own shares. This is not irrational, but it certainly depends on which is a better value. They may be making the mistake that employees make by keeping their 401Ks bloated with shares of their employers. Robert Shiller recently called share buybacks “smoke and mirrors.” There is even a legislative push to ban them again. (They were legalized in 1982.)ref 69

  Here are my gripes about the buybacks.

  • The huge tax breaks that facilitated buybacks mean that taxpayers—whether present or future—funded the share buybacks.

  • The notion that buybacks “return profits to investors” is a ruse. It’s not like you can reinvest them in better opportunities like beer, hookers, and shares of Netflix.

  • The executives are conflicted; they win if share buybacks support option prices and lose if money escapes their containment field as dividends.

  • Comparing share counts before and after the buybacks often show a shocking lack of share count reductions because they are being used to offset options issuance to executives. That’s not exactly returning capital to investors.ref 70

  • Share buybacks maximize at market tops (Figure 9), suggesting that the conflict is causing the buybacks to be dumb money (buying high). Oracle, for example, spent $15 billion buying back shares at $18 per share that they had allocated as options at $3 per share. Steve Eisman says Oracle will be issuing equity in 2019 (sell low).ref 71 In 2017, Deutsch Bank authorized buybacks and is now insolvent.

  “Do these idiots ever do buybacks during the panic bottoms, when it actually makes more sense? Of course not.”

  ~Mr. Skin, anonymous market kingpin posting at Fleckenstein Capital

  

  Figure 9. Share buybacks.

  And here is the Big Unknown. Even if all share buybacks used only real cash flow and actually reduced share counts, the gains in price owing to share count reduction should be predictable with recourse to 5th-grade math: they should be zero. Yeah. That’s right: zero. It is impossible, however, to know what effects a perpetual bid under corporate shares will have on price, particularly given non-linear amplifications in market-cap-weighted ETFs. When a truck driver in Peoria pays one cent more for a share of Apple than the previous bid, the market cap just rose $50 million. Price is determined at the margins. Years ago, Kodak jumped $2 on a 200-share trade—the last trade of the day—prompting the SEC to pretend to care. What is Apple’s buyback program doing? You cannot say, but it is surely price positive and could be massively so.

  “Whenever we have forced selling to take place, the buyers disappear and the sellers have to sell no matter what. And corporate buybacks are not going to be enough.”

  ~Matt Maley, Miller Tabak & Co.

  How about that wave of debt-based buybacks—not the debt that was incurred waiting for the Great Repatriation, but real debt (leverage)? Analysts at SocGen showed that all net debt issuance in the twenty-first century has been used to pay for stock buybacks.ref 72 That’s just fraud—a covert leveraged buyout by the creditor. But, as Jesse Felder notes, “When you have captive buyers [passive investors] who are entirely price insensitive, there is really nothing to stop you from leveraging your balance sheet.” How do I wrestle with the fact that Warren Buffett says he might buy back shares? As I’ve said on many occasions, watch what he does; The Orifice of Omaha is a hoser of a higher order.

  “The fact that something is able to be sold legally, or the fact that there’s a market for it, can be very different from the fact that it can always be sold at a price that’s intrinsically fair or close to the last price at which it sold.”

  ~Howard Marks

  “The S&P 500 is the only major market to have defied gravity, lifted by the financialization of America’s economy, whereby artificially cheap interest rates fueled stock buybacks, and desperate pensions turbocharged a leveraged private equity boom. With the Fed now reversing course, will we not have a chance to buy stocks materially cheaper?”

  ~Kevin Peters, CIO of One River Asset Management

  Let’s look at some of the silly, idiosyncratic events that happen when investors lose their minds:

  • As noted below (see “Bitcoin”), companies doubled their market caps by adding blockchain to their name or issuing a cryptocurrency.ref 73

  • An 18-year-old launched a hedge fund from his bedroom in suburban New Jersey.ref 74

  • Equities ran 300+% off the lows while the GDP tracked the Great Depression, compounding at 2% per year.

  • Value investing strategies have performed in the bottom 1 percentile since 1990.ref 75

  • The S&P ran 14 months in a row without a monthly loss.ref 76

  • Boeing rose 250% in two years.

  • Blue Apron IPOed at $10 a little over a year ago; it’s now at $1.23 and nobody has been indicted.

  • Tilray, a cannabis company reporting $28 million in sales, doubled in value in three trading days and rose tenfold in 2 months to a market cap of $20 billion before cutting in half.ref 77 As Scott McNealy would say, “What were they smoking?”

  • Solid Biosciences has no revenues and disclosed that one of its clinical trials was put on hold before its IPO in January.ref 78 The company sported a $1 billion market cap.

  • Domino’s Pizza added 35% to a 20-fold, 10-year run aided by a debt-funded buyback program.ref 79

  • Yulong Eco-Materials, a tiny Chinese manufacturer of eco-friendly building products, rallied 950% in one day after the company acquired a gemstone for $50 million.ref 80 The company claims the 17.9 kilogram Millennium Sapphire is worth up to $500 million, although the price suggests it’s worth . . . $50 million.

  • World Wrestling Entertainment (WWE) tripled in the first 9 months of 2018, sporting a trailing P/E of >100.ref 81

  • 60% of corporate debt issued by companies in the Russell 2000 is rated as “junk.”ref 82

  • GM pays its investors a dividend yield of 4.1% with a negative cash flow.ref 83

  • Uber has never turned a profit, but it’s about to go public at $120 billion.ref 84

  Nike. Let’s take a peek at Nike. What’s not to like? It’s chart is totally parabolic, rising 20-fold in as many years. It got there, in part, aided by massive share buybacks. It’s sitting at a lofty trailing P/E of 100 on increased competition and faltering sales; regress that to 20 and you get an 80% loss. That would sting. Its edgy ads—Colin Kaepernick in particular—got elevated to meme status and prompted one sheriff to make all perps where Nike shirts for their mug shots.ref 85 Most disturbing, Nike is part of the “footwear index”—yes, there is a footwear index —which has risen >1300% in <20 years (Figure 10). Did we just discover the merits of shoes in the third millennium? Of course, after the company pioneered the Air Mercury line (Figure 11), the share price never looked back.

  

  Figure 10. Shoe index.

  

  Figure 11. A 2000-year-old Nike Air Mercury dug out of a Roman excavation.

  “The market value of Elon Musk’s firm overtook BMW’s even though the profitable Bavarian luxury carmaker produced 30 times as many cars last year as the loss-making Tesla. . . . With so much dumb money about, one of Silicon Valley’s new mantras is ‘spray and pray’.”

  ~Edward Chancellor

  Tesla. The newest entry to the automotive industry has a market cap larger than Honda’s and is headed by Elon Musk, the modern era’s Leonardo da Vinci or Thomas Edison. Why not jump on this can’t-fail opportunity? Again, there are niggling little details. Tesla’s shares took off in 2013 when the company announced the Model S. Musk is burning cash in the billions, except for the most recent and highly suspect quarter when earnings appeared just as new funding was needed (Figure 12).ref 86 Tesla began hemorrhaging senior executives right before the suspect earnings report.ref 87 The cash burn prompted Tesla to ask suppliers to give back some of their money,ref 88 rendering customer security deposits a little less secure. Tesla is supposedly making state-of-the-art cars in the desert in what are tents,ref 89 affording them an analyst-pleasing high sales-to-tent ratio. (I hasten to add that P. T. Barnum made some serious coin in tents.) Tesla had a fire at one of its factories.ref 90 What? No flame retardant on the tents? The Tesla Model 3 had a first-pass yield—the percent of cars requiring no additional work—of 14% during the last week of June compared with an industry norm of 80%. The tent-constructed cars, after making it through a rigorous inspection, began to spontaneously lose bumpers,ref 91 lock owners out of their cars,ref 92 and, on bad days, blow up.ref 93 Tesla owners are rumored to be fabricating unavailable parts to fix their own cars.ref 94 Note to Elon: hire those guys. Musk seems to have cut a few corners, like terminating “brake tests.”ref 95 The company also forgot to tell investors that the DEA (not the SEC) was investigating alleged meth and cocaine sales running through its Nevada Gigafactory.ref 96

  “Tesla is the perfect metaphor for where the U.S. economy is at: a company stuffed with debt plus government subsidies, unable to deliver the wished-for miracle product—affordable electric cars—whirling around the drain into bankruptcy.”

  ~James Kunstler, Kunstlercast

  

  Figure 12. Cash burn.

  Musk showed evidence of brain cell burn along the way, causing some to suspect that he was popping too much Ambien, downing too many mushroom pizzas, or going heavy on the poppy seed bagels at the Nevada Gigafactory. Before-and-after videosref 97 make the new-era Musk look more like Dave Chappelle’s homeless character with the white stash. He started harassing analysts on conference calls for their “boring, boneheaded questions” about, oh, useless crap like “inventories.”ref 98 Harassment of the shorts included forcing an insider posting as “Montana Skeptic” (Lawrence Fosse) to shut down his Twitter feed by complaining to Fosse’s bosses.ref 99 Elon sent one of his detractors, David Einhorn, a pair of “shorts” to mock him. Late night (early morning) Tweets include gems like jokes about being bankrupt and insolvent,ref 100 which prompted fast response from the SEC (just kidding). He routinely taunted the SEC’s inability to reign him in.ref 101

  “Musk is at it again. He’s doubling down on his pedophile comment.”

  ~James Chanos, Kynikos Associates

  “You don’t think it’s strange he hasn’t sued me?”

  ~Elon Musk tweet, prompting a lawsuit for the “pedophile” comment

  “Despite intense efforts to raise money, including a last-ditch mass sale of Easter Eggs, we are sad to report that Tesla has gone completely and totally bankrupt. So bankrupt, you can’t believe it.”

  ~Elon Musk tweet

  “When you’re massive negative free cash flow, your 7-year bonds are trading $86 bid, and you need debt capital markets financing . . . you don’t joke about bankruptcy.”

  ~David Tamberrino, Goldman Sachs, on his “sell” recommendation

  The fateful moment came when Musk announced that he was considering taking Tesla private at $420 per share, well above the asking price, causing a gargantuan wad of money to change hands in the short squeeze:

  

  “I think the Thomas Edison of our age has come off the rails. ‘Funding secured’ means he has the money lined up, or he’s guilty of market manipulation.”

  ~Scott Galloway, author of The Four

  “Funding secured” reached meme status, and the SEC did wake up this time. Elon and Tesla scrambled to find somebody to pretend like they were the ones tendering the offer (to no avail), eventually settling with the SEC for a $20 million fine and the requisite temporary demotion of Musk from CEO to CBW (Chief Bottle Washer).ref 102Of course, that triggered another massive short squeeze,ref 103 yet again hurting those betting against Musk. Charlie Gasparino says Tesla could be bracing for “billions of dollars in potential liability from private lawsuits,” from both market longs, shorts, and, of course, cave-dwelling pedophiles. The street hasn’t yet figured out how to price Tesla’s shares (Figure 13). I think Tesla will eventually be auctioned off for parts on the courthouse steps. Of course, all this chaos has had a huge deleterious effect on its current share price (Figure 14).

  “He claimed there is a specific source of funding, so that better be true. He also claimed that there is a specific amount available for funding, so that has to be true; otherwise even if it’s not manipulation it would be fraud.”

  ~Harvey Pitt, former SEC chairman

  

  Figure 13. Chick fight over a few decimal points.

  

  Figure 14. Tesla share price.

  The VIX. I obsessed about the VIX—the so-called “volatility index”—last year.ref 104 It was important as both a reflection of and a cause of market frothiness. You could short the VIX at will—a one-decision trade—and make a lot of money, they said. Everybody extolled the virtues of shorting the VIX—“selling vol”—using vehicles like the XIV (clever anagram) or SVXY. There was historical precedence: Folks at LTCM loved shorting vol.ref 105

  “References to exceptionally high ‘risk-adjusted returns’ leave me wondering: How do you adjust for risk on the vol trade?”

  David Collum, YIR 2017

  “Should I kill myself?”

  ~Online investor after losing $4 million on XIV

  “People say congratulations, you called the short-vol trade. No, nothing has happened yet. This is just the appetizer for the unwind that is about to come. I think this is what people should be really afraid of . . . it will be quite disorderly and ugly.”

  ~Chris Cole, getting credit for calling the vol implosion

  There were an estimated $2 trillion vol shorts last year. Seemed like that game had to end, but when? On February 5th, 45 minutes after the markets closed on a 15% one-day loss, the VIX short trade collapsed (Figure 15). We are not talking “crushed” or a “crash ’n’ burn.” It went to zero in fifteen minutes. Credit Suisse “terminated” the XIV trading vehicle.ref 106 TradeStation clients were sent an email terminating “futures trading” and told that margin accounts were “subject to immediate liquidation.”ref 107 Nomura shut its trading down.ref 108A number of funds blew up.ref 109 The speculation was that trading firms would collapse, but that did not materialize. Chris Cole had described in lurid detail how the VIX and $2 trillion of implicit and explicit vol bets could blow up about a week before it blew up.ref 110

  

  Figure 15. Collapse of the XIV, a VIX short ETF.

  Who lost? Various pensions proved to be the vol sellers, including University of Hawaii and the Illinois pension funds.ref 111 Harvard got out in time. Are they lucky, connected, or just “wicked smaht”? Who won? That’s harder to say because not all wish to take credit. A small hedge fund made 8,600% on a wildly improbable bet the XIV would go to zero.ref 112 Discussions of serious market manipulations surfaced,ref 113 suggesting that VIX shorts got spread over the five boroughs like Fredo. And when the dust settled, there was Goldman, sitting like the fat bastard at Donner Pass, chewing a toothpick with a $200 million profit.ref 114 Goldman had predicted the problem, almost like they knew something. Oddly enough, soon after vol shorters became full-time gene pool cleaners, the SVXY vol shorting vehicle was resurrected and is attracting a new batch of suckers who can’t resist touching the stove too.

  End of Cycle. The free market has caught up to a few hooligans. After 100 years, the iconic Sears is now a carcass being picked over by its creditors. Far more shocking, General Electric, the dominant industrial super power is –80% off its 2016 high and –88% off its 2000 all-time high (requiring an 700% gain to return), hitting levels not seen since 1994. It has been removed from the Dow and replaced with Walgreens,ref 115 which is sitting at its all-time high with the same market cap as GE. For those keeping score, GE bought back its own shares all the way down, which probably explains why its pension fund is the third largest holder of GE shares.ref 116 The $170 billion dollars of GE debt (depends on how you count) could be one of GE’s toaster ovens being tossed into the pool and may be what spooked Powell into backing away from an overtly hawkish stance—”the birth of the Powell Putref 117″ (which, as of December 19th, is said to have died).

  “General Electric is the most admired company for the sixth time in the past decade.”

  ~Forbes, 2006

  For the most part, the markets have made conservative investors—what we call Cassandras, Chicken Littles, Grumpy Old Men, and Nouveau impoverished—look like fools. Has the top reared its ugly head this year with the entertainment just beginning? If not, when?

  JPM’s Kolanovic says that the next meltdown in stock prices could cause the next financial crisis and has coined the name “Great Liquidity Crisis” to describe the phenomenon. Charles Hugh Smith suggests that 10 years of reckless behavior will “unleash a non-linear avalanche of reversions to the mean and rapid unwinding of extremes.” I think he’s saying it will be fast. Rates are rising, the cycle that was never fundamentally impressive (or even sound) in the first place is getting very long in the tooth, markets seem awfully jumpy, and the algo bus fueled by unprecedentedly easy monetary policy that drove us to the summit may have no brakes for the trip down.

  “The bulls don’t seem to acknowledge the artificial nature of this bull market in risk assets in general—no other cycle had such interference from central bank incursions and support by their balance sheet expansion. . . . The tax cuts have helped buy the bulls a little bit of time, but history shows that monetary policy is far more powerful and exerts its influence with lags that are typically long, variable, and insidious.”

  ~David “Rosie” Rosenberg

  They say that nobody rings a bell at the top or bottom, but some would argue that is untrue. If you believe that valuations are ridiculous, the journey could be fast and hair-raising. Please do not blame hiking rates for a rout. The Fed laid the ground work over decades. And, by the way, if you think that you can hide from a washout by staying in the lower deciles of valuation, dream on. Hussman showed that the pain will be severe in all 10 valuation deciles.ref 118 When valuations plumb the lows, half the equities will be valued even lower. How about emerging markets? They seem cheap. Yes, but they will get cheaper. On the bright side, maybe I’m just wrong.

  

  “The complex world financial system has so detached itself from underlying economic reality that it simply cannot continue without a catastrophic discontinuity.”

  ~Tony Deden

  FAANGs

  “When wireless is perfectly applied the whole earth will be a huge brain. We shall be able to communicate with one another instantly, irrespective of distance.”

  ~Nikola Tesla, 1926

  One couldn’t possibly miss the influence of the five FAANGs—Facebook, Apple, Amazon, Netflix, and Google—on collective global equity markets and, in turn, the perceived Wealth of Nations. The lowest interest rates since the Pharaohs walked the earth juiced world equity markets with hot money drawn to inflating assets. Non-linear gains owing to market-cap-dependent passive investing put the FAANGs on a tear (Figure 16). The euphoria has been palpable; the Bank of Montreal launched a triple-levered FANG ETF.ref 119 (Ding! Ding! Ding!) While the S&P rallied >200% off the 2009 lows, the FAANGs put up >600% gains, giving them a market cap greater than the UK’s FTSE index. At one point, Amazon alone accounted for >30% of the S&P 500’s gains for the year while putting 70% on its market cap in 165 trading days.ref 120 Market pundits breathlessly watched Apple and Amazon race to be the first company to reach a trillion-dollar market cap (willfully blind to PetroChina, which reached that high-water mark in ’07).ref 12 Somebody was bidding them up like they were signed copies of the Bible. A photo finish gave the win to Apple on September 2nd followed by Amazon two days later.ref 122 Am I the only one who finds this too coincidental? Does it seem odd that September 4th was also the high-water mark for Amazon?

  

  Figure 16. FAANG index as of mid-2018.

  Meanwhile, everything is not perfect in cyberspace. Insiders were locking in profits with record share sales.ref 123I also question whether these five companies are equipped to drive economies of the twenty-first century. Can the FAANGs create wealth like Standard Oil, General Motors, U.S. Steel, and General Electric did in the twentieth century? Will the FAANGs create wealth tangible enough to provide the needs of pensioners, feed millions, and sustain the American Empire? Most have valuation and balance sheet issues that certainly would leave value investors wondering if their IQ tests came back negative.

  “If the DOJ had not moved in on Microsoft in the late 90s and warned them to stop killing small firms such as Netscape in the crib, we would not have Google, we would have Bing.”

  ~Scott Galloway

  Meanwhile, all but Netflix are facing political and regulatory pressures that could prove catastrophic. The selective censoring of social media users based on political biases is now epidemic proportions and undeniable. Twitter’s algorithms are so dumb that they censored their own CEO, Jack Dorsey (@jack) briefly.ref 124 I suspect that it won’t be long before First Amendment cases against Facebook, Google, or Twitter will be taken to the Supreme Court.ref 125

  “I think that this certain situation is so dire and has become so large that probably some well-crafted regulation is necessary.”

  ~Tim Cook, Apple CEO, on the Facebook scandals

  “God only knows what it’s doing to our children’s brains.”

  ~Sean Parker, former president of Facebook on the influence of Facebookref 126

  Facebook. Here we have a trailing P/E in the 20s and no debt, making Facebook seem reasonable. My own concern is that it has a trendiness like a teenage clothing chain. Scandals with Cambridge Analytica have given it a serious black eye,ref 127–129 starting an anti-Facebook movement endorsed by Jan Koum, billionaire founder of WhatsApp, when he announced, “It is time to #deletefacebook.”ref 130 Half of millennials are said to have removed the Facebook app from their phones.ref 131 Whether Facebook dropped the millennials’ phones from Facebook’s apps is an altogether different question. Its usage has been cut in half from its peak owing to censoring, mounting evidence that it is Deep-State personified, and its triggering of dopamine responses like crack cocaine.

  

  Mark Zuckerberg is being drawn and quartered by those who want to be protected from fake news—news that is not in somebody’s political interest—and those who abhor censorship as a crackdown on free speech. Zuckerberg himself—that True Blood “Suckerberg” look—and his antics creepier than a Boston Dynamics robot. Facebook is now positioning to manage data for the healthcareref 132 and banking industries.ref 133 If either is allowed, the term Orwellian will elevate to new levels. On the bright side, the Zuckerberg presidential run has returned to the netherworld from whence it came. Facebook looks like a long-term sell to me.

  “Mark doesn’t care about publishers but is giving me a lot of leeway and concessions to make these changes. We will help you revitalize journalism . . . in a few years the reverse looks like I’ll be holding hands with your dying business like in a hospice.”

  ~Campbell Brown, head of news partnerships at Facebook

  “They don’t need to identify suckers anymore; Facebook does it for them.”

  ~Analyst on Facebook’s program to assist fake product ads

  Amazon. Of the five FAANGs, this is the 500-pound gorilla. Amazon has essentially no earnings (P/E > 200) and operating margins below 2%, but its business model appears to be (a) pay no taxes, and (b) buy or destroy allcompetitors.ref 134 Once brick-and-mortar competitors have taken the caravan to the light, don’t be surprised if Amazon brings back brick-and-mortar under new management.

  

  Figure 17. Amazon revenue versus profit.

  “I can’t explain the valuation of big tech companies. . . . [T]o justify the multiple that Amazon trades at today, the company would have to be worth 25% of the US economy five years from now.”

  ~Sam Zell, commercial real estate god

  Some would call Sam’s quote a prediction, not a valuation warning. Amazon’s risk is regulatory and antitrust also. It is priced as a monopoly. Should sovereign states (possibly in Europe) decide Amazon is too ruthless and try to break it up, the company will be hobbled for years.ref 135 Amazon would become profitless pieces (and some profitable pieces) that do not enjoy monopolistic power. Who decides it is a monopoly? Some politically motivated judge looking over his shoulder at an angry mob that’s given up fighting Walmart and Occupying Wall Street.

  “There is nothing conservative about big corporations; they are the backbone of the left.”

  ~Tucker Carlson, journalist

  Amazon’s image got bruised by its deal with the U.S. Postal Service for shipping rates that put the USPS in the red.ref 136 Arguments are being made that government subsidies such as food stamps to underpaid employees in general (and Amazon’s employees in particular) are really just government subsidies to defer Amazon’s salary costs.ref 137 In an effort to mitigate a backlash about poor treatment of employees, Amazon offered raises and then, rather inexplicably, announced they would be paid for by removing bonuses.ref 138 Amazon hastily reintroduced a new cash bonus of $1,500–$3,000 for employment milestones of 5, 10, 15, and 20 years. If all 500,000 employees hit all benchmarks, it will cost Amazon a couple billion dollars in total. If higher pay starts shrinking that 2% profit margin, Bezos will automate even more. Of course, an employee may be at risk of being laid off in years 4, 9, 14, and 19.

  We went full oligopoly when a triumvirate of three profound monopolists—Berkshire Hathaway, Amazon, and JPMorgan Chase—proposed to partner up to convert the healthcare system into “an independent company that is free from profit-making incentives and constraints.”ref 139 No offense, but if you buy that “free” part you’re an imbecile. The Nation didn’t and took them to task.ref 140 The article also did a nice job of beating Buffett with the ugly stick, which I have tried to do a few times myself.ref 141 Amazon is also deeply embroiled in the privacy battles, as their hot new product, Alexa, records conversations within your home and sends the key data to advertisers.ref 142 A camera that follows you around the houseref 143 is being called “the Eye of Sauron.”

  Amazon announced two new corporate headquarters, one in Long Island City.ref 144 Whether the deal cut by Cuomo sold NY state’s souls to the devil remains to be determined. The placement right next to Cornell’s new tech campus gets my selfish juices flowing.

  Apple. I love Apple products but am getting closer to bailing on them. Scott Galloway, author of The Four, says Apple is successfully branding itself as an elite product line like Cartier. Maybe so but only those who bought Apple shares at the bottom can afford the 20–25% price hikes.ref 145 Paying $1,000 for a phone, $1,500 for a basic MacBook Air, and $2,000 for a MacBook Pro or iMac seems egregious. The $400 Apple watch—the Cartier of the digital world—is competing with the $25 watch that I get at Target. Apple’s revenue growth rate has slowed to an average of less than 4% annually over the past 3 years.ref 146 Jesse Felder notes that Apple’s stock trades at its highest ever price-to-free cash flow ratio while the company’s 5-year average revenue growth is the lowest in its history.ref

  “So excited for the Apple Watch. For centuries, we’ve checked the time by looking at our phones. Having it on your wrist? Genius.”

  ~Ellen DeGeneres, talk show host

  At least the company hasn’t saturated the marketplace with innovative new products. Bill Fleckenstein reminds us the iPhone 6, the latest product to dazzle the world, just had its sixth birthday! They grow up so fast. Tech analyst Fred Hickey calls Apple’s new iPhone rollout “disastrous”. Price cuts in Japan after only a month and collapsing sales in China are ominous. Buybacks are said to be keeping the shares afloat—or were until the swoon of >20% and moving faster than I can type. Apple is selling fewer phones than a few years back,ref 147which is reflected in inventory numbers. What is the company’s response to drooping iPhone sales numbers? Stop reporting sales numbers!ref 148 Seems like those 20–25% price hikes on all products are working their magic on demand. Maybe Apple’s cloud presence will save it, but the cloud also offers arbitrage opportunities (narrowing profit margins). Apple seems like a money-printing machine now, but the law of large sizes alone puts it at risk of, at best, going nowhere. In a wonderful video, Steve Jobs explains how once you have a monopoly, new products don’t help you, only better marketing. Soon, marketing people are running the company and what made it great is gone.ref 149 Indeed, what made it great is gone. They miss you, Steve.

  Netflix. A trailing P/E of >200, a price-to-revenue ratio of 10, a high cash burn rate for its new content,ref 150 a commitment of another $18 billion for more new content (some parked off balance sheet) earning the moniker “Debtflix (Figure 18),”ref 151 and a share price that reached 70% above its 200-day moving average put Netflix at risk. Disney is pulling its content from Netflix in 2019.ref 152 A Netflix spokesperson noted, “we expect to be free-cash-flow negative for several more years (Figure 18).”ref 153 Fixed income investors had auto-callable debt with a huge 20% yield, but the notes were recalled, leaving investors with a net loss owing to 2.7% in fees.ref 154 Well, the bankers did OK. Future debt issuance could get dicey.

  

  

  Figure 18. Netflix cash flow and debt.

  “Google and others are suppressing voices of Conservatives and hiding information and news that is good. They are controlling what we can & cannot see. This is a very serious situation-will be addressed!”

  ~Donald J. Trump, President of the United States

  Google. The share price of Google is up a tame 600% from the ’08 lows. With control of 90% of the search market, further penetration will have to come from other sources. Scott Galloway sees antitrust activity ramping up, although it seems to me like a weaker case than the one against Amazon.ref 155 Google is accused of biasing search results toward advertisers that pay more, which may pose an optics problem but is also how capitalism works. Leaked emails showed that Google helped Hillary with biased search results,ref 156 although not enough apparently. Its participation in deep-state filtering including ham-fisted if not downright abusive attacks on right-wing YouTube sites could lead to fines (a sarcastic BFD) or antitrust activity (a real BFD). Strong ties with the NSA are consistent with the widely held belief that all social media companies offer back doors to the Deep State.ref 157 (If you are confused as to why I keep referring to the Deep State pejoratively, you’ve got some catching up to do.)ref 158 To get dominance in China, Google appears to be signing off on a platform that allows totalitarian-state-level censorship (code-named Dragonfly).ref 159 Squeals from within the Google employee echo chamber urged Google to drop its military-funded drone program. As a compromise, it dropped its 17-year-old guiding catch phrase, “Don’t Be Evil,”ref 160 replacing it with “Be Evil.” A $5 billion fine was a wrist slap.ref 161 Tangible constraints on them may be less benign.

  Brand blemishing from firing James Damore last year got another smudge when a post-election video showed the high command at Google self-righteously spewing political views as truths and nothing but the truths.ref 162The former head of public relations says that Google suffers from serious truth issues.ref 163

  “Give us a hundred years and us billionaires will show what wealth disparity looks like.”

  ~Sean Parker, former president of Facebook

  As I type, the markets are having their way with the FAANGs—a “FAANG bang.” Maybe it’s just more jiggles en route to $2 trillion market caps for all…or maybe not.

  Gold

  “You very rarely, if ever, hear a serious discussion of the role of gold in the system going forward. I don’t see any appetite within that community to revisit that issue.”

  ~William White, formerly at the Bank for International Settlements

  “The major gold-producing nations are tired of an international gold price that is determined in a synthetic trading environment having little to do with the physical gold market.”

  ~Sergey Shvetsov, deputy governor of the Bank of Russia

  “If gold is a relic of history, why do central banks and the IMF still hold over $1T of gold? If it’s meaningless, why is everybody still holding it?”

  ~Alan Greenspan, May 2018

  Gold has been boring for years, lurking in what a friend calls “the Collum range . . . oh, about $1,200.” (Figure 19). It will be tested during the next downturn and consequent stimulus effort, but until then I’ve largely stopped reading articles about why gold will tank or soar. If it hedged against monetary idiocy, I would be living on my own Island in the Caribbean. Occasionally, however, I stumble across a nugget. Gold dropped linearly from April to August (Figure 20). Maybe that’s normal or maybe Bernie Madoff whistleblower Harry Markopolos is right: Linearity in finance is fraud. (A 21-day linear drop in silver was even more awesome.) Hedge funds went net short,ref 164 suggesting correlation if not causation, possibly fueling the brief dip below $1,200. Evidence of horseplay appeared in the form of 260,000 futures contracts—$34 billion notional value—monkey-hammering gold in 4 hours in June.ref 165 Nobody even blinks at these anymore, especially not the regulators. Of course, a couple of gold-rigging charges were made—one guy even admitted that it had been happening at the industrial scale for years—but they were disposable traders and got acquitted anyway.ref 166 Canada’s Scotiabank will pay $800,000 to settle charges of “spoofing” (fake bidding).ref 167 Wow. $800,000. HSBC has been caught four times rigging the price of gold, promising four times to never do it again.ref 168 For those interested in buying allocated gold, the Texas Bullion Exchange has opened its vaults.ref 169 You get the convenience of a debit card while still enjoying the projectile-vomit-inducing price fluctuations of gold. There are others such as the Tocqueville Bullion Reserve.ref 170

  

  Figure 18. Ten-year gold price.

  

  Figure 19. Linear drops in gold.

  “You can feel the dejection among hard core gold owners. They’re finally starting to ask themselves why there don’t seem to be any kind of market conditions in which gold *works* as an investment or hedge.”

  ~Mark Dow (@mark_dow), hedge fund manager and gold bear

  The debate about the future of gold in the global monetary system rages on among the 10 people who care. Craig Hemke (TF Metals Report) was early to notice an apparent pegging of the yuan to gold (Figure 20).ref 171Could be true or just goldbug pareidolia; regardless, it seemed to end this fall. Canada sold every last ounce of sovereign gold by 2016,ref 172 putting their holdings below those at the Bank of Dave. China, Russia, Poland, Hungary, Pakistan, Egypt, and Mongolia kept accruing the Bar-B-Qued relic.ref 173 Hungary cranked its inventories 10-fold with an affiliated repatriation from foreign vaults.ref 174 Turkey decided its gold was safer at the Istanbul Exchange than in JPM’s vaults in New York.ref 175 Rumors that Russia and China have outlined plans to create a 100% gold-backed currency system to replace the U.S. dollar as the world’s dominant currency are wild speculation and provocative (Figure 21).ref 176 They certainly trust gold more than the dollar-denominated global banking cartel.

  

  Figure 20. Yuan-gold peg and gold in U.S. dollars.

  

  Figure 21. Russian and Chinese gold acquisition.

  You really can’t put a value on gold (or eat it), but there are technical indicators suggestive of future price movements. The so-called speculators—the dumb money, whatever that means—went net short for the first time since the 2001 bottom, while the banks—the smart money (?)—went net long for the first time in history. We are parked at an all-time high of >500 claims against each ounce of gold at the COMEX vaults,ref 177 which could leave some wondering who Madoff with their gold.

  “In recent years, bullion inventories have fallen materially, and last summer Charlie and I concluded that a higher price would be needed to establish equilibrium between supply and demand.”

  ~Warren Buffett, on silver, 1997

  “We have a very similar situation in gold . . . it appears that a higher price is needed to establish equilibrium between supply and demand. . . . This won’t matter till it matters. Whenever it does, it will likely be too late to do anything about it.”

  ~Jesse Felder

  For the gold-is-real-money crowd, the market value of all above-ground gold as a percentage of U.S. financial assets currently stands at 3.4%, which is well below the historic peaks of approximately 16% and not too far from the historic lows of approximately 2%.ref 178 In the spirit of bear markets die of boredom, Vanguard Gold Fund dropped “gold” from its name at the 2001 bottom and dropped the fund altogether this year.

  In the world of human interest that even non-goldbugs can appreciate, the Rooskies dropped 3 tons of gold all over the runway when taking off at the Yakutsk Airport.ref 179 “Risk” players know that nothing good happens in Yakutsk. An amphora containing hundreds of fifth-century gold coins was found in excavations in Italy, while a Spanish galleon containing an estimated $17 billion in gold may have been located.ref 180

  “Gold could be in a prolonged tailspin.”

  ~Barron’s headline

  Silver got pummeled a bit but, fortunately, nobody owns any (except me). The industrial demand keeps my relatively small position intact. Solar now consumes about 10% of annual silver production,ref 181 and silver is found in non-recoverable form in every electronic device. The gold–silver ratio has soared from 16:1 by weight in the ground to 80:1 by price in the market.ref 182 The notion that it should somehow price in proportion to supply is hotly debated, although the consumption of silver but not gold would logically give silver the relative boost in my opinion. JPM is said to control over 50% of the COMEX silver inventories—new-era Bunker Hunts or simply their clients’ silver.ref 183 For now, I watch with bemusement.

  “The question as to whether the Fed can engineer yet another cycle (as it was able to in 2009) or whether the coming crash will be the end of the Supercycle will determine whether gold (and the miners) go up a lot or whether they rise to a terrifying degree.”

  ~Daniel Oliver, founder and managing director of Myrmikan Capital

  Bitcoin: Tales from the Crypt

  “Don’t put any money into bitcoin that you can’t afford to lose. But I don’t think we should ban it—the green bills in your pocket don’t have an intrinsic value, either.”

  ~Sheila Bair, former chair of the U.S. Federal Deposit Insurance Corporation

  “Cryptocurrencies do not fulfill any of the three purposes of money. They are neither a good means of payment, nor a good unit of account, nor are they suitable as a store of value. They fail dramatically on each of these counts.”

  ~Agustín Carstens, general manager of the Bank for International Settlements

  In the battle of gold versus cryptos—the Bugs versus the Crypts—I am in the bug camp, but I am sympathetic and respectful of the cryptophiles. Against the current monetary regime, the enemy of my enemy is my friend.

  ”Millennials are afraid stocks are too risky, so they’re investing in bitcoin.”

  ~MarketWatch

  The strongest case I can make for cryptos is karmic: I don’t own any. It’s still the Wild West, but that’s not to say this sector can’t make doubters look like boobs going forward. Some speculate that the loss in volatility—the onset of boredom—will be their demise, but I completely disagree. If they are to become currencies, they mustcalm the hell down. That plateau in the $6K zone in Figure 22, therefore, seemed “highly constructive”—until the bottom fell out. Shaking youthful day traders from the “space” is also constructive. Start with George . . .

  

  

  Figure 22. Bitcoin price.

  From Figure 22 we see that the cryptocurrencies got pegged this year as investors spit the bit. The trip from sublime to supine did not take long. After bitcoin was driven above $20,000 in late December 2017 (on its trek to $1,000,000, of course) it has now pulled back to about $3,200, which I believe is below the estimated $8,000 to mining it.ref 184 (It is said that crypto mining uses more energy per year than Ireland does.ref 185) The founder of the cryptocurrency called Ripple became richer than Zuckerbergref 186 before a little market inefficiency got cleaned up by handing Ripple a 90% drop in two days.ref 187 (Now if only we could get some market efficiency on FAANGs.)

  

  Dogecoin, invented as a spoof four years ago,ref 188 hit a market cap of $2 billion in January, eventually pulling back 90%.ref 189 It seems indisputable that the vast majority of cryptos will find strong technical support at zero. KuCoin, with a market cap of <$50,000, can’t be long for this world. Obviously the beatings took some of the piss and vinegar from Cryptomania, but The Big Three—Bitcoin (BTC), Ethereum (ETH), and XRP—retain a combined market cap of $80 billion at the time of this writing, and there are more than 2,000 cryptos listed at CoinMarketCap.com.ref 190 Since its inception, the crypto space has taken beatings that would make Whitey Bulger blush (or die), yet they have shown remarkable anti-fragility.

  “If authorities do not act preemptively, cryptocurrencies could become more interconnected with the main financial system and become a threat to financial stability. . . . Accordingly, authorities are edging closer and closer to clamping down to contain the risks related to cryptocurrencies. . . . Cryptocurrencies are, in a nutshell, a bubble, a Ponzi scheme, and an environmental disaster.”

  ~Agustín Carstens, BIS

  There are, however, some serious problems that pose existential risks. The authorities—every developed sovereign state and central bank in the world—have oligopolies on creating money and taxing money flows. If they can’t assimilate the Crypto Collective into the Borg Collective, they will try to destroy it. Crypto “hodlers” (hang on for dear lifers) stand defiantly (Figure 23), but it would scare the bejesus out of me. My Texas Hold ’em all-in bet would be on the awesome power of the State.

  

  Figure 23. Tommy Lee lowering his expectations, predicting a 250% rally in Bitcoin in the last two months of 2018.

  The State will try to tame Bitcoin before just crushing the crypto bastards garishly. Given that ignoring the cryptos wasn’t working, we witnessed subtle efforts to mainstream them. First, the banks had to stop the use of credit card purchases of cryptos for obvious reasons: the crypto collapse would (and did) cause people to default on their credit cards.ref 191 Banks then began introducing new crypto products—crypto futures, brownies, and vapes. This set the stage for the Commodity Futures Trading Commission (CFTC) to ride into Dodge City to get control.ref 192 During the routs this year, there were some huge buyers stepping in to provide what appeared to be J.P. Morgan-esque support. We’re talking $500 million purchases.ref 193 However, a federal judge ruled that cryptocurrencies are “commodities”ref 194 and, unlike all other markets on the planet where manipulation runs unchecked, the authorities promised to mete out some jail sentences. The SEC is “probing investment advisers for potential misconduct involving cryptocurrencies, signaling a new direction in its oversight of this emerging market.”ref 195 Ominously, Google announced a ban on all crypto and initial coin offering (ICO) advertising. This is the power of the State using Google as a stalking horse. (I capitalize state to get you to say, “Oooooh” and shake with fear.)

  

  The IRS declared the gazillions of crypto transactions are merely gazillions of taxable events creating gazillions of miles of red tape and gazillions of new criminals, tipping risk–reward calculations decidedly toward risk.ref 196Can you imagine if every time you bought a product with dollars it became a line item on your tax return? (Of course not: the dollar purchasing power monotonically drops.) How about all those cool toys, houses, and Lamborghinis bought with liquidated Bitcoins? They’ve got the goods and huge capital gains tax bills.ref 197Could be worse, as Saxo Bank has pointed out: Some particularly resilient consumers purchased the toys on credit, comforted by the cushion of Bitcoins priced at $2,000 apiece.ref 198 They’ve now got the toys, debts, and crypto cushions that are more like donuts.

  Claims that hackers from Russia were interfering in the crypto markets means the crypto space is a national security concern.ref 199 The NSA is now tracking the cryptos—they always were, silly—which means the whole privacy thingie is hooey.ref 200 (Hooey is Russian slang for horseshit.) It is also the rallying cry for more State intervention.

  What would a mania be without human folly, self-inflicted wounds, and some serious humor? North American Bitcoin Conference organizers in Miami stopped accepting bitcoin payments for conference tickets owing to network fees and congestion.ref 201 A long position in bitcoin futures in Hong Kong’s OKEx crypto exchange processed a $416 million trade.ref 202 The exchange was “unable to cover the trader’s shortfall as Bitcoin’s price slumped.” Rob Arnott says bitcoin futures are 10–20× leveraged,ref 203 which accounts for the big moves both ways. CNBC had a guest whose firm offered a 100× leveraged bitcoin product.ref 204 I’m guessing they are now untraceable in the blockchain (like Lawnmower Man). A company called Proof of Weak Hands Coin, referring to themselves as “a Ponzi scheme” on Twitter complete with a pyramid avatar, raised $800,000.ref 205 Hackers promptly drained its funds. Another Ponzi scheme was so bad that the Russians shut it down, but it has resurfaced and is thriving in the Heart of Darkness (Africa).ref 206 A video promo for BitConnect was produced Gangnam style—some serious sleaze on display.ref 207 BitConnect turned out to be a Ponzi scheme and, unlike the other Ponzi schemes offered by Wall Street, actually collapsed.ref 208 There is no BitConnect without Bitcon. The miracle of creative destruction is on full display as Uber scooped up the influx of new drivers.

  Legitimate (albeit pathetic) companies added “blockchain” to their names, causing their market caps to soar.ref 209 Eastman Kodak announced a crypto coin, causing shares to take off in flash. “Long Island Iced Tea” became “Long Island Blockchain.” Smith Corona changed its name to Smith Coinola and did an ICO. (OK, I made that one up.) After a brief spike, the Kool-Aid swillers gave it all back, of course.ref 210 There are, however, emerging legitimate uses of blockchain. The LegalFling app, for example, records consensual sex agreements (blockchain keys to the chastity belts).ref 211 As Jim Rickards said, “Have fun, kids.” Here’s some funny satire.ref 212

  Real Estate

  “There is a tsunami of supply comin’ down the road. If someone on this panel can tell me where the demand is gonna come from to meet that supply, then we got something to talk about.”

  ~Sam Zell

  

  Seems like a truism to me that as rates drop, real estate prices will rise—and vice versa. It’s not shocking that big real estate bubbles occurred in the 1920s and 2000s during periods of loosening policies. And, of course, rates being too damned low for too damned long should goose prices too damned high, but I don’t sense that buyers and lenders have completely lost their minds this time. With mortgage rates at a 7-year high and rising (Figure 24), we will soon find out.

  

  Figure 24. Thirty-year mortgage rates.

  Some think we will have another crippling real estate bust. My canaries in the coal mine are the single-family rentals. As Joe and Jane Six-pack drove away from the burbs in ’09 watching their former abode shrink in the rearview mirror, the rest of you witnessed the absurdity of rising home prices in the face of falling occupancy (Figure 25). Nobody slipped you acid. The private equity guys jumped in to buy the houses at steep discounts and then drove the prices higher.ref 213 Mind you, single-family rentals are a terrible business that works only when the paper-thin capitalization rates (profit margins) are amplified by leverage—cheap money—relying on low interest rates. The obvious risks are, of course, rising interest rates. That risk didn’t stop Cerberus from increasing its portfolio with a $500 million expansion of FirstKey Homes.ref 214 I suspect, however, that the boom (and Cerberus) may die as rising interest rates and commensurate falling cap rates cause the private equity guys to decide the game is over and start liquidating their large shadow inventory to flood the real estate market. For now, however, we are witnessing more froth than fragility. For those interested, that image in Figure 25 in which two normally correlated prices diverge is called “alligator jaws.” There are a lot of 2018 charts from all over the financial universe that look like that. Alligator jaws are known to slam shut without much warning. It is not a subtle metaphor.

  

  Figure 25. Home ownership rate versus price.

  The enthusiasm for housing did get a bit manic, with a third of U.S. homebuyers (or should I say buyers of U.S. homes) bidding sight unseen.ref 215 A five-story Manhattan townhouse sold for a new record of $37.2 million—quadruple what the buyers had paid in 2012.ref 216 Credit unions are once again offering 0% down for mortgages up to $2.5 million.ref 217 I saw a show this morning describing how a divorced couple who had a house-flipping show during the last bubble have gotten past their hatred and contempt to restart the show. (Ding! Ding! Ding!) Real estate analyst Mark Hanson lays out city-by-city plots showing serious froth (Figure 26). These numbers are not inflation corrected.ref 218

  

  Figure 26. Mark Hanson analysis.

  Despite surveys showing a willingness of the majority of California residents to at least consider leaving the state,ref 219 the California housing market is on fire! (OK, that was tasteless.) As we witness a net population exodus from The (shit-stained)ref 220 Streets of San Francisco for the first time ever,ref 221 the cost of a median single-family dwelling in San Francisco rose to $1.6 million (Figure 27).ref 222 An 804-square-foot house in nearby Palo Alto sold for $100K in 2003 and $5.3 million in 2018.ref 223 A 900-square-foot bungalow near downtown Palo Alto listed for $2.6 million,ref 224 below the median listing in Palo Alto of $3 million.ref 225

  

  

  Figure 27. San Francisco housing and their feces reports.

  Evidence of housing market softening, however, is very real. Shares of homebuilders have been getting crushed (losses of 29–55%) in an economy said to be booming.ref 226 According to prominent economist Lakshman Achuthan, the national home price index was contracting by mid-year.ref 227 I—a friggin’ chemist—saw the subprime and banking crisis as far back as 2002. ref 228 Bank and credit analyst Chris Whalen reminds us that the bust was clear by 2005.ref 229 He now says “nothing changed since 2008, but as in 2006, we have convinced ourselves that everything is just fine.” Total real estate sales in Manhattan fell 11% year over year.ref 230 Offers are coming in well below asking prices.ref 231 The drop was attributed to an acute oversupply of luxury units as foreign buyers sat on their hands, rising material costs of construction, and changes in tax deductibility of mortgage payments.ref 232 This latter point is important: If you can only deduct $10,000 per year of your state taxes on your Federal return, the prices of higher-end housing will necessarily adjust downward.

  Canada never really experienced a bust when the U.S. did. It seems like they have rolling booms and busts as hot money moves from city to city. While the British Columbia median prices rose 9.2% year over year, the once-hot Vancouver housing market dropped over 40%.ref 233 The two biggest Canadian banks cranked up lending rates right before 50% of all Canadian mortgages were poised to reset.ref 234 Stay tuned. Toronto buyers were feeling their oats, as people were flipping their pre-sale houses—tripling the money on their down payments before the sale even closes.ref 235,236 The down payments were acting like levered options. That game may have ended. A 3,500-square-foot lot with a 650-square-foot house sold for only $1.1 million because it is too close to a highway.ref 237 The Carlyle Group is committing a $225 million senior secured loan to Canadian homebuilder Empire Communities.ref 239 Timing seems sketchy, eh? This turn-key, ready-for-occupancy gem in Vancouver is listed for $4 million:

  

  Figure 28. Vancouver handy-man’s dream.

  The price of a house in London has increased fourfold in 20 years.ref 240 It appears as though Brexit, political upheaval, and mounting consumer debt may finally be causing the formerly red-hot London market to drop precipitously.ref 241,242 Spain’s housing bubble seems to have burst too.ref 243 China’s cap rates are in the razor-thin 1–3% range. Down in the Woop Woop of Australia, the credit bubble and housing boom seems be a bit of a boomerang, leaving homeowners a bit crikey and stonkered. Australian house prices are down 14% from their peaks and may not even be halfway to the lows,ref ref 244 which would pose way more systemic challenges than 30–45% drops in equities.

  Another housing bust will call for more government intervention. It will be as feckless as the last:

  

  Pensions

  “If you were going to look for what’s the possible real crack in the financial architecture for the next crisis, rather than looking in the rearview mirror, pension funds would be on our list.”

  ~David Hunt, CEO of $1.2 trillion asset manager PGIM

  “But if you look at these state pension funds, they’re a mess. These bills have got to be paid. . . . [A] good rate of return today of 2.5% to 3.5% doesn’t do the job. A big fear to me is who the hell in their right frame of mind would be buying bonds now?”

  ~Ken Langone, former CEO of Home Depot, on quantitative easing (QE)

  “U.S. pension fund collapse isn’t a distant prospect. It could come in 5 years”

  ~Bloomberg headline

  “Why your pension is doomed”

  ~Wall Street Journal headline

  “42% of Americans are at risk of retiring broke”

  ~CNBC headline

  In ancient Rome, Augustus set up a military pension fund using the equivalent of $500 million of his own money and put ex-military trustees in charge. It got pilfered.ref 245 We have pilfered essentially every modern-day pension plan as well. Underfunded pensions are a form of leverage, and the pensioners are the creditors. Looming defaults will be devastating. Headlines focus on the risk posed by Social Security that, in conjunction with Medicare, is leveraged $50 trillionref 246 backed by a tax base racking up >$1 trillion (6–7%) annual deficits. The state, municipal, and corporate pension plans and private retirement accounts (401Ks and IRAs) are where the real bodies are buried. More than 100 million working-age Americans who should be progressing toward a stable retirement have saved precisely zero.ref 247 As you read the anecdotes below, keep in mind that pension holes are based on aggressive assumptions of 7–8% returns. The only safe bet is that those rates of return are not safe bets. The targeted balances—the balances the pros say you will need to retire comfortably—in personally funded accounts are pathologically understated.ref 248 If we really are in the Mother of All Bubbles (MOAB), what happens if it bursts?

  

  The states’ unfunded pension liabilities have grown sixfold since 2003, and are now exceeding $1.4 trillion with the pedal to the metal. State pension costs are swallowing >25% of general revenues. The underfunding is estimated to eventually impose a surcharge to each household ranging from $30,000 for Tennessee to $180,000 for Alaska.ref 249 Kentucky has 16% of the funding needed, becoming the topic of a Frontline episode that made officials there look like a bunch of gullible hicks.ref 250 California’s CalPERS is funded to <70%, with every private citizen in California owing >$100,000.ref 251 Illinois owes >$100 billion to its pension funds—six times the annual state revenue—and the liabilities are on track to double every 6 years (11% compounded).ref 252 It is said that if the Illinois state government put 50% of state revenue toward debt, pensions, and retiree healthcare, it will reach full funding in 30 years.ref 253 The state could raise taxes, but the Fighting Illini (tax payers) are already ranked #1 in the nation. Go team! New Jersey has $80 billion socked away to pay for $280 billion of future liabilities.ref 254 (The funding ratio fell from 93% in 2003 to approximately 30% in a dozen years.) Michigan, Pennsylvania, Florida, Ohio, Oregon, Colorado, Kentucky, and Rhode Island are said to not have the biggest actuarial problems but are at risk of running out of cash first.ref 255 I’m not even sure what that means. For 28 states, accrued liabilities have grown by 50% since 2003, way faster than their statewide GDPs.

  

  Figure 29. Six states with problematic pension–GDP gaps.

  What are states to do? The California Supreme Court will decide whether pensions can be cut on government employees.ref 256 I’m gonna guess no. The Illinois Supreme Court blocked state pension reforms in 2015, consistent with the idea that you cannot selectively screw one class of creditor.ref 257 CalPERS voted to increase the amount cities must pay, leading cities to foreshadow Chapter 9 bankruptcies.ref 258 Governor Jerry Brown wanted to crank up gas taxes by 40%, which could move him markedly closer to retirement.ref 259 Illinois wants to borrow $100 billion to speculate on equities.ref 260 That ought to help its already junk-level credit rating. The League of California Cities urged CalPERS officials to think “out of the box” to improve on their already aggressive 7% presumed annualized returns.ref 261 Short the VIX, dudes! It’s a one-decision trade. The state will be “totally bankrupt by 2021–2022.”ref 262 Between 2006 and 2017, Kentucky’s bond portfolio has grown from <1% junk bonds to 53% junk.ref 263

  Reaching for yield is never a good idea, despite being forced at gunpoint by the Fed. Connecticut is broke: It may hock (sell) $2 billion worth of its buildings and lease them back at 7.5%.ref 264 Meanwhile the Fed has designed a bailout of the insolvent PBGC (Pension Benefit Guarantee Corporation)—a bailout mechanism in its own right—but one that does not cover state pensions.ref 265 My suspicion is that the Fed will loan the states money knowing full well it will never be paid back.

  

  Figure 30. Total state pension deficits (dated data but trending).

  The local (municipal) plans aren’t doing much better. New Orleans firefighters can expect 10 cents on the dollar based on their 10% funding level.ref 266 Wilkes Barre’s police and firemen’s pensions are <50% funded.ref 267Courts ruled that they couldn’t stick the pensioners. Next up: Chapter 9 restructuring, which is the legally correct solution. Cops and firemen in the tiny burg of Central Falls, Rhode Island, agreed to forfeit >50% of their pensions to escape insolvency.ref 268 New York, Philly, LA, Houston, and Phoenix all have $20,000–$30,000 per-capita pension IOUs coming due.ref 269 The murder capital of the country, Chicago, has a pension funded to 30%.ref 270 While the equity markets tripled from 2009 to 2018, Chicago’s liabilities more than doubled. Each Chicagoan is on the hook for more than $50,000 in pension debts and >$100,000 in total debts—not to mention the bar tab from the state.ref 271 Chicago’s problems are a little vague because Chicago’s and Moody’s bean counters disagree by a factor of two owing to different actuarial assumptions. Rahm Emanuel is taking a lifeboat—retiring…on a good pension—to distance himself from the Titanic problems. Before leaving, however, he wanted to borrow $10 billion to dump into the equity markets, but that got put on hold.ref 272 Maybe Illinois will lend you the money, Rahm. Similar strategies sent Detroit, Stockton, and San Bernardino into insolvency.ref 273

  

  Figure 31. Municipal pension deficits versus tax revenue for 10 major cities.

  There are countless reasons why we’re in this mess, but let’s just look at a bulleted list of waste that illustrates part of the problem, while retaining a comedic touch.

  • The head of the Oregon Health & Science University retired on a $913,000 per year benefit, while the poor University of Oregon’s retired football coach of 15 years only gets only $560K per year.ref 274 There are 2,000 Oregonians who get more than $100,000 per year.ref 275

  • The pooper scoopers who are charged with cleaning up shit off the streets in San Francisco make $184,000 per year.ref 276

  • The mayor of Ithaca, Svante Myric, is proposing that the city provide “free” child care. (I know Svante: He is a young man who I think will run for president someday. His platform will likely include some freebies.)

  • Illinois has been generous. The top 10 pensioners are each expected to pull an estimated $8–10 million from the state pension plan before they die (unless they visit Chicago). One gets over $400,000 per year as the superintendent of a school district with 1,200 kids.ref 277

  • Illinois taxpayers will be on the hook for more than 20,000 six-figure annual pensions for educators. Their pension benefits have compounded at 9% annually for nearly 30 years.ref 278

  • More than half the states have grown their pension promises at >5% annually since 2003.ref 279

  One could make the argument that some of that is odious debt—debt incurred by somebody else (usually sovereign leaders) that is so odious that you say, “Screw it: I’m not paying.”ref 280 I believe, however, that the courts are unlikely to consider odiousness at lower levels.

  Self-directed retirement plans—so-called defined contribution plans—are in brutal shape. Data from the Saint Louis Fed (Figure 32) show that the median retiree has almost nothing ($1,100),ref 281 and the highly indebted boomers with little time left to correct the error in their ways are altogether unready for retirement. The rallying cry that 80 is the new 50 ignores the harsh reality that 50% of retirements are forced by personal circumstances to retire,ref 282 and folks who do seek post-retirement employment—that’s not retirement—take a 25% pay cut.ref 283 Most people have not been adequately trained to be their own human resource specialists.

  

  Figure 32. Median retirement account and median boomer accounts.

  On the bright side, the millennials are getting the memo early enough to act. The challenge is that the message seems to be either “Don’t worry; be happy” or “Don’t bother.” Surveys show that even those with retirement accounts seem to have saved little. Those same millennials, not known for letting reality encroach on their world, want to retire, on average, at 56 years old.ref 284 Time to cut back on the bottled water, pumpkin spice lattes, and, for that matter, any form of food. It’s time to stop being a bunch of dingleberries, put your phones down, and pay attention.

  On that latter point, there is a new group called FIRE—“financial independence, retire early.”ref 285 Members of the group want to work hard, cut costs, and then retire in their 30s and 40s to travel the world:

  “How to retire in your 30s with $1 million in the bank”

  ~New York Times headline

  “Nothing was wrong with the job—it was a great company, good money, six figures. I was 26 and I said, ‘Why am I going to spend my 20s sitting at a desk?’”

  ~Mason, 29-year-old retiree

  There are over 400,000 subscribers to FIRE on Reddit,ref 286,287 sharing tips like “how to survive a Minnesota winter without shoes, gloves, or coats.” Suze Orman blew out both ovaries noting, “I hate it. I hate it. I hate it. I hate it.”ref 288 This group will be positioned perfectly for the Great Attitude Adjustment (GAA).

  Well at least we have the corporate pensions to fall back on, but they are underfunded as well (Figure 33). Corporations could always top off their pensions if they diverted funds from share buybacks and other forms of financial engineering. Ironically, that would cut into the multi-sigma profit margins, crush share prices, and, ironically, shrink everybody’s pensions plans. That’s swell. Pension coffers should be bloated with FAANG-based returns as we near the end of this investment cycle. They obviously are not.

  

  Figure 33. Corporate pension shortfalls.

  The aforementioned PBGC bailout plan does not cover the state-funded (or should we say state-unfunded) plans. There are discussions of using Puerto Rico as a beta test to introduce Chapter 9 legislation to allow for state bankruptcies, which are currently not allowed under the federal bankruptcy code.ref 289 Bankruptcy laws are designed for precisely when available assets are insufficient to cover liabilities. Private defined-contribution pensioners—the IRA/401K crowd—are gonna be investing doggie style and playing a lot of Dialing for Dollars.

  Debt

  “It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on, would save one-half the wars of the world.”

  ~Thomas Jefferson

  You have a debt problem when you have more debt than the capacity to pay it off. It arises from consumptive debt that is non-self-extinguishing. As far back as David Ricardo in the nineteenth century, we have known that debt-financed spending is not constructive to GDP. The debt problem goes global when the collective promises of sovereign states to their masses cannot be satisfied by future output. Not everybody can live the metaphorical American Dream no matter what global leaders have promised. There is a paradox in that you can save at the local level—personal, municipal, state, and even national—by having others outside your defined group owe you future goods and services (albeit accounted for using units of currency). You cannot, however, save globally. Because sovereign-level debt problems are PAYGO (pay-as-you-go) plans by definition, we’ve been trapped by compensation mechanisms that have increasingly relied on unfulfillable promises in the future rather than payment in the present. Now we find ourselves in a putative global asset boom—one that I find to be a sandcastle built by central bank largesse—while concurrently having debt problems. In the U.S., for example, average household net worth is soaring while the median family needs credit for basic needs and has squat for retirement savings.

  “The great bond bull market began waaay back in 1982—36 years. And as governments were able to keep financing at lower and lower rates, they kept promising more and more.”

  ~Capitalist Exploits on the social justice movement

  In the following sections I treat debt and savings as two sides of the same coin while somewhat arbitrarily separating corporate, personal, and sovereign debt problems from a looming global pension crisis and, for that matter, problems in the real estate market. I suspect that the Fed’s pathological aversion to letting the economy sink or swim on its own may stem from its PTSD-levels of fear of the next recession, which—I hasten to add—is as inevitable as death and taxes. The Wall Street Journal worries that we will burn a decade recovering from the next recession. I worry that they are optimists.

  All this debt has accumulated with a tailwind of relentlessly falling interest rates from a 36-year secular bull market in bonds. The blowoff phase of the bond bull is a decade of rates wrestled to 5,000-year lows by central bankers. Now we are in a rising-rate environment. The gyrations across global markets are just the trailer. If the secular bear market in bonds goes wheels up—if rates begin a multi-decade upward march because of our modern-era guns-and-butter policy—many of us may not be around to see resolution.

  Corporate Debt

  “This time around, the big bubble is the extreme leverage on the corporate balance sheet, where the chart of debt-to-GDP looks a lot like the mortgage debt-to-GDP in 2007.”

  ~David “Rosie” Rosenberg

  “Corporate debt has soared, but most of it has been used for financial engineering. . . . Who knows how many corporate zombies are out there because free money is keeping them alive?. . . Competition is a better tool than price control for protecting consumers. That applies to Amazon and the bond market.”

  ~Stan Druckenmiller

  “It is clear that this is a very different corporate bond market, and history-based financial models will most likely be found wanting.”

  ~Louis Gave, cofounder of GaveKal

  The corporate debt market is a complicated story because huge amounts of debt to financially engineer pump ’n’ dump schemes with share buybacks were waiting to be extinguished by repatriated savings (tax amnesty) from overseas. Assessing corporate leverage—debt net offsetting cash and other assets—is more important than usual. That said, from my perspective up in the nosebleed section, loose monetary policy managed to create a mountain of corporate debt, which is unsurprising to everybody but central bankers. Whocouldanode? The 54 AAA-rated companies in the S&P before the crisis have been reduced to only two because of leverage.ref 290Many—myself included—believe that the corporate bond market will be Ground Zero of the next crisis. In case I haven’t said it enough times, we are in a rising rate environment: The fuse has been lit. Net leverage normalized to EBITDA (earnings before interest, taxes, depreciation, and amortization) has doubled in only a few years. Tighter banking regulations acted like Prohibition, opening the door to hooligans, hedge funds, and other non-bank grifters with their own leverage. There is a so-called shadow banking systemref 291 that is so enormous, complex, and hidden from the light of day for us Philistines. Here’s a trick question: Who do they borrow from? These corporate-focused lenders will scamper away in a heartbeat in a downturn. The retail investor will see bids for corporate paper (debt) buried in their portfolios disappear, and it could happen in a matter of days, hours, or minutes.

  Mario Draghi’s European corporate-bond-buying binge sent some corporate bonds into negative interest rates—companies were being paid to borrow—and the Bank of Japan has now joined in.ref 292 The global bond binge caused the premium spreads—the extra interest paid for buying total garbage like commercial-mortgage-backed securities versus AAA bonds—to reach lows not seen since early 2007.ref 293 Those spreads are now widening. Companies are citing higher interest expenses chewing into earnings, which will amplify the credit spreads. Over $2.5 trillion—50% of the investment-grade corporate debt market—is rated just one notch above junk.ref 294Exchange-traded notes (ETNs) based on corporate debt are unsecured, subordinated debt that trades daily. A day will come when they don’t trade. The volume of covenant-lite corporate bonds—bonds with lower levels of constraints than the stuff we call garbageref 295—has soared and poses a huge risk because of (not despite) the fuzzy name. U.S. firms sold $9.2 trillion in bonds since 2013, a non-trivial $3.5 trillion being used for share buybacks ($850 billion in 2018).

  Is this really a systemic problem? I think so. As I am writing, GE and Deutsche Bank are gasping their last breaths—debt rattles—while doing laps around the drain. GE has $170 billion in debt owing to years of financial engineering.ref 296 Its productive assets will live on in the hands of new owners, but current holders of its debt and equities will be dealt with severely. Deutsche Bank is so huge that it seems likely to be nationalized. Rumors of a merger with Commerzbank just surfaced in what seems like one of those ’08-esque shotgun weddings.ref 297Companies like GM and IBM are not far behind. These are Mothra-sized butterflies flapping their wings.

  “The debt load for U.S. corporations has reached a record $6.3 trillion, according to S&P Global. The good news is U.S. companies also have a record $2.1 trillion in cash to service that debt.”

  ~CNBC headline

  What CNBC seems to have missed is that borrowing money (the $2.1 trillion part) to pay the interest on the $6.3 trillion is a Ponzi scheme,ref 292 and I’m not speaking metaphorically or hyperbolically. Individual companies that don’t have the cash flow to make interest payments are called zombies, implying that they are dead but somehow still stumbling around the planet posing existential risks to the living. Of course, they are rare, right? Well, 20% of the Russell 2000 index and 14% of the S&P 500 are zombies.ref 299 Passive index investors own the shares of these gems and, if not, are financially linked to clowns called “counterparties” who own them. The problem is, as noted by the Bank for International Settlements (BIS), zombies do not come back to life.ref 300Unlike real zombies in which all you need to do is tie the recently departed’s shoelaces together, these Walking Dead require the free market metes out shots to their heads.

  The beginning of what looks like a serious bond bear is hammering risk-parity funds—bond funds that used leverage to seek the risk of equities.ref 301 Congrats, guys: You found it! And then there is the “leveraged loan market,” in which companies too weak to access the junk bond market go and borrow from a guy named Vinnie. These are the payday lenders for corporations. Retail investors with this crap in their retirement accounts will be toe-tagged and bagged.

  “The selloff in GE is not an isolated event. More investment-grade credits to follow. The slide and collapse in investment grade debt has begun.”

  ~Scott Minerd, CIO at Guggenheim Partners

  Let’s finish by taking a special look at GE’s debt. In 2002, I predicted that GE was headed for trouble in an email to a friend at Goldman.ref 302 Years of financial engineering finally worked their magic.ref 303 GE survived ’08–’09 with a lot of help from the authorities but appears to be on life support now. It is getting crushed by debt estimated at $40–$170 billion depending on who is doing the bean counting. The confusion is probably caused by off-balance-sheet debt . . . just like Enron. A bunch of GE debt is still investment grade, but it is “trading like junk,” which means we’re waiting for the rating agencies to read them last rites. To avoid bankruptcy, GE eliminated its quarterly dividend, causing double-notch bond rating downgrades.ref 304 The debt burden owing to a Hail Mary strategy of borrowing heavily for M&A (mergers and acquisitions) is probably now too high. GE is said to be “locked out of the commercial paper market,”ref 305 which means it’s time to call Vinnie. A default is said to be “unthinkable,” posing systemic risks as well as sentimental risks owing to a fall of an American Icon. On that note, Sebastian Mallaby gave us a “Crisis for Dummies” description of how cascading failures happen.ref 306

  Personal Debt

  “How do you make poor people feel wealthy when wages are stagnant? You give them cheap loans.”

  ~Vincent Daniel in The Big Short

  According to a Federal Reserve study, Americans have $1 trillion of credit-card debt, $1.5 trillion of student debt (Figure 34), $1.5 trillion of auto loans, and $13.5 trillion in mortgage debt.ref 307 So many zeroes: What the hell does that even mean? We can manage the mind warp by bringing it down to the family level. The average household has $140,000 in total debt.ref 308 This number does not included unfunded liabilities at the municipal, state, and federal levels. The student debt is disturbing in that 40% of it is held by senior citizens and who are defaulting with troubling frequency (37%),ref 309 and the boomers now owe more than the millennials: “Thanks, Mom and Dad. I’ll swing by on my way to Fort Lauderdale this spring.” There are 101 individuals with over $1 million of student debt, and one dentist owes >$2 million.ref 310 The $100,000 student debt club has 2.5 million members. Owed mortgage debt is almost 5× the yearly salaries of the owners.ref 311 Credit card debt has climbed back to its 2008 peak,ref 312 but the average interest rose 3% to a lofty average 15.5%. Consumers are paying $100 billion a year in interest payments with their disposable income. One could argue that if you have credit card debt, you have no disposable income.

  

  Figure 34. Student debt or monetary policy?

  Consumer debt is growing at 2× the rate of salaries (Figure 35) while 100 million Americans have no job to make such a comparison. The auto debt market continues to show stress fractures. Approximately 30% of trade-ins are in functional default (worth less than the loan balance.)ref 313 Trading in a beater for an improved newer model is a bad decision. An estimated $280 billion of subprime auto loans are defaulting, stressing the smaller subprime lenders.ref 314 A heavily cited stat this year was that 40% of Americans do not have enough money to cover an unexpected $400 expense without borrowing the money or selling something they own, and 60% can’t cover a $1,000 tab.ref 315 This is not a moral judgment, just the facts.

  

  Figure 35. Household debt normalized to disposable income.

  It’s hard to know whether the consumers are feeling the stress. The millennials are certainly in a rush to retire with <$20K saved (see “Pensions”).ref 316 Another survey showed that 41% of them spent more money on coffee than on investing in retirement last year.ref 317 No problem: There is a Congressional bill that would allow students to pay student loans with future Social Security money.ref 318 You get just deserts only after you eat your seed corn. Whoever hatched that plan should take some of that bank lobby money they obviously accepted and get professional help.

  For every debtor there is a creditor. A global debt problem is less about some crazy form of owing too much but rather counterparty risk—the risk that debtors can’t pay. Good news: Somebody owes you $500,000. Bad news: It’s your teenage son.

  “Twenty years ago there was $40 trillion of debt in the world; today there is $250 trillion worth of debt in the world.”

  ~David Stockman, former Reagan economic advisor and Blackstone Group

  “$20 trillion got to $21 trillion in 186 days: That is blistering. . . . Donald is pro-Warfare State, pro-welfare state and has just slashed Uncle Sam’s tax take to 16.6% of GDP—the lowest rate since 1950.”

  ~David Stockman

  Sovereign Debt

  “The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly. Debt jubilees have been going on for 5,000 years, as far back as the Sumerians.”

  ~William White

  The markets most important to the functioning of capitalism—the credit markets in which lenders and borrowers haggle to determine the cost of money—are damaged. Central banks have subverted price discovery, sending bizarre signals to market participants. I asked the Twittersphere what interest rate they would demand to buy a 30-year Treasury that they were required to hold for 30 years—no selling, trading, or hedging. The answer was telling:

  

  Figure 36. Twitter poll about the term premiumref 319 that investors would require for 30-year treasuries.

  It would appear that 30-year bonds are priced wrong because somebody will be holding these assets for 30 years. My personal answer is comfortably above 7%. The interest payments on U.S. debt rose by 14% over the last year owing to increased principal payments on inflation-protected securities (“just the TIPS”),ref 320 continued generalized debt growth motoring along at 6–7%,ref 321 and overall higher rates. We will add well over $1 trillion of debt before the year is over.ref 322 Stanley Druckenmiller submits that the next recession will usher in a $2 trillion deficit. Many say we should have issued century bonds—100-year treasuries—when interest rates were low. I disagree profoundly: Forcibly jamming rates low, eliciting fixed-income investors to do unnatural things with barnyard animals just to get income, and then stiffing your counterparties with such abominations would be bad karma. In any event, that ship may have sailed because sovereign holders of treasuries such as Japan, Russia, and China are now sellers.ref 323 We are on a path to our Minsky Moment at which debt overruns our capacity to make payments. We will just inflate it away, right? Maybe not. You create inflation by creating money, and you create money by creating debt. It makes me scratch my head.

  “People who confidently think they know the consequences—none of whom predicted this—know what’s going to happen next? Again, witch doctors. How many in this room would have predicted negative interest rates in Europe?”

  ~Charlie Munger, Berkshire Hathaway

  Global debt rose from 276% of global GDP in 2007, wallowed through the Great Recession, came out the other side topping 327% of global GDP, and continues to expand at >10% per annum.ref 324 Simon Black notes that while the economy grew 36%, the debt grew 123%.ref 325 The IMF blames the growth on a prolonged period of low interest rates—those foisted on us by central banks—for nearly a decade.ref 326 By early 2018, sovereign debt returning negative nominal interest rates—absurdities that should never exist in a functioning bond market—topped $10 trillion.

  

  Figure 37. Negative interest rates on sovereign debt.

  “If 2.60% is broken on the upside—if yields move higher than 2.60%—a secular bear bond market has begun.”

  ~Bill Gross, the former Bond King (2017) on the 10-year yield

  “If we take out 3 percent . . . it’s bye-bye bond bull market. Rest in peace.”

  ~Jeff Gundlach, the new Bond King (2017) on the 10-year yield

  

  Figure 38. Ten-year treasury yields.

  Bank of America’s Michael Hartnett says, “the lowest interest rates in 5,000 years have guaranteed a melt-up trade in risk assets,” which explains the 600% wilding of the FAANGs off the ’09 lows. The rising-rate environment means that resolution and redemption—dead bodies—may start floating to the surface. JPM reported that the global bond yield curve inverted in June (Figure 39), which will trigger, sequentially, the following: (a) “yield curve deniers” will declare such inversions irrelevant, and (b) a potentially bone-crushing recession will arrive. There is also a big debt rollover coming in 2019–2028 (Figure 40). I’ve added the iconic plot of mortgage resets foreshadowing the ’08–’09 crisis just in case anybody else sees parallels.

  

  Figure 39. Global bond yield curve turning negative.

  

  Figure 40. Debt rollover, 2019–2028, versus mortgage resets, 2007–2012.

  “Consider for a second that for the first time in 18 years (!), U.S. 10-year yields are trading at a premium (10 bps) to Australian comparables! The long bond at 3.21% is 6 bps above Italian 30-year yields. . . . America is an AAA credit, and Italy is BBB.”

  ~David “Rosie” Rosenberg

  Europe seemed relatively quiet. Brexit looms, but I refuse to spend any more time reading about the carnage that will happen and patiently wait to see what does happen. The idiocy of central bankers is reflected by negative yields on Spanish sovereign debt, 10-year Swiss debt returning 0%, bonds maturing in 2055 returning 0.5%, emerging-market junk-bond yields that are now below U.S. junk-bond yields, and a Greek 10-year yield below that of the U.S. 10-year yield. Negative yields on Italian debt concurrent with the country’s budget imploding finally triggered a VIX-like response (Figure 41). Mario Andretti would be in awe of the acceleration on that price discovery. Meanwhile, the covenants underlying much of this sovereign debt are said to be weak.ref 327

  

  Figure 41. Italian bond massacre.

  “China is rewriting the economic history books because they have embarked on a view that they can simply borrow twice the amount of output growth as the growth in GDP.”

  ~Jim Chanos, Kynikos (on Real Vision)

  The out-of-body experiences are found in the emerging markets. Emerging-market debt tripled during the last 8 years.ref 328 China’s bond market is opaque but said by many to be a profound risk to global markets. According to S&P, China’s local governments have $5.8 trillion of off-balance-sheet debt, representing “an iceberg with Titanic credit risks.”ref 329 Jim Chanos, who is a galaxy-class short seller, says that the Chinese are building two to three times the number of apartments that demand can absorb. Outstanding loans are growing by >10% year over year.

  “My thesis is that over the next decade we will endure increasingly damaging debt crises that culminate in a coordinated global default—“The Great Reset,” as I call it. There are limits in how much leverage the world can handle and I think we are already beyond them. And that is before we have a global recession. The only question now is how we will manage the collapse.”

  ~John Mauldin, founder of Mauldin Economics

  Japan doesn’t even have a bond market; it was nationalized by the Bank of Japan to the point that there are days in which not a single bond trades.ref 330 A market with a single buyer is called a “monopsony” (brought to you by Snapple.) Japan already spends a quarter of its tax revenue just to service its debt even though rates are ridiculously low.ref 331 If interest rates in Japan rose to 1% (not exactly usury), the nation’s annual debt service would literally exceed all government tax revenue. When what few private bondholders left sell causing rates to flicker higher, the BOJ intervenes (three times in a single week), buying up all the bonds.

  Argentina defaults on its debt every 15 years on average.ref 332 In 2017 the country issued 100-year bonds—century bonds or what I call “Beanie Bonds”—that were oversubscribed by some of the biggest names in U.S. finance: Fidelity, BlackRock, Lazard Asset Management, and who knows how many multinational banks (Figure 42).ref 333 Gillian Tett of the Financial Times noted that these bonds “may end up being the government bond market equivalent of the Pets.com IPO during the 2001 tech boom—the sign of a bubble peak.”ref 334

  

  Figure 42. Purchasers of Argentine century bonds.

  It took less than 1 year for Argentina to functionally default.ref 335 Of course, its GoFundMe campaign secured $50 billion from the IMF to prevent global market turmoil by paying off its creditors.ref 336 Jim Rickards thinks the whole affair was a “backdoor way for China to lighten up on dollars. Yeah, it’s complicated.” That is outside my wheelhouse. What I do know is that it is never the country being bailed but rather the seemingly moronic creditors . . . which is not moronic if the creditors know bailouts are preordained. The IMF launders money from a number of countries to pay for such bailouts, but the primary sponsor is the United States—the U.S. taxpayer. Meanwhile, a 25% inflation rate and interest rates soaring to 40% are frying Argentina’s empanadas whether the country defaults or not.

  “China reminded us that the tale of synchronized growth was false and that what we have been seeing in recent years has been synchronized growth of debt.”

  ~Daniel Lacalle, eighth-ranked “economic influencer” in the world!ref 337

  I suspect that when the cost of money resets—when price discovery rears its fugly head—many of these assets will cease to exist. What’s left will likely have new owners.

  Inflation and Deflation

  “I just don’t see much inflation pressure.”

  ~James Bullard, president of the St. Louis Federal Reserve

  “If I had to bet my life on higher or lower inflation, I’d bet a lot higher.”

  ~Warren Buffett

  “We know how to deal with inflation. We don’t know how to deal with deflation in this country.”

  ~Gary Cohn, former CIO of Goldman Sachs and former chief economic advisor to President Donald Trump

  “My generation gave former tenured economics professors discretionary authority to fabricate money and to fix interest rates. We put the cart of asset prices before the horse of enterprise. We entertained the fantasy that high asset prices made for prosperity, rather than the other way around. We actually worked to foster inflation, which we called ‘price stability.’ . . . We seem to have miscalculated.”

  ~James Grant, talking to our future selves and grandchildren, 2014

  The Fed claims that a small amount of inflation is good and then wavers as to how much is optimal. Never mind that luminaries like Paul Volcker have denounced such thinking as delusional. I asked financial Twitter for the best arguments supporting the Fed’s ideas and got a host of answers, all of which had chards of truth and none of which made complete sense. The debate drew in big fish and little fry.

  Some claimed that inflation is needed to coerce people to invest as though profit motive isn’t enough. Others said consumers will retrench if they know products are going to get cheaper, contrary to data on tech gadgetry and common sense aside. William White, formerly of the BIS, previously noted that “the widely held assumption that consumers and corporate investors will extrapolate from past price declines and hold off on making purchases as a result of deflation has essentially no empirical support behind it.”ref 338 Other Tweeters pointed to the dreaded deflation that has been MIA for almost a century. Of course, the reason deflation is so dreaded is that for it to appear against the headwinds of our inherently inflationary banking system means that central bankers already did way too much—they screwed the pooch.

  Governments embrace inflation because they like to squander money they don’t have to buy votes and, as Milton Friedman said, “Inflation is taxation without legislation.” They also like the covert tax of inflation, and love taxing nominal gains that are illusory.

  “I hate the word deflation because it is only a symptom of the problem. It’s not the reason we have the problems we have today.”

  ~Richard Koo, chief economist at Nomura Research Institute, talking about Japan

  Some chimed in that the psychological impacts of wage cuts are so devastating that they are better masked by positive nominal gains. Others believe paying somebody in debased money is better than laying them off; it is a sticky wage argument. The Wall Street Journal had made such an assertion:

  “Higher inflation could have other benefits. It could help economies adjust after a downturn by lessening the need for outright wage cuts, because rising prices will erode wages anyway.”

  ~Wall Street Journal

  The ultimate foolishness is that a Committee of Elders—the Fed—thinks it is better equipped than the Wisdom of Crowds—the free markets—at setting the price of capital. Its members appear to me to be just a bunch of fools making shit up based on hopelessly flawed Gaussian models claiming to be “data dependent.” It is odd that nobody in the mainstream seems to think that when deflationary pressures appear, maybe the markets are telling us that we need a dollop of deflation.

  The article in the Wall Street Journal that enthusiastically endorsed inflation I found problematic and Tom McClellan found support for this monetary creationism inexcusable.ref 339 He attacked the Fed for trying to keep too many ligma balls in the air at one time:

  

  The mystery of this most recent decade is that creating vast sums of new reserves in central banks—an estimated $20 trillion—did not generate high or even hyper-inflation (yet). I’m a goldbug; I thought inflation was coming. Ben Bernanke blamed the “savings glut” of our trading partners, which seems to be just looking for a scapegoat. Mervyn King (see “Books”), however, did a nice job of explaining that if our trading partners let trade imbalances chase financial assets rather than goods and services, you get a lousy economy and inflation in the financial assets. That’s exactly what we got. Of course, those who speculate in those financial assets love that kind of inflation until it unwinds (oftentimes violently).

  “I’ve never bought into that.”

  ~William White, on the “savings glut” thesis

  Just as deflation is demonized by the Fed, inflation is demonized by the blogosphere. Somebody called it the “the date rape drug of taxes.” Bloggers squealing about the dollar losing 97% of its purchasing since 1913, however, often forget that there are compensating mechanisms along the way in the form of nominal pay raises and nominal asset appreciations. David Andolfatto, vice president of the St. Louis Federal Reserve and who seems to function as an outreach coordinator for the Fed, addresses this in a thoughtful blog, noting that you are 97% poorer only if you took your 1913 dollars and stuffed them in a mattress.ref 340 Ironically, if they were in uncirculated condition, you would enjoy nominal gains of up to 200-fold in the numismatic marketplace. Andolfatto also makes the curious argument that high interest rates are anti-inflationary by stepping on the economy (check) but pro-inflationary by jamming gobs of interest into the system. Wait. What? That idea is new to me and creates a bit of a monetary paradox, but I keep thinking about it.

  Michael Hartnett of Bank of America, noting 700 rate cuts and $14 trillion asset purchases by central banks since the Great Recession, sees parallels of 2018 and 1966.ref 341 Millennial chart monkeys will likely not appreciate that the years after 1966 witnessed virulent inflation, horrific real (inflation-adjusted) returns on financial assets, and an economic malaise that lasted until the early 1980s. The shift in preference from equities to hard assets and high-interest-rate bonds—notice I didn’t say “flow” into or out of anything, which is risible nonsense—caused severe turbulence. It was a terrible time to invest for most.

  Official reports of inflation are starting to creep up, although by no means outside the Fed’s highly fluid comfort range. Anecdotal reports, however, are painting a more serious picture. The CEO of Sherwin-Williams said that “raw material inflation has been unrelenting and accelerating.”ref 342 Eric Cinnamond listens to hundreds of microcap investor conference calls each quarter and says that CEOs are all complaining of cost pressures.ref 343Companies like Caterpillar report that price increases are not keeping up with rising production costs.ref 344 The CEO of Lincoln Electric claims that “We’re in a very rapidly increasing inflationary environment.”ref 345

  “J.B. Hunt says 10% raises are the antidote to the truck-driver shortage”

  ~Bloomberg headline

  The tariffs discussed in the “Economy” section are causing companies to arbitrarily implement 15–25% price hikes anticipating raw material or finished goods costs emanating from China.ref 346 (I can’t help but wonder, admittedly with a low probability weighting, if the tariffs aren’t part of a covert bilateral agreement.) The wage pressures seem real. Teachers across America have been walking out of school classrooms to attend rallies in protest for higher salaries and improved classroom resources.ref 347 Jobs are going unfilled. Wage inflation scares macro bean counters. BIS economists suggest that a global shrinkage of the working-age population is causing inflation to trend up (more money chasing, fewer workers).ref 348 Paul Tudor Jones sees Fed chair Powell as George Custer, sandwiched between a mountain of debt on one side and inflationary pressures on the other.ref 349 He thinks Powell needs to hike rates pronto to curb margin debt in the markets and facilitate a more efficient allocation of capital.

  “Volatility collapsed after the crisis because of central bank manipulation. That game’s over. With inflation pressures now building, we will look back on this low-volatility period as a five standard-deviation event that won’t be repeated.”

  ~Paul Tudor Jones

  By now most have read about the distortions of substitution and hedonic adjustment foisted on us by the Boskin Commissionref 350 and unfoisted by John Williams.ref 351 I’ve already taken a bat to the MIT Billion Prices Project—I think there is an Achilles’ heel in it—and won’t return to it.ref 352 We also know that products that don’t last should be priced per unit function: They are not. Figure 43, showing the cost of various goods and services, blanketed the internet this year. Do you really think you can buy a TV for 4% of what you paid in 1990? Sure it’s a better TV (or at least a cooler TV), but you are not walking out of Best buy with an $8 TV even on Black Friday. Have prices of cars really not moved in 20 years? A Ford F150 cost $17,000 in 2007 and $40,000 in 2017. Yes, it now has a backup camera and anti-lock brakes, but it costs more than twice as much to move firewood, display our gun collections, and wield MAGA bumper stickers. Try Googling rents or single-family home prices: Are they really up only 61% since 1995? I am calling bullshit on this chart. It was undoubtedly created by hedonic-adjusting tools (economists).

  “Americans are getting stronger. Twenty years ago it took two people to carry $10 worth of groceries; today a five-year-old could do it.”

  ~Henny Youngman, comedian

  

  Figure 43. Hedonically adjusted prices.

  I take a swipe at hidden inflation every year. The durable goods we buy have a programmed and accelerated senescence that borders on progeria. Your kids’ toys are cheaper, but do they last more than a few minutes? A toaster that cannot be repaired when it breaks is expensive, especially when it breaks fast. The quality reduction can be profound too. Processed food uses animal and vegetable parts that were previously fed to pigs. Food scientists have rendered them palatable through very clever tricks like adding buttloads of salt and sugar (or high-fructose corn syrup). The meat in Dinty Moore stew is disgusting. Cracker Jacks no longer are made from popcorn. Your appliances are shiny with lots of buttons that you never use, and they don’t last. Shrinkflation has been around for eons. Coke cut its 1.75-liter bottle to a 1.5-liter bottle and then raised the price. At some point, the company will offer a really large bottle (1.75 liters) for an even higher price. I still haven’t figured out how to account for laptops, iPads, iPhones, and internet service. For what you get, they are amazingly cheap. As a part of a family’s budget, however, they pose existential financial risk. How do you account for amazing technology that you must own—even the Mennonites own them—but that you cannot buy without a HELOC? Check out Figure 44. Try a little mental math on how much a paycheck could buy you in 1938.

  

  Figure 44. Cost versus quality.

  And here is a curious little anecdote:

  1932 gold ounce = $20.67

  1932 Yale University tuition, room, and board = $1,056 (51 ounces of gold)

  2018 gold ounce = $1,225

  2018 Yale University tuition, room, and board = $65,000 (53 ounces of gold)

  Banks

  “With mortgage applications declining, executives have a choice to make: Should underwriting standards be lowered? When volume becomes the defining metric for how loan officers and mortgage companies get paid, then loan quality deteriorates.”

  ~Chris Whalen, Whalen Global Advisors

  “Your problem is that you are trying to understand it as an economic story. Once you think of it as a crime story, you’ll get it.”

  ~Insider to Matt Taibbi when writing about the subprime crisis

  We’re told that the post-crisis banking rules were tightened to make the banks safe again, and now we are about to unwind these protections with the poorly named “Economic Growth, Regulatory Relief, and Consumer Protection Act” that would return the banks to their birthright as gigantic hedge funds.ref 353 A 1982 declassified memorandum included Jack Anderson, a journalist, discussing the upcoming collapse of the banking system and the CIA’s risk assessment.ref 354 There were crises of course; the late 80s savings and loan crisis may have been what was spooking the spooks. Do the bankers never learn? Are they doomed to loop around this infinite Mobius strip? In a sense, yes. This year’s winner of the Nobel Prize in economics, Paul Romer, and some famous guy named Akerlof, wrote a 1994 paper titled, “Looting: The Economic Underworld of Bankruptcy for Profit.”ref 355 They describe how the inefficiency of the boom–bust cycle is exploited by the banks during both phases. During the boom, the bankers make huge fees and pay themselves handsomely because, well, they are wonderful stewards of capitalism. During the bust, profits stem from looting the system, cloaked by the chaos and pandemonium of bailouts. The bankers then pay themselves handsomely because they are wonderful stewards of crony capitalism too.

  Recall in ’09 when huge bonuses were defended to keep talent around long enough to save the world from the Apocalypse caused by all this talent. Banking is like Danegeld—payments to the Vikings to stop them from looting and spreading their DNA around the Isle of Britannia. Soon the Danes wanted more money and hot chicks. I suspect we have finished the boom half of the cycle again and are now looking for the raping and pillaging phase to commence. What will trigger the next crisis? Bank analyst Chris Whalen already sees lenders bracing for problems and reducing staff in their consumer and mortgage lending businesses.ref 356 Eyes are on the European banking sector getting its market caps deracinated. One of the popular risk measures—the Libor–OIS marginref 457—is vibrating like the puddle in Jurassic Park.

  “The Senate just voted to increase the chances your money will be used to bail out big banks again.”

  ~Elizabeth Warren (@SenWarren), insert politically incorrect Indian joke here

  Despite regulatory constraints, the banks have managed to insert leverage into every orifice imaginable while moving the risks away from themselves or so they say. Bank loans to non-bank financial firms have increased sixfold since 2010.ref 358 Big banks are not making lots of subprime auto loans but rather lending to subprime loan bundlers who have jammed a record $345 billion of subprime loans.ref 359 In a crisis, the autoloans default first, and then the bundlers hit a bridge abutment. Hmmm . . . who is on the hook now? Increasingly popular and dubious loans to unsuspecting, near destitute, and likely to be transitory homeowners are called “non-qualified mortgages.”ref 360 Truth in advertising. That particular form of high-risk lending doubled in a year and is said to be on track to double again next year.ref 361 The direct risks posed by notional derivatives, which have grown 50% to $1 quadrillion since ’07, are watched nervously.

  “Getting a lot of calls about DB today. Where to begin? A hedge fund in drag that pretends to be a bank. . . . Earth [to] Merkel.”

  ~Chris Whalen

  Bearing down on a few specifics, the systemically important financial institutions (SIFIs) are all wobbling in synch—precessing—while their credit default swaps (CDSs) have arisen from their slumber.ref 362 Deutsche Bank (DB), for example, is five times the size of the former Lehman when it brought the system to its knees. DB also has the largest derivatives book on the planet. Of special interest, it is trading like Lehman, having lost 94% off its ’07 high (Figure 45). An 80% drop in earnings in 1 year suggests that the bank is insolvent and headed for nationalization. DB fired 10,000 employees (10% of its workers), a drop in the bucket.ref 363 I think it’s time it changed its name to Deutsche Blockchain.

  

  Figure 45. Deutsche Bank.

  “The best thing that could happen to society is the bankruptcy of Goldman Sachs.”

  ~Nassim Taleb, author of bestsellers (see “Books”) and former Goldman trader

  Banking is supposed to be boring, but there were a few humorous moments this year. Goldman got caught stealing billions from the 1 Malaysian Development Bank (1MDB),ref 364 but who cares about the impoverished Malaysians? That’s a rhetorical question: Other sovereign wealth fund managers seemed to care.ref 365 As Jimmy Carter said, “I guess you just can’t trust Goldman.” Danske Bank laundered over $200 billion according to whistleblowers.ref 366 That ought to generate a few fines and send a lot of business back to HSBC. Wells Fargo had a “glitch” that led to double dipping on some payments and even some accounts being emptied.ref 367 It got fined $2 billion for stealing from millions of customers. Since fines for committing felony on a gargantuan scale are considered a business expense, the bank will get a nice tax break.ref 368 It was downgraded by its bank brethren for having inadequate safeguards to prevent getting caught.ref 369 Once Wells emptied its coffers to pump shares with stock buybacks,ref 370 it had insufficient funds to keep 26,000 people on payroll.ref 371 On the bright side, the CEO got a 36% raise this year to ensure that he sticks around to clean up his mess.

  Of course, Wells Fargo’s largest shareholder, Berkshire Hathaway, played activist and jumped in to bring some honor back to this once great institution. Yeah, right. Neither side of Warren Buffett’s mouth was available for comment, but the irrepressible Charlie Munger chimed in:

  “Wells Fargo will end up better off for having made those mistakes. I think it’s time for regulators to let up on Wells Fargo. They’ve learned.”

  ~Charlie Munger

  Yes, Charlie, we’ve all learned: Crime pays, and your bluntness is surpassed only by your ruthlessness. The miracle of modern medicine is that you can sleep at night. That Wells hasn’t been auctioned off for parts and its high command marched off to a gulag illustrates the efficacy of the Obama-era “No Banker Left Behind” (NBLB) program. Being owned by Berkshire is also a “protected class.” The most satisfaction customers will get comes in the form of checks to compensate them for their losses. I’ve gotten two such checks for settlements of class action suits. They both were <0.1% of my assets under management. You know what this means? I got screwed three times: (a) the brokerages slipped roofies to me Cosby-style and repeatedly jammed illegal hidden fees up my . . ., (b) the lawyers took half the settlement, and (c) the justice system settled for squat and didn’t hang any of the bankers with their genitalia stuffed in their mouths. Do I sound bitter?

  Several academic papers concluded that Wall Street firms trade on inside information and that “changing the law to fix that may not even be feasible.”ref 372 (Academics actually get paid to come up with such epiphanies.) Bank of America (BofA) did not have a single day trading loss in the first quarter.ref 373 Seems like an improbable run in a straight game. BofA also got caught robbing safe deposit boxes again.ref 374 Recall that the state of California was emptying safe deposit boxes and selling the contents without even inventorying them first.ref 375BofA has also been freezing the accounts of people suspected of being illegal aliens, no doubt out of a deeply moral conviction and support for Trump’s immigration policies.ref 376 One of Morgan Stanley’s highly compensated bankers has been driving for Uber in his free time.ref 377 Any bets on who gets the >$100 billion Uber IPO? Finally, Jeffrey Skilling of Enron fame got out of prison.ref 378 The bankers who helped set up all the off-balance sheet scams have not been released because, well, they never got arrested.

  The party isn’t rockin’ until somebody calls the cops or puts an eye out. Until then, the social IQ of the partygoers just keeps dropping. Although nothing is happening yet—the KRE banking index is comfortably 200+% off the ’09 lows and only –20% off its 2018 highs.ref 379 There are, however, stresses building within the banking system. SocGen analysts list four triggers: trade wars, significant market repricing, European policy uncertainty, and a hard Chinese downturn.ref 380 The FDIC monitors “assets of problem banks” and reported a 200% increase during the third quarter of 2018.ref 381 The four largest U.S. retail banks are witnessing consumer stress in the form of credit card losses.ref 382 Scott Minerd suggests that small hikes in lending rates will blow out the zombies (see “Corporate Debt”), causing a wave of defaults that are long overdue.ref 383 Minerd notes, “There are a lot of companies that are zombie companies that survived the last cycle. As these companies have their debt repriced by the market with rates going up, it’s going to be harder and harder (for them) to stay alive.” The credit system is surely at risk if corporate paper starts defaulting. Jesse Felder suggests that “a cottage industry has developed to explain what is behind the dramatic move in Libor.”ref 384 Something is stirring below the placid surface. (Cue the Jaws sound effects.) Europe in general and Italy in particular pose serious risks, as does China. Whalen Global Advisors claims that net interest income for all U.S. banks will be declining by early 2019 and that, “the superficial narrative parroted by Wall Street pundits that rising interest rates are good for banks and other leveraged investors will be shown to be complete nonsense.”ref 385 Cheap funding is over. “Banks in the U.S. are about to get caught in an interest rate squeeze of gigantic proportions,” causing shrinking profits and—wait for it—a recession! There will be 11 Wells Fargo employees who couldn’t care less because they won a half billion dollars in California’s Powerball.ref 386

  “From the economy’s vantage point, instead of asking how the banks are to be saved ‘next time’, the question should be, how should we best let them go under.”

  ~Michael Hudson, Levy Economics Institute

  The Fed

  “You will never see another financial crisis in your lifetime.”

  ~Janet Yellen, spring 2018

  “I do worry that we could have another financial crisis.″

  ~Janet Yellen, fall 2018

  “The lower-for-longer approach promises, in effect, to allow the economy to boom. The FOMC needs to make a credible statement endorsing such an approach, ideally before the next downturn.”

  ~Janet Yellen

  “We have undertaken to stabilize economic forces, to mitigate the effects of the crash and to shorten its destructive period. I believe, I can say with assurance that our joint undertaking has succeeded to a remarkable degree.”

  ~Herbert Hoover, 1930

  “The Fed can change the way things look, but it cannot change what they are.”

  ~James Grant

  “The last duty of a central banker is to tell the public the truth.”

  ~Alan Blinder, former U.S. Federal Reserve vice chairman

  “For more than three decades, macroeconomics has gone backwards.”

  ~Paul Romer, winner of the 2018 Nobel Prize in economics

  The Fed has been oversteering and overmedicating the economy since 1913. The Fed promptly spawned a credit bubble in the 1920s that led to the biggest crisis in our history and was, in my opinion, the primary cause of the Great Depression.ref 387 The emergence of Greenspan sent us through a series of micro-crises ultimately leading to the big one in 2008–09. (Actually, I think the Big One is coming, but that is conjecture.) Everybody agrees that Greenspan kept rates too low for too long, laying the groundwork for the crisis. In response, Bernanke and eventually all central bankers began coloring way outside the lines. What did he do? As Stan Druckenmiller puts it, “They tripled down on what caused the crisis, and [they] tripled down globally.”

  “Data dependent Fed: average real GDP growth during QE was 2.2%. During no QE and the 5 rate hikes it’s averaged 2.1%.”

  ~@GreekFire23, smart guy—possibly in prison or Goldman (but certainly not both)

  Now the central banking cartel has created what appears to be an epic bubble of equities, bonds, and pretty much anything denominated in dollars. Bernanke opened the tap; Yellen kept it open and went for a smoke. All central banks served up buckets of punch, and the global economy became a sloppy drunk. Jerome Powell was left with the job of getting everybody to the vomitorium and cleaning up the vomit. Some think he’ll blink and let the party resume, but don’t forget that in 2001, the Fed hiked rates 50 basis points—a monetary bitch slapping—with the Nasdaq already 40% off its 2000 highs. Let’s hope that as Jay moose-knuckles the rates higher he has a steady, consistent hand on the rudder:

  “I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses . . . we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy. I think there is a pretty good chance that you could have quite a dynamic response in the market.”

  ~Jerome Powell, chairman of the FOMC

  “There’s no reason to think this cycle can’t continue for quite some time, effectively indefinitely.”
  ~Jerome Powell

  “The US is on an unsustainable fiscal path; there’s no hiding from it.”

  ~Jerome Powell

  “When it is time for us to sell [Fed assets], or even to stop buying, the response could be quite strong.”

  ~Jerome Powell, before becoming FOMC chair

  As @GreekFire23 said—I can’t believe I just typed that—the average GDP growth during QE was only 2.2%. During the subsequent period witnessing multiple rate hikes GDP has averaged 2.1%. One might ask “What is it good for?” The answer could be “Absolutely nothing! Say it again!” Economists at the St. Louis Fed published a report card on the efficacy of QE and, shockingly, concluded that it was largely a bust.ref 388 The Fed made stone soup hoping that the free market would start bringing things to add substantial ingredients. While QE pushed up asset prices as intended, the economy limped along feebly. The Fed was trying to shove credit into a saturated credit market. This is how it plays out in my head:

  Borrowers: “We would like to borrow some money.”

  Savers: “OK. Here is what it will cost.” (Some haggling ensues.)

  Savers: “We have a deal?”

  Fed: “That price is too high. We know because we have PhDs! We’ll pound it lower.”

  Borrowers: “Deal!”

  Savers: “Dufuq?”

  So how does QE actually work? In theory, banks can sell treasuries to get cash equivalents to be used as reserves for lending—treasuries are technically not considered reserves. Alas, that is a zero sum game because now cash is depleted elsewhere. When the Fed replaces long-maturity assets with short-maturity reserves via QE, no cash drains and the banks now have larger reserves against which they can lend more money with a 10- to 12-fold multiplier. Richard Koo noted that the 19-fold increase in reserves risked a 19-fold inflation and got . . . crickets.ref 389 Indeed, there was some lending, but arguably not lending conducive to economic growth (share buybacks, for example), and banks stored these reserves at the Fed in interest-bearing accounts more like an annuity to kick off a steady cash flow. The Fed economists who wrote the QE report seemed to question the practical consequences of QE and even the theoretical underpinnings:

  “It is not clear that QE should have any effect and it might actually be detrimental to the efficiency of the financial system. . . . QE works much as conventional accommodative policy does—it lowers bond yields and increases spending, inflation, and aggregate output. But we should be skeptical of this interpretation.”

  Frequent and willing sparring partner and vice president of the St. Louis Fed, David Andolfatto, often tells me that this cash-for-treasury swap is no big deal:

  “I do not think QE facilitates credit creation. QE simply relabels the public debt as ‘interest-bearing reserves’ instead of ‘interest-bearing treasuries’.”

  ~David Andolfatto, vice President of St. Louis Federal Reserve

  By the end of the ensuing debate, I find myself asking something like, “Then why did they do it?” I guess we will find out if it is no big deal in reverse, too, as they dehydrate the markets (drain liquidity) via quantitative tightening (QT). But I am ahead of myself.

  Charles Gave notes, “purchasing government bonds from domestic banks, so flooding them with reserves, the Fed can engineer an increase in the U.S. monetary base.” OK, but as Andolfatto would say, “so what?” Based on efforts in the U.S. and in Japan, where QE was big, or in Canada, where no QE is undertaken, the skeptics in St. Louis wondered whether there was any evidence that QE increases inflation or, more important, real GDP: “Evaluating the effects of monetary policy is difficult, even in the case of conventional interest rate policy. With unconventional monetary policy, the difficulty is magnified . . . perhaps the private sector can do a better job than the central bank in turning long-maturity debt into short-maturity debt.” We also got a report out of Deutsche Bank claiming that, with respect to “unconventional” monetary policies such as QE and negative interest rates, “the impact on the economy was negative.”ref 390 Prominent economist Daniel Lacalle concurs: Monetary stimulus does not work.ref 391

  “In my view it failed, 100 percent. It caused the stock market to go up because people took all that liquidity and invested it in the stock market, but it did not cause the economy to grow even 10 basis points faster.”

  ~Steve Eisman on the effect of QE

  One can only imagine what’s coming next and how we get out of this monetary lobster trap. Maybe QT will be a bust just like QE—no big deal. Oddly, Richard Koo claims he could find no papers whatsoever describing how to exit QE and submits that it might be quite a bitch—a Hotel California moment. Some say the Libor rate that determines corporate borrowing rates is already tightening ahead of the Fed. This is way above my pay grade, but the folks at BMO Capital Management seem seriously concerned.ref 392 They say a slow, methodical and putatively painless natural unwind by paying 2.5% on reserves will add $50 billion to our already bloated deficit every year. Why? Because it will deplete the cash flow from the Fed to the U.S. Treasury, which uses the cash flow to pay bills. Many don’t realize that the “FAST Act”, which authorized the U.S. government to plunder excess capital from the Federal Reserve, established a mechanism for the Fed to monetize Federal debt.ref 393

  “Fed officials will be under enormous pressure to accommodate swelling federal deficits—even if it means pretending that the central bank is a source of revenue to the Treasury. The operative model of political economy here is Argentina in the 1970s.”

  ~Chris Whalen

  “One of the characteristics of a struggling republic is the inability to separate its central bank’s resources from the fiscal largesse of the federal government. Using central bank resources to avoid addressing funding of the government is a sure path to runaway inflation, economic decline, and periodic financial crisis.”

  ~David Kotok, co-founder of Cumberland Advisors

  “Stop talking about ‘The Fed’. Talk about central banks. . . . Their balance sheets are the highest they’ve ever been.”

  ~Jim Bianco, founder of Bianco Research

  Jim’s point is that everything you see the Fed doing is being done across the globe. The Bernanke QE model was implemented on industrial scales without even beta testing it. QT will be carried out with equal care and preparation.

  “The success of our institution is really the result of the way all of us carry out our responsibilities. We approach every issue through a rigorous evaluation of the facts, theory, empirical analysis, and relevant research.”

  ~Janet Yellen

  “Congress has taken away some of the tools that were crucial to us during the 2008 panic. It’s time to bring them back.”

  ~Bernanke, Paulson, Geithner

  “Rubbish, they had all the tools necessary. They just never recognized beforehand that the economy was a massive credit bubble—just like it is now.”

  ~Albert Edwards, Societe General (SocGen), in response to the Bernank

  Let’s finish with some quotes that give me pause and may give a few bloggers some quote porn.

  “Although we work through financial markets, our goal is to help Main Street, not Wall Street.”

  ~Janet Yellen

  “If the Fed can cause a 500-basis-point change in interest rates, it is absurd to wonder if monetary policy is important.”

  ~Paul Romer

  “The Federal Reserve may have to press harder on the brakes at some point over the next few years. If that happens, the risk of a hard landing will increase.”

  ~Bill Dudley, former president of the New York Federal Reserve and former economist at Goldman Sachs

  “Central bankers are like stupid magicians: They are as surprised as the audience when they pull a rabbit out of their hat that they just put there.”

  ~Sean Corrigan (@TrueSinews), Cantillon Consulting

  “History suggests that if the Fed waits too long to remove accommodation at this stage in the economic cycle, excesses and imbalances begin to build, and the Fed ultimately has to play catch-up.”

  ~Robert Kaplan, president of the Dallas Federal Reserve

  “I see roughly equal odds that the U.S. economy’s performance will be somewhat stronger or somewhat less strong than we currently project.”

  – Janet “Yogi” Yellen

  “We’ve become so complacent about central bank policies that we’ve quietly tolerated a rise in financial asset prices to the point where even a little inflation would devastate portfolio returns.”

  ~Eric Peters, CIO of One River Asset Management

  “We have been suppressing rates. If rates rise it’s a ticking time bomb.”

  ~Richard Fisher, former President of the Dallas Fed, speaking in 2015

  “Everything we see about the near-term outlook is quite strong.”

  ~Ben Bernanke, July 2018

  “The Fed has acknowledged no failures. All the experiments have been successful, every one: no failures, no negative side-effects, no perverse consequences, only diminishing returns.”

  ~Peter Fisher, former official at the New York Federal Reserve

  “Try to publish an article critical of the Fed with an editor who works for the Fed.”

  ~J. K. Galbraith, Harvard University and author of The Great Crash, 1929

  “Even when things happen in the economy that would otherwise have triggered inflationary episodes, they don’t today because financial markets trust the Fed to do the right thing to keep inflation under control.”

  ~James Bullard

  The yield curve will soon be inverted
  As many have clearly asserted
  When everything tanks
  The fault? …central banks
  Their policies? …clearly perverted

  ~@TheLimerickKing

  Human Achievement

  “Opportunities don’t happen; you create them.”

  ~Chris Grosser

  We are now transitioning from economics and markets to the political and social events of 2018. As noted at the outset, I have over a hundred pages of quotes, notes, and anecdotes about Trump, Russian collusion, and the nefarious activities going on in the Deep State. It has grown progressively harder to wrap my brain around what I am actually witnessing. I can no longer write a chapter or two. I may be able to write a book, but certainly not in the months of November or December. It is what it is. I have focused on what catches my eye and what is achievable.

  Random topics that come across my field of view that I capture are loosely defined as “Human Achievement”. Who could forget the heroics in Thailand as cave divers saved the Thai soccer team?ref 394 Buddhist teachings by their coach helped them cope with stress and lower their oxygen intake for two weeks. Two heroic cave divers found them.ref 395 Divers from around the world suffering from toxic masculinity—no pussy hats or man buns on those guys—pulled them out. Meanwhile, Elon Musk was show boating with a useless submarine and calling one of the heroes a pedophileref 396 and then gets sued.ref 397

  Although watching sports is too time consuming for me, I catch a lot on the fly. 2018 had some unlikely sports heroes. A 36-year-old accountant, Scott Foster, was called to play goalie for the Winnepeg Jets. The night before he was playing rec league for “Johnny’s Icehouse” and probably did so the following weekend. On that one memorable night, however, he played 14 scoreless minutes in the Big League.ref 398 A 32-year old rookie got called up to play for the LA Lakers, came off the bench, and drained 19 points.ref 399 (It’s not quite like those six three-pointers by the autistic kid,ref 400 but it’s still amazing.) The winning Superbowl coach was coaching high school football nine years earlier.ref 401 (Trivia point: years ago, Cornell fired one of a long string of marginally successful football coaches. He was George Seiferth. You can’t get talent into the Ivies.) The Boss of the sports world was an approximately 12-year-old fan who, when handed a game ball by the infielder, had the smarts to give it to a seriously hot chick sitting behind him… but not before switching it with the ball he bought from Dicks Sporting Goods.ref 402 That’s metagame.

  The PyongChang Olympics had six Cornell alums (mostly women’s hockey).ref 403 In my opinion, women’s hockey is as good to watch as men’s hockey. Meanwhile, American Elizabeth Swaney achieved everybody’s dream by competing for Hungary in the half pipe while being awful—seriously wretchedly bad.ref 404 She spotted a seam in the rules that qualified her for the Olympics by amassing top-30 finishes at international events. She traveled the world competing in all half-pipe competitions with fewer than 30 entrants.ref 405

  Other bulletable achievements included:

  • Tiger won his first tournament since 2013. It’s all about redemption.
  • Jordan Bohannan tied Chris Street’s University of Iowa record for most consecutive free throws, 34, that had withstood two decades. Chris had died in a car accident 3 days after graduation. Bohannan, stepping up to the line to set a new record, looked at his brother in the stands, bonked it against the iron, and pointed to the sky: “It was not my record to have.” Superheroes don’t always wear capes. I am tearing while I type.ref 406
  • In March madness, #16 seeded UMBC beat #1 seed University of Virginia 74–54, busting every March Madness Bracket in the World.ref 407
  • Drexel came back from a 34-point deficit, setting a new comeback record for Division I basketball.ref 408
  • LA Tech football team lost 87 yards in a single play.ref 409
  • Watch this kid play catcher; you wouldn’t notice if I didn’t tell you he has only one arm.ref 410(hotlink) I hope he applies to Cornell.

  “I think the question we have to ask ourselves is this: What is the right way to behave to honor our sport and to respect our opponents?”

  ~Martina Navratilova, returning Serena Williams’ serve

  And then there were the darker moments. Serena Williams reached hero status by delivering her latest kid and in the blink of an eye making it to the finals of the US Open Singles Championship.ref 411 In the final match, however, a serious shitfit at the line judge put a dark smudge on the game. The authorities kowtowed (which is a Chinese term that translates to “acted like pussies”), causing much of the glory to be taken away from the winner, Naomi Osaka.ref 412 It wasn’t Williams’ first outburst.ref 413

  And for some more Bullets from the Dark Side:

  • Phil Michelson six putted (if you include the two-stroke penalty for whacking a moving ball) and then claimed (admitted) it was tactical to avoid an even worse outcome.ref 414 The Mets signed him because he could hit a moving ball.
  • USA Gymnastics admitted it had more coverups of pedophilia than the Catholic Church.ref 415
  • Khabib Nurmagomedov—Khabib for short and for obvious reasons—beat Conor McGregor in the UFC. (Khabibe literally wrestled grizzly bears as a kid,ref 416 so it was not a shock.) Risk was brought to a new level when a huge and arguably most dangerous sports brawl in history broke out.ref 417
  • A Russian curler was charged with doping using a well-tracked substance.ref 418 Something is fishy…so many questions.
  • Another female Russian Olympian donning a shirt stating, “I don’t do doping” tested positive for doping.ref 419
  • Nigerian soccer star Emmanuel Eminike divorced Miss Nigeria 2013 to marry Miss Nigeria 2014.ref 420
  • The first zero-emissions solar-powered boat is said to be circumnavigating the globe this year.ref 412Correct me if I am wrong but one of Magellan’s zero-emissions wind-powered boats made it around some time back. Contrary to popular opinion, Magellan did not.

  “The art world is the biggest joke going. It’s a rest home for the overprivileged, the pretentious, and the weak.”

  ~Banksy

  Away from sports, Banksy punked the art world when, seconds after the auction gavel fell on one of his $1 million paintings, a mechanism hidden in the frame shredded it.ref 422 The art world punked him back by declaring the painting’s value just doubled.ref 423 A guy jumped from 25,000 feet without a parachute and landed “safely” in a net.ref 424 Another got the coveted hat trick when, after having been mauled by a bear and bitten by a rattlesnake, he got attacked by a shark.ref 425 While astronomers recorded the first video from the surface of an asteroid,ref 426 others identified a new type of aurora and named it “Steve”.ref 427 Watch this girl playing a concerto on the violin with a prosthetic arm connected from her collar bone.ref 428 That is toxic femininity! This woman piloting a passenger jet has the engine blow off the plane and blew a hole in the plane sucking a passenger out. She displayed nerves of steel.ref 429(hotlink)

  If you dig long and hard, you eventually find the bottom of the barrel. A couple raised $400,000 for a homeless vet and just squandered it before the courts could intervene.ref 430 The author of “How to Murder Your Husband” was arrested for allegedly murdering her husband.ref 431 A man who thought he was possessed by crocodile hunter Steve Irwin was arrested for tranquilizing and raping alligators.ref 432

  In the non-hominid division, Beadnose (Bear #409) displayed impressive salmon-sourced cellulite, toppling the reigning champ, Otis (Bear #480), in Alaska’s 2018 Fat Bear Championship (Figure 46).ref 433 The Flying Dog Championship witnessed a new jumping world record of 31 feet.ref 434 I’d like to see Beadnose try that.

  

  Figure 46. Beadnose Bear at top feeding weight.

  Had to save two for last. Ten players and two coaches of the Humboldt Broncos Youth Hockey Team coming from Humboldt, Saskatchewan were killed in a bus crash.ref 435 They were dominant on the ice. GoFundMe raised a $15 million memorial fund,ref 436 but I don’t know how that town of 5,578 inhabitants will recover. RIP boys. (I’m tearing again.) Keep it in perspective folks.

  

  You know all those fires in Boston that lit simultaneously due to an over-pressurized gas line (without a peep from the news questioning terrorism)?ref 437 My son was at the “red dot” chatting with me on the phone when they started. Like I said, keep it perspective.

  

  Nature

  “I know what it means to know something, and it’s hard.”

  ~Richard Feynman, physicist

  Every year nature takes a bat to us in predictable and not-so-predictable ways. I have long stayed away from the global warming (or climate change, whatever) debate just because it is too rancorous, and I have little to offer. I once told the Secretary of Energy I was agnostic. After cleaning snot off my glasses I explained that I had not put in the 10,000 hours needed to form an educated opinion. For that matter, few have. Thus, all my colleagues in science with relatively few exceptions will sign off on the notion of anthropomorphic global warming with what is a vote of confidence in their scientific brethren but inadequate self study, providing an overstated scientific consensus. Here’s what I will say. There are highly credible scientists on both sides now, not just whackadoodles looking for ten minutes of fame. I was shocked when I started Googling some of the deniers on this list to find out they they are both prominent and disbelievers.ref 438 Let me be equally clear because I am a wuss and so you don’t hang some PC label on my sorry butt:

  If I had to bet a paycheck, I would bet anthropogenic global warming is real. If I had to bet ten paychecks, I would bet that we are going to do the experiment despite the best intentions of those who worry. Resource depletion is what scares me.   

  

  Let me make one important point: you can’t watch the weather or make any anecdotal observations and say, “See. I told you so. You guys are full of crap.” You sound like an idiot to anybody who is not an idiot (unless you are being a snarky punk, which is fine). Hundreds of hurricanes have hit North America in the last century; nothing says the last 20 are anthropogenic. Snow in October and warm days in January mean nothing:

  “This week in 1936, North Dakota was 121 degrees. This week in 1913, California was 134 degrees. This week in 1901, hundreds of New Yorkers died in the streets from the heat.”

  The warming trend, even if raging and eventually creates wind chill factors of 114 °F, is well inside the detection limits of simple human observation. With 365 days in a year, 100 years in a century, and more metrics of weather than pregnant teenagers, do you know how easy it is to break an all-time record? Those who claim to see patterns are being Fooled by Randomness. And the celebrities all know there is global warming. Remember when the star in TV medical drama “Quincy, M.E.”, Jack Klugman, testified to Congress about health care? Most celebrities are idiots as are members of Congress. Why do you think they didn’t study robotics or bioengineering? Only good science supported by good data analysis can tease signal from the noise. And what may prove to be the most ironic part of the global warming debate is that NASA scientists have found that a “big crack opened in the Earth’s magnetic field and plasma started pouring in.”ref 439 Meanwhile, a disturbing lack of sun spots and solar flares suggest an impending mini ice age is coming.ref 440 “Men plan, God laughs” or as Emily Litella would say, “Never mind.”

  Why don’t I worry about climate change? It is for practical reasons. Humans are not proactive; they follow the Law of the Commons, also known as the Law of Selfish Bastards. Look how happy the French are after being told they will get to pay a nominal energy tax to stop global warming. There was some serious heat on the streets of gay ol’ Paris. We are going to do the experiment.

  

  We had lots of hurricanes this year, with Hurricane Michael being the headline grabber. As it wiped out Mexico Beach, Florida,ref 441 it appears to have whacked a handful of our stealth bombers inside a hanger.ref 442Although there is a nice tutorial on why not every stealth bomber can be moved on short notice,ref 443 it’s less obvious why you would store billions of dollars worth of hardware in a hanger that was not hurricane proof. Moving on to Hurricane Florence and North Carolina, we find that only 3% of homeowners have flood insurance and those that do also have counterparty risk; the Federal program providing flood insurance is $20 billion in the hole.ref 444 On a funny note, Hurricane Florence appeared to be ravaging a reporter struggling to hold his ground against gale-force winds to get a story…until two guys strolled by in shorts:ref 445

  

  Figure 47. Risking life and limb.

  Of course, fooled by randomness applies to other events like activity on the Ring of Fire. For those not paying attention, we are not talking about a Bangkok-hot curry but rather the ring circumnavigating the Pacific Ocean loaded with volcanic and other geological events. Seems to be acting up a lot lately. This year’s Hawaiian volcano reminded homeowners that their houses built on formerly red hot lava might get squeegeed away, and they may no longer own ocean front property. Where some see disaster others see opportunities: can you buy futures on land that is not yet above sea level? I also waited with bated breath for Paul Krugman to write about his “broken pineapple fallacy”. The Yellowstone caldera—an ancient super volcano—keeps rising a lot and spewing reminders that rare events happen.ref 446 By the way, “Krakatoa” by Simon Winchester is a great book and offers a fascinating description of plate tectonics.

  The anti-vaxxers may have a case, but the evidence against a number of claims is profound (convinced me). I have zero doubt that, all things considered, vaccinations save lives. In regions where anti-vaccination campaigns have gotten legs, we are starting to see epidemics reappearing for the first time in many years.ref 447Disturbingly, polio has reappeared in Venezuela.ref 448 I guess we didn’t eradicate it after all. I’d be vaccinating against that one. The only thing that scared me as a kid were (a) my Dad’s stink-eye, and (b) images of iron lungs and polio wards:

  

  Contrary to popular opinion, scientists in Big Pharma would love to cure diseases; there is no conspiracy there. Popular opinion is also correct that marketing teams will try to get you to snarf down as much healthcare as theoretically possible. We continue to be seriously outnumbered in our battle against bacteria. I think those in the know are worried. Bacterial resistance to antibiotics is appearing before the drugs hit the marketplace. They are becoming non-cost effective to produce. At the street level, new flesh-eating bacterial infections of the genitals are somehow linked to best-selling diabetes drugs, causing the flesh around the genitals to literally rot away.ref 449 The CDC is now warning of an antibiotic-resistant strain of gonorrhea.ref 450 An oral cancer epidemic in men is linked to oral sex.ref 451 The message is clear: abstain. A mind-controlling parasite—yes, these things are precedented in biology and can have wildly cool effects on animal behavior—has been found in cat feces.ref 452If you are eating cat feces you now officially have shit for brains. On the bright side, the virus has been linked with an almost reckless entrepreneurial spirit (not joking). It has been identified and named Elon Muskovitis (joking).

  Of course, Nature’s wrath amplified by Man’s poor judgment was on full display as fires ravaged California. I was in a house fire in high school; I jumped out of a second story window into –2 °F weather buck naked (but who hasn’t done that a few times.) People are dying from watching TV shows about fires. You have seconds to get the hell out. When your neighborhood is on fire, get out. Pepperdine University made the call to leave all students on campus.ref 453 That could have been a tragedy of a higher order. Some criticize the administration for commandeering the resources of all firefighters in the area. Others criticize them for doing it on purpose to ensure the university was protected. It is an interesting hypothesis, but I cannot fathom that level of sociopathy, even at a university.

  I watch people lamenting the loss of their house and memories and think, “You’re alive, your belongings were tacky, and your memories are safe in the cloud. Get over it.” It is altogether different, however, when your house, school, church, stores, and employer burn to a crisp like in the ironically named Paradise, California. You really do have nothing now. It’s not Yemen, but it’s bad. There are regions in California that got one inch of rain since May in a much more secular (multi-year) draught. It was only a matter of time. I have read that the 20th century was the wettest of the last ten centuries in the State of California. It seems possible that millions moved into a desert without realizing the consequences.

  

  Humans are a durable lot; they do not take guff from Mother Nature without a fight. In a battle against the weather, Volkswagen shoots off “hail cannons” near their Mexican factory to prevent formation of car-damaging hail stones, denying Mexican farmers rain for their crops.ref 453 We managed to finally exterminate the last white rhino because, well, who needs another large mammal that doesn’t even make good stew meat.ref 455 Round-up is suggested to not only be solving our weed problem, but also eradicating those damned bees.ref 456 I’m sure Monsanto will figure out how to pollinate everything at some nominal cost. We are winning the war against sea creatures by filling the oceans with remarkable heaps of single-use plastic, generating an enormous wad of crap called the Great Pacific Garbage Patch.ref 457  The Chinese are rumored to be planning condos or a military base. 

  

  Middle East

  “We’re going to take down seven countries in five years. We’re going to start with Iraq, then Syria, Lebanon, then Libya, Somalia, Sudan. We’re  going to come back and get Iran in five years.”

  ~Wesley Clark, Four-star general in 2002, quoting a peer

  According to Ellen Brown, none of these countries is “listed among the 56-member banks of the Bank for International Settlements (BIS). That evidently puts them outside the long regulatory arm of the central bankers’ central bank in Switzerland. The most renegade of the lot could be Libya and Iraq, the two that have actually been attacked.” And from an interview long, long ago…

  Lesley Stahl: “We have heard that half a million children have died. I mean, that’s more children than died in Hiroshima. And, you know, is the price worth it?”

  Madeleine Albright: “I think this is a very hard choice, but the price — we think the price is worth it.”

  That 1996 60 Minutes exchange hasn’t aged well.ref 458 In the sequel, we pick up the plotline in the same country by following the antics of Bush the Younger. Press secretary Ari Fleisher referred to it as “Operation Iraq Liberation”,ref 459 somehow not seeing a problem with the acronym. I find our Middle East policy to be confounding except for one guiding principle: keep them all fighting. It is not really about oil but about war and banking. Following the collapse of the Soviet Union our multi-trillion-dollar defense industry needed a new foe. (Bombing Canada was a non-starter.) As we mow through conflict after conflict it all makes sense if you assume that our goal is to keep the Middle East in a perpetual state of war. Quadafi gets too strong? Kill him. Assad gets too strong, throw a false flag and bomb him. We also don’t hesitate to remind those that we haven’t bombed (yet) about the merits of the petrodollar: we agree to buy oil in dollars and, in return, they agree to fund our federal deficit and prop our asset markets with these dollars.

  In case it isn’t obvious, we don’t really like democracies. As The Donald showed in 2016, we don’t know how to control them. We are having issues with that will-of-the-people malarkey. They’re tolerable for Europe but less developed regions—the shithole countries as the Donald is known to say—require focused targets for bribes and threats of death and dismemberment. Dictators are optimal—Shahs for example—but a small gaggle of warlords is manageable. Stephen Kinzer’s Overthrow describes 13 explicit US-backed coups that overturned foreign leaders, including democratically elected ones.ref 460

  Our adventures in the Middle East have cost us an estimated $6 trillion dollars. Some is salary paid to soldiers but most is going to companies as part of our No Defense Contractor Left Behind Program (NDCLBP). Take a look at the price chart of Boeing, Lockheed Martin, Halliburton, Raytheon, or any other defense contractor (Figure 48). They are well bid based on both past and future earnings. Trump promised to be the least militaristic president—a low bar—and then increased our military budget.

  

  Figure 48. Share price of Boeing

  The Saudi regime is ruthless. They fly planes into buildings, chuck gays out of windows, and behead people for non-violent crimes. Women are tortured who dare to drive a car, remove their hijabs, or have the audacity to get raped. If you are the wrong person in Saudi Arabia, Islamophobia is not even a theoretical construct because the fear is not irrational. You wanna see a hero in the flesh? She’s Iranian (not Saudi), quite possibly dead, but now an iconic image of global feminism, a meme:

  

  Figure 49. Principled when it’s neither cool nor safe.

  Meanwhile the Saudis are slaughtering Yemenis (Houthis specifically), risking starvation of as many as 18 million of them.ref 461 Let’s go to CNN headquarters to get the latest on the global uproar:ref 462

  Rand Paul: “We are refueling the Saudi bombers. So we are essentially part of the Saudi campaign. We are helping them choose targets. It is said that thousands of civilians have died in Yemen because of this. Yes, we need to have a debate over this.”

  Wolf Blitzer: “So for you this is a moral issue cause, as you know, there are a lot of jobs at stake certainly if a lot of these defense contractors stop selling war planes, other sophisticated equipment to Saudi Arabia. There’s going to be a significant loss of jobs and revenue in the United States. That’s secondary in your standpoint.”

  The stark truth of that must-see exchange slathered with latent sociopathy leaves me gagging on my vomit. The Pentagon insists we are minimizing civilian casualties when it’s just infanticide masquerading as politics. “OK guys: let’s keep it under 18 million if we can.” US foreign policy is fostering this carnage by providing the Saudis with “the engines of death.” You can blame Trump but don’t you dare blame just Trump.

  Enter one Washington Post journalist named Khashoggi. He gets suckered into an embassy, sliced into pieces, and fed to the camels.ref 463,464 The journalists kicked it into gear and denounced the horror.

  “You gonna eat that?”

  ~Jeff Dahmer to Mohammed bin Salman

  Here is my very unpopular take: It was a bit gruesome, but not by Saudi standards that we enthusiastically tolerate. He is also just one damned journalist. Let’s put this in perspective: 18 million dying Yemenis versus One Dead Kashoggi (ODK). The world has gone collectively sociopathic on this one. You know why y’all care about some guy whose name you didn’t even know six months ago and still can’t spell? It is, in part, because Journalists Lives Matter (JLM), and psychopaths in high places are telling journalists to tell you what to worry about. Wake up or shut up. Let’s get those priorities in order. And as happened before, Nassim and I have locked arms once again:

  “A single journalist is a tragedy; ten thousand Yemenis is a statistic”.

  ~Nassim Taleb channeling Joseph Stalin

  Epilogue: The journalists are now starting to notice the carnage in Yemen. Alas, it was never about Khashoggi or Yemen. They are just chess moves.

  Syria

  “We’ll be coming out of Syria, like, very soon. Let the other people take care of it now.”

  ~Donald Trump

  “A new confirmed chemical attack in Syria would pose a dilemma for President Trump, who … recently said he wants to get the United States out of Syria.”

  ~NYTimes

  “Just so there’s no confusion here, if the Syrian regime uses chemical weapons we will respond very strongly, and they really ought to think about this a long time.”

  ~John Bolton

  Three days after Trump’s announced pull out there was a chlorine gas attack attributed to Assad. That is some serious bad luck. A leaked 2006 memo shows we have been trying to “election monitor” and destabilize Syria for quite some time.ref 435 For several years I have been writing about false flag attacks under the Obama administration trying to georelocate Assad’s remains across the Levant. A Sputnik article predicted fake chlorine gas attacks were imminent.ref 466

  

  Figure 50. 2014 Department of State tweet declaring “Mission Accomplished: “Heckuva a job Johnny!”

  A disturbing trend is that those pulling off such scams are getting sloppy, relying increasingly on simply controlling the press coverage. There are, however, rogue pundits who refuse to play along. Seymour Hersh declared the chlorine attacks and anti-Syrian rhetoric to be a crock.ref 467 Tucker Carlson, as he so often does now, stepped out on a limb and gave a brilliant must-see diatribe denouncing the neocons for marching us toward a military conflict.ref 468  Pat Buchanan joined with the doubters.ref 469 And, of course, Russia’s Ambassador to the EU in Syria declared it was a complete farce, a hoax concocted by the ‘white helmets’ to justify US forces to bomb Assad.ref 470 I did an RT interview on the chlorine gas attacks as follow up to the Skripal poisonings (see “Nerve Gas Poisonings”). I was so brain dead trying to keep it all straight that I Freudian slipped into a Skripal poisoning plotline before the interviewer reeled me in.ref 471 German Chancellor Angela Merkel denounced the attacks as evidence we failed to eradicate Assad’s chemical arsenal, but Germany refused to enter the fray.ref 472 British ambassador to the United Nations, Karen Pierce, blamed the Russians of course.ref 473 (She must have slipped plotlines too.)

  Social media dismembered the story. You would have time to run from the house, admittedly coughing and feeling really crappy, maybe even dying later.ref 474 The stacks of bodies inside the house smelled wrong, and the notable absence of sick survivors was odd.ref 475 The bodies were in different states of decay, showed assorted traumas, and displayed blood accumulating in the wrong places. (I’m sure there are Middle Eastern startups that provide bodies on-demand—there is no shortage—but the quality control might be lacking.) Most tellingly, the same bodies were being recycled for different photos.ref 476 One kid claimed he was walking along the street (probably staring at his cell phone), grabbed without warning, and hosed down in front of camera-wielding observers capturing his ordeal.ref 477 An intrepid western reporter, Robert Fisk, actually went to the scene—I’m surprised too—and found nobody knew about the attacks.ref 478 That’s a special kind of PTSD. The public seems to not buy into these stories. Mike Krieger of LibertyBlitz blog caught a Fox News Twitter poll asking whether people were for or against attacking Syria because of the chlorine gas attack.ref 479 With 49,000 votes tallied—a non-shabby sample size—69% did not support action. Within two hours, 140,000 pro war supporters joined in and supported the attacks (Figure 51). We are all getting duped.

    

  Figure 51. Fox poll swinging wildly (h/t @LibertyBlitz)

  Who are these “unarmed and impartial” good Samaritans—these caped crusaders—known as the “White Helmets” who clean up the messes caused by pro-Assad bad guys?ref 480 They are called the Syrian Self-Defense Group. Max Blumenthal, a journalist with considerable experience in the Middle East, calls them a “shadowy group” who also appear to be creating the messes (the arsonist-firefighter combo platter.)ref 481 White Helmeted caped crusaders by day, dark villain mad bombers by night. According to Max, the group is part of a well-funded larger organization called the United States Agency for International Development (USAID) that travels the globe intervening in places like Cuba and Venezuela. The Netherlands figured this out and pulled their support.ref 482

  I repeat my original assertion: our interest in the Middle East is more about war than oil. Eisenhower nailed it in his farewell address.ref 483 It’s about money and power—the military-industrial complex. I found this Creature from Jekyll Island-like documentary about banking and war to be entertaining.ref 484

  

  Nerve Gas Poisonings

  A former colonel in Russian military intelligence who turned MI6 agent and his daughter Yulia were found unconscious on a public bench in Salisbury, England. Headlines flashed that a novichok-class nerve agent put the Skripals into comas. They eventually recovered and were whisked away to a secret location for their safety.ref 485 This is just spy versus spy stuff at best, but Prime Minister Theresa May and the British authorities were quick to condemn the Rooskies:

  “It is now clear that Mr. Skripal and his daughter were poisoned with a military-grade nerve agent of a type developed by Russia. This is part of a group of nerve agents known as novichok. Based on the positive identification of this chemical agent by world-leading experts at the Defense Science and Technology Laboratory at Porton Down, our knowledge that Russia has previously produced this agent and would still be capable of doing so.”

  ~Theresa May, Prime Minister of the UK

  This is a heap of Moose and Squirrel feces. “Hey. There’s novichok in the mass spectrum; let’s start World War III!” The authorities were lying their asses off. The hyperbolic language—”military grade” to distinguish it from the crap sold at Walmart—and the suggestion that only the Rooskies know how to make it is hogwash. These novichoks are some of the simplest organic molecules with biological activity.ref 486 They are no harder to synthesize than Tylenol, so I called them out:

  

  Although that tweet got picked up later,ref 487 it was crickets at the time. As the international sabers began to rattle loudly, I took another Tweet at it:

  

  “That Russia Tweet was a fkn DAISY CUTTER man you are controversial. I applaud it.”

  ~Tony Greer, @TGMacro  

  That “f*cking daisy cutter” did the trick. It was all over the international press that a Cornell chemist threw a flag. As a nouveau Roosky apologist I found myself on George Galloway, Russia Today (RT),ref 488 Stranahan and Nixon on Faultlines,ref 489 Scott Horton,ref 490 and a missed opportunity to hit Al Jazeera. I was warned by nervous Cornell authorities about the propaganda machine RT, to which I asked, “Worse than CNN?” It also brought Tweeters into my feed from intelligence organizations prompting me to STFU.

  The UK authorities say that the incidents in Amesbury and Salisbury are linked, but Professor of Chemistry at Cornell University, Dave Collum, told RT that “it’s impossible to make a connection as there’s been no data presented” to the public to back those claims. He also reiterated that London’s statements of only Russia being capable of producing the novichok chemical were “totally false.” He described the nerve agent as “a simple compound,” which is actually just “three steps from commercially available materials.” “I’ve put it on a final exam in my course… and they [the students] all got full credit. It was so easy, I knew none would lose credit because it’s like asking a bunch of bakers to make chocolate chip cookie recipe,” the US chemist said.

  ~RTref 491

  The boys and girls at Britain’s Porton Down—the nerve center of the UK chemical weapons program(me)—refused to finger the Rooskies,ref 492 causing the rhetoric to target motive:

  “There is no doubt the nerve agent used in the attack was the military-grade nerve agent from the Novichok series. This has been confirmed by specialists, our specialists,…There is also no doubt that the Novichok was produced in Russia by the Russian state. Russia has investigated ways of delivering nerve agents likely for assassination purposes. Part of this programme has involved producing quantities of Novichok agents. The fact that the Novichok was produced in Russia and the fact that Russia has a history of state-sponsored assassinations and the fact that Russia has responded with the usual playbook of disinformation and denial left us with no choice but to conclude that this amounts to an unlawful use of force by the Russian state against the United Kingdom. All of the UK’s actions have been fully consistent with our obligations under the Chemical Weapons Convention.”

  ~Dr. Laurie Bristow, British Ambassador to Russia

  Who had the skill and motivation? Russia and any country interested in making it look like Russia did. That narrows it down to pretty much every sovereign state in the World, including, in the vernacular, the “shitholes.” According to a private communication from a physicist in Finland, novichoks appear to have been made by the US, Iran, UK, Canada, Czech Republic, France, Israel, Sweden, The Netherlands, and Germany. The head of the military laboratory said his lab had made ‘novichok’-related chemicals for testing. His statement was called “unfortunate” by the country’s Prime Minister, and then he got fired.ref 493

  To test my theory that it was easy to make, I put a question on the final exam of my first-year graduate-level organic chemistry course:

  

  Figure 52. 2018 Final exam in Chem 6660, Synthetic Organic Chemistry.

  All got full credit except one kid who obviously will never cut it as a terrorist. It’s worse than that: I think you could pour the four critical ingredients in a bucket simultaneously and end up with a punch that would flatten way more than just a bunch of fraternity brothers (at Yale). These nerve agents weren’t state secrets: their structures were reported in an eight dollar bookref 494 (that apparently only the Russians can afford) or, if you are particularly tech savvy, Wikipedia.ref495

  I wasn’t standing alone in my doubt. Craig Murray, former UK ambassador to Uzbekistan, was screaming at the top of his lungs.ref 496 The Spiez Laboratory at the Swiss Federal Institute for NBC-Protection, a division of the Federal Office for Civil Protection, got a sample and claimed it wasn’t even a novichok that whacked the Skripals but rather a substance used by the United States, the United Kingdom, and other NATO states.ref 497 Seymour Hersh didn’t buy it:ref 498 “When the intel community wants to say something they say it…High confidence effectively means that they don’t know.” Famous British journalist, John Pilger, called the Skripal poisoning “total bolox” and wondered “Why do we journalists write down what governments tell us?”ref 499 (That’s a trick question: they are made men and women, many of whom on payroll.) The Ron Paul Institute noted that the British claim of Russian assassinations “reads like another desperate repetition of the falsehoods and insults towards Russia issued by Theresa May’s lame-duck Government.”ref 500 The most interesting theory is that the Skripals got shell-fish poisoning from a seafood restaurant they ate at that day.ref 501

  The Rooskies blamed Porton Down, which is only eight miles from Salisbury and had recently cut 132 staff (motive), prompting their spokesperson to say, “There’s no way that anything like that would ever have come from us or leave the four walls of our facilities.”ref 502 The internet sleuths dug in. Nobody could understand how a contaminated door nob at the Skripals could fail to kill the Skripals—there is a non-lethal dose, of course, so that logic is wrongref 503—and why nobody else got sick.ref 504 Before long, Skripal was being connected to the Steele Dossier.ref 505 I am not joking. I dissed that idea until more evidence emerged.ref 506

  “One should be mindful that the chemical components or precursors of A-232 or its binary version novichok-5 are ordinary organophosphates that can be made at commercial chemical companies that manufacture such products as fertilizers and pesticides.”

  ~Ex-Soviet Scientistref 507

  This ex-Soviet scientist who wrote “the book” on Soviet nerve agents was remarkably obtuse, seemingly playing both sides.ref 508 Go figure. One exchange was particularly entertaining:

  Mirzayanov: It is obvious to me that Moscow hoped that no one would catch them.

  Interviewer: But you published the formula for novichoks eight years ago.

  Mirzayanov: I don’t know if the FSB [Russia’s security group] saw my book.

  As the story began to die down and people were left pondering the whereabouts of Yulia Skripal—maybe with that Vegas security guard?—it happened again. Another couple in Salisbury got poisoned supposedly by somebody filling her Chanel perfume dispenser with eau du novichok.ref 509 She died; he recovered. Theresa May was at it again:

  “No other country has a combination of the capability, the intent, and the motive to carry out such an act.”

  ~ Prime Minister Theresa May on the Salisbury poisonings

  “Mr Speaker, we are quite clear that Russia was responsible for this act. As I set out for the House in my statements earlier this month, our world-leading experts at the Defense Science and Technology Laboratory at Porton Down positively identified the chemical used for this act as a Novichok – a military-grade nerve agent of a type developed by the Soviet Union. We know that Russia has a record of conducting state-sponsored assassinations and that it views some former intelligence officers as legitimate targets for these assassinations. And we have information indicating that within the last decade, Russia has investigated ways of delivering nerve agents probably for assassination, and, as part of this programme, has produced and stockpiled small quantities of Novichoks.”

  ~Theresa May on the Salisbury poisonings

  This time they rounded up a couple of Roosky assassins, but that story began to fall apart almost immediately. The two patsies were fingered by two officers who were said to have a “rare skill in memorizing faces.”ref 510Hokey Smokes, Bullwinkle: now the are just lying like teenagers. The residue detected in the assassins’ hotel room found two months later could not be detected the following day.ref 511 That’s not how chemistry works, folks. As they separately walked down the jetway at the airport a camera caught them at the exact same position in the jetway with the exact same time stamp to the second (Figure 53).ref 512 If they were even a second apart, one picture would necessarily show two men. Camera’s showed them walking around London far away from the crime scene minutes before the putative crime, walking in the wrong direction.ref 513 The camera angles were also wrong.ref 514 If this was a Russian hit, they have lost their groove; real assassins get the job done (bumper sticker). One disturbingly knowledgeable tweeter noted that serious assassins have an independent team do the reconnaissance.

  

  Figure 53. Fake photos showing two spies at the same place at the same time.

  So what is it all about? More sanctions. More Russophobia. More demonizing of Putin. The New Cold War. Theresa May’s Government imposed sanctions on Russia, including the expulsion of 23 diplomats.ref 515 While France refused to play along,ref 516 the US chummed the water:

  “This attack on our Ally the United Kingdom put countless innocent lives at risk and resulted in serious injury to three people, including a police officer…To the Russian government, we say, when you attack our friend you will face serious consequences.”

  ~US State Department’s Official Statement

  The Russians weren’t happy:

  “The Skripal poisoning was not an incident but a colossal international provocation… Any threat to take ‘punitive’ measures against Russia will meet with a response. The British side should be aware of that.“

  ~Maria Zakharova, Russian Foreign Ministry Spokeswoman

  “I simply don’t have any normal terms left to describe all this…expulsions won’t go unanswered…I said that the United States took a very bad step by cutting what very little still remains in terms of Russian-American relations.”

  ~Sergei Lavrov, Russian Foreign Minister

  Rob Slane of Blogmire blog summed up the situation nicely:ref 517

  “It’s all remarkably clever, and it seems to have been specifically designed to generate the impression to the uninitiated that investigators are simply making it up as they go along.”

  Any Russian will tell you that when things look bleak, drink vodka. A Bristol distillery promptly offered a new product, “Novichok Edition.” Staggering from withering criticism, they found themselves apologizing, as often happens when alcohol is involved.ref 518                                   

  

  Kavanaugh versus Blasey Ford

  “We now live in an age that risks a new form of sexual McCarthyism. . .  The best way of assuring that we don’t is to accord every person, regardless of his status, the kind of fundamental fairness we would expect for ourselves if we were accused.”

  ~Alan Dershowitz, Harvard University

  

  At risk of life, limb, and all forms of appendages, although I punted the ball on a lot of political topics this year, I’ve got to write about the Kavanaugh hearings because I believe the casual observer missed most of the plot. Quick disclaimer: As a pro-choice atheist I probably have a few bones to pick with Kavanaugh’s politics. Highly respected journalist Ambrose Evans-Pritchard described his dealings with Kavanaugh in unflattering terms years back during the Vince Foster and Whitewater investigations.ref 519,520 (That just got weird fast.) Unfortunately, hearings that were supposed to vet his credentials to be a Supreme Court justice were reduced to one simple question: Is Brett Kavanaugh a drunken serial rapist? Kinda gives me pause.

  The protests against Kavanaugh began the minute his nomination was announced. Protesters hired by companies like Crowds on Demand to “astroturf” any issueref 521,522 sifted through stacks of signs opposing all possible nominees to pull out the anti-Kavanaugh signs.ref 523 As the story goes, Christina Blasey Ford (CBF) contacted Senator Dianne Feinstein about a sexual assault by Kavanaugh when she was 15. The details were both sketchy and fluid, possibly because she had forgotten about the whole affair until 2012 counseling sessions dredged up suppressed memories.ref 524 Feinstein paid for a lie detector test and then sat on the story until the time was right to pounce. I suspect that CBF thought she could drop a quick grenade and move on to a new career as a decidedly elevated heroine of the progressive community. As so often happens, all bets are off once the first shots are fired. Her name was leaked, and the journalists were off and running.

  Reinforcements showed up. A woman claimed Kavanaugh swaffled her in the face at Yale, but she was decidedly fuzzy on details and it was a bit late to swab her face for DNA.ref 525 Another showed up with the Lawyer of the Porn Stars, Michael Avenatti, claiming she witnessed a dozen Kavanaugh-sponsored gang rapes until she realized how self-incriminating that sounded.ref 526 In an odd coincidence, she had previously filed a sexual harassment suit against New York Life . . . using the attorneys representing CBF.ref 527 (Wait. It gets weirder.) She and Avenatti are now under investigation for bearing false witness.ref 528 A guy claimed he witnessed Kavanaugh rape a woman on a boat until the FBI entered the scene. He lost his bearings fast and found himself out on the gangplank.ref 529 A new Jane Doe sent an anonymous letter describing being raped by Kavanaugh in a car, but she’s now not-so-anonymously heading for an altogether different hearing after admitting it was a fib and that she had never met him but was pissed off.ref 530 NBC knew that at least one of his accusers was lying like a dog but ran with the story anyway.ref 531 I’m old enough to remember when NBC was staffed by respected journalists.

  “We have already reviewed your client’s allegations. We focus on credible allegations. Please stop emailing me.”

  ~Mike Davis, U.S. Senate Committee on the Judiciary, to Michael Avenatti

  Kavanaugh detractors asked inane rhetorical questions like, “Why would they lie?” You just can’t fix stupid I guess. The anti-Kavanaugh #MeToo team submitted that all those accusers, no matter how non-credible when in isolation, couldn’t all be lying. Recall that over 100 people found syringes in their Pepsi cans.ref 532 Why would they lie? They were all convicted of fraud. The pundits seemed to forget that rapists are determined by 12 of their peers in courts of law. With the accusers’ stories getting scalded by the light of day as non-hyperbolically summarized by The Weekly Standard,ref 533 David French,ref 534 Byron York,ref 535 and others.ref 536 the future of the Supreme Court came down to just two people in an epic he said–she said battle in the Congressional Octagon.

  “I only drank beer to excess one time in college. When? If I’m remembering right, it was from 1977 to 1981.”

  ~Andrew C. McCarthy, contributing editor of the National Review

  “I do not believe that the temperament of Kavanaugh can be judged from this one, unique circumstance. He was accused, among other things, of leading a virtual rape gang in high school. That would leave most people rather ticked and angry.”

  ~Jonathan Turley, constitutional law scholar at George Washington University

  Kavanaugh threw early punches trying to make the case in a pre-game interview that he was a choirboy, but nobody bought it. His yearbook showed an amazing résumé but included jargon-rich comments typical of young men, showing he might have been a hooligan at an all-boys prep school. Allusion to a girl dubbed “Renate Alumnius” mentioned by name only (except to those who do not know what that semi-colon thingie is) was inferred as evidence that she was a favorite among the boys—a slut in the vernacular—but she was also one of the 65 female signers of a letter of support saying they knew Kavanaugh and he was honorable.ref 537 Police records from New Haven showed that Kavanaugh may have chucked a glass of ice on somebody at a bar while at Yale.ref 538 That proto-ice bucket challenge was morphed into a violent-drunk plotline. CBF had a yearbook too that was scrubbed but retrieved by the WayBack Machine.ref 539 It is said to be salacious, but I didn’t bother to look; it’s not relevant.

  During the hearings Kavanaugh threw what appeared to be tantrums. I think they were ill-advised in retrospect, but I have no doubt that they were advised, not just spontaneous outbursts. Many say his bahavior was unbecoming of a judicial nominee. Here’s how I see: If I am being falsely accused of such heinous crimes, I would get so medieval that my next hearings would be in a court of law looking at serious time spent in a condo that locks from the outside.     

  

  “There is something deeply unsettling in the scene of a United States senator going through the yearbook entries written by a teenage boy in High School as a material issue for a confirmation to the United States Supreme Court.”

  ~Jonathan Turley

  In a matter of a few months, Kavanaugh had been reduced from the lofty position of Supreme Court nominee to mean, beer-guzzling gang rapist displaying violent mood swings. As to the accused assault of CBF, he pulled out a calendar showing that he was out of town when the alleged assault took placeref 540 and has acute CCHD (compulsive calendar hoarding disorder). The dog piling came from every direction and was astonishing. USA Today accused him of being a pedophile (Figure 54). The American Civil Liberties Union (ACLU) committed $1 million dollars to keep a Supreme Court nominee off the court. Wrap your brain around that irony. Kavanaugh’s current employer, Harvard University, managed to start a Title IX charge against him and implied that if he did not get confirmed, he would be unemployed.ref 541

  

  

  Figure 54. Fair and balanced

  The battle was fierce. Lindsey Graham put on a now-legendary tirade:ref 542

  “This is the most unethical sham since I’ve been in politics. . . . Boy, y’all want power. Boy, I hope you never get it. I hope the American people can see through this sham, that you knew about it and you held it.”

  ~Lindsey Graham, US Senator from South Carolina

  Oddly enough, the media immediately began omitting, “Boy, y’all want power. Boy, I hope you never get it.” I think it had a little too much truthiness.

  The day of CBF’s testimony finally arrived, and what a show! Rachel Mitchell, the questioner with 25 years’ experience prosecuting sex crimes, allowed the skanky old white guys with sordid pasts and taxpayer-funded slush funds to bribe their own victimsref 543 to sit back and watch. The PTSD that caused CBF to forget the entire event until it was resurrected by therapy in 2012 gave way to lurid details with “100% confidence.”ref 544 She described how she had a second door installed in her house out of feelings of insecurity from the decades-old event and leaving family members baffled at what was going on in her head. Even flying was said to be a horrifying experience. CBF described her lie detector test as a bewildering new experience. Mitchell followed up with an equally bewildering question as to whether CBF had ever helped anybody else take one.ref 545 WTF was that about? Hold that thought. Mitchell subsequently summarized her concerns in a letter,ref 546 concluding that CBF’s testimony did not pass Mitchell’s smell test (although the GOP did hire her.) The court of popular opinion had a few opinions of its own, expressed in thoughtful, measured tones:

  

  The press referred to her testimony as emotional, gripping, compelling. She described the trauma of being thrown on a bed and barely escaping. So what is the problem here? Let’s just hang the bastard. I’m gonna open big: I don’t care what all the sycophantic virtue-signalizing pundits had to say, CBF was not credible. I know enormous numbers of women in academics. They all have gravitas. Teaching anywhere from 40 to >100 lectures a semester grooms stage presence and amplifies the gravitas. Her résumé shows that she is rather accomplished.ref 547 Although I could quibble over factual errors in what she said (and there were a quite a fewref 548) the problem was in the presentation. She spoke like a 9-year-old girl, a rather pathetic one at that. We all had childhood memories that were ruined by our childhood, and then we #moveon. I grew up with a drunk mother—a face-in-her-mashed-potatoes drunk mother. It groomed independence. Oh, now I can hear you saying, “But Dave, you privileged punk: You’ve never been sexually assaulted,” and you would be wrong. When I was about 8 years old—even unresurrected memories get a little fuzzy in detail—my brother and I were molested by an eye doctor named Dr. McGraw who grabbed our nuts for an hour straight. “First or second? I’ll take neither, you goddamned perv!” If I had been a little older, I probably could have reshaped his Prince Albert with a ball-peen hammer. Instead, we told my dad, ate dinner (probably mashed potatoes), and sat down to an episode of Mr. Ed (“Willlburrrrrr”).

  When a well-known voice actress called out CBF’s fake voice—her “fry”—on YouTube, the actress was promptly fired.ref 549 I tried to find footage of CBF lecturing and came up with a goose egg. I’m waiting for some to show up after the fact, showing her in her natural state. Some screen grabs of her RateMyProfessor.com evaluationsref 550 provided insight into her unedited and unflattering demeanor. For example:

  “Prof. Ford is unprofessional, lacks appropriate filters, and I am honestly scared of her. She’s made comments both in class and in e-mails, if you cross her, you will be on her bad side. I fear to think of the poor clients that had to deal with her while she got her MSW and her LCSW. Absolutely the worst teacher I ever had.”

  ~RateMyProfessor.com from a furry screen grabref

  Supporters cried, “Fake!” OK, but how would we know? The originals got scrubbed from the website (probably with help from the Googleheads.)ref 551 Be my guest: go check.

  And when you thought it couldn’t get weirder, her friend of 10 years and boyfriend of 6 years said in a sworn affidavit that CBF never mentioned the assault and flew in planes (including some sketchy ones) many times without fear.ref 552 The new front door installed to alleviate her PTSD just so happened to allow her to illegally rent part of her $3 million house to affluent Google techies, and its timing failed to match her claims.ref 553 The question about helping others with a polygraph is the plot thickener. The boyfriend testified that he witnessed CBF coaching a friend on how to pass a polygraph test.ref 554 Pretty good for somebody who has never taken one. Must have worked, because that friend soon thereafter joined the FBI and stayed until soon after Trump’s win “triggered” her resignation. CBF’s decidedly shifting memories of the assault that had been suppressed until 2012 are curious given that she is a psychologist. By the way, what is her research specialty? Glad you asked: suppressed memories and how one can shape them and even create new ones.ref 555,556

  Then it gets super weird. CBF is said to have CIA ties, FWIW.ref 557 Sounds like internet legend, but renowned pundit David Icke seemed to buy it.ref 558 Her parents also have been tied to the CIA.ref 559 Her FBI buddy and handler, Monica McLean,ref 560 worked for Preet Bharara,ref 561 a highly political former prosecutor. One of McLean’s superiors answered to Jim Margolin, who just so happened to be working the Michael Cohen case.ref 562 Another CBF handler during the hearings had also helped Anita Hill take on Clarence Thomas.ref 563 Politics is a very dirty business indeed. CBF’s brother has been tied to Fusion GPS,ref 564 the same clowns who faked the Trump–Russia collusion dossier. My head just exploded, destroying yet another keyboard.

  

  Let’s wrap this up, ACLU claims aside, to make a case against somebody, you need data. Otherwise, it’s just a lynch mob. Just ask Tom Robinson. Some subset of the #MeToo movement doesn’t agree with this, but they are wrong. It is a profound problem that sexual assaults often leave no evidentiary trail. I hasten to add that if you read Martha Stout’s The Sociopath Next Door,ref 565 you’ll learn that an estimated 1 in 25 people are said to be clinical sociopaths. Stir in dirty politics, and the odds of flawed testimony soar. You’re welcome to blindly take people at their word, but on issues of such polarizing importance, you would be a fool (or, worse, a virtue signaler). In short, I will not just believe you in the absence of evidence. That’s not how Western justice works.

  The final chapter may be unfinished. The democrats took a beating for tactics that seemed evil even among independents.ref 566 Of course, they blamed Avenatti, not themselves.ref 567 After Stephen Colbert asked, “So how did our politics get so poisonous?” one of his staffers, Ariel Dumas, expressed the left’s horror at their failure and solace in their pyrrhic victory:

  

  Oh dear Ariel. You are a hateful person. I hope I haven’t offended you. I presume you already know this.

  The political establishment has no further use for CBF. It did, however, leave her with a GoFundMe campaign, which kept the spigot cranked open even after everything quieted down, raising over $867,000 to pay off whatever bills and costs were incurred during the ordeal (which is none because the DNC picked up the entire tab).ref 568 I’m sure it helped her remember why she did it.

  

  One could argue that the Kavanaugh story is one of redemption—a potentially precocious teen showing some questionable judgment. Whoopie Goldberg, Malcolm X, Nelson Mandela, and Tim Allen did. I’m willing to let the ambiguity of what Kavanaugh may or may not have done as a teenager be corrected by time as well.

  A GoFundMe campaign also left Kavanaugh with >$500,000, which he promptly and certainly mandatorily donated to charity.ref 569 Kavanaugh is now a justice on the Supreme Court of the United States. Those on the left may try to impeach him.ref 570 If they fail, maybe they will take the case all the way to the Supreme Court. Pundits on Fox enjoyed the final victory by, no kidding, downing a couple of beers on air.ref 571 Lindsey Graham seems to have recovered, displaying what may be the smuggest look I have ever seen. That pedophilic eye doctor in need of a beating with a ball-peen hammer is probably dead, but his legend lives on in his nickname: Quick Draw McGraw.

  

  Epilogue: A video of Kavanaugh and his wife celebrating with Trump brought up one last serious question: Does he beat his wife? Oh FFS! Women claiming to work with battered women, however, say they have seen the look a million times. I confess that I watched the damning footageref 572 it quite a few times and, while the narrative is a reach, I could be convinced. This one is gonna live rent-free in my head for awhile.

  Political Correctness: Adult Division

  “Political correctness is elevation of sensitivity over truth.”

  ~Bill Maher, comedian

  The construct of political correctness finds its roots in 1930s communism, in which it was “a semi-humorous reminder that ‘the Party’s interest is to be treated as a reality that ranks above reality itself.’”ref 573 A national survey showed that 80% of American adults think that political correctness is a problem,ref 574 suggesting that a relatively minor 20% are highly educated virtue signalers. Technically, I am a doctor of philosophy, but I identify as a medical doctor and can write you a prescription for a new pair of gonads. Virtue signaling—saying things to impress those around you to show that you are thinking correctly—is said by Taleb to be like paying for indulgences. It is a form of lying that, according to late evolutionary biologist John Maynard Smith, is a way of getting laid. He called it the “sneaky fuckers strategy.”ref 575 But am I not also virtue signaling to the 80% when I pejoratively call the signalers a bunch of wankers? No, because I may be dead wrong but I’m not lying.

  A malign interpretation of political correctness—PC for short—is how the politically far left and left-wing power structure exert control over the population. Don’t blame me: I got this little thesis from Malcolm X:ref 576

  “If you study the structure of the negro community—economically, politically, civically, psychologically, and otherwise—it’s controlled by the white liberals who usually pose as the friend of the negro who actually differs from the white conservative. . . . I’m suspicious of whites who join negroes and always have to be in the lead. Who always have to be at the top. Who always have to be in negro organizations. Let them give some advice to negroes and stand on the sidelines. . . . [Negro leaders] are puppets who have been put in front of the negro community.”

  ~Malcolm X, Nation of Islam and civil rights activist

  PC encompasses all sorts of oddities, including cultural appropriation and overt disdain for the hat trick of evil—white/heterosexual/male. The blunt but highly effective tool is to hang a repugnant-sounding label on your opponents—misogynist, racist, homophobe, or Canadian—which is guaranteed to send them scrambling for safe spaces (or Jonestown). If the label sticks, you’ve vanquished the bastards.

  2018 may have been a turning point. One senses that pushback will not necessarily get you fired. (Keep your savings account topped off, just to be safe.) The Supreme Court ruled that wedding cake bakers do indeed have constitutional protections.ref 577 We saw the emergence of Jordan Peterson, a decidedly no-frills University of Toronto psychologist who cut his teeth opposing mandated PC speech.ref 578 All imaginable labels have been tattooed on Jordan’s ass, but the guy has thought deeply about his beliefs and is a worthy foe. In what became an epic must-see interview—a meme in the making—he eviscerated Cathy Newman.ref 579  Newman was so brutalized by his logic and her inability to brand him by shoving words in his mouth that she embarked on a post-debate victim march and enrolled herself in a concocted witness protection program.ref 580 No, Cathy: Your beating was painful but only metaphorical. The left’s hatred of Jordan helped sell millions of copies of his book that would have sold a few hundred copies to friends and family otherwise (see “Books”). As is so common nowadays—what kind of word is nowadays?— ideas pose a threat. We can’t have any of those! Peterson’s ideas took root so fast that his personal YouTube channel was closed down but then reinstated.ref 581 I watch his interviews like a coach watches game films to see how not to get beat by skullduggery. Cathy would have owned my sorry ass.

  Let’s take a peek at the year’s PC Follies in the adult world using a bulleted list—Can I use the word bulleted?—revealing what the “batshit crazies” got into this year. You may find yourself checking the mirror for facial drooping and listening for slurred speech:

  • A rapist identified as a trans woman was incarcerated in a women’s prison, where she sexually assaulted four more women.ref 582
  • A survey claims that 50% of millennials are socialists and that 75% of those don’t know what it means.ref 583
  • The #MeToo movement has spread to corporate America, wherein men supposedly meet to “talk through their feelings, allowing themselves to grow more vulnerable, and, yes, to cry together.”ref 584 I’m tearing up just thinking about it (sob). Despite the fact that this is clearly hyperbolic crockery, some have expressed concerns that these are men’s-only groups.
  • A woman hired by Facebook to review content flagged as highly dubious has sued Facebook for being “exposed to highly toxic, unsafe, and injurious content” that caused PTSD.ref 585
  • A controversial release of a pedophile on bail got the perp’s decapitated corpse delivered to the judge’s front door.ref 586 That, by the way, is not PC.
  • Transgender women continue to do shockingly well in women’s sporting events, including a gold medal at the 2018 UCI Masters Track Cycling World Championships.ref 587 To all you moms and dads who drove your daughter to practices—to the moms in the must-see iconic P&G “Thanks, Mom” Olympic commercialref 588—just remember that everybody is a winner.
  • Columbus Day celebrations were canceled in Columbus, Ohio.ref 589
  • The pink pussy hat has been deemed offensive to transgender women and gender non-binary people who don’t have typical female genitalia (pussies) and to women of color, whose genitals are not always pink.ref 590
  • GOP candidate Ron DeSantis got slammed for telling voters not to “monkey it up” by voting for his gubernatorial opponent in Florida (who happens to be black).ref 591 The left went nuts, saying they have never heard of this phrase or, apparently, this thing we call Google. Obama showed his white-nationalist roots by saying he “monkeyed around” with something.ref 592
  • NASCAR’s Conor Daly lost sponsorship of Lilly Diabetes owing to a racially insensitive remark made by his father in the 1980s.ref 593
  • Silicon Valley elites are spending $20 per gallon on raw water—water that is fully untreated.ref 594 An old SNL spoof ad sold Swill, mineral water from Lake Erie.ref 595
  • The Miss America pageant is removing the bathing suit competition.ref 596 Major news outlets reporting the story invariably showed pictures of prior contestants in skimpy bathing suits. They are replacing this leg of the competition with a quantum mechanics exam and calling it the Cal Tech Admissions Pageant.
  • A Canadian restaurant manager booted a customer for wearing a MAGA hat. Customers choked down their bear-meat omelets and left irate.ref 597
  • A woman tried to hang her kid in the basement—we’ve all done that one—and struck a bicyclist and a car driven by a pregnant woman while being pursued. The judge gave her probation.ref 598 I must confess that she is statistically unlikely to repeat that again.
  • The new celebrity fashion trend is to get facials made from cloned baby foreskins.ref 599 The nickname “Dicknose” seems appropo although something more subtle like Smegyn would work.
  • People are squealing for the rights of sex dolls to not be abused.ref 600
  • The Brits, never bashful about asking somebody to hold their beers, are discussing whether to make misogyny a hate crime or just let the birds fend for themselves.ref 601 Some note that “everything in the UK has been criminalized except crime.”
  • Microsoft is warning customers using Office, Xbox, Skype, and other products that the company is prohibiting offensive language and inappropriate content. Can I use phrases like “totalitarian”, “Stalinist”, or even “rot in hell fascist pigs?”ref 602
  • The mayor of London tweeted that “there is never a reason to carry a knife. Anyone who does will be caught, and they will feel the full force of the law.”ref 603
  • A restaurant in Britain charges white customers £13 more than people of colour—it’s spelled color, you plonkers—to challenge racial wealth disparity.ref 604 I would guess that the owners personally helped narrow the wealth gap.
  • The French had their hold-my-Chablis moment: They are considering a bill to make cat-calling of women a crime punishable with a €750 fine.ref 605
  • A Polish brewery, The Order of Yoni, produced a beer marketed as being brewed using vaginal secretions from two smoking-hot models.ref 606 Yoni is Sanskrit for vagina. (I’m not joking . . . and it’s not PC either.)
  • Students in Indonesia are making moonshine out of used Tampons.ref 607
  • Black Lives Matter and former NAACP kingpin Shaun King was exposed for having some very white parents.ref 608 Rumors of a romance with Rachel Dolezal remain unconfirmed.
  • #MeToo activist Asia Argento is said to have paid off a 17-year-old (underage) actor to shut him up about an affair. She now claims her underage love muffin assaulted her.ref 609
  • Rhode Island is pondering a one-time $20 fee to access porn sites or other “offensive material” online.ref 610 That really sucks.
  • High fashion’s latest trend is said to be male models wearing prosthetics to look pregnant and macho men wearing bras.ref 611 The marketing head at Target says they can’t keep them in stock.
  • Literature published by a California health information provider, in an effort to deal with modern gender issues, refers to the vagina as the “front hole.”ref 612 Those who hatched this idea are now called “A-holes.”
  • A Roanoke City social services worker was fired and escorted from the building for having a concealed carry permit.ref 613 Not the gun; just the permit.
  • Nurses in South Africa have to acknowledge their white privilege before treating aboriginal patients (or get their heads hacked off).ref 614
  • The BBC is reducing the salaries of some male journalists after criticism over unequal pay.ref 615 Can’t say I saw that one coming.
  • Craigslist shut down personal ads—“SWM looking for hot monkey love”—after Congress passed a bill on sex trafficking.ref 616
  • The Manchester Art Gallery took down pre-Raphaelite paintings of naked nymphs to appease the pervs who think other pervs can’t look at them as just art.ref 617
  • To fight obesity, the UK wants to legislate that pizzas shrink or lose their fattening toppings.ref 618 Are you guys trying to have a revolution?
  • I personally heard a rumor that an employee at one of the FAANGs got reprimanded by human relations for calling a tall colleague a “long drink of water.” The correct greeting is, “Hey, Stretch!”
  • A judge meted out a 25-year sentence without parole for drunk driving in which nobody got hurt.ref 619 I imagine there was a chronic problem, but you get less for shooting your spouse. Something like house arrest with an ankle bracelet for tracking might have sufficed.
  • Team USA was criticized for cultural appropriation for having Native American motifs on their gloves at the Winter Olympics.ref 620 Lacrosse teams around the country are scrambling to figure out how to play without sticks.
  • The former head of the CDC grabbed the ass of a friend of 30 years at a party, apologized, and nine months later was arrested and fired.ref 621 The woman said she worried about hurting someone by coming forward . . . and then wrote an article in the New York Times.ref 622 It just so happens that he was up to his ass in the politically charged vaccine debate.
  • Swedish authorities pixelated the face in the photo of a man wanted for murder.ref 623

  Anything called “The War on . . . ” is likely to be a bad idea and ineffectual. The War on Big Gulp Sodas has given way to the War on Straws. Restaurant owners who hand out unsolicited straws in California are subject to $1,000 fines and 6 months in prison for each infraction.ref 624 The originator of the movement, Milo Cress, claimed that 500 million straws are handed out unnecessarily. Milo’s data comes from—wait for it—a phone survey of straw manufacturers he conducted in 2011 when he was just 9 years old.ref 625 The Raw Water lobby was unconcerned because it sells its products in plastic bottles. Some wonder if a plastic straw conviction will keep you from getting a gun permit.

  Starbucks is remarkably progressive, but it discovered that the intolerant left eats its own. It got into a spat about whether several black customers were loitering.ref 626 It’s likely that mistakes were made. A corporate-wide policy change to tolerate all such loiterers has now converted Starbucks into a safe space for crackheads.ref 627The bathroom-dwelling coke-snorters will have to bring their own straws. Starbucks’s new inclusiveness training also warned employees not to “accidentally mistake scruffy-looking husbands for homeless men.” Finally, somebody defends me.

  “Dumbass fucking white people marking up the internet with their opinions like dogs pissing on fire hydrants.”

  ~Sarah Jeong, journalist and New York Times editorial board

  Journalist Sarah Jeong was brought onto the editorial board of the New York Times. The newspaper claims to have been fully cognizant of her polarizing tweets over the years. How polarizing? She supported killing cops, killing men, and being remorseful that she will reach the end or her life without having killed a single guy.ref 628,629,630,631,632 The defense that she was fighting trolls by illustrating troll tactics fell apart when the vile tweets just kept surfacing spanning years.ref 633 Vox noted that “a lot of people on the internet today [are] confusing the expressive way antiracists and minorities talk about ‘white people’ with actual race-based hatred, for some unfathomable reason.”ref 634 The Verge, where Jeong still worked, described any assertion of racism in Jeong’s tweets as “dishonest and outrageous.”ref 635 Slate, a publication just slightly left of Putin, came to her defense referring to the work of conservative trolls.ref 636 Of course, she was fired immediately and booted off Twitter. Just kidding. She kept her job and got verified on Twitter because we couldn’t possibly know whether it was her or just some generic hateful, foul-mouthed troll. She hit peak irony when old tweets trolling her current employer surfaced in vast numbers.ref 637

  “After a bad day, some people come home and kick the furniture. I get on the Internet and make fun of The New York Times.”

  ~Sarah Jeong

  I didn’t write about media this year—I had plenty of material but not enough time—but I will say that with Constitution protections offered to journalists come Constitution-level responsibilities. So many of you really suck now. I am talking the bottom-of-the-barrel, “suck the chrome off a trailer hitch” levels of suck.

  There is nothing more sanctimonious than Hollywood multi-millionaires shaking their Oscars and talking about oppression. I find it odd that every TV show and movie now includes profound violence and multiple scenes where a lead actor sweeps off the top surface of a desk or kitchen table, plops some starlet’s yoga-tightened ass down, and bangs her lights out. Aren’t they supposed to ask permission—“May I touch your breast?”—or is that rule negated when your paycheck is on the line? Let’s see what Hollywood was up to this year:

  • In the moon-landing movie First Man, actor Ryan Gosling refused to plant the American flag. 
  • The BBC faces backlash for its decision to cast able-bodied Charlie Heaton in its adaptation of The Elephant Man rather any one of dozens of seriously deformed men who decided their best option was to go to USC’s acting program.ref 638
  • Hollywood pulled Scarlett Johansson from the role of a transgender man in Rub and Tug because she is not a transgender man.ref 639 That’s why it’s called acting. Daniella Greenbaum defended casting her, but then quit at Business Insider when it pulled her column.ref 640 On the bright side, it was a principled call because they surely didn’t boot Scarlett to pump up the box office proceeds.
  • Bill Cosby was found guilty of sexual assault. Good riddance.ref 641
  • ABC executives regret their “knee-jerk” decision to fire Roseanne Barr because of a few tweets (that I happen to think had no racial intent) after realizing that destroying its best show (and her career) was an expensive blunder.ref 642 Norm MacDonald defended Roseanne for saying the #MeToo movement has gone too far and then was promptly pulled from a Tonight Show appearance.ref 643
  • The Weinstein Company filed for bankruptcy, ending all non-disclosure agreements. This could get interesting.ref 644
  • Elijah Wood had spoken out boldly about pedophilia in Hollywood saying, “It was all organized. There are a lot of vipers in this industry, people who only have their own interests in mind. There is darkness in the underbelly . . . victims can’t speak as loudly as the people in power. That’s the tragedy of attempting to reveal what is happening to innocent people: They can be squashed.”ref 645 Elijah now declares no direct knowledge of pedophilia in Hollywood.ref 646 The pervs got to him. 
  • Having attained predator status as an alleged pedophile, Kevin Spacey got written out of the script of House of Cards.ref 647 His new movie, somewhat ironically named Billionaire Boys Club, which was already in the can, opened in eight theaters and made $287.ref 648 That is not a typo. It would have been less if the one guy who went and sat in the back pleasuring himself—let’s call him just “Kevin”—also bought a large Coke and popcorn. (How do you know when it is bedtime in the Spacey house? When the big hand touches the little hand.)
  • The Academy Awards hit an all-time low Nielsen rating—a 24% drop year over year—because sanctimony doesn’t sell.ref 649 Remember the olden days when they would defend victims like Juanita Broaddrick? Me neither.
  • The new Jack Ryan series was “blasted” for pushing “masculine American heroism” and “white male entitlement.”ref 650
  • My wife dragged me off to see Mama Mia (the sequel). The four men in the theater that night were literally congratulating each other for falling on their swords. By movie’s end, I wondered if Hollywood may start delivering us leading men—three in this case—lacking any semblance of masculinity.

  PC loses its humorous component when it goes violent. Antifa seems to have taken over Portland, Oregon. I never expected to read about “The Battle of Portland.”ref 651 This liberal enclave seems to be unprotected by the police, who were told to stand down.ref 652 Antifa has now been declared “domestic terrorists” by the authorities.ref 653 Portland citizens cheered as a squad of police scrubbed the streets of Antifa rascals harassing passersby.ref 654 Antifa vandalized the Metropolitan Republican Club in New York City and sees no irony in talk about punching Nazis.ref 655 A professor of philosophy who cold-cocked an unsuspecting person is out on $200,000 bail.ref 656 Apparently, if you are a prominent republican, you are no longer eligible to dine in public because the intolerant left has the right to make you miserable. A rare unmasked Antifa thug screamed vile insults to the widow of a 9/11 victim (a fireman).ref 657 The assailant escaped harm by a razor-thin margin. The Unmasking Antifa Act of 2018 proposes laws prohibiting protesting with a mask.ref 658 I’m fence-sitting that one. An investigative journalist undercover probing Antifa appears to have been whacked shortly after he vowed to expose George Soros.ref 659

  A friend of the family supported this no-rules approach to politics, prompting me to “lose my shit” and state, “You are declaring war. Do you realize that my team has all the fucking guns?” This prompted my wife to send me to the store on an errand.

  

  There is a really ugly side to the gender battles that I had underestimated until now. Let’s open with a tweet that sat in my notes for months:

  “Well, I don’t want to go up and talk to her, because I’m going to be called a rapist or something.”

  ~Henry Cavill, actor who plays Superman in the DC universe films

  Mike Pence, darling of the left (not), noted his policy to never have dinner alone with a woman who is not his wife.ref 660 This got called the Pence Rule and led to some investigative journalism. What they discovered is that corporate America, in addition to all the misogynist white men, is heavily populated with men fearing that they will be accused of something without cause.ref 661 Some said that they won’t ride alone in an elevator with a female colleague. Others have age cutoffs, below which the women are avoided. This is truly horrifying—what economists might call a negative externality of higher order. Young women need access to mentoring and opportunity. Fear of association—call it a phobia if you wish—is profoundly destructive. One gent said that the solution is obvious: “Just don’t be an asshole.”ref 662 He is trivializing this paradox (and virtue signaling). We are moving women and minorities into positions of power and authority. Society hasn’t completely worked out some of the details.

  Political Correctness: Collegiate Division

  “The wind of freedom blows.”

  ~Stanford University’s motto

  “You can’t spend your whole life worrying about your mistakes. You fucked up! You trusted us.”

  ~Otter in Animal House

  Many administrators, professors, and students are working their asses off to get it right, going about the business of scholarship and education. Parents hand us their kids and ask us to equip them with technical and social skills needed to become functional adults. They also ask us to keep them healthy and safe for their first road trip. Most exceed our expectations outside the control of their parents (at least before cell phones). Forget not that these students descended from mammoth hunters. The headlines you read and YouTube clips you see of faculty and students acting like assholes belie the thousands of success stories that would make you proud and that Make America Great. (OK. Maybe I’m pressing my luck now.) There is, however, a creeping Tyranny of the Few—noisy whack jobs—who can alter the tenor of campus life. When they start throwing their feces, all hell breaks loose. I would call it Tyranny of the Minority, but that might be misconstrued as some racist dig, and I would find myself in front of a tribunal or angry mob (which I file in the Department of Redundancy Department).

  “The darkest part is not the rise of radicalism, but the passive acquiescence of the vast majority of faculty and students.”

  ~Lee Jussim, professor of psychology at Rutgers University

  “When they come to you—your kids—and say, ‘I’d like to study critical race theory and intersectionality and bullshit 101 whiteness.’ Then you say, ‘Yeah, well, you are going to pay the $60,000 because I am not going to pay the money that I have amassed through my hard work for you to be polluted learning about nihilistic academic fields that are intellectual terrorism.”

  ~Gad Saad, professor at Concordia University

  Universities suffer from a host of self-inflicted wounds. Surveys show that what was a 2:1 left-wing lean among some faculty now tips the scales at anywere from 10:1 to well over 50:1.ref 663 Some colleges are said to have no conservatives. (I suspect they are in closets.) The rallying cry is that faculty members are all left leaning because of their great intellects. There is a core group of academics (students and faculty) that seems to have an insatiable need to gripe about wide-ranging topics that have been codified as “grievance studies.”ref 664 If your kid’s major ends in the word “Studies,” you might want to peek at the curriculum. Actions that are so insignificant as to be called “microaggressions”—mathematically one-millionth of a normal aggression—are now campus horrors to be strangled in the crib. In a grand bargain to create the most inclusive communities, universities are dismantling freedom of association of like-minded students.ref 665 Removal of such self-assembled support groups—think fraternities, for example—is forcing students to suffer an odd crowded isolation. If you oppose this new order, be ready to be tagged with a pejorative label that ends in “–phobia,” “–archy,” or “–ist.” Society is also trying to remove all semblances of hierarchies as being unfair or not inclusive, ignoring the fact that they are biological and cultural evolution’s mechanism to minimize conflicts.

  “My daughter is looking for a summer job. She’s a millennial so she’s hoping to find part-time work as a CEO.”

  ~Brian Kiley (@kileynoodles)

  We as a nation measure our intellectual worth by numbers of college graduates. Of course, students and their parents are loading up on mountains of debt to spend four or more years to “find themselves.” The military or Peace Corps will do so more cost-effectively, and for a mere $150,000, I will personally find your kid and save you a lot of money. The proliferation of college experiences that leave students with little or no chance of discharging their debt after graduation has done irreparable damage to a generation. This is not hyperbole: irreparable damage. I suspect that replacing half of our college degrees with technical training would provide huge benefits. An elevator repair guy told me that after a five-year paid apprenticeship, he will make a six-digit salary. What does four or five income-free, debt-laden years in college guarantee you?

  “Whereas the University of Chicago has traditionally sought to cultivate an intellectually robust and diverse student body by seeking out creative and unconventional thinkers, the introduction of a pre-professional business major would attract applicants who view their education primarily as a preparation for lucrative careers.”

  ~An activist’s letter, nailing it!

  The Department of Education claims that administrative positions have grown at 10 times the rate of tenured faculty positions.ref 666 The University of Michigan currently employs a staff of 93 full-time diversity administrators.ref 667 More than 25% earn in excess of $100,000—as much as elevator repair techs. These soaring added costs are exacerbated by an arms race to provide better food, dorms, study and safe spaces, and gym facilities. Schools either upgrade or watch the talent head off to greener pastures. Jonathan Haidt and Greg Lukianoff (see “Books”) say that colleges crossed the Rubicon when they began thinking of students as consumers, and we all know the consumer as King. The unwillingness of college administrators to stand up to precocious and, at times unruly, consumers has been called an “epidemic of cowardice.”

  “Universities are becoming ungovernable.”

  ~Anonymous university president

  Now let us wander through anecdotal disasters that occasionally visit college campuses—stories that should touch a wide range of emotions, including the fear somebody slipped you a roofie. Colleges and universities constitute the mothership of political correctness.  Let’s begin with just some seriously goofy shit. Bear in mind that some of these ideas get attributed to universities when they are more likely emanating from university-sanctioned organizations—student clubs—that are given the coveted right to free speech, which they promptly exploit to suppress free speech from others:

  Standardized tests are being removed so that objective measures of skill and merit can be replaced with more subjective measures of things like, oh, ideological conformity.

  • A Michigan State University study concluded that Latinos who support meritocracy, hard work, and independence are perpetuating a bias problem.ref 668
  • A Clayton State University professor offered students extra credit to attend an event of the Democratic Party’s gubernatorial candidate: The school intervened.ref 669
  • Gonzaga University hosted an “International Day of Tolerance,” urging students, particularly “white people,” to ask themselves, “Am I a tolerant person?” and “Do I stereotype people?”ref 670 There is a concept rich in irony.
  • The University of Colorado-Boulder has removed the term “illegal aliens” from its library catalog in favor of “more ethical subject headings” to foster an “inclusive atmosphere.”ref 671 I have thoughts on what else you could remove from where.
  • University of Texas treats masculinity as a “mental health issue,” empowering young men to “break the cycle.”ref 672 I’m guessing the Alamo is no longer in the curriculum.
  • Clapping has been banned at the University of Manchester student union to avoid triggering anxiety and improve accessibility. It has been replaced with “jazz hands.”ref 673

  

  • A Fresno State professor followed a series of dubious tweets—we’ve all done that— with one baiting people to call her. The phone number she posted was for a mental health hotline instead.ref 674 Bet that worked well for this high-function moron.
  • Students at law schools are being triggered by curricula covering entire branches of study. Lectures on rape law, for example, are popular targets.ref 675 These same activists are likely to speak out in support of rape victims, albeit in total ignorance.
  • Emotional support dogs are growing by leaps and bounds.ref 676 That’s cool; I have three Labrador retrievers, although I would not call them supportive.
  • George Washington University students launched a petition to change the school’s mascot from the Colonials to the Hippos because Colonials is too evocative of colonization and oppression.ref 677 Hippos are really fat: aren’t you fat shaming and culturally appropriating hippos?
  • Princeton put on (packed on?) a “fat-positive dinner” to discuss “fat-positive programming for the spring semester.”ref 678 The university also offered a course to help students fight “fat phobia” through dance. I’m more than a few pounds heavy now, and my wife fat-shames the heck out of me.
  • “If someone calls you fuckin’ fat, they may be bullying you, but you might be fuckin’ fat.”
  • ~David Goggins, former Navy Seal
  • I did the math: The famous “Freshman 15”—the pounds gained from all-you-can-eat buffet-style dining—causes Cornell’s North Campus housing to gain 45,000 lbs. every fall semester. I wonder if building codes accounted for this.
  • Students at Lee University petitioned to disinvite Vice President Mike Pence, declaring that Pence’s political views are “at odds with Christian values.”ref 679 What would Jesus say?
  • A professor who teaches politics and global security at Virginia Tech tells us that fossil fuels are contributing to a warped sense of “masculine identity” and “authoritarianism” among men, coining the phrase “petro-masculinity” to describe what she sees as a convergence of “climate change, a threatened fossil fuel system, and an increasingly fragile Western hypermasculinity.”ref 680 Nailed it.
  • A group of UCLA students earning $13 an hour to promote diversity on campus started a “Toxic Masculinity Committee.”ref 681 I’m guessing that they don’t lift weights together.
  • A St. Mary’s College professor offered a term project instead of a real final exam on topics ranging from “environmental racism,” “the Green Movement in Africa,” and “eco-normativity in Western environmental campaigns.”ref 682
  • Mount Holyoke College, an all-women’s school, is discouraging calling female students “women” to promote a “gender neutral” classroom environment.ref 683
  • A Cornell student gave her senior thesis defense in her underwearref 684 because her professor—a progressive and widely respected female faculty member—suggested that what she was wearing in her practice talk was potentially inappropriate.ref 685 Yeah, well, I was Cornell’s first streaker, running through Bio 101 in the fall of 1972.

  “I tell 18-year-olds, ‘Six years ago you were 12; what the hell do you know?’”

  ~Jordan Peterson, Professor of Psychology and author of 12 Rules for Life

  • A University of Wisconsin student filed a dreaded “bias report” after a peer hogged weights at the campus gym then yelled at him to back off.ref 686
  • A website entitled, “Make them scared UW,” run by University of Washington students, allows individuals to anonymously accuse people of sexual assault with no evidence.ref 687
  • A Marquette University student group is telling “white folks” to “stop calling the cops” when they feel threatened. “Hey, what do ya say you put down your dukes and give me a big hug?”ref 688
  • A math paper was withdrawn in an uproar because it tried to model the genetics of gender differences.ref 689 (There’s an “irrational number” joke in there somewhere.)
  • A paper suggesting that males have fat-tailed intelligence bell curves—they tend to occupy the extremes of the spectrum—created such a ruckus that the National Science Foundation wanted acknowledgement of support removed. The paper got retracted.ref 690
  • A professor at Wilfred Laurier University wrote a book with a chapter entitled, “When a Man’s Home is Not a Castle: Hegemonic Masculinity Among Men Experiencing Homelessness”. The detailed description does not clarify the idiocy.ref 691
  • A professor who was charged and pleaded guilty to a work-unrelated domestic violence charge years earlier was written up in the school newspaper. A shitstorm ensued, and he killed himself.ref 692 Y’all have blood on your hands and maybe lucky he turned the gun on himself. There are good articles on “academic mobbing” and other neo-Stalinist behaviors.ref 693
  • A paper on gender dysphoria by a Brown University assistant professor drew so much attention that Brown distanced itself from the work. A dean at Harvard hammered the president of Brown for being a coward (my words).ref 694
  • The University of Minnesota is considering introducing a “Pronoun Rule.” Professors, staff, and students who use the wrong pronouns (he, she, ze) risk firing or expulsion.ref 695 Zat is nuts.
  • Food workers at NYU’s dining facility celebrated Black History Month with “racially insensitive” meals.ref 696 The employees are African-American. Seems like it ought to provide some cover. The real crime was that the girl—can I call a teenager a girl?—said she—can I say she?—was “ignored.” A woman scorned…

  “[T]his modern-day trend of cultural appropriation of yoga is a continuation of white supremacy and colonialism, maintaining the pattern of white people consuming the stuff of culture that is convenient and portable, while ignoring the well-being and liberation of Indian people.”

  ~Shreena Gandhi, a religious studies professor at Michigan State

  “Nothing could be more asinine than outrage against ‘cultural appropriation’.”

  ~Steven Pinker, professor at Harvard University

  • A psychology study by researchers at San Francisco State University claims that 25% of millennials have PTSD because of the 2016 elections.ref 697 Heterodox Academy says it is the Gen-Zers, not the millennials, that began disrupting campuses abruptly in 2014-ish.ref 698
  • Hofstra students want to remove a Thomas Jefferson statue (because he was such a douche).ref 699
  • The removal of a Civil War statue at North Carolina State by protestors took hours, but campus police did nothing. Turns out the protestors were outside agitators, not students.ref 700
  • Students at Baylor University will receive training in microaggressions.ref 701 This training includes “talking to the victim” and “educating the attacker.” Recall that complimenting a woman on her shoes is considered a microaggression, so maybe the term “attacker” and “victim” is just a wee bit hyperbolic.
  • Feminists at Yale University are lobbying the administration to force all-male fraternities to open recruitment to women while not pushing to integrate sororities.ref 702
  • University of Wisconsin-Stevens Point will be cutting programs to “recognize a growing preference among students for majors with clear career pathways”.ref 703 Tenured faculty in Art, English, Geography, History, Philosophy, Political Science, and Sociology will be packing their bags. I’m speechless.

  “I cultivate a cutting-edge approach to human geography through a theoretical edifice that foregrounds emerging thematic concerns within the discipline by incorporating both poststructuralist critique and a radical revival of anarchist philosophy.”

  ~Simon Springer, professor and anarchist-geographer at the University of Victoria

  Hyper-active political correctness is not unique to the United States. Lecturers in Britain have been told “not to use words in capital letters in course assignments because it might ‘frighten students’.”ref 704 BOO! Made ya flinch. A journalism school’s staff have been told to mollycoddle students by “writing in helpful, warm tones, avoiding officious language and negative instructions.”ref 705 The memo refers to “enhancing student understanding, engagement, and achievement” and listed frowned-upon words. A Dutch university mob protested the appearance of Jordan Peterson because of “his politically-incorrect worldview.”ref 706

  Three academics totally punked the grievance studies community by writing a bunch of fake papers—getting a few published and another pile accepted—before they pulled back the curtain.ref 707 My favorite podcaster, Joe Rogan, interviewed two of the perpetrators, Peter Boghossian and James Lindsay (Helen Wilson was not present).ref 708 This is 2 hours of eye-watering hysteria. They describe fake papers about gendering dogs at dog parks and putting men on leashes. They used the search-and-replace command on Hitler’s Mein Kampf to replace “Jew” with “white male” and then wrote a paper using the new sentences. A paper titled, “Going in Through the Back Door” described the desensitization of heterosexual men to homophobia by inserting various objects into their butts. The referees’ suggestions, without fail, made the papers even nuttier. They learned to “problematize” the target thesis and use “word laundering” to take a normal word and give it special meaning. (If you like binge-watching stuff, try Joe Rogan’s 1200 podcasts.)

  “There is no such thing as black racism.”

  ~A professor at Florida Gulf Coast University

  Psst. Professor. Come here. Closer…YOU’RE AN IDIOT! Goofy ideas begin to do damage by leaking into the curriculum. As told by one of my favorites, Campus Reform, Berkeley offers courses about white privilege to “confront uncomfortable conversations about privilege and positionality” and to “understand where white bodies have the responsibility to be in movements against white supremacy and in solidarity with marginalized peoples and groups of color.”ref 709 Berkeley offers over 150 student-taught courses, which helps keep the lights on and is said to be “an excellent way of meeting the University’s minimum unit requirement.” One can only imagine the course content. A course at Salisbury University in Maryland titled, “Pyramid of White Supremacy” teaches students about—I don’t know—maybe pyramids of white supremacy?ref 710

  Those little twinges of bias can get rather specific. A gender studies professor at Northwestern University suggests we should be able to “hate men.”ref 711 I can sign off on a few. If you surmise that the professor is referring to women, you might be wrong. Self-loathing and virtue signaling is considered admirable among young men. A University of Maryland support group called “White Awake” was designed to help white students who may “sometimes feel uncomfortable and confused before, during, or after interactions with racial and ethnic minorities.”ref 712 Pressure caused the University to change the name to “Anti-Racism and Ally Building Group.” How about just “Race Baiting 101”?

  One of the big stories is that Harvard is getting pounded in court for racism in its admissions.ref 713 When a school bends over backward to accept underrepresented kids, it necessarily excludes others. Society decided long ago that, in moderation, this is an acceptable price to pay. Apparently, those of Asian descent—what we call Asian Americans—are taking the brunt of it, and numbers showing the bias are compellingref 714 and drawing fire from the courts.ref 715 I once personally stepped on a rake by claiming just such a latent bias exists. I can’t even fake the PC thingie I guess. Evidently, kids with Asian-sounding names were scoring rather poorly in the subjective categories involving personality. I think universities have the right to accept only Americans if they want, whether such a policy is advisable is an altogether different story. They do not, however, have the right to discriminate against those named Chang, Chen, Lee, or Park.

  “The greatest threat to free speech is no longer governmental.”

  ~Bret Weinstein, former professor at Evergreen State College

  “This is beyond free speech; this is disrespectful.”

  ~President of Fresno State University

  Probably the largest and most consequential political shift is the move away from free speech. One survey showed that 50% of students would support a law making it illegal to say offensive things in public.ref 716 Another revealed that only 35% of female college students think free speech is more important than “diversity and inclusion.”ref 717 A Gallup poll showed that the majority of American college students support “disinviting” speakers they don’t like; 37% support shouting them down; and 10% support using violence to silence them.ref 718 Anti-abortion clubs have been banned because the ideas being discussed are considered subversive.

  

  “Identity” politics—the decidedly left-wing idea that you subsume your identity to that of the group and, thus, necessarily forfeit independent thought—arrived on campuses with little warning around 2013–14. Scholars like Haidt and Lukianoff have burned a lot of ATP trying to understand from whence it came and why. I have a theory! Kids are influenced profoundly during their formative years—their Wonder Years. What book series totally dominated the childhoods of current college kids? That’s right: Harry Potter. Early in the first book, the little wand-wielding wizards are assigned a group for the rest of their stay at Hogwarts by a magic hat. Once assigned, they assume the behavioral norms of their group. May God have mercy on your soul if you become a Slytherin. This is the stuff of Harvard psychology PhD theses showing how quickly people form group identities. It’s the classic prisoner–guard experiment.ref 719 It’s what inspires normally sane people to sit in –20°F weather in Green Bay wearing a cheese hat while rooting for a team full of guys with whom they have absolutely noshared ideals or experiences. We are witnessing the Slytherins coming of age and arriving on campuses.

  “Apparently, all that is required to throw a student out of school is that some other student claims to feel unsafe.”

  ~Gregory Germain, professor of law

  The Title IX program that began with normalizing college commitments to women’s sports has morphed into a commitment to women’s rights more generally. It’s a great idea on paper. In the hands of activist university administrators, however, it can be nightmarish.ref 720 On the heels of a tenure case at Cornell in which an unsubstantiated assertion arguably cost an assistant professor tenure according to the courts,ref 721 the young accuser—Jane Doe, of course—subsequently exacted retribution on one of the faculty member’s graduate students, slamming the brakes on his PhD defense by filing yet another Title IX complaint.ref 722 Two dozen Cornell law professors interceded, demanding that Cornell grant the student his PhD and stop the bullshit (my words, not theirs).ref 723 As I’ve said before, if you ever run into John Doe or Jane Roe, for heavens sake stay away. Nothing good can happen.

  A decidedly progressive sociology professor at University of Michigan, after accusing a student of plagiarism, was accused of harassment.ref 724 In a world where accusations are so vague and difficult to sort fact from fiction, Oberlin has a 100% conviction rate.ref 725 That is what they used to call “a hangin’ judge”. The courts are routinely beating up universities and exacting large fines when due process drops below minimally acceptable levels. Courts are demanding universities up their games on due process, which is sorely lacking on some campuses. This long-overdue pushback against unchecked Title IX cases has the most militant supporters of the #MeToo movement angry. After years of sexual harassment and abuse at the hands of men, they feel that women’s evidence-free accusations should suffice. Nearly 100 students at the University of Southern California demanded a tenured professor be fired after he sent a reply-all email noting that “accusers sometimes lie.”ref 726Others hold the quaint view that trying to destroy somebody’s life is a problem regardless of the weapon of choice. Cases of demonstrably false accusations keep piling up in numbers not approaching legitimate accusations but sufficient to underscore the importance of due process.ref 727 Here is my bottom line: If you have no data you have no case, regardless of how heinous the crime. I repeat: It’s how our system works.

  “Racism is a serious issue, and unfortunately what we found were many examples of students willing to use that charge in an attempt to get back at their peers in everyday squabbles.”

  ~Chris Rochester, director of communications at MacIver Institute

  I chose not to describe dozens of grisly stories, including many false accusations, and instead finish by noting that progress toward normalcy is detectable. We are starting to have discussions about identity politics. The now legendary Evergreen State College appears to be going even further down the rabbit hole toward totalitarianism and headed for insolvency.ref 728 That’s probably a win. Nationally recognized progressives including Alan Dershowitz, Steven Pinker, John McWhorter, Bret Weinstein, Heather Heyling, and Jordan Peterson—collectively referred to as the “Intellectual Dark Web”ref 729—are now defending against leftist McCarthyism on college campuses. Betsy DeVos, secretary of education, is attempting to tighten up some of the details of Title IX (much to the horror of fuming progressives).ref 730 Nicholas Christakis, one of the controversial Yale professors who found himself in the middle of Social Justice Warfare by supporting the idea that Yale students are capable of choosing their own Halloween costumes, has been awarded one of Yale’s Sterling Professorships, the highest honor a faculty member can receive.ref 731 Right-wing activist group TPUSA has watchlists of left-wing professors. That would look like a telephone book and is very bad idea for a bunch of free-speech libertarian types.ref 732 Princeton University has become the second Ivy League school, after Yale, to face a federal Title IX investigation into allegations that some of its programs discriminate against male students.ref 733 This too shall pass.

  “We’ve been paid to leave a burning building.”

  ~Heather Heyling, commenting on her and her husband Bret Weinstein’s severance packages to leave Evergreen State College

  Political Correctness: Youth Division

  “Prepare the child for the road, not the road for the child.”

  ~Jonathan Haidt, author of Coddling the American Mind

  No generation is completely ready for the next one. Certainly the Greatest Generation was ill-prepared for the arrival of drug-addled boomers who trusted nobody over 30. The latest generation of young punks has discovered porn on their phones, rendering back issues of National Geographic obsolete. Cyberbullying is acute, especially for girls who seem to be more at risk and are more prone to destroying social structures without having to resort to formal violence according to Haidt and Lukianoff (see “Books”).ref 734 (When you Google this you will get articles about the girls as victims without clear statements about girls as perpetrators.) The boys, taking cues from the Jackass series, impale themselves from skateboards, dive into bonfires, and eat Tide Pods (killing more than one of these Tide Podlers).ref 735 Procter & Gamble is making its Tide Pods even less appetizing, if you can imagine that.ref 736 The sport of snorting a condom and pulling it out of your mouth probably has a funny back story.ref 737 Efforts to test boundaries are now “hold my phone” moments. Although Darwin Awardees in Training are not new, one wonders how many fatalities uploaded to the cloud are caused by the iPhone.

  What has changed, however, is what the boomers will do to protect the little dumplings, inadvertently doing more damage in the process. These protective measures range from sketchy to moronic. (Sorry: If the shoe fits wear it, pinhead.) Parents are now monitoring their kids’ calls, email, and phone messages. Phone apps now exist that make the kid check in, or the cops get called and the phone tracked.ref 738 “We found your kid, Mr. and Mrs. Stalin. Their battery had died. Would you like us to take them to the Gulag anyway?” What happened to “be home for dinner by six and don’t be late?” An Edmonton day care is requiring kids bring helmets to protect them on the playground.ref 739 Sugared drinks are being mandated by law to be removed from children’s meal menus at restaurants.ref 740 Several towns have made it unlawful for a 12-year-old to trick or treat,ref 741 presumably to protect the littler kids who are, without fail, now accompanied by dozens of adults. A fine of $25 or “up to 6 months in jail” seems a bit weird. “I’ll take the $25, your Honor.” We check the kids’ candy to make sure there are no razor blades or poison, unaware that every documented case of such attempted infanticide has been traced to a family member. “Honey, I poisoned the kids.” In one county, 10- and 11-year-olds must have at least one parent “get to the choppers” (helicopter parent) when the kids are outside playing.ref 742 Disney’s Sleeping Beauty is finally drawing scorn for the scene in which Prince Charming ravages the sleeping girl with a non-consensual kiss.ref 743 Hey, Amnesty International: Don’t you have bigger fish to fry?

  

  Of course, once the kids hit high school, it’s time to give some slack to the leash. Yeah, right. One high school declared that oral presentations in class are an unreasonable burden for those with anxiety.ref 744 Jonathan Haidt notes that we have about 100 kidnappings per year—most by a pissed-off divorcee parent—while 10 kids per day are killed texting and driving. One Girl Scout got the clever idea of selling her cookies in front of a pot dispensary.ref 745 I suspect a boomer parent hatched that plan. She sold 312 boxes to the stoners. Girl Scouts of America declared it “not cool.”ref 746 The GSA administrators in the Colorado chapter, however, declared that it was “totally cool, Dudette.”ref 747 One teacher decided that the term “Ma’am” was inappropriate in the current PC culture. When the kid just couldn’t shake this rural nicety, she made him write the word repeatedly (which seems kinda backward) and have his parents sign it.ref 748 The teacher also said that if she had had something, she “would have thrown it at him.” I can only imagine that parent–teacher conference. Schools are banning children from using the term best friend over fears that some really unlikeable, spoiled little douche may feel left out. This also ensures that kids will not form tight, lasting relationships. A teacher in Florida was fired for refusing to give students a grade of 50% even though the assignments were not turned in.ref 749 The school had an unstated “no zero” policy. Ironically, the school was run by a bunch of zeroes.  

  

  Most of these are marginally harmful lobotomizations that may not leave scars (provided the kid doesn’t become a cutter). However, many child psychologists suggest that increasing academic problems in young boys stem from repeated chastisement for acting like, well, young boys. Schools are denouncing toxic masculinity in kindergarten.ref 750 Kids caught “sexting”—sending semi-lewd or lewd pictures via cellphone—are being charged with trafficking in child porn.ref 751 One elementary school passed around flyers denouncing “white privilege.”

  The institutionalization of PC not only hurts the kids but also infringes on parents’ rights to add any post-genetic finishing touches and determine levels of risk. A mom was investigated for letting her 8-year-old walk the dog around the block. Another received a visit from the police because her kids were playing in the front yard “unsupervised.” She noted that, “For something like this to happen to me, there’s something really wrong.” Ya think? Something like this once happened to my wife and I, and a woman from social services showed up. Once this sanctimonious piece of human detritus—Do I sound like I’m over it?—started citing the scriptures in a decidedly sanctimonious way, I told her that “I am fighting the urge to throw you out the door on your fucking head.” My wife suggested my comments were counterproductive. I thought I showed great restraint.

  Schools are throwing Common Core math at them, ensuring that they will all share a common denominator: total mathematical ignorance including not knowing what “common denominator” means. After dropping $400 million on its development, the Gates Foundation declared common core math a total failure.ref 752 It is still in use, lobotomizing children across the country. I suspect its deep-seated purpose was to forcibly engineer equal outcome at any cost. So much for inclusivity. Ian McEwan, an award-winning author, began to wonder about the system as a whole when after helping his son with an essay about his own novel his son received a C.ref 753

  “If you breastfeed your sons, you are training them to be rapists when they grow up. You’re basically teaching them that they can touch a woman’s body whenever they want. If you oppose rape, stop breastfeeding boys!”

  ~Shaykha Alia (@AliaAbheed), activist, not joking

  Schools are increasingly filled with boys, girls, and fence sitters. I must confess that sexual and gender ambiguities must be traumatic for kids who are already in traumatic periods of their lives. I watched my son for at least 5 years wondering if and when he would come out (even to his family). He waited till it was time. Nobody else gets to make that call. Let the parents ponder how to raise the kid in the most nurturing and constructive manner possible.

  I even support parents who are serious loons doing stuff I think is sketchy because it’s not my kid. A new class of child called “theybies” are babies and kids raised gender neutrally, ensuring that they will consume copious quantities of mental health services later in life.ref 754 One woman fought gender norms by naming her son Vagina.ref 755 Middle school may get a little rough. Didn’t Johnny Cash write a song titled, “A Boy Named Vagina”? There are, however, some real consequences moving down to the younger age brackets. Pediatricians and psychologists are battling it out over gender dysphoria, what it means, and what to do about it. Scientists are using fMRI to study transgenderismref 756 (sounds good) to aid earlier “transition” (gettin’ a little sketchy), possibly as early as age 3.ref 757 Hold your horses there, Buckeroos: You might want to wait till they can talk and get through a whole day without Pull-Ups (gender-neutral colors, of course.) Some worry about “social and peer contagion” of the gender dysphoria;ref 758 this is not like some passing lesbian phase sophomore year in college. One judge removed a 17-year-old transgender teen from her parents because they refused to allow hormone treatments.ref 759 All of this reminds me of the Saturday Night Live skit with the doctor who delivered 4,000 girls in a row. Half needed only a minor postnatal surgical procedure. One thing is clear, if your son transitions to become a girl, get ready to pay more for toys and clothes.ref 760 Somehow the free market has figured out that there is a recessive X-linked gene for insensitivity to price. If, on the contrary, your daughter transitions to a boy, you will be able to afford college. Jazz hands!

  

  When I was a kid we had one rule: Be home for dinner. I was riding my bike miles from home by age 8 and groping young girls (not like Brett Kavanaugh!) and hitchhiking with permission at 12, drinking without permissionat 13, smoking pot at 14, and dropping acid at 15. I started to study at 17, graduated from Cornell with a degree in genetics at 22, and got my PhD in chemistry at 25. (Yes folks: That is a 2.7-year PhD from Columbia and no post-doc, all with damaged chromosomes to boot.) Nobody broke my spirit by declaring me flawed. My peer group played copious quantities of only self-supervised sandlot sports until middle school. We laid out the field, made up the rules, refereed the games, and had some Lord-of-the-Flies moments. This peer group generated a three-time first-team All-American lacrosse player at Syracuse, the 12-year center for the Dallas Cowboys, and probably the only faculty member in the modern era to have been an assistant or head coach of two collegiate sports (me).

  How about some solutions or suggestions, Dave? OK. Since you asked. First, read Jonathan Haidt’s and Greg Lukianoff’s book, Coddling the American Mind (see “Books”). I sent it to one of Cornell’s deans, and he said it described the problems landing in his office to the letter. Let them go outside, get hurt, cause trouble, and pay some consequences. No broken bones or lost eyes? That was a good day. Stop depriving kids of constructive play by inserting vast numbers of résumé-boosting activities with oppressive levels of adult supervision. I’ve read college and graduate admissions applications for many years; most parents haven’t a clue about what really matters. Watch the movie Stand by Me or the often overlooked Tree of Life. That was my childhood. And don’t you dare say those were simpler times; that’s a load of garbage asserted by helicopter parents.

  Others are also taking action. The French are talking about banning phones in school. At first I flinched, but I realized that they’re onto something.ref 761 A woman named Lenore Skenazy has started the free-range parenting movement, which supports the type of parenting that used to be considered normal.ref 762 I am also now an enthusiastic supporter of school choice. If you insist on indoctrinating kids, at least give the parents the choice of which gulag to ship them off to every morning. And on the more micro level, give families some choice: (a) common core math versus actual math; (b) learning how to write versus reading books like Waiting for Godot, and (c) secular or religious philosophical underpinning. Parents shouldn’t have to pay double for private schools at least in the more populated areas where multiple tracks and schools are already necessary; there would be no added cost. Finally, let the kids determine their peer groups—let’s call them “boys” and “girls”—and let them play separately without adults force-feeding inclusion. Are what we called “cooties” now microaggressions with “attackers” and “victims”? There will be plenty of time in the later years for coed binge drinking and teen pregnancies. If none of this makes sense, that’s OK, but may God have mercy on your soul, mofo.

  Conclusion

  Bad times create strong men.
  Strong men create good times.
  Good times create weak men.
  Weak men create bad times.

  It’s safe to say we have tough times ahead, because that has always been true. If equity markets regress to the mean while the 38-year-old bond bull market turns into a bear, we will witness some serious wealth destruction. I could be wrong, of course, but if the case for overvaluation in both equities and fixed incomes is sound, I remind you that gravity always wins. It is undefeated. China seems on the cusp of the first serious lesson about the downside of capitalism. The European Experiment of a super-sovereign world may falter when fill-in-the-blanxits start leaving. If the U.S. finally comes to terms with its debt problem through a mechanism I haven’t yet imagined, the 12-step program will not include excessive consumption on the back of more debt (hair of the dog). Boom–bust cycles are normal, but this one could be a bit too synchronous for comfort, and it follows a supernatural monetary policy.

  “I think the next downturn is going to be a different kind of downturn. I think it will be more severe in terms of the social-political problems. It will be harder to handle. . . . It will have bigger international implications.”

  ~Ray Dalio

  “There is a numbness out there, there is an ambivalence out there that’s concerning. . . . When the next turn comes—and it will come—it’s likely to be more violent than it would otherwise be if we let some pressure off along the way.”

  ~Michael Corbat, Citigroup CEO

  Here’s what is bugging me. There has been a growing malaise since the ’08–’09 crisis manifesting upheavals that seem correlated. I blame Obama and his Department of Justice in part. This is not because of his politics—they shockingly never bugged me that much, and I like the guy—but rather because he let the bad guys go by policy. They stitched up festering wounds that laid foundations for social upheaval (mixed metaphorically speaking). The Occupy Wall Street movement was toothless but a beta test. Now we have Antifa, which is a combination of dangerous people and gullible followers. Presumably there are right-wing analogs, but I find them harder to identify as coherent groups.

  “Liberals claim to want to give a hearing to other points of view, and are then shocked and offended when they discover there are other points of view.”

  ~William F. Buckley, founder of The National Review

  I think the reason that those on the left are so prominent on my radar right now is that they went berserk when Hillary—the first female presidential contender—got beaten by the most repugnant opponent they could imagine. You don’t have to look hard to see educated and intelligent people—they are not one and the same—saying some of the most vile things. From the left has spawned an intolerant liberal left. There seems to be a prevailing wisdom that if you know you have the moral high ground (who doesn’t think that?), there are no rules. You first label your opponent—white, male, conservative, heterosexual, neo-Nazi, fascist, insufficiently progressive, or all of the above—and then attack verbally and even physically. I reached out to a decidedly progressive faculty member who was being eviscerated unjustly—scorn, hate mail, the whole enchilada. I’ve done this many times simply to let them know they’re not alone. When I noted the irony that it was coming from the left, they responded:

  “The harsh criticism on my role in the story (as reported by the media) is not coming from folks on the left, it’s coming from liberals. There’s a big difference, as you know.”

  What a fascinating response. As I understood it, liberals were compassionate and tolerant, albeit a little rich in fanciful ideas. The graphic in Figure 55 shows that everything has changed.ref 763 As your political opponents move to the extreme, you move to the other extreme. We were OK in 2004, quite healthy actually. By 2017, however, we had polarized.

  

  Figure 55. The growing political and social divide.

  “War is when your government tells you who your enemy is, and revolution is when you discover it for yourselves.”

  ~Source unknown

  When the riots in France started, they were reputed to be about an energy tax. You would be shocked at the number of journalists and bloggers trolling Twitter trying to find someone who could explain what was reallyhappening. Here is my answer: Government is like a fiat currency. Once faith in it is lost, you will witness cascading failures that are too complex to comprehend in detail. Arab Spring began when one highly flammable Tunisian lit himself on fire. As Billy Joel says, “We didn’t start the fire.” Avalanches, explosions, earthquakes, and fires all thwart serious efforts to model them. Metastable systems—systems displaced markedly from equilibrium waiting for the right spark or trigger—return to equilibrium unexpectedly, quickly, and often violently. Social movements start small (by definition) and unexpectedly, but they move quickly and can end violently. France has been down this path. Edmund Burke was one of the few who saw the social movement in late eighteenth-century France as the first rumblings of a murderous rebellion. The Rodney King–sparked LA riots started to spread; we got lucky when they burned out. When everyone is grumpy and some guy decides to light a car on fire, don’t be surprised when others join in. They all share a common denominator: they’re PO’d.

  “The collapse is fundamentally due to the unstable position; the instantaneous cause of the crash is secondary.”

  Didier Sornette, Professor of Entreprenurial Risks, ETH Zurich

  The solution is to have strong social institutions and social capital that unifies the populace. This gets to my criticism of the left, not the people but rather the leaders and power brokers denounced by Malcolm X (above). When you deem it your job and derive power from providing goods and services to the masses, self-governing and self-sufficient groups represent risk. It’s a turf war. Under the guise of inclusion, people are now being discouraged from self-assembly. Men and women as well as boys and girls are not allowed to have their own sports. The Boy Scouts of America, where fathers and sons congregated to train and civilize a new generation of responsible fathers, is no longer just fathers and their sons.

  Fraternities are an interesting case study in social cohesion. They are on the lam from society. You house a few dozen 18- to 22-year-old men away from their parents for the first time. A few mishaps are a certainty. Statistically, if you select a few dozen men from a campus randomly, give them a Greek label, and monitor their behavior they will collectively look like a dumpster fire. I will admit there is also groupthink that amplifies behavior and drops average IQs to levels that can shock adults. They also represent legal bull’s-eyes for lawyers when things go bad. Some universities have replaced fraternities with communal living units. Why do other schools support this increasingly polarizing Greek communal system? First, the nouveau communal units are not as cohesive as those that are self-assembled. I have a data-less theory: If universities analyzed suicides on campuses—they are common on all campuses because of the risky age bracket—they would find that the suicide rate in fraternities is low. When things go poorly—a flunked exam or being dumped by a girlfriend—the dejected kid goes back to his fraternity and gets shitfaced with dozens of his friends. It is a support group unlike any others (except for maybe in the military). From these collectives of incorrigible crazies emerge future leaders, not only of corporate America but also of university alumni organizations. I am stunned by what the Bands of Losers I lived with turned into as they got older. During reunions, fraternities fill with old friends sharing common stories—stories that are common even if they didn’t overlap in college—while independents wander the campus looking at new buildings or don’t bother to return at all. Are these really organizations you want to dismantle?

  Let’s swing our gaze elsewhere for a moment. I always viewed gentrification of dilapidated neighborhoods in big cities as a rebirth of sorts, a spontaneous urban renewal. Out with the old, in with the new. I recently stayed with a friend (Andy Huszar) in Harlem. My life expectancy would have been 5 minutes when I was in grad school. What a miracle. What I failed to realize, however, was that those dilapidated buildings were part of neighborhoods, not just dwellings. Neighborhoods are like Cheers where “everybody knows your name.” Gentrification forces people to find cheaper housing elsewhere. They will find it, of course, but they won’t find a community. You can hear the fabric tearing.

  “We live in a society of decreasing circles. More and more of us know fewer and fewer of us. We live alone and eat by ourselves, often with a TV or computer rather than a human being for company.”

  ~The American Conservative (@amconmag)

  Now I will go where no rational man has gone before: religion! I have been a pro-choice atheist my whole life—just a pagan with a busy sword—and am unlikely to switch sides now. As a scientist, extreme Christian views on creation and evolution are never gonna make sense. Over the years, however, my thinking became more nuanced as an accumulated broader historical perspective caused cognitive dissonance to encroach. The Church in medieval Europe certainly has plenty of blotches on its record, but in a “World Lit Only by Fire,” the church brought order where there would have been only chaos. Vivid imagery of Hell that made medieval life look cushy by comparison kept the nobles from abusing the peasants. How about the Spanish Inquisition? Well, they were legally trained well above the norm of their time. A documentary on the massive “inquisitor archives” showed that the inquisitors executed fewer people over four centuries than the state of Texas offed over a far shorter span. There is also evidence that the inquisitors viewed religion as outside of their jurisdiction during some periods. Why the bad rap? Every time Spain got into a war, which was quite often, the opposing team would pull out horrific tales of the inquisitors to rally the troops. Also, the norms for the era were pretty damned bad anyway (see Pinker in “Books”).

  How about all the scientists that got oppressed by the Church? A little history of science shows that gets a little fuzzy too. Leonardo da Vinci carved up people in the basement like John Wayne Gacy without getting flack. When scientists discovered something new, the Church would often say, “God is even more grand than even werealized.” A savvy scientist would say, “You betcha, Pope.” The scientists who got into trouble may have lacked the self-control to avoid pushing the Church’s buttons. I know enough scientists like this to say that my thesis is in the realm of possibility.

  “Defending rights against the encroachments of the government saves the common liberties of the country.”

  ~Alexis de Tocqueville, 18th century French diplomat, historian, and political scientist

  When Alexis de Tocqueville came to America, he marveled at how much freedom Americans enjoyed and how religious they were. He also marveled at the lack of lawlessness (brawling aside, which he noted was way too consensual). The message was that our strong Constitution and limited laws gave us unprecedented freedom while religion gave us the will not to abuse it. You resisted stealing from your neighbor simply because it was wrong. You helped your neighbor because it was right. Charles Murray in Coming Apart (see “Books”) paints in graphic detail how the last half-century has witnessed a stunningly abrupt replacement of morality for rules. What happens when we have lots of rules but nobody feels morally obliged to follow them?

  From the left there is a relentless push to remove Christmas from schools, denounce those who support the American flag, control what is taught to children and where, emasculate men, move decisions from the local to the centralized national government through rules and regulations, take away our freedom of choice with whom to do business, confuse abstract feminism with women’s rights, take away parents’ rights to choose what is best for their children, and decide with whom we can affiliate and who we get to exclude. These institutions and ideas represent a critical social glue. Be careful what you take away.

  Thus, I am an atheist living in a unique society that was built on strong moral values that find their roots, at least in part, in religious convictions that I do not share in their detail. I should be very careful, however, to not lose sight of the fact that I am reaping what I did not sow. I should have more faith in those who already have faith. I am now a cognitive dissident. And with that, my work here is done. You’re welcome.

  “Maybe our favorite quotations say more about us than about the stories and people we’re quoting.”

  ~John Green (who?)

  Acknowledgements

  There are so many people from the world of finance and markets who patiently allow me to invade their space with inane comments and questions. Many are household names—real legends—even outside of the finance world. One year I tried to thank a ton and found out how many more I excluded. As The Donald would say, “I love all of you” (but Rudy, you are the best. I love ya, man.) That said, people do reach out, and I’m happy to chew some fat. My email is dbc6@cornell.edu. If I don’t answer an email, it’s either because MSFT Outlook has filtered yet more emails (thanking Steve Sinofsky, friend and former president of Microsoft under Ballmer, for that one) or because I just screwed up. And if I know you, I’ll cook you burgers on our deck overlooking Cayuga Lake if you come to Ithaca. Some of you already have standing offers. People, not places or experiences, are what fill my bucket list. And, by the way, send your kids to Cornell because it is a truly wonderful school. How wonderful? We have more departments in the top ten than any other school in the country . . . and “everybody knows your name.” I have no strings to pull, but I do understand the system if you want some advice.

  There are always new additions. That’s Sean in the middle sleeping on Grandpa, Miles on the left, and Liam on the right in the photo on the left. Sean’s a boy until he’s old enough to decide for himself. In the right-hand photo is Claire, a rescue from a breeder. This picture is after we peeled 25 pounds off her. She identifies as a Lab, our third, although similarities to bear #409 (Beadnose) are inescapable.

  

  Figure 56. Three punks in training and The Master (left) and “Claire” aka “Claire the Bear” aka “The Tank” aka “Butterball” and The Master of that too (right). 

  Books

  “Moses wrote one book. Then what did he do?”

  ~Sidney Morgenbesser, Columbia University philosopher

  I would have read more books when I was younger if the ones they made us read didn’t suck salty balls and if it were not for acute CLCS (chronic lip cramping syndrome). I was a typical boy on the lower end of the reading scale with a highly targeted curriculum:

  

  As an adult, career and family have kept my reading list short (outside of volumes on chemistry). Enter the audiobook. Snobs say it’s not reading, to which I say, “Bite me.” I use my ears; you use your eyes. Hellen Keller used her damn fingers. I can get through a dozen per year just commuting a 24-minute round trip to work. When my wife asks me to go to the store, it’s like asking me to read for a few minutes. And even if the books are mediocre—I try to be selective—they just keep marching forward monotonously to the finish. I have failed to finish very few (no fading Post-its). I burn them to disk for $10 a pop via Amazon Prime so that my colleagues can mooch them. The books all profess to be non-fiction, although I have my doubts sometimes. Topics include history, markets, economics, science, psychology, anthropology, and college-level courses from the Teaching Company. I’m trying to get through American history through the eyes of presidential biographers (even with Chester Arthur in my sights). Simple treatises on complex topics (like Mervyn King’s latest below) show me how to formulate and articulate complex ideas simply.

  The Fifth Risk by Michael Lewis

  Those who hate books that are one-third book and two-thirds fluff should appreciate Michael Lewis for brevity. Lewis’s treatise blends several plotlines without bringing much of his typical comedic flare. The primary plotline is to hammer Donald Trump for his poor transition in taking over the federal government. Some of the loons Trump put in key staff positions do indeed seem to be inexcusable. I think Lewis does a credible job, although it seems a little light on awareness that (a) Trump had no clue that he would win, and (b) his transition team had support from neither political machine. The second, dominant plot is to describe some of the amazing things federal employees do that we haven’t a clue about. He does this well, although he again glosses over the estimated 2 million federal employees who are not brimming with skill and productivity. The book was informative.

  https://www.amazon.com/The-Fifth-Risk/dp/B07GNTDQJQ/ref=sr_1_1?ie=UTF8&qid=1540764617&sr=8-1&keywords=The+fifth+risk

  Coming Apart: The State of White America, 1960–2010 by Charles Murray

  Stan Druckenmiller said that Charles Murray’s book “scared the hell out of me.” Murray, you may recall, is the putative alt-right whackadoodle who wrote The Bell Curve and was physically attacked at Middlebury College in 2017. I would be hard pressed to pigeonhole this book as leaning to the right. It is a great story about how the fabric of social structure is fraying badly. We’ve replaced morality and a sense of social cohesiveness with a far less effective rule- and law-based society. It’s an important book. (Jonah Goldberg admitted to me that his newest book channels Murray’s, albeit dripping with sarcasm. It’s on my list.)

  https://www.amazon.com/Coming-Apart-State-America-1960-2010/dp/B007A5GPI4/ref=sr_1_1?ie=UTF8&qid=1540766157&sr=8-1&keywords=coming+apart

  The Intimidation Game: How the Left Is Silencing Free Speech by Kimberley Strassel (@KimStrassel)

  Kimberley Strassel is no friend of the left, so it’s not a surprise that she would focus on the evil deeds of only left-wing politicians. She does a credible job of laying out the political hijinks, which are decidedly disquieting. The emphasis is on how they use government and law as a weapon against the right. If one were to assume the right wing is equally guilty, you probably get an accurate view of how awful politics inside the Beltway has become. It was too lopsided for me to endorse it enthusiastically.

  https://www.amazon.com/s/ref=nb_sb_ss_c_1_17?url=search-alias%3Daps&field-keywords=kimberly+strassel+intimidation+game&sprefix=kimberly+strassel%2Caps%2C899&crid=KTNBKEVY0EKG

  Antifragile: Things That Gain from Disorder by Nassim Taleb (@nntaleb)

  To the list of terms “fragile” (easily broken) and “robust” (hard to break), Nassim Taleb suggests the term “antifragile” (grows more durable under stress). The most obvious and intuitive example is the immune system. Taleb venomously attacks those he disrespects (economists), and his prose is an acquired taste. Many will find the vitriol too much. He makes interesting arguments about how our efforts to protect ideas, objects, people, and institutions inadvertently weaken them. He reinforces maxims like “stability breeds instability” or “that which does not kill us makes us stronger.”

  https://www.amazon.com/Antifragile-Things-That-Disorder-Incerto/dp/0812979680/ref=sr_1_1?s=books&ie=UTF8&qid=1540766748&sr=8-1&keywords=nassim+taleb+antifragility

  Skin in the Game: Hidden Asymmetries in Daily Life by Nassim Taleb (@nntaleb)

  Nassim Taleb tees off on those in our world who get to call the shots and reap rewards but do not pay the price of failure. This heap of targets includes politicians, economists, and bankers. One of his strong supporters over at Amazon referred to Taleb as “rude and angry”. Detractors hold a mirror up to him and ask if his disdain for advice givers isn’t some form of hypocrisy. As always, I enjoy reading his books, but bring a thick (antifragile) skin.

  https://www.amazon.com/Skin-Game-Hidden-Asymmetries-Daily/dp/042528462X/ref=pd_sim_14_4?_encoding=UTF8&pd_rd_i=042528462X&pd_rd_r=3dd4538b-db03-11e8-8a27-e7c97784a407&pd_rd_w=H6BYO&pd_rd_wg=1XNLh&pf_rd_i=desktop-dp-sims&pf_rd_m=ATVPDKIKX0DER&pf_rd_p=18bb0b78-4200-49b9-ac91-f141d61a1780&pf_rd_r=00R3KDQCS3P0ZFCG8BQX&pf_rd_s=desktop-dp-sims&pf_rd_t=40701&psc=1&refRID=00R3KDQCS3P0ZFCG8BQX

  The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google by Scott Galloway (@profgalloway)

  Scott Galloway is an entrepreneur, venture capitalist, and New York University professor. He knows his way around the tech world. In this book he critiques the FAANGs (ex-Netflix). Although it seems to be intended as a tell-all description of the dastardly deeds of these monopolistic, civil-liberty-encroaching companies, he cannot hide his awe. Clearly Amazon is at the top of his leaderboard as a completely mind bending and society-changing wielder of unchecked power. Apple is praised for marketing itself as a well-branded provider of elite products. (I was left unconvinced of its durability.) Facebook and Google draw fire for their powerful incursions into our daily lives. I am unconvinced that any of them are as durable as Galloway thinks. The backlash to their power may be surprising. I only wish I had this book 15 years ago; I would have made a killing as a true-believing investor.

  https://www.amazon.com/Four-Hidden-Amazon-Facebook-Google/dp/0735213674/ref=sr_1_1_sspa?s=books&ie=UTF8&qid=1540768834&sr=1-1-spons&keywords=scott+galloway+the+four&psc=1

  The Coddling of the American Mind: How Good Intentions and Bad Ideas Are Setting Up a Generation for Failure by Jonathan Haidt (@JonHaidt) and Greg Lukianoff

  Jonathan Haidt and Greg Lukianoff are evolutionary psychologists at the vanguard of the fight to push back against political correctness and the strange form of social activism that appeared abruptly on campuses around 2014 (and, I hasten to add, graduate programs around 2018). He is openly liberal while claiming that he no longer recognizes what is called liberalism in this era. The book describes in lurid detail what is happening, how it happened, and its profound consequences. If you’re the parent of young children, you should read it before it’s too late for your kids. Great book. I sent it to one of our deans, and he said that what Haidt describes is what he deals with every day, and it has caused him to rethink his child-rearing tactics.

  https://www.amazon.com/Coddling-American-Mind-Intentions-Generation/dp/B079P7PDWB/ref=sr_1_1?ie=UTF8&qid=1540769381&sr=1-1&keywords=coddling+the+american+mind

  The Marshall Plan: Dawn of the Cold War by Benn Steil (@BennSteil)

  I read this book twice, the first time in draft form while it was being written and the second in audiobook form after publication. Benn Steil is a bestselling author hailing from the Council on Foreign Relations (CFR) which gives him a remarkable view of the world and access to unparalleled human resources. After piecing together how John Maynard Keynes and Harry Dexter White negotiated the new global currency order in his bestselling, Battle of Bretton Woods, Steil charges into the task of probing the political machinations required to establish the global political order. He describes in scholarly detail (read: not for the faint of heart) how the Russians and the U.S. went headlong into the Cold War. The Marshall Plan to save Europe from imploding in the post-war era was politics on steroids—less humanitarian and more global positioning. The politics within the U.S. and Europe were as complex as any. What I still have not grasped, however, is why West Berlin, deeply embedded in the Eastern Bloc, was so important.

  https://www.amazon.com/Marshall-Plan-Dawn-Cold-War/dp/B078F1H2SP/ref=sr_1_1?ie=UTF8&qid=1540769828&sr=1-1&keywords=the+marshall+plan

  12 Rules for Life: An Antidote to Chaos by Jordan B. Peterson (@jordanbpeterson)

  Jordan Peterson has had a growing presence in the culture wars. He came to prominence fighting a Canadian law that would mandate the use of pronouns for all the gender fence sitters. Peterson then rocketed to fame after a series of interviews with liberal attackers (notably Cathy Newman) in which he systematically dismembered their ideas. (I watch his interviews as though they were game films.) This book describes a series of guidelines on how to live your life and raise your children to avoid becoming insufferable with insufferable children. The lessons are sound. The book is a good read that would have died in obscurity if not for his rise to fame, which has led to millions of copies sold. Cathy Newman made him wealthy.

  https://www.amazon.com/12-Rules-Life-Antidote-Chaos/dp/B0797Y87JC/ref=sr_1_1?ie=UTF8&qid=1540771653&sr=1-1&keywords=jordan+peterson+12+rules+for+life

  The Undoing Project: A Friendship That Changed Our Minds by Michael Lewis

  At some level, this book is a recycling of ideas of Michael Lewis’s Moneyball (the book, not the movie!) and Daniel Kahneman’s Thinking Fast and Slow, both of which are brilliant books. Lewis goes into considerable depth describing how Danny Kahneman and Amos Tversky worked as “the odd couple” for many years to create the ideas underlying Thinking Fast and Slow, which won Kahneman the pseudo Nobel Prize in economics. The Undoing Project is about the two men. In my opinion, this book will likely lose a lot of appeal for readers who are unfamiliar with Kahneman’s and Tversky’s work. Thus, read Thinking Fast and Slow and Moneyball first, then decide about The Undoing Project.

  https://www.amazon.com/Undoing-Project-Friendship-Changed-Minds/dp/0393354776/ref=tmm_pap_swatch_0?_encoding=UTF8&qid=1544929043&sr=1-1

  The Better Angels of Our Nature: Why Violence Has Declined by Steven Pinker (@sapinker)

  Pinker wrote what could have been titled, The Comprehensive History of Violence. It covers all facets from crimes, brutal punishments, wars, domestic violence, you name it. Steven Pinker makes a strong case that we have become less violent over the centuries. He deals with those who point out atrocities of the twentieth century by invoking a per-capita metric and describing hugely violent periods that are largely unknown to most of us. The horrific stats on violence in the past are sobering, occassionally forcing me to take breaks during the more gruesome parts. To paraphrase Pinker, “I could have Adolf Hitler standing in front of me, and I would not have thought of doing that to him.” The book could have been shorter, but it certainly is enlightening and serious scholarship.

  https://www.amazon.com/Better-Angels-Our-Nature-Violence/dp/0143122010/ref=sr_1_fkmr0_1?ie=UTF8&qid=1524771442&sr=8-1-fkmr0&keywords=steven+pinker+the+better+angels+among+us

  Red Notice: A True Story of High Finance, Murder and One Man’s Fight for Justice by Bill Browder (@Billbrowder)

  I ran across Bill Browder ever so briefly last year as I wrote about the Magnitsky case in which the U.S. put sanctions on Russia for torturing Sergei Magnitsky to death. This affair got tangled up in the Clinton–Russia dealings. Browder describes his efforts at dealing with Russian oligarchs as he was an early entrant to Russia after the fall of the Soviet empire. You can’t help but notice that Browder is very much like the oligarchs he describes, strip mining Russia of assets on sale in the post-empire chaos. After reading the book, I began to run into bloggers who view Browder in a much darker light and paint him as the true villain. I am altogether uncertain about where fact and fiction meet in this book.

  https://www.amazon.com/Red-Notice-Finance-Murder-Justice/dp/B00T567KIA/ref=sr_1_1?ie=UTF8&qid=1540773044&sr=8-1&keywords=red+notice+by+bill+browder

  The Selfish Gene by Richard Dawkins (@RichardDawkins)

  This 1970s classic describes how evolution works at the gene level rather than the group level. (This book was a natural choice for me as a former genetics major with a fondness for evolution and various nature–nurture battles.) Dawkins’s gene-level evolution was pushed so strongly that it stifled contrary theories—group-level natural selection—to the point that it took decades for them to re-emerge and eventually usurp Dawkins’ model. The book is a little dated, but I enjoyed it. His most lasting legacy is the idea that humans pass along non-gene-level information (ideas) through cultural evolution. He called these ideas “memes.” And now you know the rest of the story.

  https://www.amazon.com/Unknown-The-Selfish-Gene/dp/B004U8NB2M/ref=sr_1_1?ie=UTF8&qid=1540773425&sr=1-1&keywords=the+selfish+gene&dpID=51ovAOjmklL&preST=_SX342_QL70_&dpSrc=srch

  The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham, Jason Zweig (@jasonzweigwsj), and Warren E. Buffett

  This, folks, is the bible of investing. Graham was Warren Buffett’s mentor. This revised edition has updates from Zweig and Buffett, but it seems faithful to Graham’s original edition, which I read so many years ago that I had no idea of its importance and wisdom. Modern investors who read this will say either, “OMFG!” because they understand its importance or, “This thinking blows” because they’re still swilling new-era Kool-Aid. The book convinced me that I should probably never buy a common stock unless I am willing to throw a Hail Mary because I could not possibly do the analysis adequate enough to be called an “intelligent investor.” My best hope is to go for sectors. On the battle of stocks versus bonds, I was struck by the claim that people who think they will necessarily make more money in stocks than in bonds in the long run are “delusional.” Debunking this belief has been my white whale for a couple of years. I think the authors are correct, but the era of interventionist (arrogant) central banking has made their maxim seem wrong for a good long time. This book is a must read for those who think they are hotshot investors. Dismiss their wisdom at your peril.

  https://www.amazon.com/Intelligent-Investor-Definitive-Investing-Essentials/dp/0060555661/ref=tmm_pap_title_0?_encoding=UTF8&qid=1540773969&sr=1-1

  The End of Alchemy: Money, Banking, and the Future of the Global Economy by Mervyn King

  Mervyn King’s view of the financial crisis and monetary policy on both sides of the crisis is either precious—he is the former head of the Bank of England—or garbage, because he is one of “them.” Maybe he’s just trying to salvage his legacy, but King is remarkably critical of central banking and monetary policy. He knows that consumption is unsustainably high, and it cannot be solved with stimulus. That game is over. The level of the book is low—I think I could have written much if not all of it—but this level of “honesty” from one of the global elite is shocking. They way he articulates ideas with clarity makes the book highly entertaining.

  https://www.amazon.com/End-Alchemy-Banking-Future-Economy/dp/B01GQNTC8K/ref=sr_1_1?ie=UTF8&qid=1540775043&sr=1-1&keywords=mervyn+king

  Hoover: An Extraordinary Life in Extraordinary Times by Kenneth Whyte

  I’m attempting to complete a history of the United States through the eyes of presidential biographers. Hoover was a natural given that he was POTUS during an economically disastrous four-year term. There are many myths propagated by Hoover owing to this little bit of bad timing that came to a head with Roosevelt beating him like a rented mule in the 1932 election. In a nutshell, Hoover was extraordinarily qualified as a businessman and, when called to service, a focused and highly competent civil servant. The guy got the job done. He has been vilified because of a largely erroneous role played during the Great Depression and because Roosevelt was a dick. Hoover saw it coming, spotted the metastability of the credit and stock markets, and sweated the details. He did everything in his power to mitigate the damage, stopping short of big-government solutions. He also didn’t pander to the masses for love or votes, which carried with it a high price politically. I was left with the sense that Hoover was one of the greats.

  https://www.amazon.com/Hoover-Extraordinary-Life-Times-ebook/dp/B01MZAAX0M/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1543698108&sr=1-1&keywords=herbert+hoover+biography

  Sapiens: A Brief History of Humankind by Yuval Noah Harari and Derek Perkins

  I mowed through two books by Yuval Noah Harari and Derek Perkins that seem to ponder the meaning of life. Sapiens got the bulk of the press. The book wanders through the cultural evolution that led from hunter-gatherers to what we are today. One of the more interesting concepts is that you would have trouble arguing life got better until we reached the era of modern medicine. We merely got better at packing more people into tight places. I have this odd paradox: I enjoyed wandering through the story but within a matter of months could not for the life of me tell you what it was about. Some books are sticky: The ideas stay with you. This one was not of those for me (a little like a pleasant dream that leaves your memory moments after waking). One Amazon reviewer possibly caught the spirit of my concerns noting, “Rather than being the interesting synthesis I’d hoped for, this turned out to be a series of disjointed bits touching on nearly every aspect of society.”

  https://www.amazon.com/Sapiens-Brief-History-Humankind/dp/B0741F3M7C/ref=sr_1_3?ie=UTF8&qid=1543699009&sr=1-3&keywords=homo+deus

  Homo Deus: A Brief History of Tomorrow by Yuval Noah Harari and Derek Perkins

  As the sequel to Sapiens, it suffers from the same disconnected wandering through a stream-of-consciousness presentation of entertaining ideas. Once again, I enjoyed it like one might enjoy listening to a symphony, but in the end, the notes blur together. One hopes that part of this disappointing lack of stickiness is merely how the human mind indexes information. Maybe the ideas are in in my skull—part of my cultural DNA—but only retrievable when a cue from the environment resurrects them, allowing me to molest somebody with my globality.

  https://www.amazon.com/dp/B01BBQ33VE/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1

  The Oxford Dictionary of Allusions by Andrew Delahunty

  An allusion is “an expression designed to call something to mind without mentioning it explicitly; an indirect or passing reference.” There you have it. I worked my way through a book of allusions for fun. Most aren’t that good, but I hit a couple of gems. The book is not for Philistines. (Did you catch that allusion?)

  https://www.amazon.com/Oxford-Dictionary-Allusions-Andrew-Delahunty/dp/0198600313

  The Myth of Capitalism: Monopolies and the Death of Competition by Jonathan Tepper

  I read only a handful of draft chapters while this book was being written. Based on that foreshadowing, I suspect the overall message—oligopolies, not just monopolies, are destroying capitalism—will be a compelling story. I’ll let you know a year from now.

  https://www.amazon.com/Myth-Capitalism-Monopolies-Death-Competition/dp/1119548195/ref=sr_1_cc_1?s=aps&ie=UTF8&qid=1543701902&sr=1-1-catcorr&keywords=jonathan+tepper

  The whole beast can be downloaded as a single PDF Here…

  

• On Gun Confiscation: "Here's How It Might Actually Go Down"

  Authored by Selco via Daisy Luther’s Organic prepper blog,

  After reading a couple of articles about magazines/weapon news from New Jersey – actually, after reading a lot of comments from people on that news-  I have the urge to write this article. It is written from the survivalist point of view. There is, of course, the possible danger to get comments like “What the hell do you know Selco? You are not American, shut up!” Because I am going to be “poking” a few sacred cows here.

  

  So…

  Right now, this is not the rise of communism.

  “Stalin is coming.”

  I do not think this all news is about “rise of communism” in the US, and also I do think that you still live in a land with a lot of great rights and liberties, which is very cool.

  What is not cool is the fact that you are moving in the direction of slowly “shrinking” of those rights. But it is still very far away from a “communistic evil empire”, so I do not see sense in having big headlines about Nazis and such other than scaring people for whatever reason.

  Weapon rights and the government

  I see here something which is much more dangerous than the fear of communism.

  It is how people react to news or new laws about any weapon limitation. It’s how they talk about what the majority of them are planning to do.

  Government at its core has the urge to control people in whatever way they can.  If you are more armed that means you are less controllable.

  But if you are acting in a way that you are screaming from the rooftops how you “will defend your right to have (whatever) weapon (contrary) to the newest law” and how you’ll “be proud to own i, and to show it”  you eventually are not doing yourself any favors.

  Do you really think that when the time comes that the government will send two pale clerks to search your home looking for whatever weapon?

  Nope.

  Here’s how confiscation might actually go down.

  Here is how it might actually go down. This is one possible scenario:

  First, you’ll be labeled as a terrorist, some weird guy who wants to overthrow the government. Maybe your photo will be posted somewhere stating that you are very sick, and that you pose a danger to society.

  If you are a member of some group, let’s say a prepper group, you all will be labeled as terrorists first, and through the media, you can be portrayed as a domestic terror cell, to the point that your next door neighbor will help police to get you.

  Do not underestimate the power of the government machine. You may truly be a fighter for constitutional rights and a real patriot, but in 3 days you can become a crazy terrorist that citizens will actually hunt down and shoot like a mad dog.

  The point here is there is no point of publicly “yelling” about what you own and what are your rights to own.

  Of course, you need to own weapons that you think it makes sense to own.

  But why does everybody else need to know that, including government and government services?

  The 2nd Amendment

  The 2nd Amendment is very cool, and I like it very much, but here is the ugly truth:

  It works only if the government wants it to work.

  One day, when the government does not want it to work anymore it will be out of order, illegal, or even terrorist to practice it.

  Sorry, it is not your inalienable right. The government lets you THINK  it is your inalienable right.

  Actually, you do need to protect that right. You need to defend it.

  But again not in a way that you gonna portray yourself as a terrorist. I mean, I will own what I want to own, and only I am gonna know that untill the day when I need it very badly.

  Owning weapons

  There used to be a law about weapons here, where I live, before the war. And yes, you could own a weapon but it was such a hard law that actually not too many people owned legal weapons.

  And right when the SHTthe F, first thing that happened was the confiscation of legal weapons, based on lists of who own legal weapons.

  Now what people could do then was to say, “This is my legal weapon. I have a right to own it, by the law.” And those who did that usually got shot.

  There were 20 heavily armed guys at your door asking nicely for your weapon, to be turned over to them in the name of “law” as an effort of a government that wanted to calm down a chaotic situation.

  Sometimes if you said no, those guys would simply destroy the whole house with RPGs and bombs.

  And guess what that meant?

  Folks who owned legal weapon lost them even before the big SHTF. And a lot of guys who owned them in an illegal way hidden somewhere still own them when SHTF.

  Illegal and legal have different meanings in different times and based who says those words, so think about it.

  I am not saying that it will go like that there where you are. What I do say is you that you need to think a bit outside the box when it comes to owning things.

  My thoughts on this

  For many years I found it ridiculous not to have an illegal (not traceable) weapon stored somewhere safe for the bad times.

  When SHTF and when (if) guys show up on my doorstep to confiscate my weapon what will I do?

  I will give them the weapon that they know about. What else I should do?

  Practice my rights?

  Nope.

  I have more of that stuff. It’s not worth it to fight over the one they know about.

  What could be coming for the future?

  Again I do not really see the government taking away all rights of owning a weapon as a possibility there. The tradition of firearms is simply way too big, and also the number of weapons is too big, too.

  But what is possible is the rapid shrinking of that right through some big event, in an effort of getting things back to normal.

  When something big happens and there is big fear and terror, people are ready to “give away” a lot of rights and liberties in exchange for the feeling of safety and security. This is wrong of course but it is how things work.

  So actually you never know, anything is possible.

  One bad side of having rights and freedoms for a long time (in owning weapon) is thinking it is always gonna be like that.

  Or thinking it must be like that.

  The “good side” of not having good gun rights is having a tradition of having ALWAYS hidden somewhere an illegal weapon. Always.

  And only you know about it and maybe your family.

  There is no need to brag about that anywhere else.

  *  *  *

  About Selco:

  Selco survived the Balkan war of the 90s in a city under siege, without electricity, running water, or food distribution.

  In his online works, he gives an inside view of the reality of survival under the harshest conditions. He reviews what works and what doesn’t, tells you the hard lessons he learned, and shares how he prepares today.

  He never stopped learning about survival and preparedness since the war. Regardless what happens, chances are you will never experience extreme situations as Selco did. But you have the chance to learn from him and how he faced death for months.

  Read more of Selco’s articles here.

  Buy his PDF books here. 

  

• America Is One Of The World's Deadliest Countries For Journalists

  Media group Reporters Without Borders said Tuesday it has observed a terrifying trend in the number of journalists killed and imprisoned worldwide, in 2018.

  For the first time, the US is one of the world’s deadliest countries for journalists after six were killed.

  The Paris-based group, also known as RSF, said the US ranked sixth on the list for most dangerous countries for journalists, behind Afghanistan, Syria, Mexico, Yemen, and India.

  Four journalists, as well as a sales manager, were killed in June when a deranged gunman opened fire at the Annapolis, Maryland offices of the Capital Gazette. Two more reporters, a North Carolina television anchor and cameraman, were killed by a tree while covering a hurricane in May. 

  

  “Non-professional journalists play a fundamental role in the production of news and information in countries with oppressive regimes and countries at war, where it is hard for professional journalists to operate,” RSF said in the report.

  The big picture: The group states there is an “unprecedented” level of worldwide hostility against members of the press, than in any other period on record. 

  

  Murder, imprisonment, hostage-taking, and disappearances of journalists all increased on a year-over-year basis.

  In total, 80 journalists were killed in 2018, with 49 murdered while 31 were killed in the act of reporting.

  While the report blames warzones in Afghanistan for the increased deaths, 45% of those killed were not in conflict regions. 

  

  Three hundred and forty-eight reporters have so far been detained this year and 60 were held hostage.

  China leads the world in detentions, with 60 journalists held in state jails. Thirty-one journalists are currently being held in Syria. 

  “Violence against journalists has reached unprecedented levels this year, and the situation is now critical,” Christophe Deloire, the group’s secretary general said. “The hatred of journalists that is voiced, and sometimes very openly proclaimed, by unscrupulous politicians, religious leaders and businessmen has tragic consequences on the ground, and has been reflected in this disturbing increase in violations against journalists.”

  

  RSF highlights the case of Saudi journalist Jamal Khashoggi, who was allegedly killed in the Saudi consulate in Istanbul, Turkey.

  The report warned: The Khashoggi killing in October shows “how far some people will go to silence ‘troublesome’ journalists.”

  

Digest powered by RSS Digest

• America's Technology & Sanctions War Will Bifurcate The Global Economy

  Authored by Alastair Crooke via The Strategic Culture Foundation,

  

  “The true reason behind the US-China ‘trade’ war has little to do with actual trade … What is really at the basis of the ongoing civilizational conflict between the US and China … are China’s ambitions to be a leader in next-generation technology, such as artificial intelligence (AI), which rest on whether or not it can design and manufacture cutting-edge chips, and is why Xi has pledged at least $150 billion to build up the sector”, Zerohedge writes.

  Nothing new here: yet behind that ambition, lies another, further ambition and a little mentioned ‘elephant in the room’: that the ‘trade war’ is also the first stage to a new arms race between the US & China – albeit of a different genre of arms race.

  This ‘new generation’ arms-race is all about reaching national superiority in technology over the longer-term, via Quantum Computing, Big Data, Artificial Intelligence (AI), Hypersonic Warplanes, Electronic Vehicles, Robotics, and Cyber-Security.

  The blueprint for it, in China, is in the public domain. It is ‘Made in China 2025’ (now downplayed, but far from forgotten). And the Chinese expenditure commitment ($ 150 billion) to take the tech lead – will be met ‘head on’ (as Zerohedge puts it), “by a [counterpart] ‘America First’ strategy: Hence the ‘arms race’ in tech spending … is intimately linked with defence spending. Note: military spending by the US and China is forecast by the IMF to rise substantially in coming decades, but the stunner is: that by 2050, China is set to overtake the US, spending $4tn on its military, while the US is $1 trillion less, or $3tn … This means that sometime around 2038, roughly two decades from now, China will surpass the US in military spending.”

  This close intimacy between tech and defence in US future defence thinking is plain: It is all about data, big data and AI: A Defense One article makes this very clear,

  “The battle domains of space and cyber are divorced, largely, from the raw physical reality of war. To Hyten [Gen. John E. Hyten, who leads US Air Force Space Command], these two uninhabited spaces mirror one another in another way: They are fields of data and information and that’s what modern war runs on. “What are the missions we do in space today? Provide information; provide pathways for information; in conflict, we deny adversaries access to that information,” he told an audience on Wednesday at the Air Force Association’s annual conference outside Washington, D.C.. The same is true of cyber.

  The US wages war with tools that require a lot of information… Inevitably, more adversaries will eventually employ data-connected drones and gunships of their own. The heavy information component of modern-day weapons, particularly that those wielded by air forces, also creates vulnerabilities. Air Force leaders this week discussed how they are looking to reduce the vulnerability for the United States while increasing it for adversaries”.

  So, the ‘front line’ to this trade/tech/defence war, effectively pivots about who can design – and manufacture – cutting-edge, semi-conductors (since China already has the lead in Big Data, Quantum computing, and AI). And, in this context, General Hyten’s comment about reducing US vulnerability, whilst increasing it for adversaries takes on major significance: For Washington, the plan is to ramp up export controls (i.e. ban the export) of so-called ‘foundational technologies’ — those that can enable development in a broad range of sectors. 

  And the equipment for manufacturing chips, or semi-conductors – not surprisingly – is one of the key ‘target areas’ under discussion.

  Export controls though, are just one part of this ‘war’ strategy of ‘data denial’ to adversaries. But semi-conductors is one field in which China is indeed vulnerable: since the global semiconductor industry rests on the shoulders of just six equipment companies, of which three are based in the US. Together, these six companies make nearly all of the crucial hardware and software tools needed to manufacture chips. This implies that an American export ban would choke off China’s access to the basic tools needed to manufacture their latest chip designs (though China can retaliate by choking-off the supply of Raw Earth, upon which sophisticated tech, is reliant).

  “You cannot build a semiconductor facility without using the big major equipment companies, none of which are Chinese,” said Brett Simpson, the founder of Arete Research, an equity research group. And, as the FT, notes, the real difficulty is not [so much] designing the chips, but in the making of very cutting-edge chips.”

  So here is the point: the US is attempting to clasp to itself both the ‘pure’ technology-knowledge, plus additionally, the practical tech supply-chain experience and knowhow, in order to repulse China out from the western tech sphere.

  At the same time, another strand to the US strategy – as we have witnessed with Huawei, a global leader in 5G infrastructure technology (in which the US is falling behind) – is to scare everyone off incorporating Chinese 5G in to their national infrastructures – through such devices as the arrest of Meng Wanzhou (for breach of US sanctions). 

  Even before her ‘arrest’, America has been systematically cutting Huawei out of the global 5G rollout, by quoting the magical words: ‘security concerns’ (Just as it is attempting to cut Russia out of weapons sales in the Middle East, on similar, tech-protective, grounds: i.e. that states should not buy Russian air defence, since this would give Russia a ‘window’ into NATO tech capabilities).

  And, as General Hyten made clear, this not just about increasing tech and area denial, and promoting vulnerability for adversaries in terms of chips – but the US also plans to extend tech and area info-denial to space, cyber, avionics and military equipment.

  It’s another Cold War – but this time it is about technology and ‘data denial’.

  Well, China, with its centralized economy, will throw money and brainpower, into creating its own, ‘non-dollar sphere’, supply lines: for semi-conductors; for components – both for civil and military use. It will take time, but the solution will come.

  Clearly, one consequence of this new arms race between the US – and China and Russia – is that specialized, and thinly-populated supply lines will have to be disentangled, and made anew, each in its own separate sphere: that is, on one hand, within the NATO-dollar sphere, and on the other, in the non-dollar sphere, led by China and Russia.

  And not only will there be this physical supply-line disentanglement and separation, but should the US persist with its Huawei leverage tactic of ‘War on Terror’-style ‘rendition’ of foreign businessmen, or business women, alleged to have breached any US broad spectrum tech sanctions, there will have to be a disentangling of mixed boardrooms to avoid exposing company officials to individual arrest and prosecution. Limitations on company officers’ travel, where their business spans spheres, is already happening (as a result of the attempted rendition of Meng Wahzhou – and in order to avoid being caught up in tit-for-tat, retribution).

  The bifurcation of the global economy was already in process. This stemmed firstly from America’s geo-political financial sanctions regime (i.e. Treasury Wars) – and the consequent attempts by targeted states to de-couple from the dollar sphere. The ‘war hawks’ surrounding the President are now inventing a whole new swathe of ‘tech crimes’ for sanctioning – ostensibly to give Trump oven more of his much-desired negotiating ‘leverage’. Clearly the hawks are using the ‘leverage’ pretext, to up-the-ante against China, Russia and its allies – for far wider ambitions than just giving the President more ‘cards in his hand’: Perhaps rather, to re-set the entire power-balance between America versus China and Russia.

  The obvious and inevitable consequence has been an accelerating financial separation from the dollar sphere; and the development of a non-dollar architecture. De-dollarisation in a word.

  Effectively, the US seems prepared to burn-down its reserve-currency status, to ‘save’ itself – to ‘Make America Rich Again’ (MARA), and to hobble China’s rise. And while burning down dollar-hegemony, the Administration is burning its own ‘global order’ too: attenuating it from the ‘global’ – down to a reduced sphere of US tech and security allies, facing China and the non-West. The domestic consequences for America will be felt in the new (for Americans) frustration of finding it harder to finance itself, in the manner in which it has grown accustomed, over the last 70 years, or so.

  Peter Schiff, CEO and Chief Global Strategist of Euro Pacific Capital, says that:

   “The dollar – [the US] having the reserve currency, [is placing that] status … in jeopardy. And I don’t think the world likes giving America this kind of power that we can impose our own rules and demand that the entire world live by it. So, I think this has a much bigger and broader ramifications other than what’s going on in the stock market today. I think long-term, this is going to undermine the dollar, and its role as a reserve currency. And when that goes, so does the American standard of living: because it’s going to collapse.”

  “People think we have the upper hand because we have this huge trade deficit with China. But I think it’s the other way. I think the fact that they supply us with all this merchandise that our economy needs, and the fact that they hold a lot of our bonds [debt], and continue to lend us a lot of money so we can live beyond our means – they’re the ones, I think, that call the tunes, and we have to dance to it.”

  This tech and data new Cold War will polarise the global economy into spheres, and already it is polarising it politically, into a new ‘with us, or against us’ American paradigm. Politico notes:

  “The Trump administration’s global campaign against telecom giant Huawei is pitting Europe against itself – over China. In the midst of a ballooning US-China trade conflict, Washington has spent the past few months pressing its EU allies via its ambassadors to take a stronger stance against Chinese telecom vendors such as Huawei and ZTE.

  The American push…is exposing fault-lines between US allies in Europe as well as [between] the so-called “Five Eyes” intelligence community — which have largely followed the US lead — and others that resist the American pressure, by stopping short of calling out Chinese tech.

  On the other side there is Germany, which wants proof from the United States that Huawei poses a security risk, as well as France, Portugal and a slew of central and eastern EU nations.

  The increasingly divergent attitudes show how Donald Trump is forcing allies to take sides in a global dispute and measure their economic interests — often deeply embedded with the Chinese vendors — against the value of a security alliance with Washington.”

  The potential for accelerated de-dollarisation is one aspect, but there is another potential flaw inherent to the wholesale repatriation of supply-lines. US corporate earnings have ballooned over the last two decades. Part of this earnings hike stemmed from ‘easy’ liquidity, and ‘easy’ credit; but a major element owed to cost-cutting – that is to say, off-shoring elements of higher-cost US production (because of wage levels, regulatory costs and employee entitlements) to lower wage, less regulated states. The coming bifurcation of the global economy has therefore, as its inevitable consequence, the repatriation of lower-cost production (in China and elsewhere) to a now higher-cost, and more highly regulated, US and European environment.

  Perhaps this is a good thing – but for sure it means costs and prices will rise in the US and America, and it means that corporate business models will be impaired as they de- off-shore. Americans’ standards of living will decline further (as Peter Schiff foretells).

  The alienation and disgruntlement of America’s ‘deplorables’ and Europe’s ‘Yellow Vests’ is evidently a profound problem – and one that will not be solved by a new Cold War. The roots to our present discontents lie precisely with the ‘easy’ liquidity, and the ‘easy’ credit paradigm, which centrifuged-out societies into the asset owning 10% and into the non-asset holding 90% of society, and which degraded so the sense of societal well-being and security.

  Of course this discontent can really only be resolved by addressing the question of our hyper-financialised economic paradigm – which is not something the élites will, or want, to ‘touch’.

  

• Sierra Nevada Snowpack On Track To Collapse 79%, New Study Warns

  A new report by the Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab) examined the headwater regions of California’s ten major reservoirs, representing half of the state’s surface storage, discovered each could experience a 79% decline in peak snowpack water volume by 2100.

  Berkeley Lab used supercomputers to investigate current warming trends and carbon emissions.

  Scientists analyzed how a future warmer world would affect “snowpack upstream of 10 major reservoirs — three in Northern California, three in Central California, and four in Southern California. The reservoirs are Shasta, Oroville, Folsom, New Melones, Don Pedro, Exchequer, Pine Flat, Terminus, Success, and Isabella,” said The Mercury News.

  

  By 2039 to 2059, the snowpack runoff could drop by 54%, the study determined, and then 79% from 2079 to 2099. The study noted that three northernmost reservoirs, Shasta, Oroville and Folsom, could see an 83% reduction, by 2100.

  Alan Rhoades, a postdoctoral fellow at Berkeley Lab and lead author of the study, said his team of researchers found that peak runoff could come four weeks earlier by 2100, at the beginning of March rather than April 01. 

  Mountain snowpack is a significant source of water for California: “Our precipitation is really intermittent and extremes-driven,” Rhoades said. “We get 50% of our annual precipitation in five to 15 days, or one to two weeks. Our water demand is highest during the summer months when we don’t get a lot of precipitation, so we really rely on mountain snowpack as a stopgap for our water supply.”

  “So as the world continues to warm, these storms will get even warmer and won’t readily get to freezing, whereby you could have snowfall or snow accumulation and the persistence of snow on the surface,” he said.

  As a result of warmer weather, the amount of snow is projected to decrease while rain could increase. The study noted that it did not look at rainfall, only mountain snowpack. 

  

  The study also found that snowmelt rates will decrease. The snow season which includes both the accumulation and melt portion of the season will fall by 20 days by 2050 and 39 days by 2100. This is primarily due to future weather systems will produce less snow but also because with the peak timing shifting to earlier in the year, the days are shorter and less energy from the sun is available to melt the snow.

  Ellen Hanak, director of the Water Policy Center at the Public Policy Institute of California, has already begun to address the future water crisis in the state. 

  “Voters passed Proposition 1 in 2014, a water bond with $2.7 billion for new storage projects. This summer, state officials earmarked that money for eight projects, including raising the dam at Los Vaqueros Reservoir in Contra Costa County, building a new reservoir at Pacheco Pass in Southern Santa Clara County, building the massive Sites Reservoir in Colusa County, and several large groundwater storage projects in Southern California,” said The Mercury News.

  Gov. Jerry Brown also signed a groundwater law that requires farmers and municipalities to better track groundwater usage. 

  Hanak said, “more projects are needed, such as efforts to pay farmers to flood their fields and orchards in wet years, recharging groundwater tables, along with far more recycled water projects, conservation efforts and other initiatives.”

  “We have surface reservoirs, groundwater basins, and we have rivers and canals and aqueducts to connect them,” she said. “We’re going to have to manage them together more consistently.”

  …And now it makes perfect sense: WSJ recently exposed Harvard University’s endowment (valued at $39 billion as of 2018), the largest academic endowment in the world, for quietly snapping up farmland and related water rights to properties located in the California region. 

  It seems like Harvard is establishing itself in the water brokering business, as the endowment’s money managers know they will make a killing when California runs out of the water.

  

• Is The US Preparing For A War Between LatAm States?

  Authored by Thierry Meyssan via The Voltaire Network,

  Little by little, the partisans of the Cebrowski doctrine are advancing their pawns. If they must cease creating wars in the Greater Middle East, they’ll just turn around and inflame the Caribbean Basin. Above all, the Pentagon is planning to assassinate an elected head of state, ruin his country, and undermine the unity of Latin-America.

  

  John Bolton, the new US National Security Advisor, has relaunched the Pentagon’s project for the destruction of the State structures in the Caribbean Basin.

  We remember that in the aftermath of the 9/11 attacks, the Secretary for Defense at that time, Donald Rumsfeld, created the Office of Force Transformation and nominated Admiral Arthur Cebrowski as its Director. Its mission was to train the US army for its new role in the era of financial globalisation. It was designed to change military culture in order to destroy the State structures of the regions which were not connected to the global economy. The first chapter of this plan consisted of dislocating the « Greater Middle East ». The second stage was intended to perform the same task in the « Caribbean Basin ». The plan was designed to destroy some twenty coastal and insular States, with the exception of Colombia, Mexico and as far as possible, territories belonging to the United Kingdom, the United States, France and Holland.

  When he arrived at the White House, President Donald Trump opposed the Cebrowski plan. However, two years later, he has so far only been able to prevent the Pentagon and NATO from handing over States to the terrorist groups they employ (the « Caliphate »), but not to stop manipulating terrorism. Concerning the Greater Middle East, he has managed to diminish the tension, but the wars still continue there at lower intensity. Concerning the Caribbean Basin, he restrained the Pentagon, forbidding them to launch direct military operations.

  Last May, Stella Calloni revealed a note from Admiral Kurt Tidd, Commander in Chief of SouthCom, exposing the operations aimed at Venezuela. A second penetration was simultaneously implemented in Nicaragua, and a third, running for the last half century, against Cuba.

  Working from several previous analyses, we concluded that the destabilisation of Venezuela – beginning with the guarimbas movement, continued by the attempted coup d’etat of February 2015 (Operation Jericho), then by attacks on the national currency and the organisation of emigration – would end with military operations led from Brazil, Colombia and Guyana. Multinational manoeuvres of troop transport were organised by the United States and their allies in August 2017. This was made possible by the election of pro-Israëli President Jair Bolsonaro, who will come to power in Brasilia on 1 January 2019.

  

  Brazilian Vice-President Hamilton Mourão with President Jair Bolsonaro.

  The next Vice-President of Brazil will be General Hamilton Mourão, whose father played an important role in the pro-US military coup d’etat of 1964. He has made himself famous by his declarations against Presidents Lula and Rousseff. In 2017, he declared – on behalf of the Grand Orient of Brazil – that the time for a new military coup d’etat had arrived. Finally, he was re-elected with President Bolsonaro. In an interview with the magazine Piaui, he announced an impending overthrow of the Venezuelan President, Nicolás Maduro, and the deployment of a Brazilian « peace » force (sic). Faced with the gravity of these statements, which constitute a violation of the United Nations Charter, elected President Bolsonaro declared that no-one had any intention of going to war with anyone, and that his Vice-President talked too much.

  In any case, during a Press conference on 12 December 2018, President Maduro revealed that US National Security Advisor John Bolton was handling the coordination between the teams of Colombian President Iván Duque and those of the Brazilian Vice-President. A group of 734 mercenaries is currently being trained in Tona (Colombia) in order to perpetrate a false flag attack, allegedly by Venezuela, against Colombia – thereby justifying a Colombian war against Venezuela. The war would be under the command of Colonel Oswaldo Valentín García Palomo, who is today in hiding after the attempted assassination by drone of President Maduro during the anniversary of the National Guard on 4 August 2018. These mercenaries are supported by Special Forces stationed on US military bases in Tolemaida (Colombia) and Eglin (Florida). The US plan is to take over, from the beginning of the conflict, the three Venezuelan Libertador military bases of Palo Negro, Puerto Cabello and Barcelona.

  

  Wanted notice for Colonel Oswaldo Valentín García Palomo of the Venezuelan National Guard, after he had commanded an attempted assassination of the President of the Bolivarian Republic.

  The US National Security Council is attempting to convince various states not to recognise Nicolás Maduro’s second mandate (he was re-elected last May, but will assume power with the New Year). This is why the states of the Lima Group contested the Presidential ballot even before it took place, and illegally forbade Venezuelan consulates from organising it. Furthermore, the migration crisis turns out to be just one more manipulation – many of the Venezuelans who fled the monetary crisis believing that they would easily find work in another Latin-American country are today trying to return home. But the Lima Group prevents them from doing so, forbidding Venezuelan planes who are attempting to repatriate them to use their air space, as well as interdicting the buses which have come to help them cross the borders.

  Everything is therefore happening as if we were watching a remake of the events which bloodied the Greater Middle East after the attacks of 11 September 2001. The main point is not the military actions, but the appearance of disorder that the events present. First of all, it’s intended to confuse people into making a silk purse out of a sow’s ear. In the space of five years, Venezuela and Nicaragua, which used to enjoy a positive image abroad, are now being wrongly described as « failed states ». While the history of the Sandinistas and their struggle against the Somoza dictatorship has not yet been re-written, it is taken for granted that Hugo Chávez Frías was a « Communist dictator » (sic), despite the fact that his country experienced a massive economical and political leap forward during his Presidency. It will soon become possible to destroy these states without anyone complaining.

  Time is passing more and more rapidly. When, in 1823, US President James Monroe decided to close the Americas to European colonisation, he could not have imagined that 50 years later his decision would morph into an affirmation of US imperialism. Just as today, when President Donald Trump declared, on the day of his investiture, that the time for régime change was over, he did not imagine that he would be betrayed by his own people. Nonetheless, on 1 November 2018, his Security Advisor John Bolton declared in Miami that Cuba, Nicaragua and Venezuela formed a « troïka of tyranny ». Then his Secretary of Defense, General James Mattis, affirmed on 1 December, before the Reagan National Defense Forum, that elected President Maduro is an « irresponsible despot » who « has to go » 

  

• "The Worst Possible Situation" – This Surprise Tax Liability Will Blindside Hedge Fund LPs

  Investors who have their money with hedge funds like Point72 could be blindsided by a surprise tax liability, according to a new report from Bloomberg. LPs across the hedge fund universe could be affected by deductions that most businesses used to be able to take for the interest they pay on loans.

  When the IRS released hundreds of pages of proposed regulation last month, it became clear that these deductions would be limited to hedge funds who were performing well – and that since most hedge funds have had a poor year, their tax bills might increase as a result. Those are costs that are likely to be passed on to each fund’s limited partners.

  David Miller, a tax lawyer at Proskauer Rose LLP stated:

  “The rules create the worst possible situation”.

  This impact is just one of the many unexpected changes that both corporate and private taxpayers are learning about as the IRS issues “thousands of pages” of new regulations to implement new tax law.

  

  However, the private equity industry was able to hang onto tax breaks for carried interest. The new law extended the period required for managers to qualify for a lower rate on their investment profits, instead of simply killing the break.

  Hedge fund investors will likely be surprised when they get their tax forms early next year. There will be new lines for calculating interest expense that weren’t previously there. Funds that rely on borrowing money to make their bets will see the biggest impact. Funds now can only deduct these costs if they have had strong performance and have generated enough income against which to take the deductions.

  And the timing for these changes is awful. Hedge funds have been widely underperforming, overall down 3.62% this year through November. Because they won’t meet the income and performance thresholds necessary, the underperformance will result in a “double whammy” where performance lags at the same time that expenses rise. Hedge funds more focused on buy and hold strategies are not affected by the deduction cap. Also exempt from the deduction cap are businesses with gross receipts of less than $25 million.

  For certain, those who invest in Point72 are potentially at risk. It had $13 billion in client assets and $71 billion in regulatory assets under management as of last month. The fund was down about 5% last month, which offset its 2018 gains.

  

  Trader funds that use leverage could balance interest income and expenses so that their investors won’t see too much of an effect, but because many hedge fund managers have lost money this year, the shockwaves could still be profound. The $3.2 trillion hedge fund industry has seen investors pull out $68.8 billion since the beginning of 2016. We recently noted that these outflows were accelerating over the last few months.

  And the continued effect of these new tax laws could get worse moving forward. For now, companies can deduct interest cost up to 30% of EBITDA until 2022. After that, it changes to 30% of EBIT, excluding depreciation and amortization.

  Like many things involving the IRS, there wasn’t a lot of clarity on the law until it was actually released.

  Simcha David, a tax partner at accounting and advisory firm EisnerAmper stated:

   “It’s really the limited partners that seem to get screwed here. I was completely shocked.”

  

• "Panic In The Air" – Stunned Traders Speechless At The Carnage

  CNN’s Fear & Greed Index just hit 5… an all-time record low (most extreme fear)…

  

  And the following provides a simple analogy for what happens when one market snaps…

  Tough week in China…

  

  European stocks had an ugly week…

  

  And, if this holds up next week, will be the worst year for EU stocks since 2008…

  

  But since the trade war truce, US equities have dramatically underperformed…

  

  It was a total shitshow in US equities – Dow, S&P, Trannies down around 6% on the week, and Nasdaq and Small Caps down a shocking 8% or so…

  

  Not decoupled from the rest of the world after all…

  

   

  Worst week for Dow, Nasdaq since Oct 2008 (5th week lower in last 6)

  

  • Worst week for S&P since Aug 2011 (5th week lower in last 6)

  Just 300 more points lower in the S&P to catch down to financial conditions fair value…

  

  • Worst week for Russell 2000 since Sept 2011 (5th week lower in last 6)

  From the 52-week highs:

  • Dow -16%

  • S&P -17%

  • Nasdaq 100 -21% – BEAR

  • Nasdaq Composite -22% – BEAR

  • Trannies -23.6% – BEAR

  • Small Caps -26% – BEAR

  First it was the Russell 2000. Then the Nasdaq Composite. Today it’s the Nasdaq-100 that crossed a bear-market threshold by retreating 20% from a peak. The index’s record was set Aug. 29, the same day as the broader Nasdaq index.

  

  Why today? Blame the FAANG stocks. Facebook, Amazon.com, Apple, Netflix and Google/Alphabet together account for more than two-thirds of the Nasdaq-100’s loss.

  

   

  Since The Fed, Gold, the dollar, and the long-bond are all up around 0.5%, while stocks collapsed around 6%…

  

   

  Year-to-Date it’s carnage with Trannies and Small Caps down 16%, Dow and S&P down 10%, and Nasdaq Composite down 8%!!

  

   

  On the day, we can see where Fed’s Williams tried desperately to jawbone markets higher – but ended up admitting that the balance sheet runoff is on auto-pilot…

  

  and then Navarro comments into the bell did not help…

  

  Bank stocks were a bloodbath – with Regionals have dumped the entire Trump Bump…

  

   

  Goldman Sachs was a disaster – down over 5% today alone (down 42% from highs)…

  

   

  VIX term structure remains inverted and spot VIX topped 31 for the first time since Feb today…

  

   

  Under the covers, there are some extremes:

  Put/Call (Open Interest) has collapsed…

  

   

  Nasdaq/NYSE New Lows is soaring…

  

  Which, as Bloomberg reports, is ominous at best.  Since 1984, there were only eight days when a bigger proportion of shares did so, according to Sundial Capital Research. Two of them were in 1987 — during the famous Black Monday crash, when the Dow Jones Industrial Average lost 23 percent in one day, and then again during the following session. The rest were in the aftermath of the collapse of Lehman Brothers in October and November 2008.

  “There are more than hints of panic in the air,” Jason Goepfert, president of Sundial Capital Research, wrote in a note Thursday.

  “There is clear evidence of wholesale selling on a level we rarely see.”

  And finally, the regime has changed dramatically with a mass exodus of smart money flows…

  

  None of this was helped the largest market cap company in the world suffering a death cross…

  

   

  Credit markets were a bloodbath this week with loans collapsing bidless…

  

  And HY spreads exploding…

  

   

  Bonds & Stocks were dumped the last two days…

  

   

  Treasury yields ended the week notably lower (though not as much as one would expect given the carnage in stocks, since we suspect some forced selling by Risk-Parity funds took some of the buying away)…

  

   

  10Y Yields closed below the key 2.80% level…

  

   

  And if cyclical stocks (relative to defensives) are right, Treasury yields have a long way to fall…

  

   

  The Dollar Index slipped on the week, but the last three days (post Powell) have been chaotic…

  

   

  Cryptos drifted lower today but had a huge week…Bitcoin’s best week since Feb

  

   

  Gold and Silver managed gains on the week but copper and even more so crude were clubbed like baby seals…

  

   

  Gold pushed up to its 200DMA…

  

   

  Silver underperformed gold…

  

   

  WTI Crude tumbled to a $45 handle today…

  

  *  *  *

  Finally, we note the surge in USA Sovereign credit risk as the government heads for shutdown (and debt ceiling debacles)…

  

  On the macro side, things are not awesome…

  

  But it’s not just the sovereign that is in trouble…

  The profits recession’s already here. The GDP data showed that National Accounts earnings after-tax and w/ IVA & CCA are up 19.6% YoY as of Q3. Strip out these goodies and pre-tax profits are -0.3%. My advice is to fade the cheerleaders that populate the segments on bubblevision.

  — David Rosenberg (@EconguyRosie) December 21, 2018

  https://platform.twitter.com/widgets.js

  Still… the worst December since The Great Depression – probably nothing, right?

  

  Actually, there are over $17 trillion reasons to worry!!

  

  Who could have seen that coming?

  

  We give the final word to none other than Dennis Gartman who said this morning – “Stock prices continue to plunge and there is nothing else that one can say other than that… the internals remain manifestly, harshly, overwhelmingly, one sidedly, shockingly, dismayingly, margin call-creatingly bearish”

  

• The Great Saudi Muddle

  Authored by Daniel Lazare via ConsortiumNews.com,

  Does the Senate want Crown Prince Muhammad bin Salman to own up to the murder of dissident journalist Jamal Khashoggi?  Is it really seeking an end to Saudi Arabia’s war of aggression against Yemen?  The answer to both questions is: kind of, sort of, not really. 

  That’s the takeaway from a couple of resolutions the chamber approved amid great fanfare last week.

  The first, sponsored by Senator Bernie Sanders, calls on Trump “to remove United States Armed Forces from hostilities in or affecting the Republic of Yemen” by, among other things, putting an end to in-flight refueling of Saudi and the United Arab Emirate war planes. The resolution, which passed 56 to 41, was a small step toward ending a war of aggression that has claimed as many as 80,000 lives – although it would have been stronger and less self-serving if it had also called for cutting off arms sales that have allowed US weapons manufacturers to reap vast profits off human misery.

  But the second resolution, which passed on a unanimous voice vote, was a muddle that shows just how self-defeating US policy has become.  Sponsored by Republican Senator Bob Corker, it began by holding the crown prince responsible for Khashoggi’s murder in an Istanbul consulate on Oct. 2, an act, it said, that has “undermined trust and confidence in the longstanding friendship between the United States and the Kingdom of Saudi Arabia.”

  

  MbS: Are his days numbered?

  This generated excited headlines to the effect that the U.S. might at last be breaking with MbS, as Crown Prince Muhammad bin Salman is universally known. But news outlets failed to mention what the resolution said next.  It declared, for instance, that the U.S.-Saudi relationship is “an essential element of regional security.”  While saying nothing about arms shipments to Saudi allies, it condemned Iran for supplying rebel forces with “advanced lethal weapons.”  It blamed the Houthis “for egregious human rights abuses, including torture, use of human shields, and interference with, and diversion of, humanitarian aid shipments” – this while remaining silent about Saudi-UAE atrocities, which reportedly include a string of torture chambers in which political opponents are roasted over open fires, among other horrors.

  Most bizarrely of all, the resolution warned the Saudis that “increasing purchases of military equipment from, and cooperation with, the Russian Federation and the People’s Republic of China challenges the strength and integrity of the long-standing military-to-military relationship” between Washington and Riyadh.  The Senate is thus angry with MBS not only because he sent a seventeen-member hit squad to knock off a US resident in the middle of a European capital, but because he’s consorting with America’s business rivals.  The resolution further warns that such purchases “may introduce significant national security and economic risks to both parties,” language that is every bit as threatening as it sounds. 

  The result is a ball of confusion, one that tries to distance the US from a murderous Saudi prince while at the same time demanding closer relations with the government he heads.  It calls on the Saudis to behave more nicely to their neighbors, wind down the war in Yemen, and cease murdering people in broad daylight so that the clock can be turned back a few years and the process starts all over again.  To quote Giuseppe de Lampedusa’s famous line in his novel, The Leopard, it wants everything to change so that everything can remain the same.

  Incoherence

  This is as incoherent as anything Trump has come up with, including his notorious Nov. 20 statement with regard to MbS’s guilt or innocence that “maybe he did and maybe he didn’t.”  Trump can’t let go of his Saudi ties.  But, then, the Senate can’t let go and not let go at the same time.

  No one knows what to do, which is why the resolution tried to play both sides of the net.  In describing MbS as “a wrecking ball,” one whom it is “very difficult to be able to do business” with, Republican Senator Lindsey Graham was essentially calling on the crown prince to step down.  

  He could be replaced, under U.S. pressure, perhaps with the former crown prince he replaced, Muhammad bin Nayef, said to be favored by the CIA, which publicly blamed MbS for Khashoggi’s murder.

  But it could also mean a destabilizing factional feud within the ruling clan leading to a messy regime change, which, as Washington foreign-policy experts have learned all too painfully since the Arab Spring, could well lead to chaos.

  To be sure, there is always the hope that a senior member of the Al-Saud will step in once MbS is removed and re-establish order. Indeed, Saudi experts already have a candidate for the job in mind: King Salman’s younger brother Ahmed bin Abdulaziz, who, while living in self-imposed exile in London, startled Saudi watchers by telling a small group of hecklers not to blame the Al-Saud for the Yemen war, only the king and crown prince.  “They are responsible for crimes in Yemen,” he said. “Tell Mohammed bin Salman to stop the war.”

  Since public criticism of this sort is unprecedented, it was assumed that when Prince Ahmed flew back to Riyadh a few weeks after the Khashoggi murder under a US-UK promise of protection, it was with the goal of putting the Al-Saud on a new footing.

  But no one knows what might bubble up if he were to try.  Things might return to normal after a royal shake-up – assuming one is in the works – or they may not.  After all, it was assumed that Libya would return to normal once a former prime minister named Ali Zeidan took over from deposed strongman Muammar Gaddafi.  When that didn’t work out, it was hoped that an ex-academic named Omar al-Hassi would have better luck.  But when he fell too, it was clear that only anarchy would reign.  

  Hence the fear in Saudi Arabia is that something similar might occur post-MbS – that, as a source told The New Yorker’s Robin Wright, “[s]omeone from outside the system could make it collapse,” whereupon the kingdom would succumb to “instability like elsewhere in the region.”

  Homemade in Washington

  

  FDR: Making deal with Saudis that still governs the nations’ relations.

  If so, it’s a problem entirely of Washington’s own making.  Democratic and Republican administrations alike have continued to build up Saudi Arabia despite repeated warnings that it was creating a monster.

  In 1945, FDR granted Saudi King Ibn Saud a blanket security guarantee in return for unrestricted oil access.  A few years later, Truman used the newly-established Marshall Fund to finance massive Saudi oil shipments to war-torn western Europe, thereby establishing the kingdom as the world’s leading exporter.  Following the epic price increases and Oil Embargo of the 1973, Washington hit upon yet another deal, this time to recycle excess petrodollars by exchanging Saudi oil profits for U.S. weaponry.  A regional military colossus was thus born, one that felt free to attack whomever it pleased thanks to colossal oil wealth, vast quantities of high-tech arms, and an unlimited U.S. security guarantee and political cover.

  Aggression and repression were the inevitable result. Unwilling to upset a vital strategic partner, the Obama administration said nothing when Riyadh sent troops into neighboring Bahrain to bloodily suppress democratic protests; when it flooded Syria with bloodthirsty Sunni jihadis, and when, in March 2015, it declared war on Yemen, its neighbor to the south.  Indeed, the administration felt it had no choice but to help out.

  Thus, a top general signaled his assent even while admitting that he had only been given a few hours’ notice while a State Department spokesman added forlornly: “We don’t want this to be an open-ended military campaign.” Nearly four years later, with as many as 13 million people teetering on the brink of starvation, that’s exactly what it’s turned out to be.

  Joined at the hip with the Saudis, the U.S. appears to have no idea how to go about severing an increasingly toxic relationship, as last week’s incoherent Senate resolutions make clear.

  The U.S. was happy to build Saudi Arabia up, but it’s clueless now that Saudi Arabia is dragging it down.

  *  *  *

  Please give to our end-of-year fund drive, by clicking Donate.

  

• Follow The Money: Americans Earning Over $200k Are Moving Here

  Americans earning over $200,000 are flocking to Cook County, Illinois; Baltimore–Washington metropolitan area; Jacksonville suburbs; Houston, Texas; and dozens of other exclusive communities around the country. Some of these communities have been gentrified, thus have a fine divide between rich and poor. With wealth inequality at record levels, the country is splintering into two Americas (the haves and the have-nots).

  Bloomberg is fascinated with prosperous America. They measured the economic fortunes of households earning $200,000 or more by using the Census Bureau’s American Community Survey to gain color on these ultra-wealthy neighborhoods. Here is a map of the share of households earning $200,000 or more:

  

  About 7% of American families bring in $200,000 per year, according to the consulting firm Webster Pacific. This population of wealthy people has never been higher since the Dot Com bubble. The firm used government data published on Dec. 06 and adjusted for inflation. (The ranking excludes recently created tracts, those defined as tracts of significant change and any tracts with fewer than 100 households in either 2000 or 2017, said Bloomberg.)

  

  Cook County, a county in Illinois and the second-most populous county in the US after Los Angeles County, California, is home to No. 1 and No. 7 fastest-growing concentrations of $200,000-plus households.

  Bloomberg said, No. 1, ironically, used to be one of the worst housing projects in the state. The complex was notorious for violent crime, poverty and de facto racial segregation until its demolition in the early 1990s. In the mid-90s, authorities fretted with the idea that gentrification of the area would displace low-income families. Two decades later, they were correct, the area’s concentration of $200,000-plus households has skyrocketed from zero to 39%. 

  Cook County has another top ten neighborhood about 20 miles north: the Glen. The community was constructed on Naval Air Station Glenview, “the community has hundreds of families living in condos, townhouses and single-family homes that go for as much as $2.5 million each,” according to realtor Margaret Ludemann.

  Baltimore–Washington metropolitan area, has four of the top 10 (Nos. 2, 3, 5 and 6) fastest-growing regions of high earners. The region already had a significant concentration of wealth dating back to the Dot Com bubble. But since then, people have gotten so wealthy that more than half of the households earn $200,000 or more. (The New York metropolitan area captured Nos. 9 and 10.)

  

  “Lobbyists, defense contractors, law firms and technology companies all played a role in the Washington area’s ascent. So, too, has the high ratio of multi-earner households,” according to Jeannette Chapman, deputy director at the Stephen S. Fuller Institute at George Mason University.

  Chapman said with all that wealth concentrated in the Baltimore–Washington metropolitan area; many residents do not feel wealthy, even though they are high-earners. 

  “A household earning $200,000 here still might be struggling in a way that’s just unfathomable in other parts of the country because the costs are so much higher,” she said.

  No. 4 area is in Florida, surrounding Marsh Landing, a gated community in Ponte Vedra Beach, said Bloomberg.  Its residents have made a lot of money since the Dot Com bubble. In 2000, the area had a 20% concentration of the wealthiest Americans. Now some 56% of households there make $200,000 or more.

  The neighborhood is down the street from Jacksonville, a city that has added more than 23,000 financial-services jobs since 2000, according to the JAXUSA Partnership, a division of the local chamber of commerce. 

  “Since the financial crisis, Wall Street companies have sought to reduce wage expenditures by putting employees in cities with a lower cost of living. As a result, Bank of America Corp., Deutsche Bank AG, and Citigroup Inc. now employ thousands of workers each in northern Florida,” said Bloomberg.

  Houston, Texas, enjoyed the benefits of a massive fracking bubble. In the city’s metro areas, new development is attracting an enormous inflow of households that have deep pockets.

  In neighborhoods such as Oak Forest, families making more than $200,000, are rushing to renovate 70-year-old bungalows, the region has made it to No. 10 in the top 100 fastest-concentrating pockets of $200,000 households.

  

• Amazon's Creepy Facial Recognition Doorbell Will Surveil Entire Neighborhood From People's Front Doors

  Authored by Meadow Clark via Daisy Luther’s Organic Prepper blog,

  At first glance of Amazon’s new patent application, one would be tempted to think it no more than a built-in “smart” security system.

  But no, this facial recognition surveillance doorbell does a lot more than record would-be thieves.

  

  Ding! Dong! Prepare to be downright disturbed.

  According to a new report, the patent application, made available in late November, would pair facial surveillance such as Rekognition, the product that Amazon is aggressively marketing to law enforcement, with Ring – a doorbell camera company that Amazon acquired in 2018.

  CNN writes, “Amazon’s application says the process leads to safer, more connected neighborhoods, as well as better informed homeowners and law enforcement.”

  Yeah, that’s one way of putting it. Here’s another:

  Amazon is dreaming of a dangerous future, with its technology at the center of a massive decentralized surveillance network, running real-time facial recognition on members of the public using cameras installed in people’s doorbells. –Jacob Snow, ACLU

  Wow. Do you feel safer yet?

  This tech isn’t really there to protect your house or neighborhood.

  It’s going to record all who walk by and gather composite images and recordings that can be stored in a cloud and accessed by law enforcement to help surveil and catch suspects.

  One of the main problems – besides the obvious privacy violations and smashing the 4th amendment to smithereens – is that facial recognition has been abysmal so far. That means if a database determines you are a suspect because you bear a striking resemblance, then the police could show up and detain you before you even drop off the potato salad to your next potluck.

  Snow writes:

  While the details are sketchy, the application describes a system that the police can use to match the faces of people walking by a doorbell camera with a photo database of persons they deem “suspicious.” Likewise, homeowners can also add photos of “suspicious” people into the system and then the doorbell’s facial recognition program will scan anyone passing their home. In either case, if a match occurs, the person’s face can be automatically sent to law enforcement, and the police could arrive in minutes.

  It would be far to easy to get yourself on a “list” with this technology

  CNN reports:

  The application describes creating a database of suspicious persons. Unwanted visitors would be added to the list when a homeowner tags them as not authorized. Other people could be added to the database because they are a convicted felon or registered sex offender, according to the application. Residents may also alert neighbors of a suspicious person’s presence.

  But some people, such as a mail courier, could be placed on an authorized persons list. Postal service logos could be used to help identify them.

  Putting people on a naughty list? Wait, doesn’t that all sound eerily similar to the social credit systemrolled out in China?

  “The patent describes the neighborhood surveillance system as an opt-in service,” CNN adds.

  But really, it is not possible to opt out of broad brushstroke surveillance. How can I opt out of my neighbor (and Amazon, and the government) storing everything about me in the Cloud? What if my neighbor hates that my tree branch hangs over their fence? Will I go on their suspicious persons list?

  Remember when Amazon just sold books?

  “As a former patent litigator, I’ve spent a lot of time reading patents. It’s rare for patent applications to lay out, in such nightmarish detail, the world a company wants to bring about,” writes Jacob Snow in a recent ACLU report on the newest invasive technology by the company that only 10 years ago just sold…books.

  Save

  Photo: Amazon

  Is Justice blind or prejudiced?

  “These systems threaten to further entangle people with law enforcement, ripping families apart and increasing the likelihood of racially biased police violence,” Snow claims.

  He adds, “this technology puts activists and protesters in danger when exercising their First Amendment rights.”

  Tests from the ACLU showed that facial recognition doesn’t correctly identify people and this leaves the door wide open to let A.I. do the justice. That means innocent people could be filling up the privatized prison system.

  The ACLU tested the software, and…

  The ACLU tested the Rekognition software and proved that it incorrectly identified members of Congressas common criminals. Yes, the irony would be giggle-inducing in a John Oliver segment, but not so much for the innocent person serving life in prison.

  This glaring inaccuracy prompted Amazon shareholders to urge the company to stop selling this tech to law enforcement. The recent patent application serves as a flippant disregard for that plea.

  “The application also undercuts Amazon’s own purported defense of its face surveillance product. The company has told the public that biometrics should only be used by law enforcement as an aid, not a replacement, to human judgment. But Amazon’s patent application is pushing the technology toward automation, removing human judgment from the identification process, and instead potentially relying on data, like arrest photos, that itself is a record of racially discriminatory policing,” says Snow.

  The ACLU notes that facial recognition is even less accurate for darker skinned people and that this technology paves the way for harassment and wrongful action against the formerly incarcerated. But for activists, too.

  Here is a figure of the doorbell and the surveillance scope. Check out the rest of the patent application HERE:

  Save

  Diagram from Amazon’s patent application

  That’s Not All, Folks!

  Snow warns that the patent makes it painfully clear that this surveillance tech will not be limited to doorbells or homes.

  Any complementary audio or visual device – Cough! Echo! Cough! – can be set up for biometric scanning.

  Amazon is expecting to target a bevy of other biometrics such as:

  • fingerprints

  • skin-texture analysis

  • DNA, palm-vein analysis

  • hand geometry

  • iris recognition

  • odor/scent recognition

  In addition, the surveillance tech could even include recognition based on behavioral characteristics, like:

  • typing rhythm

  • gait

  • voice recognition

  Imagine a doorbell – or in-home device – that can do all that.

  Do we even know each other as well as Amazon will know us?

  For Snow…“It confirms that Amazon wants to enable the tracking of everyone, everywhere, all the time. And it’s apparently happy to deliver that data to the government.”

  We always knew the government had boundary issues but this is just TMI – too much intimacy. 

  A lot of people are comfy and cozy with the idea that they are being watched all the time, like the people lining up to be scanned at the airport to save two seconds of their time.

  For me, being watched under a microscope by my government makes every nerve of my being burn with the fire of a thousand hells with the added dread that there is not one minute of reprieve, nor any identity of my own except to be an eyeballed object of the all mighty, omnipresent State.

  But, hey, that’s just me…

  You can’t escape this recognition tech.

  If you go to someone’s house, you’ll be on the digital record.

  Snow writes:

  Imagine if a neighborhood was set up with these doorbell cameras. Simply walking up to a friend’s house could result in your face, your fingerprint, or your voice being flagged as “suspicious” and delivered to a government database without your knowledge or consent. With Amazon selling the devices, operating the servers, and pushing the technology on law enforcement, the company is building all the pieces of a surveillance network, reaching from the government all the way to our front doors.

  Like I said before when I wrote about biometrics at the Atlanta International airport: it’s nearly impossible to avoid facial recognition technology today.

  Yet, we do still have control over how we spend our money, our voice, and with whom we spend our time. It’s not much control in the grand scheme of things but if we rise up and fight this, our great grandchildren will honor us.

  That is, if they will even understand the concept of privacy by the time they get here…

  

• 'Greatest Economy Ever' – Boston's Homeless Population Soared 14% Over The Year

  Rising homelessness: The reality of life for America’s poor in the “greatest economy ever”  

  On any given night across the US, more than 500,000 Americans are homeless, according to the 2018 Annual Homeless Assessment Report (AHAR) published by the Department of Housing and Urban Development (HUD) and distributed to Congress on Monday.

  The report is a sobering view that the economy is far from great, but is actually completing a turning point as the next economic downturn is in sight.

  

  Homeless trends across the country are accelerating for the second year in a row.

  In Massachusetts, HUD data shows homelessness jumped 14.2% from 2017 to 2018, an increase of more than 2,500 people, the most significant jump in the nation.

  

  The latest figures show an estimated 20,000 people are homeless in the state. That population has fluctuated in the last several years, — it was higher, for instance, in 2014 and 2015, said WBUR Boston.

  Since the 2008 stock market crash, homelessness in Massachusetts has soared by nearly 5,000 people, or 33%. 

  The vast majority of people currently homeless are sheltered, according to HUD. 

  

  Charlie Baker, Governor of Massachusetts, has made it a top priority to move homeless people from motels, tent cities, and temporary shelters to more stable housing options.

  Besides the real economy that is on life support, the Federal Reserve artificially juiced the real estate market by holding the federal funds rate at the zero lower bound for many years. In return, housing prices soared as wages did not keep pace. Many people were priced out of homes and could barely afford rent. 

  The housing affordability crisis has been a significant driver of homelessness for the Greater Boston region and many parts of the state. 

  

  “Our state and local partners are increasingly focused on finding lasting solutions to homelessness even as they struggle against the headwinds of rising rents,” HUD Secretary Ben Carson, said in a statement.

  Nationwide, a 2% rise in the unsheltered homeless population has been seen this year – those are people living in vehicles, tents, and or on the city streets. 

  However, the report does show a glimmer of hope for the homeless crisis on the West Coast. 

  The total number of people living on the streets in Los Angeles and San Diego, two epicenters of the homelessness crisis, slightly declined in 2018, suggesting officials in those cities are actively combatting the problem. 

  In the eyes of the Trump administration, mega-corporations, and Wall Street, it is the “greatest economy ever,” but under the hood, the real economy is faltering, millions are broke, without jobs, living on the streets, and or addicted to opioids. America is imploding from within – the next recession will undoubtedly expand the homelessness crisis.

  

Digest powered by RSS Digest

• The Future Is Now: AI For Evil Vs AI For Good

  Authored by Brian Wallace via Hackernoon.com,

  The explosive growth in artificial intelligence capabilities is thanks to the ingenuity of human beings. Building machines to take over positions in service industries from construction to retail is a big step for technology and an even bigger step for mankind. But while some of us fear for our jobs, AI in the wrong hands may have more nefarious intentions, even putting lives at stake.

  In business settings, AI augmentation reduces the mundane and repetitive tasks we do on a daily basis, helping to free up our valuable creative energies. By 2021, this will generate almost $3 trillion for businesses and account for 6.2 billion hours of worker productivity. As a force for good, we look to AI to help us be safer, learn smarter, and work more efficiently — but not everyone has good motivations for AI. From authoritarian governments, to propaganda, to fueling social divides, AI is only as good as our intentions.

  Though we may fear the results and capabilities of AI, the driving force behind the technology is mankind. When these machines are slated for evil, we only have ourselves to blame. Take a look at this infographic for more on the growth of AI and its potential for both good and evil.

  

  

• Continued American Occupation Of The Middle East Does Not Suppress Terrorism, It Causes It

  Authored by Craig Murray,

  Even the neo-con warmongers’ house journal The Guardian, furious at Trump’s attempts to pull US troops out of Syria, in producing a map to illustrate its point, could only produce one single, uncertain, very short pen stroke to describe the minute strip of territory it claims ISIS still control on the Iraqi border.

  

  Of course, the Guardian produces the argument that continued US military presence is necessary to ensure that ISIS does not spring back to life in Syria. The fallacy of that argument can be easily demonstrated. In Afghanistan, the USA has managed to drag out the long process of humiliating defeat in war even further than it did in Vietnam. It is plain as a pikestaff that the presence of US occupation troops is itself the best recruiting sergeant for resistance. In Sikunder Burnes I trace how the battle lines of tribal alliances there today are precisely the same ones the British faced in 1841. We just attach labels like Taliban to hide the fact that invaders face national resistance.

  The secret to ending the strength of ISIS in Syria is not the continued presence of American troops. It is for America’s ever closer allies in Saudi Arabia and the Gulf to cut off the major artery of money and arms, which we should never forget in origin and for a long time had a strong US component. The US/Saudi/Israeli alliance against Iran is the most important geo-political factor in the region today. It is high time this alliance stopped both funding ISIS and pretending to fight it; schizophrenia is not a foreign policy stance.

  

  There has been no significant Shia Islamic terrorist or other threat against the West in recent years. 9/11 was carried out by Saudi Sunni militants. Al Qaida, ISIS, Al Nusra, Boko Haram, these are all Sunni groups, and all Saudi sponsored. It is a matter of lunacy that the West has adopted the posture that it is Iran – which has sponsored not one attack on the West in recent memory – which is the threat in the Middle East.

  The origin of this stance appears to lie in the fact that the Shia group Hezbollah proved to have the only military force among Israel’s neighbours capable of halting an Israeli invasion. After the disastrous invasion of Iraq resulted in an Iran friendly regime in Baghdad, the US decided for balance of power reasons to back Saudi regional power plays, only for Saudi Arabia to fall into the hands of the psychopathic warmonger Mohammed Bin Salman who escalated an already flawed policy to breaking point.

  The chaos of this incoherent and counterproductive strategy is, peculiarly enough, what the neocons actually want. Perpetual war and destabilisation in the Middle East is their goal. One of the findings I had not expected to discover in writing Sikunder Burnes was that the British had been deliberately exploiting and exacerbating the Shia/Sunni divide as early as 1836 to the Imperial purpose. Today, by keeping Arab populations poor and politically divided, the neo-cons believe that they enhance the security of Israel, and they certainly do facilitate the access of western companies to the oil and gas of the region, as we see in destabilised Iraq and Libya.

  The Clintons and Blair were the apotheosis of the capture of the mainstream “left” political parties by this neo-con Imperialist agenda in the Middle East. Sanders, Trump and Corbyn were the first politicians with any chance of power for many decades who did not pay lip-service to the neo-con agenda. Trump’s lack of enthusiasm for Cold War politics has been neutralised from any possible action on his part by the ludicrous lie that Russia hacked his election.

  Furthermore his greed has led to deals with Saudi Arabia which have largely undercut his declared preference for non-interventionism. And now in Syria, the very hint that Trump may not be fully committed to the pursuit of perpetual war has the entire neo-con establishment, political media and NGO, screaming in unison, both sides of the Atlantic.

  I have written before that Trump may be a rotten President for Americans, but at least he has not initiated a major war; and I am quite sure Hillary would have done by now. For a non-American, the choice between Hillary and Trump ended up in balancing on one side of the scale the evil of millions more killed and maimed in the Middle East and the launching of a full on, unreserved new Cold War, against on the other side of the scale poorer Americans having very bad healthcare and social provision and America adopting racist immigration policies. I do hope that the neo-con barrage today arguing for more American troops in the Middle East, will help people remember just how very unattractive also is the Hillary side of the equation.

  It is also very helpful in revealing the startling unanimity of our bought and paid for political, media and NGO class here in the UK.

  

• "A Correction Is Happening Now": Sonoma County Housing Market Plunges In November 

  We have been documenting the US housing market — particularly in hot cities like Seattle, San Francisco, New York City, Miami, and Las Vegas — appears to be headed for the most significant slowdown in many years.

  Across the country, existing home sales have peaked, reflecting declining affordability, greater price reductions, and deteriorating housing sentiment. This could be the beginning of a turning point, where housing prices across the country have not just plateaued, but could soon experience a noticeable drop. 

  About two and a half hours north of San Francisco, another slowdown is festering in Sonoma County’s residential real estate market; sales and home prices have tumbled in November while the number of homes available for buyers jumped, said The Press Democrat.

  

  In November, the county’s median housing price crashed to $615,000, a decline of more than 9% from the record peak of $700,000 in June, compiled by Rick Laws of Compass real estate brokerage.

  In the last three months, the number of homes sold declined to its lowest level in eight years; it is almost like the entire real market paused. Moreover, the inventory of homes for sale at the end of November exploded, from 515 to 909, a 77% increase from a year earlier.

  Lori Sacco, a managing broker at Vanguard Properties, blames the November year-over-year inventory spike, not on the weakening of the real estate market, but rather the October 2017 Northern California wildfires that burned thousands of homes.

  

  Sacco said, “a correction is happening now, relative to the bump we had due to the fires.”

  “Though the market appears to be trending toward a greater balance between buyers and sellers…The North Bay wildfires are likely to affect the local market and economy for years to come. The November correction is on top of the normal seasonal decline that takes place leading into the winter months and during the holidays,” she said.

  The rapid slowdown in sales and prices is the most evident throughout the Bay Area, but mainly in the North Bay and Sonoma County, due to the October 2017 wildfires, which destroyed 5,334 homes. 

  Selma Hepp, vice president and chief economist at Compass, said “months after the fires, home sales declined 11% the North Bay, compared to the previous year. But home sales jumped 15% in November 2017, when many buyers responded to a sort of post-fire panic or “knee jerk” reaction.” 

  According to Hepp’s report, “year-over-year home sales in the Bay Area saw declines in November, December and January last winter, sales in the North Bay remained elevated during that period. That sales boost, however, ended in March, when North Bay sales activity began to slow, mirroring the decline across the entire Bay Area.”

  By 3Q 2018, Sonoma County posted the most significant year-over-year decline of all Bay Area counties, at 26%, according to Hepp’s analysis. 

  Sacco also said higher-end luxury homes in the $2 to $3 million range are not selling, as it appears that market has seized up.

  No one knows how far and how fast real estate markets could plummet into 2020. Turning points take time to materialize, however, it seems like people could start panicking, as early as 2019.

  

• Amazon Goes Full Orwellian

  Authored by Sarah Cowgill via Liberty Nation,

  Bezos poised to become knower of all things, with strategic moves to collect info on individuals inside and out…

  

  “We know that no one ever seizes power with the intention of relinquishing it,” came a warning from George Orwell’s novel, 1984, that is rapidly, wickedly, becoming prophecy with new Amazon eye-in-the-sky technology and a dark and disturbing twist. The American Civil Liberties Union (ACLU) is poking that eye with a sharp stick.

  And Jeff Bezos is not feeling the love.

  In what appears to be Bezos’s latest strategic move in the quest to replace God as knower of all things is a hybrid monster of facial recognition software and a doorbell camera widget manufactured by Ring, a company that Amazon bought earlier this year.

  In a gross assault on the right to privacy, a patent filed months ago essentially describes a product that captures information on people who as much as walk past a doorbell, sending real-time information to police databases.  It also will allow customers the ability to upload to law enforcement photos of anyone they deem might be a sketchy individual.

  What does a non-sketchy, normal person wear when ringing a doorbell?

  Jacob Snow, a technology and civil liberties attorney for the ACLU, is fired up and fighting:

  “It’s rare for patent applications to lay out, in such nightmarish detail, the world a company wants to bring about.  Amazon is dreaming of a dangerous future … ”

  Or perhaps Bezos dreams of ruling the world.

  Biometrics Bastardization

  But attaining an unlimited collection of facial snapshots is just the beginning. A deeper dive into the patent application reveals that Amazon is prepping to expand its unlimited munitions stash of photos with other biometrics.  And what it plans to extract from unsuspecting folks will horrify freedom-loving Americans.

  Amazon plans to advance data collection that will include fingerprint scans, skin-texture analysis, DNA information to rival that of Ancestry.com, palm-vein analysis, hand geometry, iris recognition, odor/scent recognition, voice recognition, and if you have a hitch in the giddy-up, it will be able to track that as well.

  An authoritarian surveillance police state in the making?

  But let’s talk about Rekognition, another program Amazon sold to law enforcement agencies and pitched to Immigration and Customs Enforcement (ICE).  It’s fatally flawed against people of color.  A test found the program misidentified 28 lawmakers as police suspects, including six members of the Congressional Black Caucus.  Oops, discriminatory, much?

  

  On top of concerns by activists, community leaders, and politicians, 450 of Amazon’s employees signed a letter of protest to Bezos to “demand that we stop” sales of the controversial software immediately, and one brave soul published, anonymously, a heartfelt call to arms in an editorial on Medium:

  “Amazon talks a lot about values of leadership. If we want to lead, we need to choose between people and profits. We can sell dangerous surveillance systems to police, or we can stand up for what’s right. We can’t do both.”

  Absolute Surveillance

  As critics fear Amazon is pushing for a world policed and governed through automation, Bezos software continues to rack up sales, potentially removing human judgment from the law enforcement tool kit.

  Members of Congress, employees, and civil rights organizations all have requested answers from Bezos, and they have been met with only the chirps of crickets.  Amazon refuses to talk.  But Teresa Carlson, vice president of the worldwide public sector of Amazon Web Services, is on record stating that Amazon “unwaveringly” supports law enforcement and the U.S. government defense and intelligence services.  That may tell us all we really need to know.

  As soothing words from 1984 tell us, “But it was all right, everything was all right, the struggle was finished. He had won the victory over himself. He loved Big Brother.”

  America, Big Brother has your six.  Look out.

  

• Did #MeToo Cause The Death Of Company Holiday Parties?

  In many U.S. offices, employers and employees are getting ready to celebrate the end of a long work year by throwing a holiday party. Some party animals may be disappointed to hear that 2018 will see the fewest planned holiday parties in nearly a decade. As Statista’s Niall McCarthy notes, a new poll conducted by Challenger, Gray & Christmas, Inc. has found that 65 percent of companies will hold a holiday party this year, the lowest number since 2009 when it was 62 percent. That of course came amid a backdrop of the recession and tighter budgets.

  

  You will find more infographics at Statista

  Nearly a decade later, the economy is thriving and the money is flowing. If the country’s economic situation has nothing to do with companies ditching holiday parties, then what’s going on?

  According to the survey, concerns about potential liability following the #MeToo movement could be having an impact while increases in remote working might be making holiday party gatherings difficult to organize in some cases. Concerns about bad behavior at Christmas parties is well-founded and the occasion is often blamed for workers releasing pent-up stress accumulated throughout the year, over-indulgence in alcohol, a willingness to make feelings about co-workers known and in some cases, sexual harassment.

  The research made the point that the impact of #MeToo has been overwhelmingly positive in U.S. workplaces and spurred companies to introduce important policies to protect staff. Even though it found that 40 percent of companies took no action to address the issue and do not intend doing so prior to the party, others have managed to make progress and address their staff. 27.3 percent said they briefed staff on the issue and that precautions are being taken to ensure revellers are mindful of avoiding any impropriety. 24.2 percent said that even though they did not take any precautions in advance of the holiday party, the issue of #MeToo was addressed at some point over the past year.

  

• Twitter Suddenly Locks @WikiLeaks And Multiple WikiLeaks Staff Accounts

  Authored by Caitlin Johnstone,

  WikiLeaks staff are unable to access or post from the organization’s primary Twitter account or other accounts used by its staff and legal team, according to WikiLeaks editor-in-chief Kristinn Hrafnsson.

  “These accounts are locked @wikileaks @assangedefence @wltaskforce @assangelegal and cannot be accessed,” Hrafnsson recently tweeted.

  “They also seem to have been shadow banned. Should we be worried in these critical times?”

  

  “To clarify, these accounts cannot be accessed and new tweets posted,” Hrafnsson added.

  “Attempts to get this fixed through normal methods, when tech error have happened, have not worked. No replies to DM´s addressed to people who should be worried that accounts with 6 mill followers are frozen.”

  These accounts are locked @wikileaks @assangedefence @wltaskforce @assangelegal and cannot be accessed. They also seem to have been shadow banned. Should we be worried in these critical times?

  — Kristinn Hrafnsson (@khrafnsson) December 20, 2018

  https://platform.twitter.com/widgets.js

  The primary WikiLeaks Twitter account has 5.4 million followers and for years has been the primary means by which the organization has made public announcements, going so far as to say it is the only account authorized to make statements on behalf of WikiLeaks. The Assange Defence account, which is run by the legal campaign to free its founder Julian Assange from arbitrary detention and persecution, has 747,000 followers. The WikiLeaks Task Force account, which has been used to correct disinformation and combat corporate media smears about WikiLeaks, has 142,000 followers. The @AssangeLegal account, the account of justice4assange editor Hanna Jonasson, has 12,000 followers. All four of these accounts have per Hrafnsson been locked to prevent the use of those platforms and shadow banned.

  Now, Twitter has claimed that it does not engage in shadow banning as a practice, but its denial took the form of redefining shadow banning to mean “deliberately making someone’s content undiscoverable to everyone except the person who posted it, unbeknownst to the original poster,” while acknowledging that in order to find a blacklisted account’s content “you may have to do more work to find them, like go directly to their profile,” which is what most people mean when they talk about shadow banning on Twitter. When asked about shadow banning, Twitter CEO Jack Dorsey let loose an nonsensical word salad somewhere along the lines of “Well I think the statements behind the statement and the question behind the question is the me behind the me and the you behind the you and it’s a blibba blabba zim zam hey look over there.”

  “We do not look at content with regards to political viewpoint or ideology,” @Jack told me. But he knows some people do not believe him. “I think we need to constantly show that we are not adding our own bias, which I fully admit is left, is more left-leaning,” he says… pic.twitter.com/1i8jJunhfz

  — Brian Stelter (@brianstelter) August 18, 2018

  https://platform.twitter.com/widgets.js

  It is worth noting here that Dorsey has an established record of lying to Twitter users about the social media outlet’s censorship practices. In the lead-up to the 2016 election, Twitter CEO Jack Dorsey was asked point-blank if Twitter was obstructing the #DNCLeaks from trending, a hashtag people were using to build awareness of the DNC emails which had just been published by WikiLeaks, and Dorsey flatly denied it. More than a year later, we learnedfrom a prepared testimony before the Senate Subcommittee on Crime and Terrorism by Twitter’s acting general counsel Sean J. Edgett that this was completely false and Twitter had indeed been doing exactly that to protect the interests of US political structures by sheltering the public from information allegedly gathered by Russian hackers.

  And indeed, @wikileaks, @assangedefence, @wltaskforce, and @assangelegal are as of this writing so aggressively shadow banned that an advanced search for tweets by those accounts turns up not one single post by any of them.

  Even if Twitter does end up restoring access to all or some of these accounts, the fact that the site would shut them down at all is deeply disturbing.

  

  A massive Silicon Valley giant’s willingness to operate as an extension of the national security state to an even limited extent does not say good things about the future of free information access.

  Thoroughly shadowbanned indeed. The original tweet and replies by wikileaks in this thread on the Integrity Initiative have been blacked out and replaced with “This Tweet is unavailable”. Same thing for other Wikileaks threads I searched for via replies. https://t.co/MoGUWTUsAA pic.twitter.com/dJ4UtkHDqs

  — Tatiana Schild ⌛️ (@tatianaschild) December 20, 2018

  https://platform.twitter.com/widgets.js

   

  So in answer to Hrafnsson’s question “Should we be worried in these critical times?”, I think the answer is yes. Twitter has already actively helped shrink WikiLeaks’ voice and facilitated fake accounts and disinformation by refusing to verify the account of Julian Assange back when he had unrestricted internet access, and it appears to now be censoring the entire organization. At a time when the Trump administration is known to be pursuing Assange’s arrest, at a time when the now-Secretary of State has waged a war on WikiLeaks, at a time when narrative control has become a primary focus of the ruling power establishment as the US and its allies hurtle toward a military confrontation with Russia and/or China, yes, we should be worried. Very worried indeed.

  *  *  *

  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 articles are entirely reader-supported, so if you enjoyed this piece please consider sharing it around, liking me on Facebook, following my antics on Twitter, throwing some money into my hat on Patreon or Paypal, purchasing some of my sweet new merchandise, buying my new book Rogue Nation: Psychonautical Adventures With Caitlin Johnstone, or my previous book Woke: A Field Guide for Utopia Preppers.

  Bitcoin donations:1Ac7PCQXoQoLA9Sh8fhAgiU3PHA2EX5Zm2

  

• Kroger Starts Replacing Humans With A Robot Grocery Delivery Fleet

  Nuro and The Kroger Co. announced Tuesday that a fleet of unmanned autonomous vehicles would begin delivering groceries to the general public, effectively eliminating the last mile human delivery drivers.

  Since August, both companies have thoroughly tested the grocery delivery service with an autonomous Prius fleet, accompanied by drivers and sometimes chaser vehicles during the pilot trial. In the last four months, robot cars delivered more than 1,000 orders to customers across the Phoenix metropolitan area at its Fry’s Food Stores for $5.95 with no minimum order requirement for same-day or next-day deliveries, said Reuters.

  

  With Tuesday’s announcement, the fleet has expanded to include Nuro’s custom, low-speed, zero-emission, self-driving vehicle, known as the R1.

  

  

  The R1 is engineered for short neighborhood trips and for the exclusive purpose of transporting and delivering goods.

  

  “Nuro envisions a world without errands, where everything is on demand and can be delivered affordably,” said Dave Ferguson, Nuro’s president and co-founder. “Operating a delivery service using our custom unmanned vehicles is an important first step toward that goal.”

  “Kroger customers are looking for new, convenient ways to feed their families and purchase the products they need quickly through services like pickup and delivery,” said Yael Cosset, Kroger’s chief digital officer.

  

  “Our autonomous delivery pilot with Nuro over the past few months continues to prove the benefit of the flexible and reliable technology. Through this exciting and innovative partnership, we are delivering a great customer experience and advancing Kroger’s commitment to redefine the grocery experience by creating an ecosystem that offers our customers anything, anytime, and anywhere,” Cosset added. 

  Phenoix will not be the only metropolitan area that has self-driving vehicles delivering groceries, Kroger plans a much broader rollout in the coming years. 

  Walmart and Amazon have also invested in their last mile delivery operations.

  For example, Walmart, Ford and delivery service Postmates said last month they would work together to deliver groceries to Walmart customers and focus on the implementation of autonomous vehicles. 

  This could be the beginning of the self-driving industry. This new technology will revolutionize the economy, but at the same time, lead to an incredible amount of job loss for the transportation industry into the 2020s. 

  To gain more color on automation in the workplace and how millions are expected to lose their jobs, here is Karen Harris, Managing Director of Bain & Company’s Macro Trends Group, discusses the impact of demographics and automation on employment in the years ahead.

  

• The Professions With Highest (And Lowest) Suicide Rates

  Submitted by Priceonomics

  

  From 1999 to 2016, the suicide rate in the United States increased by a troubling 30%. What’s more, there is a clear gender divide in the prevalence of suicide in the United States-men commit suicide at more than three times a higher rate than women.

  The CDC recently released a report showing the suicide rates of various professions in 2015. Given that job and money trouble ranks among the leading causes of suicide, along with Priceonomics customer RegisteredNursing.org, we thought we’d dive deeper into the data and calculate which professions have the highest and lowest suicide rates and how it varies by gender.

  We found that the profession with the highest suicide rate is Construction and Extraction, with 52.1 deaths by suicide per 100,000 professionals, a rate that is over 200% higher than the average profession. By a large margin, the profession with the lowest suicide rate is Education, Training, and Library with a suicide rate of 5.3 per 100,000 workers, nearly 10 times lower than that of construction/extraction professionals.

  Additionally, in this data set, the suicide rate for males is 26.0 per 100,000 professionals compared to 7.1 for women. In fact, for all professions we looked at, men had a higher suicide rate.

  ***

  Before diving into the results, it is worth spending a moment on describing the CDC data we use for calculations. While the report from the CDC was recently released in November of 2018, the most recent time period it covers is 2015. And is just from 22 states.

  Perhaps most important to note is that the CDC provides suicide data at the highest level of “major occupational group.” This splits the entire US workforce into just 22 occupations. As a result, many different sub-occupations are lumped together in just one occupation (for example, nursing, doctors, and dentists are all in one occupation).

  Across this data set of 22 occupations in 22 states, the suicide rate in 2015 was 16.9 deaths per 100,000 people, an increase of 10% from 2012.

  The next chart shows the suicide rate in 2015, split by major occupation group. While 16.9 is the average suicide rate, the rate varies substantially by occupation.

  

  The occupation with the highest suicide rate is Construction and Extraction with 52.1 deaths per 100,000 people, nearly 40% higher than the occupation with the second highest suicide rate. The occupation with the lowest suicide rate is Education, Training and Library with a 5.3 suicide rate compared to 16.9 for the national average.

  Health care practitioners and health care support professions see 11 to 12.5 rate per 100,000; this includes nursing professionals.

  Do lower paying jobs tend to have higher suicide rates? We next juxtaposed BLS salary data by occupation group with the CDC suicide rates.

  

  In general, there is a small trend that higher paying jobs tend to have lower suicide rates, but the data is too noisy to make a conclusion. Additionally, some of the occupations with the highest suicide rates have salaries comparable to ones with much lower suicide rates. However, none of the highest paying occupations are also ones with high suicide rates, hinting there might be the relationship between pay and suicide rates worth exploring with more data.

  The last time the CDC published this suicide rate by profession data was from 2012. How have things changed between then and 2015?The next chart rankings occupations by their increase (or decrease) in suicide rates during this year period:

  

  Given that overall suicide rates increased 10% between 2012 and 2015, it’s not surprising that most of these occupations have had an increase in suicide rates. Nevertheless, a number of occupation have had increases in suicide rates far in excess of the national average; Food Preparation and Serving has seen an increase of nearly 50% and Arts Design, Entertainment, Sports and Media almost 40%.

  Any analysis of suicide rates without discussing gender differences will be remiss in overlooking an important point: male dominated industries will have higher suicide rates because men have higher suicide rates than women. The following chart shows suicide rate by gender in 2015 across all occupations.

  

  Men across all occupations have a suicide rate of 26.0 per 100,000 people, three times more than females. So are occupations with high suicide rates just an indication that there are a high percentage of men in that labor pool? Not exactly.

  If we break down the suicide rate for each occupation by gender, we notice that even for the same occupation men have a substantially higher suicide rate than women.

  

  For every single major occupation, men have substantially higher suicide rate than women. Not only that, but for most occupations, men commit suicide at a rate 3-5 times higher than women do. So yes, male dominated industries will have higher suicide rates than more balanced ones, but there is still variation in suicide rates by industry that is not explained by gender mix.

  Because of impact of gender, let’s conclude by looking at which professions have the highest suicide rates for men and then also for women.

  

  Because men make up most suicides, it’s not surprising that the list of professions with the highest suicide rates for men is similar to the overall list for both genders combined. In fact, the top 5 professions with the highest suicide rates for men is nearly identical to the top 5 professions with the highest suicide rates overall (though in a slightly different order).

  For women, the professions with the highest suicide rates is substantially different from the men, but in large part because the CDC did not publish the female rates for a number of professions with high suicide rates like Construction and Extraction due to low sample size in women. The following chart shows suicide rates by occupation for women, excludes those occupations:

  

  The occupation with the highest suicide rate among females is Art, Design, Entertainment, Sports and Media (this occupation ranked second among men). The occupation that ranked second among women (Protective Services) also ranked highly among men. For women, the industries of Education, Training, Library, as well as Management have the lowest suicide rates (these two professions also have low rates among men). Of note, Building and Grounds Cleaning and Maintenance has low suicide rate among women, but it is 5 times higher for men.

  ***

  In America, suicide is a rising problem, especially among men. For most professions we looked at, males commit suicide at rate 3-5 times higher than for women. While the national average is 16.9 deaths by suicide per 100,000 people, some professions have suicide rates almost three times higher than that for men. Even among a single gender, there is a huge variance among suicide rates. Higher paying jobs tend to have lower suicide rates, but low pay doesn’t completely explain suicide rates since some professions have about the same compensation but vastly different rates of suicide.

  As death rates in America soar from the mental health issues, stress and anxiety, and the Opioid crisis, it’s important not to overlook suicide is rising in America and it’s an issue that we would be remiss not to address.

  

• Former Baltimore Top Cop Pleads Guilty To Tax Fraud 

  Former Baltimore Police Commissioner Darryl De Sousa has pleaded guilty in federal court Tuesday that “he willfully neglected to file income tax returns and falsely claimed deductions to slash the amount he owed to the Internal Revenue Service,” said The Baltimore Sun.

  Feds say former Baltimore Commissioner De Sousa falsely claimed 9 withholding deductions; falsely claimed donations to charity; falsely claimed property tax and mortgage deductions; police department made aware of withholding problems in 2015 @wjz #BREAKING pic.twitter.com/IkikFXopgW

  — Mike Hellgren (@HellgrenWJZ) December 18, 2018

  https://platform.twitter.com/widgets.js

  De Sousa, 54, resigned as the city’s top cop in May, after failing to file his federal taxes for 2013, 2014 and 2015. He faces up to three years in jail and a $300,000 fine when he is sentenced in late March 2019.

  “You do agree you’re guilty of these three offenses?” U.S. District Judge Catherine Blake asked him on Tuesday. 

  “Yes, your honor,” De Sousa said.

  He joined the Baltimore Police Department in 1998, and in January 1999, submitted a W-4 to the city of Baltimore incorrectly claiming nine adjustments for state and federal taxes. This “substantially reduced” the amount of taxes withheld from his salary, according to the U.S. Attorney’s Office for the District of Maryland.

  More numbers on Fmr Baltimore Police Commissioner Darryl De Sousa—according to feds, he falsely claimed $42,001 in charitable contributions that he never made. In 2008, he claimed a $10,562 mortgage interest and $4,652 property tax deduction despite not owning a home @wjz pic.twitter.com/1OhoEsHAxQ

  — Mike Hellgren (@HellgrenWJZ) December 18, 2018

  https://platform.twitter.com/widgets.js

  In addition, when he filed his state and federal income taxes for 2008 through 2012, he claimed deductions he was not eligible for. This included “unreimbursed employee expenses when he had no such expenses, mortgage interest deductions and deductions for local property taxes when he did not have a mortgage or own any real property, and business losses when he did not operate any businesses,” according to the state’s attorney’s office.

  

  De Sousa’s long history of alleged tax fraud continued through 2011, 2012, and 2014, when he neglected to file tax returns or pay any penalties or interest for filing late. During those years, he did file fraudulent claims for unreimbursed employee expenses and charitable donations, according to the state’s attorney’s office.

  Under his plea agreement, De Sousa must pay the federal government and the state of Maryland a total of $60,645.

  Before his deceitful tax scheme was uncovered, De Sousa was named the Baltimore top cop in January after Mayor Catherine Pugh fired his predecessor, Kevin Davis. He served less than four months before stepping down on May 15. Gary Tuggle has served as interim commissioner since.

  In a May 2018 statement released via Twitter, De Sousa took responsibility for tax fraud:

  “I fully admit to failing to file my personal Federal and State taxes for 2013, 2014 and 2015. I did file my 2016 taxes and received an extension for my 2017 taxes. I have been working to satisfy the filing requirements and, to that end, have been working with a registered tax advisor.

  To be clear, I have paid Federal, state and local taxes regularly through the salary withholding process.

  While there is no excuse for my failure to fulfil my obligations as a citizen and public official, my only explanation is that I failed to sufficiently prioritize my personal affairs. Naturally, this is a source of embarrassment for me and I deeply regret any embarrassment it has caused the Police Department and the City of Baltimore. I accept full responsibility for this mistake and am committed to resolving this situation as quickly as possible.”

  De Sousa’s case has added to the instability in the Baltimore Police Department. The department has had four commissioners since the 2015 Baltimore Riots. The city is drowning in homicides with a homicide rate that is the highest in the country, according to recent FBI data.

  In November, Mayor Catherine Pugh named Fort Worth Police Chief Joel Fitzgerald as a possible candidate to become the city’s next top cop. The city council is expected to vote in early 2019 on his nomination.

  

Digest powered by RSS Digest

• Europe Losing Appetite On Russia Sanctions As Banks Remain Skittish

  Nearly five years after the Crimean crisis and subsequent western sanctions on Russia, Europe is increasingly “losing the appetite for punishing actions against Moscow,” writes Bloomberg in a new report suggesting investors are impatiently waiting for clarity on Russia as its economy enters bunker mode. Even willing European companies are now “starved of financing” on the mere threat of more punitive measures to come. 

  However, it’s precisely the psychological uncertainty of more looming US sanctions as lawmakers make continued threats over accusations of Russian meddling in the 2016 presidential elections that’s part of Washington’s arsenal. And when sanctions are handed down, it’s further the cloudy ambiguity in terms of what’s targeted when that produces a chilling effect: “The most effective sanctions are the ones that aren’t entirely clear, because the lack of clarity has a chilling effect on investment,” Frank Schauff, chief executive officer of the Association of European Businesses in Russia, told Bloomberg. He cited one sanctions law passed by Congress last year that has absurdly confusing language saying particular actions “will be in place for a long, long time.”

  

  Pavel Chinsky, head of the Franco-Russian Chamber of Commerce and Industry, noted past data on countries under US sanction shows Washington throwing its weight around is enough to keep willing companies away: “The U.S. has such a major role with the weight of the dollar and the extra-territoriality of their laws,’’ he said. For example, “French banks don’t finance Franco-Russian projects. Full stop. Not because it’s forbidden, but because they’re being ultra-cautious,” Chinsky said. “They all fear repercussions on their U.S. activities,’’ he added.

  The mere risk of new measures following last month’s Kerch Strait incident has been enough to keep foreign businesses waiting nervously on the sidelines, despite the EU showing no signs that it will penalize Moscow in the wake of the incident. During talks in Paris on Monday French Economy Minister Bruno Le Maire and his Russian counterpart Maxim Oreshkin announced plans for further cooperation in areas including energy, nuclear, space and tourism, but this is easier said that done as neither Macron nor Putin appear willing to find a way forward on contrary Ukraine stances. 

  Given that tensions are higher than ever, with Ukraine still under temporary martial law as its president hypes a “Russian invasion” threat, and with a Russian build-up of forces including S-400 air defense systems on Crimea, there’s been no offered EU track for easing the penalties. Instead it’s bunker mentality on both sides at a moment that sliding oil prices have added to Russia’s pain, though as one recent study on the sanctions impact since 2014 study found, “The underperformance has been much bigger than crude alone can explain.” 

  

  Thus even an oil price recovery likely won’t have much impact on Russia’s pummeled economy, per Bloomberg:

  With sluggish annual growth of less than 2 percent and the Russian state’s expanding role in business, even a recovery in oil prices isn’t likely to give a boost to the economy, according to Putin’s former finance minister, Alexei Kudrin, who now heads the Audit Chamber that monitors the budget.

  For now, major European companies with operations in Russia are hunkered down but are finding it hard to finance expansion because banks are wary of U.S. reprisals. German investment averaged $550 million annually since 2013 compared to $3.6 billion a year from 2007-2012. French companies invested $666 million in the first half of 2018, down from a peak of $2.6 billion in 2010.

  Last month Putin confirmed while speaking at an investor conference in Moscow that annual trade with the EU “had fallen by almost half from a peak of $450 billion to $236 billion,” according to the Bloomberg report.

  

  And one recent study claimed that US sanctions have knocked as much as a whopping 6% off Russia’s economy over the past four years when compared to expected GDP growth after 2014 without sanctions in place. 

  For a reminder of just what types of statements out of the White House and State Department have kept European banks and investors skittish, US Assistant Secretary of State for International Security and Nonproliferation Christopher Ford said just over a month ago related to the Skripal case: “Under statute… there is a menu of options if you will, things that need to be considered. As part of that, we do not have an inter-agency decision answer on what those pieces are yet. It is under active consideration.” He threatened further at the time: “The second round of sanctions under the statue is a more draconian menu than the first round.”

  Projected/imagined GDP growth after 2014 without sanctions in place assuming prior patterns…

  

  Pompeo has promised over the past weeks efforts toward a further squeeze on Russian energy export efforts, saying, “We will keep working together to stop the Nord Stream 2 project that undermines Ukraine’s economic and strategic security.” Nord Stream 2 is expected to be put into operation by the end of 2019 and is seen as a vital European lifeline Russia needs to halt its economic slide, and an issue where Europe – most especially Germany – has shown itself unwilling to bow to US demands.

  It remains the “unknown” and corresponding emotional/psychological impact of US economic warfare and potential negative fallout for those third parties who “might” be caught in the cross-hairs that appears precisely a secondary effect in place by design of Washington planners.

  

• 2018: The Year Of "Putin-Nazi Paranoia"

  Authored by CJ Hopkins via The Unz Review,

  As my regular readers will probably recall, according to my personal, pseudo-Chinese zodiac, 2017 was “The Year of the Headless Liberal Chicken.” This year, having given it considerable thought, and having consulted the I Ching, and assorted other oracles, I’m designating 2018 “The Year of Putin-Nazi Paranoia.”

  

  Not that 2017 wasn’t already paranoid. It was. It was completely paranoid, and otherwise clinically batshit crazy. But 2018 has been batshit crazier.

  It started out with the Internet companies that control the flow of information that most of us now perceive as “reality” launching an all-out War on Dissent, purportedly to protect the public from “divisive” and “confusing” content, and other forms of Russian “influencing.”

  

  Twitter started sending out scary emails warning customers that there was “reason to believe” that they had “followed,” “retweeted,” or “liked the content of” accounts “connected to a propaganda effort by a Russian government-linked organization.” Facebook launched its own Ministry of Truth, manned by “a dedicated counter-terrorism team” of “former intelligence and law-enforcement officials” (also known as The Atlantic Council, NATO’s unofficial propaganda wing). Google stepped up its covert deranking of insufficiently Russia-hating and other “non-authoritative” websites.

  This Orwellian corporate censorship campaign was enthusiastically welcomed by liberals and other Russia-and-Trump-obsessives, who by this time were already completely convinced that secret Russian Facebook agents were conspiring to transform the Western masses into zombified, Russia-loving neo-Nazis by means of some sort of irresistible Putin-Nazi hypno-technology that would melt their brains to oatmeal the second they clicked on one of those dancing cat GIFs.

  

  But the paranoia was just getting started.

  By the Spring, professional Putin-Naziologists were issuing warnings explaining that anyone using words like “globalist,” “globalism,” or “global capitalism” was an anti-Semite. There was no such thing as “globalism,” they told us. “Globalist” was just Nazi codespeak for “JEW!” Moreover, anyone criticizing “the media,” or mentioning “banks,” “Wall Street,” or “Hollywood,” or, God help you, making fun of “George Soros,” was clearly a Russia-loving, Sieg-heiling Nazi.

  Meanwhile, in London, Blairites were busy combing through six year-old Facebook posts in an effort to prove that Jeremy Corbyn had transformed the British Labour Party into his personal Putin-Nazi death cult. The Guardian published over one hundred articles smearing Corbyn as an anti-Semite and “linking” Labour to anti-Semitism. The BBC jacked up the Russia paranoia, doctoring Corbyn’s hat on TV to make it appear more insidiously Slavic. Owen Jones sprang to Corbyn’s defense, explaining that, yes, the Labour Party was a disgusting hive of anti-Semites, but they were doing their utmost to root out the Nazis, ban all criticism of the IDF, and reverse the mass exodus of Jews from London.

  All this was happening in the wake of the notorious Novichok Porridge and Perfume Attacks, allegedly perpetrated by two totally incompetent, pot-smoking, prostitute-banging “assassins” that Putin personally dispatched to Salisbury to miserably fail to take out their target and then waltz around getting photographed by every CCTV camera in Great Britain. According to the corporate media, Putin tried to cover the crimes of these Jason Bourne-like GRU assassins by ordering his network of Putin-Nazi Twitter bots to flood the Internet with disinformation. Sky News captured and mercilessly interrogated one of these alleged “Twitter bots,”who it turned out was just a feisty British pensioner by the name of Ian, or at least that’s what Putin wants us to believe!

  Back in America, millions of liberals and other Russia-and-Trump-obsessives were awaiting the Putin-Nazi Apocalypse, which despite the predictions of Resistance pundits had still, by the Summer, failed to materialize. The corporate media were speculating that Putin’s latest “secret scheme” was for Trump to destroy the Atlantic alliance by arriving late for the G7 meeting. Or maybe Putin’s secret scheme was to order Trump to sadistically lock up a bunch of migrants in metal cages, exactly as Obama had done before him … but these were special Nazi cages! And Trump was separating mothers and children, which, as General Michael Hayden reminded us, was more or less exactly the same as Auschwitz! Paul Krugman had apparently lost it, and was running around the offices of The New York Timesshrieking that “America as we know it is finished!” Soros had been smuggled back into Europe to single-handedly thwart the Putin-Nazi plot to “dominate the West,” which he planned to do by canceling the Brexit (which Putin had obviously orchestrated) and overthrowing the elected government of Italy (which, according to Soros, was a Putin-Nazi front).

  As if that wasn’t paranoia-inducing enough, suddenly, Trump flew off to Helisnki to personally meet with the Devil Himself. The neoliberal establishment went totally apeshit. A columnist for The New York Times predicted that Trump, Putin, Le Pen, the AfD, and other such Nazis were secretly forming something called “the Alliance of Authoritarian and Reactionary States,” and intended to disband the European Union, and NATO, and impose international martial law and start ethnically cleansing the West of migrants. That, or Trump and Putin were simply using the summit as cover to attend some Nazi-equestrian homosexual orgy, which The Times took pains to illustrate by creating a little animated film depicting Trump and Putin as lovers. In any event, Jonathan Chait was certain that Trump had been a “Russian intelligence asset” since at least as early as 1987, and was going to Helsinki to “meet his handler.”

  

  In the wake of the summit, the neoliberal Resistance, like some multi-headed mythical creature in the throes of acute amphetamine psychosis, started spastically jabbering about “treason” and “traitors,” and more or less demanding that Trump be tried, and taken out and shot on the White House lawn. A frenzy of neo-McCarthyism followed. Liberals started accusing people of being “traitorous agents of Trump and Moscow,” and openly calling for a CIA coup, because we were “facing a national security emergency!” A devastating Russian cyber-attack was due to begin at any moment. National Intelligence Director Dan Coats personally assured theAssociated Press that the little “Imminent Russia Attack” lights he had on his desk were “blinking red.”

  Into this maelstrom of monomania boldly slunk the Charlottesville Nazis, who had resolved to reenact their infamous national white supremacist tikki torch conclave right across the street from the White House this year. The Resistance and Antifa had been promoting this event as the long anticipated Putin-Nazi uprising, and Kristallnacht II, and other such nonsense, so it was a bit of a letdown when only twenty or thirty rather timid Nazis turned up. It felt like maybe the Great Nazi Panic of 2018 was finally over.

  

  But no, of course it wasn’t over.

  The Nazis had just gone underground. Weeks later, right there on national television, a Jewish-Mexican-American Nazi was spotted transmitting secret Nazi hand signals to her Nazi co-conspirators. One of them, a U.S. Coast Guard member, then relayed the secret Nazi signal to… well, it wasn’t entirely clear, perhaps the Underground Putin-Nazi Navy, which was steaming toward the Florida coast hidden in the eye of Hurricane Florence.

  

  By the Autumn, with the midterm elections fast approaching, the Putin-Nazi terrorists finally struck. It soon became clear that those secret hand signs were just parts of a much larger Trumpian conspiracy to “embolden” a couple of totally psychotic wackos to unleash their hatred on the public. Wacko Number One accomplished this by mailing a series of non-exploding explosive devices to various prominent members of the neoliberal Resistance. Wacko Number Two stormed into a synagogue in Pittsburgh and murdered a lot of people. While the corporate media were unable to prove that Trump, Putin, or possibly Jeremy Corbyn, had personally “emboldened” these wackos, clearly, they had been “emboldened” by somebody, and thus were definitely domestic Putin-Nazi “terrorists,” and not just mentally disturbed individuals … like all the other mentally-disturbed individuals who go around murdering people all the time.

  In November, at last, the tide began to turn. Despite the relentless “chaos campaign to undermine faith in American democracy” that the Russian bots and Nazis were waging, the Democrats managed to win back the House and rescue America from “the brink of fascism.”

  Apparently, the War on Dissent was working, because the millions of Black people that the Russians had brainwashed into not voting for Clinton in 2016 with those Jesus-doesn’t-like-masturbation memes had all miraculously been deprogrammed.

  Liberals celebrated by singing hymns to Special Prosecutor Robert Muellerand compiling lists of people to subpoena to testify before congressional committees in what will someday be known as “the Hitlergate Hearings.” The New York Timeseven published a “roadmap” that Mueller and his team can follow to “send incriminating evidence directly to Congress,” thus protecting this “evidence” from the Justice Department, which is totally infested with Russians and Nazis!

  But it’s not quite time for liberals to break out the vuvuzelas and Trump effigies yet … or to let up on the paranoia. The Putin-Nazi menace is still out there! The Internet is still literally crawling with all sorts of deviant, division sowing content! And now the Russian bots have brainwashed the French into staging these unruly Yellow Vest protests, and the Putin-Nazis have “weaponized” humor, and the economy, and religion, and Brexit, and Wikileaks, and pretty much everything else you can imagine. So this is no time to switch off the television, and log off the Internet, and start thinking critically … or to forget for one moment that THE NAZIS ARE COMING, and that A DEVASTATING RUSSIAN ATTACK IS IMMINENT!

  So here’s wishing my Russia-and-Trump-obsessed readers a merry, teeth-clenching, anus-puckering Christmas and a somewhat mentally-healthier New Year! Me, I’m looking forward to discovering how batshit crazy things can get… I have a feeling we ain’t seen nothing yet.

  

• "They're Hungry And Humble" – Thanks To Tight Labor Market, Employers Are Hiring Felons In Droves

  Looking past anxieties about job-killing automation replacing human workers with robots, the supremely tight US job market is creating job opportunities for Americans who had been considered virtually unemployable in the very recent past. We’re talking about people with criminal convictions for violent crimes – murders, armed robbers and others. Some industries – like long-haul trucking, for example – have reached a crisis point, where employers are eager to hire anybody with a pulse, a will and a drivers’ license.

  And as President Trump’s criminal justice reform law is set to release more low-risk offenders on to the streets while simultaneously offering them more opportunities to secure job training and employment, the Wall Street Journal on Wednesday published a long-form feature chronicling the paper’s attempt to follow three ex-cons as they searched for employment over the course of a year.

  

  Barry Green

  The story showed that, even though at least one of the convicts had only recently been released after spending more than two decades in prison for murder, all three of them managed to find satisfying work. The three men benefited from living in New York State, which recently passed a law making it more difficult for employers to turn away job applicants with criminal records, while also offering tax credits to employers who hire felons.

  

  But if anything, the stories of these three men show just how much work is available in the contemporary economy, even as the work-force participation rate remains mired near all-time lows and average hourly wages have risen only modestly since the recovery from the financial crisis began.

  

  Tony Ramos

  Barry Green, a Brooklyn-born parolee who works on a construction site, told WSJ that he came clean with his boss about the length of his incarceration and the severity of his crimes after a few months on the job.

  Shortly after Barry Green got a job manning a gate at a Brooklyn construction site, he started pitching in on other duties. He cleaned the construction site, helped move tools and filled leaking holes. About a month later, Mr. Green felt he had proved his worth, enough to open up about his past.

  Mr. Green confided to his boss in April that he had served 24 years in prison for murder and had been paroled five months earlier. He said the admission briefly surprised his supervisor, but then he sent Mr. Green back to work.

  “I’m employable,” said Mr. Green, 41 years old. “That’s why I felt comfortable going forward.”

  Despite never having held a job, not having an ID and never having used social media (something that, we imagine, many employers might consider a plus) Green has managed to find and keep a job thanks to his work ethic, he said.

  Leaving Sullivan Correctional Facility last year, he didn’t have an ID, physician or bank account, and had never had a full-time job. Technology had changed so much that he felt like he was “traveling to the future.”

  He’s still working on convincing his family that he is a changed man.

  His mother, Lynnette Green, 62, said she tried her best to keep her son out of trouble. “He was hardheaded, and he didn’t listen,” she said.

  Mr. Green, who dropped out of school in the fourth grade, said he regrets the mistakes he made when he was young. But the man who came out of prison is much different, he said.

  “The 40-year-old guy who she got to get to know, I ain’t lazy,” he said. “I’m a worker.”

  While more employers are becoming open to the idea of hiring people with criminal records, some companies – like Koch Industries – have been doing it for decades. Koch recently removed the question on its applications asking about criminal records. Any candidates who do have a criminal record are asked to explain what they have learned from the experience.

  Koch Industries, one of the country’s largest private corporations, has been hiring applicants with criminal histories for decades. “They’re hungry, humble and they want a second chance,” said Mark Holden, senior vice president of the Wichita, Kan.-based company.

  Koch Industries removed the felony checkbox from its job applications in 2015. If someone with a criminal record applies for a position, the company instructs interviewers to ask what they learned from the experience and how they’ve changed.

  The current labor market provides a unique opportunity, Mr. Holden said. “There’s such a lack of skilled labor,” he said, “so that’s opened the door for a lot of people with criminal records.”

  Still, security for other employees and customers – as well as the all-important question of legal liability – remain concerns.

  Katherine Wylde, chief executive of the Partnership for New York, a business coalition, said security and liability for employees and customers remains a concern. “When you get into violent crime, it gets tricky,” she said.

  Tony Ramos, who served two months for a misdemeanor assault conviction, said he thought he was “done for” after Yelp rejected the Temple graduate for a job that he was qualified for, citing his criminal record.

  “I was devastated,” said Mr. Ramos, who graduated from Temple University in 2010 with a bachelor’s degree in business administration. “I have the credentials, and you guys denied me because of an isolated incident? It’s like, what the heck?”

  But Ramos eventually found work as a program director at a community center in the Bronx, a job he says he really enjoys. His boss said that, if the center passed over those with criminal records, they would miss out on “a lot of amazing talent.”

  Mr. Ramos eventually landed a job as a program director at the Children Arts and Science Workshops Inc., a community center in a Bronx public housing development. The hiring process included a background check and a hearing to discuss his misdemeanor.

  “Everyone has a past,” said Hanan Al-Bilal, Mr. Ramos’s supervisor. “If I were not to engage any candidates who had contact with the police, I would lose a lot of amazing talent.”

  Motivated by his experience, Mr. Ramos plans to run for Congress in 2020. “I’m fortunate enough that I have the education and experience that I still landed this job with my record,” he said. “But there’s other people not that fortunate.”

  Randy Rosa, a career criminal who now works at a nonprofit in the South Bronx, said that after a stint or two in prison, convicts start building what he called a “negative resume.”

  “As you get denied for stuff because of your record, you just get further and further into what you know best, which would be hustling, robbing or stealing,” Mr. Rosa said. “And all you’re doing is building a negative résumé.”

  While recent legislative efforts are designed to curtail recidivism, many ex-convicts end up back behind bars. About four in nine prisoners released in 2005 in 30 states were arrested at least once in the year following their release, according to a 2018 Justice Department report. Even more—83%—were arrested at least once during the nine years following their release.

  Baz Dreisinger, a professor at John Jay College of Criminal Justice, said felons have few options after leaving prison because of the stigma attached to their convictions.

  After their release, “it’s almost like people go through a honeymoon period because you feel like ‘I’m free,'” said Ms. Dreisinger, who also teaches inmates. “Then you realize the world has put me in a second-class citizen place.”

  More so than any government program or criminal justice reform package, nothing prevents recidivism better than finding ex-cons a fulfilling, well-paying job.

  Antonio Hendrickson, Mr. Rosa’s boss at the mentorship organization, said many people with backgrounds similar to Mr. Rosa’s want to have steady jobs. “But when you ain’t got no money and nobody’s hiring you…your survival instinct kicks in,” he said.

  Last November, Mr. Hendrickson was doing outreach at a probation hearing and overheard Mr. Rosa complaining that a parking garage had rejected him for a position. He hired Mr. Rosa as a mentor.

  “Just the everyday getting a job is still difficult for guys and women with felonies,” Mr. Hendrickson said. “Something gotta give.”

  In that sense, Trump has already implemented one of the biggest criminal-reform efforts in recent memory thanks to the Trump economy.

  

• Don't Hold Your Breath On US Troop Withdrawal From Syria

  Authored by Patrick Lawrence via ConsortiumNews.com,

  The announcement on Wednesday that the U.S. will withdraw all remaining troops from Syria within the next month looked at first like a rare victory for Donald Trump in his admittedly erratic opposition to senseless wars of adventure.

  “We have defeated ISIS in Syria, my only reason for being there,” the president tweeted with an unmistakable air of triumph.

  After historic victories against ISIS, it’s time to bring our great young people home! pic.twitter.com/xoNjFzQFTp

  — Donald J. Trump (@realDonaldTrump) December 19, 2018

  https://platform.twitter.com/widgets.js

  Don’t get your hopes up. Just about everything in these initial reports is either wrong or misleading.

  • One, the U.S. did not defeat the Islamic State: The Syrian Arab Army, aided by Russia, Iran, and Hezbollah militias did.

  • Two, hardly was ISIS the only reason the U.S. has maintained a presence in Syria. The intent for years was to support a coup against the Assad government in Damascus—in part by training and equipping jihadists often allied with ISIS. For at least the past six months, the U.S. military’s intent in Syria has been to counter Iranian influence.

  • Last and hardly least, the U.S. is not closing down its military presence in Syria. It is digging in for an indefinite period, making Raqqa the equivalent of the Green Zone in Baghdad. By the official count, there are 503 U.S. troops stationed in the Islamic State’s former capital. Unofficially, according to The Washington Post and other press reports, the figure is closer to 4,000—twice the number that is supposed to represent a “full withdrawal” from Syrian soil.

  It would be nice to think Washington has at last accepted defeat in Syria, given it is preposterous to pretend otherwise any longer. Damascus is now well into its consolidation phase. Russia, Iran, and Turkey are currently working with Staffan de Mistura, the UN’s special envoy for Syria, to form a committee in January to begin drafting a new Syrian constitution.

  

  U.S. forces conducted a precision airstrike near Sarmada in northwest Syria Nov. 18 that Pentagon says killed a senior al-Qaida leader. (Army photo by 1st Lt. Daniel Johnson)

  It would also be nice to think the president and commander-in-chief has the final say in his administration’s policies overseas, given the constitution by which we are supposed to be governed. But the misleading announcement on the withdrawal of troops, followed by Trump’s boastful tweet, suggest something close to exactly the opposite.

  As Trump finishes his second year in office, the pattern is plain:

  This president can have all the foreign policy ideas he wants, but the Pentagon, State, the intelligence apparatus, and the rest of what some call “the deep state” will either reverse, delay, or never implement any policy not to its liking.

  Blocking Few Good Ideas

  Syria is a case in point, but one among many. Trump announced in March that he would withdraw American troops as soon as the fight against ISIS was finished. By September the Pentagon was saying no, U.S. forces had to stay until Damascus and its political opponents achieved a full settlement. From the new HQ in Raqqa, The Washington Post tells us, U.S. forces will extend “overall control, perhaps indefinitely, of an area comprising nearly a third of Syria.”

  This is how 2018 has gone for Trump. This president has very few good ideas, but we can count on his foreign policy minders to block those he does have if they fail to conform to the orthodox playbook—the foreign policy “blob,” as Barack Obama famously called it.

  Reversal on Military Budget

  Earlier this month Trump complained about the Pentagon’s out-of-control budget and pledged to cut it, if marginally, from its current $716 billion to $700 billion in the 2020 fiscal year. “I am certain that, at some time in the future,” he said in one of his inevitable tweets, “President Xi and I, together with President Putin of Russia, will start talking about a meaningful halt to what has become a major and uncontrollable Arms Race. The U.S. spent 716 Billion Dollars this year. Crazy!”

  

  Raqqa Internal Security Force Training Class receive their initial issue of equipment after training in Ayn Issa, Syria, July 31 2017.(U.S. Army photo by Sgt. Mitchell Ryan)

  Days later the president had a meeting with Defense Secretary James Mattis and the chairmen of the House and Senate Armed Services Committee. The White House announced immediately afterward that the three had agreed on a 2020 defense budget of $750 billion: from a 2 percent cut to an increase of nearly 5 percent in the course of one meeting.

  Trump’s idea of improving relations with Russia has faced a wall of opposition from the first, needless to say. His summit with President Putin in Helsinki last July ignited a fresh uproar – and his suggestion that Putin come to Washington in the autumn still another. With Director of National Intelligence Dan Coats in the lead, that invitation was mocked to death within days. A New Year’s prediction: There will be no second summit with Putin, probably for the duration of Trump’s term in office.

  Among the biggest disappointments of the year has been the administration’s failure to build on Trump’s effort to advance a settlement with North Korea after seven decades of tension in Northeast Asia. The Trump–Kim summit in Singapore last May did what initial encounters between heads of state are supposed to do: It established a working rapport. By that measure, any detached judgment of the meeting would have to count it a success.

  But the U.S. press uniformly criticized Trump nonetheless for not coming home with the full details of the North’s nuclear disarmament. These same media have since treated us to the usual stories, sourced from the intelligence agencies, that the North is misleading us once again. Result: A second summit appears to have fallen off the White House’s agenda despite Trump’s statement at the UN last autumn that the two leaders would meet again “quite soon.”

  One does not have to entertain any liking for Donald Trump to find this pattern disturbing. It suggests that our foreign policy cliques, wedded to an orthodoxy devoted more or less entirely to U.S. primacy, have positioned themselves—over the course of many administrations—to dictate America’s conduct abroad even to our presidents. There is danger in this, no matter who the occupant of the White House happens to be.

  *  *  *

  Please give to Consortium News’ end-of-year fund drive, by clicking Donate.

  

• Orlando Home Sales Tank And Inventory Floods Market: Markings Of A Housing Slowdown

  A new housing report from the Orlando Regional Realtor Association published Monday shows November home sales have declined and inventory is building as interest rates have quickly cooled the real estate market.

  Home sales plunged 6.9% last month to 2,575 while the number of homes for sale jumped to a 3.3-month supply, the largest inventory build in more than one year.

  Real estate agents have told the Orlando Sentinel that interest rate increases have completely removed buyers from the market.

  “There has been a shock in how quickly interest rates have gone up,” said Eric Soto, a real estate agent and co-owner of TC Orlando Homes based in Altamonte Springs.

  

  What is happening in Orlando mirrors trends nationally: Existing home sales have peaked, reflecting declining affordability, greater price reductions, and deteriorating housing sentiment. 

  As we have mentioned before, real estate markets across the country are at turning points, where housing prices have not just plateaued, but could soon experience a noticeable drop in 2019. 

  In Greater Orlando, November single-family home prices stalled from the month before.

  

  “But though there are more homes available, it’s still far from a buyers market,” Soto said.

  “There may be more homes than there were a few months ago but only a few hundred,” he added.

  Jeff Tucker, a Zillow economist, said inventory is steadily building in many markets across the country. However, he did not call it a huge increase, yet.

  “This is certainly not looking like an inventory spike,” he said. “It’s just coming up from really low levels.”

  In other words, the real supply is still to come, which could trigger when homeowners realize that prices are trending lower as the economy starts to slow.

  “A five- or six- month supply of homes is a good equilibrium between buyers and sellers,” Tucker said. “Even at a 3.3-month supply, sellers still have control over the market,” he said.

  “It’s a bit of a breather for buyers, though,” Tucker said. “But there is a downside with interest rates rising.”

  Tucker warned rising interest rates might remove buyers from the market because of affordability factors.

  Alex Vastardis, a Dr. Phillips area real estate agent with Coldwell Banker, said the slowdown in November was largely seen in homes for less than $300,000.

  Despite the slowdown, Vastardis said he still has some customers coming into his office looking for new homes. “December is usually a pretty positive month because people want to sell their homes or get into a new one before the end of the year.”

  No one knows how far and how fast real estate markets could drop in 2019. It certainly seems that interest rate rises in Greater Orlando have entirely shut off demand for less than $300,000 homes.

  

• California's Next Calamity: Storms Compounded By High Tides

  Authored by Mac Slavo via SHTFplan.com,

  The wildfires that have taken their toll on California could be just the beginning of the state’s calamities. Now, the high tides of winter are coming and if those tides are worsened by an incoming storm, they could devastate entire cities on the coasts.

  

  On December 10, the National Oceanic and Atmospheric Administration (NOAA) released a report stating there is an 80 percent chance of an El Niño event this winter. Such events are associated with wetter and more intense winter storms. However, NOAA does caution that its data are from September through November and the intensity of the El Niño will not be known for quite some time still.

  Tides are determined by the sun and moon’s gravitational pull on the oceans. This warning from NOAA comes as heavy storms bear down on California’s Pacific Northwest.   In central and northern California on Monday,  waves were as high as 30 feet, with 40- to 50-foot breaks. Coastal flooding and erosion were reported. And sn even-more-powerful storm smacked the region yesterday, prompting flood watches, high-wind alerts, and winter storm warnings across nine states.

  According to ABC News, holiday travelers along I-5, which runs north to south through Washington, Oregon, and California, can expect to be drenched with heavy rains. Although that storm has mostly passed and is headed to the Rocky Mountains, California is not out of the woods just yet. High surf warnings were issued by the National Weather Service from Point Conception, California, north of the Los Angeles  Basin, to the coast of southwestern Washington, highlighting an especially heightened threat to life and property within the surf zone, reported Weather.com.

  This is what Noyo looked like this afternoon. pic.twitter.com/dre839M6J2

  — U. S. Elaine™️ 🍳 (@USelaine) December 17, 2018

  https://platform.twitter.com/widgets.js

  This new storm system comes just a week after a surfer was killed by big swells at San Francisco’s Ocean Beach. The waves that killed the surfer were only 10 feet high.  Should the tides interact with a storm of that magnitude, devastation on the West Coast would be imminent.

  

• McCain Was Responsible For Steele Dossier Leak

  A longtime associate of late Arizona Senator John McCain leaked a copy of the infamous Steele Dossier to BuzzFeed News, according to a Wednesday court filing, according to the Daily Caller‘s Chuck Ross. 

  

  McCain dispatched former State Department official David Kramer to London on November 28, 2016 where Dossier author Christopher Steele reportedly allowed Kramer to see it, while a copy was later provided to McCain through Kramer. McCain then provided a copy of the document to former FBI Director James Comey during a December 9 meeting, according to an October 2017 Daily Caller report.

  On Wednesday, thanks to a filing by US District Court Ursula Ungaro as part of a final report ahead of her ruling in BuzzFeed‘s favor in a defamation lawsuit, we learn that Kramer provided BuzzFeed a copy of the dossier during a December 29, 2016 meeting. As the Caller notes, it is unclear whether Kramer actually gave BuzzFeed‘s Ken Bensinger a copy, or if Bensinger took photos of the document – or both. 

  

  “Kramer testified that Bensinger took photos of the Dossier when Kramer was out of the room, even though he asked Bensinger not to,” wrote Ungaro, who added that “in a later declaration, Kramer stated that he had no objection to Bensinger taking a hard copy and had provided hard copies to other journalists.”

  “The parties dispute whether Kramer gave Bensinger a copy or whether Bensinger took photos of the Dossier when Kramer was not looking,” reads a footnote in the ruling. 

  Kramer met Nov. 30, 2016, with McCain and McCain’s chief of staff, Christopher Brose, to review Steele’s reports.

  “Kramer advised McCain to share the reports with the FBI and the CIA,” according to Ungaro.

  Days later, Kramer met at McCain’s behest with Victoria Nuland, who served then as assistant secretary of state for Europe and Eurasian affairs and the State Department, and Celeste Wallender, the top Russian affairs official at the National Security Council.

  Nuland and Wallender were aware of the dossier and Steele, according to Ungaro. –Daily Caller

  According to the filing, “Kramer reviewed with Bensinger what he knew about the Dossier and explained that he took the allegations seriously.”

  

• Senate Passes Stopgap Funding Bill To Avert Government Shutdown

  The Senate passed a seven-week, stopgap funding bill on Wednesday, preventing a partial government shutdown that was expected to begin at midnight on Friday. Senators passed the legislation by voice vote, which represented the final item on the Senate’s to-do list as they wrap up their work for the year this week; the bill will now go to the House, and be signed by President Trump.

  Republican senators say that while they believe Trump is unhappy with Congress passing a short-term fix, they believe he will sign it because they were able to keep other controversial policy riders off of it.

  

  More importantly, the stop-gap bill, puts off the fight over Trump’s fight with Pelosi, Schumer and the Democrats over the president’s demand for $5 billion for the border wall.

  “I think the message is don’t add anything else to it,” said Sen. John Cornyn (R-Texas), the No. 2 Senate Republican. “He’s not happy about that [a continuing resolution] but he understands the reality.”

  The bill, which will fund roughly 25% of the government, pushed back the funding deadline from Dec. 21 to Feb. 8, and avoids dragging a partial shutdown fight into the Christmas holiday. A vote on the bill was temporarily held up Wednesday over a fight on whether or not to include a land and water measure, which has been stalled amid negotiations for months.

  Senators held out hope as recently as Tuesday that they would be able to scramble together a deal to fund the remaining seven out of the 12 appropriations bills through Sept. 30, the end of the 2019 fiscal year. But both sides remained far apart on funding for the U.S.–Mexico border wall. Trump and House Republicans want $5 billion for the wall. Democrats, meanwhile, dug in at $1.3 billion as their cap and that it would go toward fencing not a physical concrete wall.

  Hopes for a long-term deal seesawed throughout the week amid a shuffle of meetings and competing theories from lawmakers about what they would be able to agree to. However, hope was quickly dashed when House Democratic Leader Nancy Pelosi told reporters that Democrats couldn’t accept the deal offered by Republicans.

  “Senator Schumer — Leader Schumer and I have said that we cannot accept the offer they made of a billion dollar slush fund for the President to implement his very wrong immigration policies, so that won’t happen,” Pelosi said on Tuesday.

  Republicans acknowledged that the Democratic rejection of their offer made punting the funding fight all but inevitable.

  Meanwhile, conservative lawmakers and pundits are blasting GOP leaders and Trump over the stopgap spending measure. Rep. Jim Jordan questioned rhetorically in a tweet: “Let me get this straight… our chances of getting the Wall will be better in February when Nancy Pelosi is Speaker than now when we have the majority?” But the White House appeared increasingly resolved to a continuing resolution as the week stretched on, the deadline looming and no long-term deal in sight.

  White House press secretary Sarah Huckabee Sanders said Tuesday that “at the end of the day, we don’t want to shut down the government.”

  Unwilling to accept defeat, Trump remained defiant saying in a tweet Wednesday that “one way or the other, we will win on the Wall!”

  “In our Country, so much money has been poured down the drain, for so many years, but when it comes to Border Security and the Military, the Democrats fight to the death,” he tweeted on Wednesday. “We won on the Military, which is being completely rebuilt. One way or the other, we will win on the Wall!”

   

   

  

• Venezuela’s Gold In Limbo Amid Tug-Of-War At The Bank Of England

  Submitted by Ronan Manly of BullionStar.com

  In early November news was placed into the British media (Reuters and The Times) revealing that the Bank of England in London, one of the world’s largest custodians of gold bars on behalf of other central banks, was refusing to allow the withdrawal and repatriation of 14 tonnes of gold belonging to Venezuela’s central bank, the Banco Central de Venezuela (BCV).

  According to these media reports, the delays / refusals by the Bank of England to allow the Venezuelan gold repatriation ranged from excuses about the prohibitive cost of transport insurance to concerns about future money laundering. In all cases, these excuses were bogus, as I explained in the article “Bank of England refuses to return 14 tonnes of gold to Venezuela” on the BullionStar website, dated 15 November, and that the real reasons for the Bank of England’s refusal were political. As I stated at the time in my conclusion:

  “The reasons put forward by official sources in the Reuters and Times articles for why Venezuela can’t withdraw its gold from the Bank of England are clearly bogus. The more logical and likely explanation is that the US, through the White House, US Treasury and State Department have been liaising with the British Foreign office, HM Treasury to put pressure on the Bank of England to delay and push back on Venezuela’s gold withdrawal request.”

  According to the Reuters report dated 5 November, the Venezuelan central bank gold withdrawal plan had “been held up for nearly two months”, which would put the original withdrawal request by the BCV to the Bank of England at a date in at least September and probably earlier. So the BCV had been looking for its gold back for sometime, and the Bank of England was stalling. One reason the Bank might have been stalling was to wait for the introduction of US Executive Order 13850 which was signed on 1 November, imposing US economic sanctions on anyone doing business with the Venezuelan gold sector.

  As far as the BCV’s gold withdrawal request and the Bank of England’s refusal, nothing much happened in the public domain until early December when there came a flurry of news and activity showing that the Venezuelan custodied gold matter at the Bank of England was far from resolved, and indeed that the heat had been turned up a few notches by both sides.

  

   

  Borges and Vecchio appeal to Mark Carney

  First up was a letter to the Bank of England Governor Mark Carney, dated 30 November, from two dissident figures of the Venezuelan political opposition, Julio Borges and Carlos Vecchio. Borges is a former Venezuelan national assembly (legislature) president and also founder of Venezuelan political party Primero Justicia (Justice First). Vecchio is co-founder of and coordinator for another Venezuelan political party Voluntad Popular (Popular Will).

  A summary of this letter and its background can be read in a 3 December Univision News article by David Adams in a link here. The actual letter in pdf format can be read here at this link -> Borges-Vecchio-Letter-to-the-BoE.

  

  “In 2012, Chavez withdrew 40% of this gold, leaving 50 tonnes there by 2015“. Not fully accurate. The Venezuelan gold repatriation operation started on 25 November 2011 and ended on 30 January 2012. In August 2011, the BCV had 16,908 Good Delivery gold bars held abroad (including gold deposits that were claims on bullion banks). The BCV then repatriated 12,819 Good Delivery bars to Caracas in Venezuela, leaving 4,089 Good Delivery gold bars in the Bank of England’s vaults (about 50.8 tonnes). I would therefore say that the BCV repatriated 50% of its gold held at the Bank of England, not 40%, and that the operation was completed by January 2012. Why Borges/Vecchio say 40% is not clear. Maybe the Bank of England used some gold swaps with another central bank such as the Banque de France as part of the gold transfers repatriated to Venezuela over late 2011 / early 2012 (note: there is some evidence that some of Venezuela’s repatriated gold came from Paris).

  “Since 2015, Venezuela lost most of this 50 tonnes of gold as collateral in gold swap transactions, leaving 14 tonnes at the Bank of England.” Highly likely, and probably true, but the exact numbers for gold swaps are not known since the details of central bank gold swap transactions with bullion banks are highly secretive and protected by the Bank of England / IMF / LBMA.

  The BCV did enter various gold swaps in recent years, such as with Deutsche Bank, Citibank and the Bank for International Settlements (BIS). Gold swap transactions most commonly occur for gold held at the Bank of England. In 2017, the BCV let a gold swap with Deutsche Bank lapse which was using $1.7 billion of the BCV’s gold as collateral. Deutsche Bank then kept the gold that was put up as collateral. This would have been between 30 – 40 tonnes of gold.x

  

  Then in April 2018, the BCV paid Citibank $172 million to recover some of the gold that had been collateral in another gold swap with Citi. Rolling up a haircut on the amount the BCV paid Citi, this would be about 5 tonnes of gold returned by Citi to the BCV. So the figure of 14 tonnes remaining after the bullion banks had got their hands on most of the 50 tonnes of Venezuela’s gold at the Bank of England (which appears to have been about 36 tonnes) seems plausible. After the Citi swap was wound up in April, maybe this was when the BCV began asking for its gold back. If this was the case, then the BCV withdrawal request to the Bank of England has been pending for some time now, and all through the summer.

  

  Doing a rough calculation of how many Good Delivery gold bars the remaining 14 tonnes of Venezuela’s gold at the Bank of England now represents, an estimate would be in the region of about 1125 gold bars (or 27% of the original 4,089 gold bars). This is the gold now being frozen by the Bank of England, about 1125 gold bars. If this gold is in custody, it will be set-aside or allocated and the BCV will know the individual serial numbers of every bar. As I wrote previously, the BCV should at the very least publish for everybody to see, the weight list / serial number list of all of these gold bars so that they cannot be confiscated / used by the Bank of England or bullion banks for other purposes, such as being sold to other central bank customers or sold to gold-backed ETFs.

  As for the actual letter by Borges and Vecchio, not surprisingly since they oppose Venezuela’s Maduro-led government, the letter uses a series of arguments about Venezuela’s Maduro ‘regime’ to try to convince the Bank of England not to release the gold. These arguments include references to the threat of ‘future crime’ money laundering even before it may exist, human rights violation allegations, allegations about the lack of independence of the BCV, as well as Trump’s Executive Order from 1 November, etc.

  Readers can read the full letter for themselves at the above link (3 pages and signature page) to get a sense of the Borges / Vecchio arguments.

  

  A Visit to Threadneedle Street: Calixto Ortega and Simón Zerpa

  Less than a week after the Borges / Vecchio letter to the Bank of England became public knowledge, the Venezuelan central bank and government raised the stakes in the tug of war, with news that “two high-ranking Venezuelan officials” were flying over to London to have a meeting at the Bank of England in an attempt to retrieve Venezuela’s 14 tonnes of gold. This meeting was scheduled for Friday 7 December. The two high-ranking officials in question were Venezuelan central bank (BCV) president Calixto Ortega Sánchez, and Venezuelan finance minister Simón Zerpa Delgado.

  

  While Reuters was the only media source initially revealing the news that Ortega and Zerpa were coming to visit the Bank, the planned visit was also confirmed by a letter from British MP, Andrew Lewer, who on 6 December also wrote to Bank of England governor Mark Carney (cc’ing the UK Chancellor of the Exchequer Philip Anthony at HM Treasury), asking that any meeting request by Ortega and Zerpa be rejected and any request to transfer the 14 tonnes of gold to Venezuela be declined. Lewer’s full letter in pdf can be read here -> Andrew Lewer letter to Mark Carney.

  

  Quite why Andrew Lewer, a backbench Tory MP who was only elected to the UK Parliament for the first time last year, should take it upon himself to write to the Bank of England to try to scupper the Venezuelan meeting with the Bank seems odd. Has he been put up to it? Lewer claims to be vice-chairman of a grouping in Westminster’s parliament called the Venezuela All-Party Parliamentary Group (APPG) but strangely his name does not appear on the latest list of officers of this Venezuela APPG dated 21 November 2018, who are Graham Jones, Mike gapes, Mark Menzies and Viscount Waverley.

  

  In his letter to the Bank of England’s Carney, which reads like a schoolboy letter to the BBC’s Newsround, backbencher Lewer makes reference to the fact that Simón Zerpa was put on a US Treasury list of sanctioned Venezuelan government officials in June 2017 for a previous role he held at state-owned oil company PDVSA. Zerpa was only on this list as it was part of a recommendation made by a US congressional commission on Venezuela which deemed PDVSA to be a corrupt government entity. Interestingly, last April US headquartered Citibank didn’t have a problem returning gold to the BCV at the Bank of England when it unwound the Citi – BCV gold swap, and didn’t have an issue about sanctions since Zerpa was also Venezuelan minister of finance at that time, so obviously this argument from Lewer is as it appears, bogus.

  In the case of Ortega who was appointed as BCV president in June 2018, Lewer says that Ortega’s appointment was not ratified properly by the Venezuelan National Assembly. Lewer includes a link to a statement on a website of Venezuelan opposition political coalition website “Mesa de la Unidad Democrática” (Unidad) (Democratic Unity Roundtable in English), to back up his claim. While its true that the National Assembly is now heavily Maduro dominated, this is primarily because the Unidad coalition boycotted the National Assembly election in 2017 and vacated its ability to contribute to the Assembly..

  Lewer signs off saying that he thinks ‘any transfer to the regime would be quite wrong’ and ‘urges’ a rejection of the meeting between the Bank of England and the BCV’s Ortega and the Venezuelan minister for finance Zerpa. As a supposedly independent central bank, the question must also be asked, what business does a British Member of Parliament have interfering in the operations  of the Bank of England and in its gold storage agreements with its international central bank customers?

  

  Meeting or No Meeting?

  So did the meeting between the Bank of England’s Carney (or his lieutenants) and Venezuela’s Ortega and Zerpa actually take place, either on Friday 7 December or any date after that? The simple answer is no one knows. Since the reporting of the intended meeting on 6 December, there has been zero new media coverage of this topic. A report by London financial district newspaper City AM on 6 December said that Bank of England “deputy governor Sir David Ramsden will attend the meeting. It is unclear whether Carney will be present.”

  So did Sir Ramsden attend the meeting? Did HM Treasury officials such as the Chancellor of the Exchequer Philip Hammond, attend the meeting? Was there even a meeting and did Ortega and Zerpa fly into London or not? The answer a the time of writing is no one seems to know?

  As well as the public interest and general media interest, many central banks from around the world (more than 70) store their gold in the vaults of the Bank of England under gold storage agreements, so presumably these central banks will be very interested in knowing the outcome of this bizarre saga of 14 tonnes of gold in limbo in London. If the Bank of England was to take the take Borges / Vecchio / Lewer / US Treasury concerns on board and continue to freeze the Venezuelan gold, then surely it should apply a consistent yardstick, and examine some of the other less salubrious central bank and government customers from aroudn the world that it stores gold bars on behalf of. Should it not?

  David Adams in his 3 December article raises the interesting point that on 10 January Maduro begins a new term in office, and that by delaying the gold transfer until after that, it would be easier for the Bank of England to keep the 14 tonnes of gold on the basis of ‘government illegitimacy’.

  

   

  Whatever happens next, this Venezuelan gold bar drama at the Bank of England is far from over, and the gold could still become a symbol in the battlefront that appears to be forming among the world’s influential powers, with the US and UK on one side, and the gold hoarding nations of China, Russia and Turkey on the other. City AM reports that “Carney discussed the [Venezuelan] gold transfer during a meeting at the G20 summit in Argentina“.

  

  After the same G20 summit, Turkey’s president Erdogan visited Venezuala’s capital Caracas, and ‘slammed Venezuela sanctions’ according to Reuters, saying that “Political problems cannot be resolved by punishing an entire nation…we do not approve of these measures that ignore the rules of global trade.”

  Recently, China agreed to lend Venezuela $5 billion during a visit by Venezuela’s Maduro to Beijing in September. And following a Maduro visit to Moscow earlier this month where Russia agreed $6 billion in investment deals with Caracas , Russia has now sent military bomber aircraft to Venezuela in another show of support for Maduro.

  With the Bank of England staff now in party mode and many about to leave on their Christmas and New Year breaks, it looks like Venezuela’s 14 tonnes of gold will sit quietly in London until at least January, if not indefinitely. But if the Bank of England governor Mark Carney has sleepless nights, that its a fair bet to suggest that Venezuela’s gold is one of the topics that is keeping him awake at night.

  This article was originally published on the BullionStar.com website under the same title “Venezuela’s gold in limbo amid tug-of-war at the Bank of England“.

  

Digest powered by RSS Digest

• US Navy Contractors Hacked by China "More Than A Handful Of Times"

  Over the last 18 months, Chinese hackers breached several unidentified Navy contractors, stealing large amounts of data related to undersea warfare, including top-secret programs to develop supersonic anti-ship missiles for submarines, officials and experts said, triggering top-to-bottom review of cyber vulnerabilities for the Navy.

  Navy Secretary Richard Spencer recently requested a review to examine why the service and its contractors are continuing to get hacked by China.

  Officials told The Wall Street Journal that a classified initial assessment of the problem was delivered to Navy Secretary Spencer last week and provides appropriate countermeasures to thwart future cyber attacks.

  Navy officials declined to say how many cyber attacks occurred during the 18 months except to say that there were “more than a handful,” calling some of the cyber attacks “troubling and unacceptable.”

  

  “Attacks on our networks are not new, but attempts to steal critical information are increasing in both severity and sophistication,” Spencer wrote in an internal memo in October reviewed by the Journal.

  “We must act decisively to fully understand both the nature of these attacks and how to prevent further loss of vital military information.”

  Spencer’s memo excluded explicitly mentioning China, but officials told WSJ that China mostly does the hacking.

  On Friday, the Navy said Spencer’s memo “reflects the seriousness to which the [Navy] prioritizes cybersecurity in this era of renewed great power competition so that our Navy and Marine Corps warfighting team can sustain and improve our military advantage over any peer or competitor.”

  Even though China would struggle in a conventional war with the US, Navy officials said Beijing had already shown its muscles on the modern battlefield as it continues to launch cyber attacks on the US.

  “They are looking for our weak underbelly,” said a defense official. “An asymmetric way to engage the United States without ever having to fire a round.”

  Officials told WSJ that “cyber fingerprints pointing to China include the remote administering of malware from a computer address accidentally exposed as located in the island province of Hainan.”

  US officials also say they have classified sources that have ample evidence the attacks are directly linked to China.

  Tom Bossert, an ex-homeland security adviser to President Trump, said the “Chinese hack the U.S. military and other organizations for various reasons—sometimes to sabotage American systems, sometimes to gather intelligence and other times to gain a competitive advantage by stealing intellectual property.”

  “It’s extremely hard for the Defense Department to secure its own systems,” Bossert said. “It’s a matter of trust and hope to secure the systems of their contractors and subcontractors.”

  An intelligence official told WSJ that subcontractors employed by the military are severely lagging in cybersecurity and have been targeted by the Chinese. 

  “Senior Pentagon leaders view the military’s acquisition process as inadequately structured to hold contractors and subcontractors accountable for their cybersecurity,” officials said.

  Spencer’s memo coincides with a broader strategy by the Trump administration to label China as a thief of American intellectual property. 

  WSJ indicates that Navy contractors and subcontractors that have been hacked, are generally targeted by one Chinese government hacking unit, known as Temp.Periscope or Leviathan, that often deploys email phishing schemes to break inside secured networks. 

  

  The hacking group has been active since at least 2013 and has focused mostly on targeting Western governments and their militaries. 

  Ben Read, senior manager for cyber espionage analysis at FireEye, said that Temp.Periscope has been one of the top hacking groups in China targeting American maritime interests. 

  The group has targeted ” entities that may be strategically significant to Chinese interests in the South China Sea, including Cambodian political organizations,” Read said.

  So, how many more hacks will Washington tolerate until President Trump snaps and punishes Beijing with even more tariffs while sending an even greater US military presence in the South China Sea?

  As a reminder, NATO recently declared that a major cyber attack on one of its members could be grounds for a declaration of war.

  

• Why Did Google Choose Now To Remove "Don't Be Evil" Clause from Its Code Of Conduct?

  Authored by Meadow Clark via Daisy Luther’s Organic Prepper blog,

  Google used to have an iconic clause in its code of conduct that said, “Don’t be evil.” Yet the clause was recently and quietly sent down the memory hole…

  

  Given the recent House Judiciary Committee hearing involving Google CEO Sundar Pichai to testify on issues like the secretive Dragonfly project that would install a special censorship search engine for Chinese citizens…it’s a little creepy.

  Did Google symbolically peel off its last visage of propriety when it dropped its don’t-be-evil clause?

  Gizmodo reported in May that the “don’t be evil” concept went through a metamorphosis:

  Google’s unofficial motto has long been the simple phrase “don’t be evil.” But that’s over, according to the code of conduct that Google distributes to its employees. The phrase was removed sometime in late April or early May, archives hosted by the Wayback Machine show.

  “Don’t be evil” has been part of the company’s corporate code of conduct since 2000. When Google was reorganized under a new parent company, Alphabet, in 2015, Alphabet assumed a slightly adjusted version of the motto, “do the right thing.” However, Google retained its original “don’t be evil” language until the past several weeks. The phrase has been deeply incorporated into Google’s company culture—so much so that a version of the phrase has served as the wifi password on the shuttles that Google uses to ferry its employees to its Mountain View headquarters, sources told Gizmodo.

  Side Note: Alphabet Inc created a sister subsidiary to Google called Waymo that has launched its self-driving cars in Arizona as we speak.

  Here is what the old code of ethics looked like:

  “Don’t be evil.” Googlers generally apply those words to how we serve our users. But “Don’t be evil” is much more than that. Yes, it’s about providing our users unbiased access to information, focusing on their needs and giving them the best products and services that we can. But it’s also about doing the right thing more generally – following the law, acting honorably, and treating co-workers with courtesy and respect.

  The Google Code of Conduct is one of the ways we put “Don’t be evil” into practice. It’s built around the recognition that everything we do in connection with our work at Google will be, and should be, measured against the highest possible standards of ethical business conduct….

  The “don’t be evil” concept was one of the standards that appealed to potential employees. Yet, it was met with its own critics for being vague and hypocritical. Define evil, Google – define it!

  The updated version, however, is eerily sterile, and reads:

  The Google Code of Conduct is one of the ways we put Google’s values into practice.

  Not very inspiring. Evil dictators have values, too, what of it?

  The Google Monopoly

  Maybe it’s just too hard to stay clean when you’re the biggest search engine in the world, controlling 92% of global search traffic whereas the next two largest search engines, Bing and Yahoo, have only 2% each of traffic.

  Google owns 8 services that each have 1 billion users:

  • Google search engine
  • YouTube
  • Chrome browser
  • Google Maps
  • Drive
  • Android
  • Google Play

  The timing is Interesting

  The Independent UK reported in May:

  The updated code of conduct comes as artificial intelligence researchers call for Google to abandon a project developing AI technology for the military.

  Google’s refusal to cut ties with the US military led to the resignation of around a dozen employees from the company, who cited ethical concerns and warned that autonomous weapons directly contradicted the firm’s famous ‘Don’t be evil’ motto.

  In a letter signed by more than 3,100 Google employees last month, the workers stated: “We believe that Google should not be in the business of war… We cannot outsource the moral responsibility of our technologies to third parties,” referring to the company’s involvement in a controversial Pentagon program called Project Maven.

  Project Maven would use AI and machines to track and identify objects using drones for the Department of Defense.

  Ever since, Google has been embroiled in scandal after scandal and has had it has its hands in just about every pie imaginable.

  “In August, Google was reported to be tracking its users’ locations even when location services were switched off.,” reported BBC.

  Namely, Project Dragonfly, tracking users, data collection, security breaches and potentially biased filtering practices in its search engine.

  “Google collects an amount of info about its users that would make even the NSA blush,” said Chairman Bob Goodlatte at the recent congressional hearing. “I think it’s fair to say most Americans have no idea the sheer volume of data being collected.

  “It’s time to take back your data from Google and Facebook’s server farms”

  Giri Sreenivas wrote a compelling op-ed for The Guardian speaking out against the actions of Big Tech. He had hopes that Google CEO Sundar Pichai would at least be held to count for Project Dragonfly as much as Yahoo was for aiding and abetting the Chinese government with private data that led to the arrests of two journalists for dissent.

  Nope. Pichai was never lambasted even though Dragonfly’s completion would mean a similar imprisonment scenario except on a mass scale.

  Full disclosure: Sreenivas is the CEO of Helm which lets users host email and other data on a personal server. More on that below.

  Sreenivas reported some things I hadn’t previously known about Dragonfly:

  Codenamed Project Dragonfly, the search engine would come with a bevy of features attractive to any autocracy: specific keywords like “human rights” could be blocked, searches would be linked to personal phone numbers, data servers located in China would be open to inspection at any time. Dragonfly would even allow the government to change weather and air pollution data to downplay the toxicity in its cities.

  There would be no requirement to notify users of how their data is being used or by whom, nor any barrier to Google handing over personal data when requested, as Yahoo did more than a decade ago. In explaining the company’s motives, Pichai said Google had to explore China “given how important the market is and how many users there are”.

  “These tech companies have gone on long enough,” he said.

  Sreenivas wants a decentralized internet.

  By giving up that data when needed, Big Tech can continue amassing and monetizing it, he reasons. He argues for a decentralized Internet.

  Then he offers this gem:

  We’ve outsourced this moral decision-making to the companies themselves. It’s them that we trust to say “we’ll cooperate with this government but not with this one”[…]

  Yes, why is Big Tech thumbing their nose at the government of its home base but kowtowing to other governments who are actively violating the human rights of their people? Meanwhile, while our data is being siphoned off, there is talk about how Google deserves “free speech” to do as it will with its search engine algorithms. If Google is to be treated as a human being, then what other human beings could get away with these violations?

  *  *  *

  What can we do to protect our privacy from Big Tech?

  Sreenivas offers these more private options:

  Private Apps

  • Signal – an alternative to Facebook Messenger and Google Hangouts
  • Telegram – another messaging alternative

  Private Browsers

  • Tor or Brave – instead of Chrome

  Then he suggests that people can build their own email servers if they know how, in order to avoid Gmail or Yahoo. Of course, that’s exactly what his company, Helm, helps people do.

  In addition, be sure to check out Daisy’s list of alternative social media and video options.

  

• The Latest Facebook Scandal: Netflix, Spotify Could Read Private Messages, Yandex Was Given IDs

  Facebook has been giving some of the world’s largest technology companies – more than 150 of them, far more intrusive access to users’ personal data than it has ever disclosed according to an investigation by the New York Times. The Times interviewed over 60 people including current and former employees of Facebook and its partners, former government officials and privacy advocates – and reviewed over 270 pages of Facebook’s internal documents while performing technical tests and analysis to monitor what data Facebook has been handing out like candy. 

  

  The records, generated in 2017 by the company’s internal system for tracking partnerships, provide the most complete picture yet of the social network’s data-sharing practices. They also underscore how personal data has become the most prized commodity of the digital age, traded on a vast scale by some of the most powerful companies in Silicon Valley and beyond. –NYT

  The discovery goes far beyond the Cambridge Analytica data harvesting scandal in which basic data was collected on up to 87 million users through a lifestyle survey app. Thanks to the United States having no general consumer privacy law, up to 400 million people’s private information was freely shared with the likes of Google, Microsoft, Netflix, Spotify and other partners – and they didn’t sell it; Facebook gave everyone’s information away for free throughout the tech community in order to foster industry relationships and advance their own interests. 

  The exchange was intended to benefit everyone. Pushing for explosive growth, Facebook got more users, lifting its advertising revenue. Partner companies acquired features to make their products more attractive. Facebook users connected with friends across different devices and websites. But Facebook also assumed extraordinary power over the personal information of its 2.2 billion users — control it has wielded with little transparency or outside oversight. –NYT

  The company allowed Microsoft’s Bing search engine to see the names of virtually all Facebook users’ friends without their consent. 

  Netflix and Spotify were given the ability to read and delete Facebook users’ private messages. 

  Facebook also allowed Spotify, Netflix and the Royal Bank of Canada to read, write and delete users’ private messages, and to see all participants on a thread — privileges that appeared to go beyond what the companies needed to integrate Facebook into their systems, the records show. –NYT

  Both Netflix and Spotify claim they had no idea they had such broad capabilities, while a Royal Bank of Canada spokesman denied that the bank had any such access. 

  Amazon was granted access to users’ names and contact information through their friends, while Yahoo! was able to view streams of friends’ posts as recently as this summer despite Facebook promising that it had stopped this type of sharing years earlier. 

  What’s more? China’s Huawei and Russian search giant Yandex – accused last year by Ukraine of funneling user data to the Kremlin – had access to Facebook’s unique user IDs.

  Facebook records show Yandex had access in 2017 to Facebook’s unique user IDs even after the social network stopped sharing them with other applications, citing privacy risks. A spokeswoman for Yandex, which was accused last year by Ukraine’s security service of funneling its user data to the Kremlin, said the company was unaware of the access and did not know why Facebook had allowed it to continue. She added that the Ukrainian allegations “have no merit.” –NYT

  The list of companies with which Facebook shared your private information includes China’s Huawei and Russia’s Yandex — which is to say, companies regarded as partners of Chinese and Russian intelligence.https://t.co/PbFP9D4vTj

  — Binyamin Appelbaum (@BCAppelbaum) December 19, 2018

  https://platform.twitter.com/widgets.js

  In April, reeling from the Cambridge Analytica scandal, Facebook CEO Mark Zuckerberg promised lawmakers that people “have complete control” over their information on Facebook. Except it looks like certain “partners” were able to access user data anyway. 

  In all, the deals described in the documents benefited more than 150 companies — most of them tech businesses, including online retailers and entertainment sites, but also automakers and media organizations. Their applications sought the data of hundreds of millions of people a month, the records show. The deals, the oldest of which date to 2010, were all active in 2017. Some were still in effect this year. –NYT

  Facebook was able to circumvent a 2011 consent agreement with the Federal Trade Commission (FTC) which barred the company from sharing user data without explicit permission, because Facebook considered the partners extensions of itself – “service providers that allowed users to interact with their Facebook friends.” This allowed the company to grant such unprecedented access to everyone’s information. The partners were reportedly prohibited from using the personal information from purposes outside the scope of their agreement, however there has been little to no oversight. 

  According to Facebook, most of its data partnerships fall under an exemption to the F.T.C. agreement. The company argues that the partner companies are service providers — companies that use the data only “for and at the direction of” Facebook and function as an extension of the social network.

  …

  Pam Dixon, executive director of the World Privacy Forum, a nonprofit privacy research group, said that Facebook would have little power over what happens to users’ information after sharing it broadly. “It travels,” Ms. Dixon said. “It could be customized. It could be fed into an algorithm and decisions could be made about you based on that data.” –NYT

  “This is just giving third parties permission to harvest data without you being informed of it or giving consent to it,” said former FTC consumer protection bureau chief David Vladeck. “I don’t understand how this unconsented-to data harvesting can at all be justified under the consent decree.”

  “I don’t believe it is legitimate to enter into data-sharing partnerships where there is not prior informed consent from the user,” said Roger McNamee, an early investor in Facebook. “No one should trust Facebook until they change their business model.” –NYT

  Facebook began forming data partnerships as a relatively young company, as Zuckerberg and crew sought to deeply integrate the social media network into other sites and platforms in order to stay relevant and stoke growth. Each corporate partner that used Facebook data helped drive the company’s expansion by onboarding new users, which drove up advertising revenue. At the same time, Facebook was collecting data from its partners on users as well. 

  According to two mid-level employees, Facebook had entered into so many partnerships by 2013 that it could hardly keep track of them. In order to manage the agreements, a tool was built which turned the special data access on and off, while also keeping records on what were internally referred to as “capabilities,” or the level of special privileges which allowed companies to obtain data.

  Among the revelations was that Facebook obtained data from multiple partners for a controversial friend-suggestion tool called “People You May Know.”

  The feature, introduced in 2008, continues even though some Facebook users have objected to it, unsettled by its knowledge of their real-world relationships. Gizmodo and other news outlets have reported cases of the tool’s recommending friend connections between patients of the same psychiatrist, estranged family members, and a harasser and his victim.

  Facebook, in turn, used contact lists from the partners, including Amazon, Yahoo and the Chinese company Huawei — which has been flagged as a security threat by American intelligence officials — to gain deeper insight into people’s relationships and suggest more connections, the records show. –NYT

  Some of the data shared was limited to non-identifying information with research firms, however agreements with around a dozen companies raised several privacy concerns – including companies which had the ability to see users’ contact information through their Facebook friends, even after the company said in 2014 that it had stripped all applications of that ability. 

  As of 2017, Sony, Microsoft, Amazon and others could obtain users’ email addresses through their friends. –NYT

  In 2011, Facebook was investigated by the FTC over what they called “instant personalization,” by which the company changed the privacy settings of their 400 million users in 2009 to make their information available to all of the internet, before sharing that information “including users’ locations and religious and political leanings with Microsoft and other partners.” 

  The FTC called the privacy changes a “deceptive practice,” after which Facebook stopped mentioning the instant personalization feature in public, and entered the consent agreement with the federal agency. 

  Under the decree, the social network introduced a “comprehensive privacy program” charged with reviewing new products and features. It was initially overseen by two chief privacy officers, their lofty title an apparent sign of Facebook’s commitment. The company also hired PricewaterhouseCoopers to assess its privacy practices every two years.

  But the privacy program faced some internal resistance from the start, according to four former Facebook employees with direct knowledge of the company’s efforts. Some engineers and executives, they said, considered the privacy reviews an impediment to quick innovation and growth. And the core team responsible for coordinating the reviews — numbering about a dozen people by 2016 — was moved around within Facebook’s sprawling organization, sending mixed signals about how seriously the company took it, the ex-employees said. –NYT

  Of note, many of Facebook’s data sharing partnerships were not subject to privacy program reviews according to two former employees. Executives simply trusted that their partners would adhere to Facebook’s data policies, while company officials say that the level of review “depended on the specific partnership and the time it was created.” 

  In 2014, Facebook ended instant personalization and walled off access to friends’ information. But in a previously unreported agreement, the social network’s engineers continued allowing Bing; Pandora, the music streaming service; and Rotten Tomatoes, the movie and television review site, access to much of the data they had gotten for the discontinued feature. Bing had access to the information through last year, the records show, and the two other companies did as of late summer, according to tests by The Times. –NYT

  Both Pandora and Rotten Tomatoes also claim they had no idea they had such vast information at their fingertips. Microsoft, meanwhile, says that Bing used the data to build profiles of Facebook users for “feature development” within Microsoft services, and not for advertising. The company says it has since deleted the data. 

  Facebook claims that the data sharing didn’t violate users’ privacy because it only allowed access to public data (including private messages?). Others have called into question whether or not the FTC is even doing its job. 

  “There has been an endless barrage of how Facebook has ignored users’ privacy settings, and we truly believed that in 2011 we had solved this problem,” said Marc Rotenberg – head of the Electronic Privacy Information Center which filed one of the first privacy complaints against Facebook. “We brought Facebook under the regulatory authority of the F.T.C. after a tremendous amount of work. The F.T.C. has failed to act.“

  

  

• Japan Cites "Severity And Uncertainty" Of China Threat In Seeking Aircraft Carriers

  Japan has announced that for the first time since World War II it is seeking aircraft carriers as part of a massive 5-year $242-billion military overhaul, primarily to counter what it perceives as a growing China threat, which is about $17.8 billion more than in an earlier defense budget.

  Defense officials unveiled plans on Tuesday to refit its Izumo-class warships to carry US-designed F-35B fighter jets, an advanced stealth fighter it hopes to purchase over forty of within the next decade, which have short takeoff and vertical landing capabilities.

  

  The stealth fighters will be deployable aboard two of Japan’s largest ships, the JS Izumo and JS Kaga, which as flat-top ships more than 800 feet long and displacing 27,000 tons, can accommodate multiple fixed-wing aircraft and helicopters. The ambitious defense overhaul, called the National Defense Program Guideline, was approved by Japan’s parliament on Tuesday and cited the “severity and uncertainty” of challenges with regional great power China, which are “increasing with extremely high speed.”

  The approved defense guideline further emphasized close US-Japanese strategic relations, which it described as “more important than ever for our national security,” and authorized Japan to actively support American military operations in the region. Japanese law was recently updated to allow its military to give logistical aid to US forces, and is now expanded to protecting US vessels and aircraft.

  Readiness against the advancing technical capabilities of China were also noted in the defense guideline, which cited “Rapid expansion of new areas, such as space, cyber and electromagnetic waves, is fundamentally changing the ideal state of national security, which had placed importance on dealing with physical areas such as land, sea and air.”

  In media statements, Chief Cabinet Secretary Yoshihide Suga cited regional threats on Tuesday while outlining the plan: “Under the drastically changing security environment around Japan, the government will take all possible measures to protect the lives and assets of Japanese people.” 

  Defense officials also noted frequent foreign military activity in the East China Sea and western Pacific Ocean. And just this week Russia announced that it is continuing build-up on a series of islands claimed by Japan, which Moscow calls the Kuril Islands. 

  

  Currently there are only two Japanese airbases which can be used by conventional fighter jets: Naha Air Base and the Maritime Self-Defense Force base on Iwo Jima. This has left Japanese military planners feeling unprepared as waters in the region grow hotter, especially in light of increased US-China confrontations and the potential for a wider confrontation. 

  A defense officials told the AFP that new ships and fighter jets are set to “increase operational flexibility” for the military in terms of protecting remote Japanese islands, specifically in the southern waters. “We have a very, very small [military] footprint” in the area between Okinawa and Taiwan, the official said. Japan has denied that it’s seeking “full-fledged aircraft carriers,” noting instead, “We are not creating carrier air wings or carrier air squadrons” like the US Navy, but that its future F-35B squadron would be primarily stationed on land.

  Meanwhile, Prime Minister Shinzo Abe has lately signaled Japan’s readiness to abandon its 20th pacifism which was part of the terms of its defeat after WWII, citing emerging “threats” from China and North Korea. This has new orientation has been manifest in the controversial procurement and testing of Tomahawk cruise missiles purchased from the US, which has angered nearby powers Russia and China. 

  

• "Saudi Arabia Is Going Bankrupt" Taleb Exclaims After Seeing Kingdom's Latest Budget

  In all the noise surrounding the latest market moves, political news and frenzy over tomorrow’s Fed rate hike (or pause), an important development was missed by many when Saudi Arabia released its budget for 2019 earlier on Tuesday, which at 1.106 trillion riyals, or $295 billion – the largest in the kingdom’s on record – represents a 7% increase from 1.030 trillion in 2018.

  During the unveiling of the budget, Saudi King Salman said his country will continue paying public sector cost-of-living allowances for citizens and will boost spending to stimulate growth even as Saudi Arabia toils to close its deficit, which it won’t do yet again as the kingdom forecasts a 6th consecutive budget deficit in a row, estimated to hit $35 billion in 2019.

  “We are determined to go ahead with economic reform, achieving fiscal discipline, improving transparency and empowering private sector,” the King said.

  While state-funded Saudi “generosity” to keep its citizens happy – and not, say, thinking radical, revolutionary thoughts – is well known, analysts believe the continued cost-of-living allowances, first established in January 2018 and estimated by officials to cost more than $13 billion, are intended to stimulate sluggish growth but mostly shore up support for the royal family and Crown Prince Mohammed bin Salman after a controversy-ridden few months.

  The royal allowances of 1,000 riyals a month ($266) are paid to civil servants and military personnel, and other allowances will continue for pensioners and those living on social security. Riyadh will also increase student benefits by 10 percent for the next fiscal year, the king announced.

  There is just one problem: for Saudi Arabia to be able to meet its projected revenue and fund these generous payments it will need oil prices to rise higher. Much higher.

  Looking at the details of the budget, a few troubling details emerge: revenue is forecast to hit 975 billion riyals while total spending will rise 7% to 1.106 trillion riyals, resulting in a 131 budget deficit, or 4.2% of GDP (nearly double the size of Italy’s projected deficit, if still quite smaller than the US deficit) as GDP is expected to grow from 2.3% in 2018 to 2.6% in 2019.

  And while the government expects non-oil revenue to increase from 287 billion riyals in 2018 to 313 billion in 2019, the big question mark is what happens with oil revenue. According to the budget, Saudi Arabia expects oil revenues to grow nearly 10% from 607 billion riyals in 2018 to 662 billion in 2019, it is the assumptions embedded in this revenue forecast that are, well, concerning.

  To hit 662 billion riyals in oil revenue, or $177 billion, up from $162 billion in 2018, Saudi Arabia expects near record oil output of 10.2 mmb/d sold at a price of $80/barrel, while Saudi Aramco won’t increase its allocations to the government. For reference, Brent settled just above $56 today, which means that oil has to rise at least 40% for the Saudi budget revenue assumption to be hit. Brent would have to rise an additional $15 to $95 a barrel for the kingdom to balance its budget deficit according to Bloomberg chief Middle East economist Ziad Daoud.

  

  As a reference, analysts expect Brent in 2019 to trade around $73 a barrel, a number which may be rather aggressive considering the recent plunge in the commodity, largely the result of continued excess output coupled with declining demand from China and other key markets.

  Even with these aggressive assumptions, which see Saudi Arabia oil revenue rising to a five-year high, the Kingdom will still post its sixth-straight budget deficit.

  Last year, Saudi Arabia based its 2018 budget on crude averaging $63 a barrel, $17 below the latest forecast even as its OPEC-defecting neighbor, Qatar, assumed $55 per barrel in its budget forecast released last week.

  So what happens if oil refuses to levitate to the desired price? As Bloomberg’s Javier Blas notes, “Saudi Arabia will need to take on further debt, spend its petro-dollar reserves or, at some point, introduce again austerity (as it was forced to do in 2015-2016).”

  If #oil prices don’t go higher and/or production rises, #SaudiArabia will need to take on further debt, spend its petro-dollar reserves or, at some point, introduce again austerity (as it was forced to do in 2015-2016) #OOTT

  — Javier Blas (@JavierBlas) December 18, 2018

  https://platform.twitter.com/widgets.js

  It goes without saying that Saudi Arabia’s bullish call is the latest sign that the kingdom expects its efforts to corral OPEC members and its allies to cut production next year will support prices. On the other hand, any more Qatar-style defections, and the Saudi budget will not only be busted, but Saudi Arabia will end up taking on a lot more debt, which means it will be at the mercy of global creditors.

  And while one can see an optimistic scenario in which everything goes as Saudi Arabia has planned, Nassim Taleb is not so sure, with a rather simple assessment: “Saudi Arabia is going to go bankrupt.“

  Saudi Arabia is going to go bankrupt. https://t.co/g3B0DwnHyM

  — Nassim Nicholas Taleb (@nntaleb) December 18, 2018

  Perhaps not just yet: according to the budget, public debt is expected to rise to 678 billion riyals or 21.7% of GDP, hardly an insurmountable number although, as noted above, it’s not the stock but the flow, and Taleb may well be right if Saudi Arabia’s traditional bankers decide to boycott the Kingdom, preventing it from gaining access to global capital markets, Taleb’s dour assessment may well be right.

  

• Your Biometrics: Silent Witnesses Against You And Tools To Track You

  Jeremiah Johnson (nom de plume of a retired Green Beret of the United States Army Special Forces) via SHTFplan.com,

  Another week has gone by where we have seen a tremendous amount of activity around the world: the French, Belgians, and Dutch are engaged in protests labeled “yellow vest” protests. In actuality, the yellow vests are insignificant: these Euro-Socialist countries require citizens to wear yellow vests in public for protests…for “safety” reasons. Actually it is so that center mass is easier to acquire by their paramilitary police forces. There is a good possibility of a major war escalating from current problems between Ukraine and the separatist provinces of Luhansk and Donetsk. The U.S. phony economy is not doing well.

  

  Quietly and almost unnoticed by the beeves of the American populace are the biometric measures for surveillance and tracking being emplaced by the United States with the cooperation of major corporations. I have written articles on the biometric scanners being used in an Atlanta airport, and that Chicago is following suit, along with Delta using these biometric data collection scanners prior to boarding flights in Los Angeles.

  A new article surfaced this week that you need to read. Entitled “FBI plans ‘Rapid DNA’ network for quick database checks on arrestees,” by Tom Jackman on December 13, released by the Washington [Com]Post.

  This is very serious, indeed. Here’s an excerpt:

  Though DNA has revolutionized modern crime fighting, the clues it may hold are not revealed quickly. Samples of saliva, or skin, or semen are sent to a crime lab by car (or mail), and then chemists get to work. Detectives are accustomed to waiting days or weeks, or longer, for the results. Some labs are so backed up, they take only the most serious crimes. Some samples are never tested.  But a portable machine about the size of a large desktop printer is changing that. A “Rapid DNA” machine can analyze the DNA in a swab and produce a profile of 20 specific loci on the DNA strand in less than two hours. Some local police departments and prosecutors have been using Rapid DNA machines for about five years to solve crimes.

  How “procedurally harmless” this may sound on the surface, people, there is something that is not mentioned.

  With those machines, they will be able to stow them in vehicles… for use door-to-door.

  If you think for an instant the State is not going to clamp down on us, think again. What is the best way to deal with unfunded liabilities and the rising, unstoppable debt? Make it disappear (via an EMP…Electromagnetic Pulse…attack), and start a war (external, or internal, labeled “civil unrest”). Look at what just happened in New Jersey. They declared magazines with a capacity of more than 10 rounds illegal, and they just may search houses for them. Look what happened in Boulder, Colorado…where residents have until Dec. 27, 2018 to register their firearms with the Boulder Police Department.

  Registration is the preliminary step before confiscation: they need to know who owns the guns and where they are kept.

  This DNA and biometric-gathering apparatus that the government and its damnable agencies and bureaucracies are emplacing will enable the confiscation of firearms. It is coming. It is coming, as surely as I’m typing these words right now. The CCTV cameras, the cameras above the cash registers, in your bank. The banks themselves: now they are starting to take biometric IDs in the form of fingerprints and retinal scans. Guess what? Those records are also available to our friendly, smiling police departments.

  We are witnessing the marginalization of cash. That’s right! You pay for something in cash that is more than a hundred dollars or so, and they look at you as if you’re a criminal. Banks and their SARs (Suspicious Activity Reports), the banks and their “fractional reserve” policy, of loaning out more than five dollars on every dollar they hold. The banks, not allowing you to withdraw more than a couple thousand of your own dollars…not allowing you to use an ATM to withdraw more than a few hundred dollars. The banks: reporting on every dime you bring in and take out, copying your checks, even making a note of the distribution of the very bills you take out when you cash a check.

  You can see these idiots in convenience stores, using a “debit” card to buy a soda and a bag of chips…with a total of just a couple of dollars. Ten years ago, such small amounts for purchase would not have been permitted on the card: now, it is the new “norm.” Now the bank and the store will charge for every transaction…in addition to the profits that they make on the over-inflated-priced garbage they’ll sell you. Need a money order? Most places will (at the very least) make you give them a name. Yeah, Mr. Slick will give them a phony name, not paying attention to the little black “Legg’s Egg” dome camera behind the register. Mr. Slick just became guilty of fraud under the defacto laws and U.S.C. edicts. Plus they have the biometrics to boot…the photo, along with the receipt and the money order number.  Great job, “Ethan Hunt!”

  Every letter sent through the USPS (U.S. Postal Service) is photographed, with the origin and destination recorded in their little database. Every transaction you make, whether in cash or not, is recorded and stored for their little records.

  In this manner, all Fisher-Price People and Weebles are accounted for (and accountable) at all times, in the happy little Muppet system….so “ain’t that America…the home of the free,” to paraphrase John Cougar’s song?

  Here’s some more out of the article:

  However, the machines are not connected to CODIS, the FBI’s combined national DNA database. So the FBI is launching a Rapid DNA initiative to place the machines in police and sheriffs’ booking stations around the country, hoping to enable law enforcement to check arrestees against the CODIS database and, when matches are made to DNA from unsolved crimes, head off the release of the suspects.  In testifying to Congress about the Rapid DNA network in 2015, then-FBI Director James B. Comey said the technology “would help us change the world in a very, very exciting way.” Comey said it would allow “booking stations around the country, if someone’s arrested, to know instantly — or near instantly — whether that person is the rapist who’s been on the loose in a particular community before they’re released on bail and get away or to clear somebody, to show that they’re not the person.”

  Ahh, to be sure, Comey, it’s an excitin’ world yer leadin’ us into…well, led, anyway. “Evan McCone” is no longer one of the hunters, now, is he? As Bill Clinton appointed you, perhaps you should have begun looking for the rapists with a search on his DNA. Then again, those measures are only for the proletariat, never the Politburo. Changing the world in an exciting way, eh? This coming from the “E-mail Doctor” himself.  Those who are holding us accountable are beyond accountability themselves.

  The point: who is to stop these goons from taking a sample of anything in your house and affixing it to some piece of evidence linked to a [supposed] crime? Sound far-fetched? Think again. Recently in Baltimore, a cop and his buddies were indicted for fabricating evidence with their little “body cameras.” Unbeknownst to them, the cameras recorded 30 seconds prior to their pressing the button…and this “extra” footage showed them falsifying evidence and planting it on people to “expedite” their version of justice. They also were acquitted.

  These will be the ones coming for the firearms…yes, coming for the guns. They’re just taking their time and crafting their little laws and statutes, and when the time is right, they’ll go door to door. They already have the records of so many purchases, as Form 4473, a Firearm Transaction Record, is stored indefinitely in gun stores. They will utilize these records, as well as the “unofficial” ones…those gun shows have CCTV cameras, and that film is kept in their databases and fusion centers…forever.

  Since the feds infiltrate all of them, do you really believe they haven’t recorded everyone who walks in there, and picks up a weapon? That they haven’t recorded them leaving the parking lot?

  They have recorded all of it. Every time you buy ammo in a big-box or sporting goods store, it is recorded…amount, type, and for what caliber. Every accessory bought online is metadata that they will use against you. The investigation is the key for them: if it is under investigation, there is no limits to what they can do, or convince/coerce a court to enable them to do. Here are the stats, and another “kicker” for you from the article:

  Thirty states and the federal government allow DNA to be taken at the time of arrest. Sixteen states allow it to be analyzed immediately, and in the other 14 states, DNA may be taken at arrest but not analyzed until after arraignment on charges.

  Congress approved legislation last year authorizing the Rapid DNA network, and the FBI plans to roll it out slowly beginning next year. “Our goal in 2019,” said Thomas Callaghan, chief biometric scientist for the FBI Laboratory, “is to be able to have a pilot project done where we actually develop a DNA profile in a booking station, with no human review, and have it electronically enrolled and searched in the national database. We have to ensure that the quality that’s done in a lab can be done in a booking station,” which are often jails where fingerprints and mug shots are usually taken.”

  That last is telling: “the FBI plans to roll it out slowly beginning next year.”

  Why is that? Well, some reasons are that the technology is ahead of the laws…they need some time to craft some more laws that will enable them to be able to sample more than the current laws permit now. The biggest reason?  So that it will not be noticed by the Muppets in Fisher-Price Land. Out of sight, out of mind…until the bars are completely constructed and the cage is complete. Did you see what Callaghan said? Let’s embolden it, as it is critical to understand:

  “…a DNA profile in a booking station, with no human review, and have it electronically enrolled and searched in the national database.”

  No human review. Will there even be a hearing? Probably a robot judge, akin to the parole officer in the movie “Elysium.” Do you think arrests will be on the rise? Yeah, they’ll take you in, and you’ll have the DNA taken from you…regardless of whether the charges are pursued or not.

  Read the article. Read everything that you can on the tech they’re rolling out. Today’s police officer is tomorrow’s enforcer of a full-blown tyranny. We have reached a point where the vote is irrelevant. The vote is only meant to give the population the illusion that the choice is theirs. It never was. The media and the Democrats are all over the President akin to white on rice, and they’ll be on him relentlessly all the way up to and through the next election, if we make it that far as a nation.

  Right now we’re standing on the threshold of the abyss…a plunge into complete totalitarianism and surveillance on every citizen. People, they’re coming for the guns…in every way, shape, and form. They have to have them in order to finish off what is left of the U.S. and institute global governance. I recommend watching an older movie entitled “Gattaca,” for the types of measures they’ll eventually be using to collect DNA with or without our approval. It will happen: in public places, where you work, where you shop, and where you bank.

  By matching the CCTV cameras with the samples they take, they will positively identify you and get the DNA. Look what the NFL, what the military, and what law enforcement, as well as hospitals and others have gathered already. Your DNA is a mute witness that can testify against you where you have shopped, what you have eaten, and how you spend your time. They will use it to track you and find you when the time arrives. We have a little bit of time left, but not much before they close the cage on us…one that you cannot see, but is all around us and becoming stronger by the day.

  

• Qatar Ambitions Soar After OPEC Exit With $20 Billion US Expansion

  After Qatar’s historic and unprecedented early December announcement that the small, gas-rich Gulf state will exit OPEC effective Jan. 1 following nearly 60 years of membership, Qatar Petroleum CEO Saad Sherida al-Kaabi announced over the weekend that the state-owned oil and gas company plans to invest more than $20bn in the US oil and gas sector. 

  As reported by Reuters on Sunday, al-Kaabi’s main concern appears to be over its long term plans in the United States, specifically its majority stake of the Golden Pass LNG terminal in Texas. He cited current proposed “NOPEC” legislation, or No Oil Producing and Exporting Cartels Act, which aims to enable the US to extra-territorially impose its domestic legislation on others by giving the government the right to sue OPEC and OPEC+ countries like Russia because of their coordinated efforts to control oil prices. A decision over staying the course for its Golden Pass LNG project expansion is expected “within weeks”.

  

  And this comes at a time when President Trump has been unrelenting in his criticisms of OPEC, blaming the organization for increasing the price of oil while leaning on the Saudis to produce more to help him drive oil prices even lower.

  Qatar’s exit has been telegraphed as a huge blow to rival GCC state Saudi Arabia — de facto leader of the global oil cartel — after the kingdom led its GCC partners in waging economic and diplomatic warfare against Qatar (a complete blockade to be precise) since an open rift in June 2017, accusing it of supporting terrorism and boosting Iran.

  Especially since the Oct. 2 Saudi murder of journalist Jamal Khashoggi and slow drip of Turkish media leaks revealing the shocking details, the Qataris see Riyadh as unduly leveraged by the White House, accelerating production to appease Trump. However, we should note that Qatar has been spinning its exit from OPEC has having no political overtones.

  Additionally, al-Kaabi announced new foreign partners for the construction of liquefied natural gas (LNG) trains for its LNG expansion project, including with Italian oil giant Eni, among others operating in Qatar (Exxon Mobil, Total, Royal Dutch Shell). Plans to build four liquefaction trains for the LNG expansion is part of a broader goal of boosting capacity to 43 percent by 2023-2024, according to Reuters.

  

  Concerning the newly announced $20 billion investment push in the US, QP is looking “at gas and oil, conventional and non-conventional,” according to Kaabi’s statements Sunday. “We are looking for a lot of things (in our partners) including asset swaps, things that will help me in my international expansion,” he said. “If I don’t get good deals, nobody will come.”

  And separately, QP will make its second foray in Mexican oil and gas, announcing it entered into an agreement with Eni to buy a 35% stake in three oilfields offshore Mexico, which include the Amoca, Mizton and Tecoalli offshore sites. Al-Kaabi said this “strengthens” Qatar Petroleum’s “international footprint” and “expands its presence in Mexico.”

  Last January QP secured exploration rights to five blocks off the coast of Mexico in the Campeche and Perdidio basins, along with Eni and Shell respectively. Al-Kaabi added of the project, “we look forward to collaborating with Eni to ramp up production to around 90,000 barrels of oil per day by 2021.”

  Previously Al-Kaabi summarized Qatar’s ambitions in leaving OPEC as follows:

  Achieving our ambitious strategy will undoubtedly require focused efforts, commitment and dedication to maintain and strengthen Qatar’s position as the leading LNG producer.

  I would like to reaffirm Qatar’s pride in its international standing at the forefront of natural gas producers, and as the biggest exporter of LNG.

  And as we explained previously this is no mere hyperbole or empty boasting as Qatar is already the world’s largest LNG producer, with some 77 million tons per annum of liquefaction capacity, though that lead is not being challenged by Australia as it finally completes its massive LNG project expansion boom.

  Yet, going forward, Qatar will far outpace any of its LNG exporting rivals, both Australia, Russia and even the U.S. as the country enters its so-called second phase of LNG project development. Last year, in a surprise statement, Qatar announced that it would boost LNG production to 100 mtpa within the next five or six years – a remarkable decision given LNG development in other parts of the world that will all be vying for the same market share. 

  

• Here's What Newly-Diagnosed Amnesiac James Comey "Did Not Recall" On Day 2 Of Testimony

  Former FBI Director James Comey appeared December 17th, 2018, for a second round of questions by a joint House committee oversight probe into the DOJ and FBI conduct during the 2016 presidential election and incoming Trump administration.

  

  The Joint House Committee just released the transcript online (full pdf below).

  Director Blue blog’s Doug Ross read through most of the septic backflow so you don’t need to. You’re welcome:

  1. Double Standard: Obama vs. Trump

  Trey Gowdy grilled Comey on his vastly different handling of comments by Trump and Obama. When Trump asked Comey whether he could see his way clear to easing up on Flynn, Comey memorialized the conversation in a memo and distributed it to his leadership team, including Andrew McCabe and James Baker.

  However, when President Obama on 60 Minutes publicly exonerated Hillary Clinton’s mishandling of classified information — setting the stage for true obstruction of justice — Comey did nothing. He never talked to the president about potential obstruction, he never memorialized his observations, and he didn’t leak anything to the press. These were all things he did with Trump.

  He might call it a “higher loyalty”, but it looks to us peons like a true double-standard. Democrats get Wall Street Bankster treatment, while the rabble get tossed in the slammer.

  2. According to Comey, Flynn had no right to counsel

  This is interesting:

  Mr. Gowdy. Did Mr. Flynn have the right to have counsel present during that interview?

  Mr. Comey. No.

  Oooooooookay.

  3. Comey confirmed McCabe called Flynn to initiate “entrapment”; contradicts himself on counsel

  And:

  Mr. Gowdy. Why not advise General Flynn of the consequences of making false statements to the FBI?

  Mr. Comey. …the Deputy Director [McCabe] called him, told him what the subject matter was, told him he was welcome to have a representative from White House Counsel there…

  So Comey is saying that Flynn didn’t have the right to counsel (item 2), and then states that he does have the right to a White House counsel attending the meeting.

  The lies are getting harder and harder to keep straight with this egregious individual.

  4. Comey lied about McCabe’s conversation with Flynn

  When asked whether McCabe was trying to set Flynn up by asserting no counsel was needed in the interview, Comey claimed he was unaware of that critical fact. But McCabe, in a written memo, asserted that he told Flynn, “[i]f you have a lawyer present, we’ll need to involve the Department of Justice”.

  In other words, McCabe was trying to ensure Flynn had no counsel present during the interview.

  5. Comey still falls back on the Logan Act scam to justify his actions

  Yes, the Logan Act. When former secretary of state John Kerry meets with various Mullahs while President Trump is unwinding the disastrous Iran deal, there’s no crime there!

  But let Flynn, a member of the Trump transition team, have a perfectly legitimate conversation with a Russian diplomat, we get:

  Mr. Comey. And I hesitate only with “wrong.” I think a Department of Justice prosecutor might say, on its face, it was problematic under the Logan Act because of private citizens negotiating and all that business.

  What a lying sack of gumbo. At the time, Flynn was not a private citizen. He was a member of the incoming administration, and had anyone bothered to prosecute prior transitions for similar “crimes”, the entire Obama and Clinton posses would be breaking rocks at Leavenworth.

  6. Comey Throws James Clapper Under the Bus

  When asked by Jim Jordan about his private meeting with the President to brief him on a very tiny portion of the “salacious and unverified” (Comey’s words under oath) dossier, Comey claimed ODNI James Clapper had orchestrated the entire fiasco.

  Mr. Comey. …ultimately, it was Clapper’s call. I agreed — we agreed that it made sense for me to do it and to do it privately, separately. So I don’t want to make it sound like I was ordered to do it.

  He wasn’t ordered to do it, but it was Clapper’s call.

  Oooooooookay.

  7. Jordan Torches Comey Over His Dossier Comments

  I’ll just leave this here. Comey may need to put some ice on that.

  Mr. Jordan. So that’s what I’m not understanding, is you felt this was so important that it required a private session with you and the President-elect, you only spoke of the salacious part of the dossier, but yet you also say there’s no way any good reporter would print this. But you felt it was still critical that you had to talk to the President-elect about it. And I would argue you created the very news hook that you said you were concerned about…

  …it’s so inflammatory that reporters would ‘get killed’ for reporting it, why was it so important to tell the President? Particularly when you weren’t going to tell him the rest of the dossier — about the rest of the dossier?

  8. Comey Concealed Critical National Security Concerns About Flynn From the President

  This is quite unbelievable: in a private dinner with the president, Comey neglected to mention that just three days earlier he had directed the interview of Trump’s ostensible National Security Advisor.

  Mr. Comey. …at no time during the dinner was there a reference, allusion, mention by either of
  us about the FBI having contact with General Flynn or being interested in General Flynn investigatively.

  Mr. Jordan. That was what I wanted to know. So this is not just referring to the President didn’t bring it up. You didn’t bring it up either.

  Mr. Comey. Correct, neither of us brought it up or alluded to it.

  Mr. Jordan. Why not? He’s talking about General Flynn. You had just interviewed him 3 days earlier and discovered that he was lying to the Vice President, knew he was lying to the Vice President, and, based on what we’ve heard of late, that he lied tyour agents. Why not tell his boss, why not tell the head of the executive branch, why not tell the President of the United States, “Hey, your National Security Advisor just lied to us 3 days ago”?

  Mr. Comey. Because we had an open investigation, and there would be no reason or a need to tell the President about it.

  Mr. Jordan. Really?

  Mr. Comey. Really.

  Mr. Jordan. You wouldn’t tell the President of the United States that his National Security Advisor wasn’t being square with the FBI? … I mean, but this is not just any investigation, it seems to me, Director. This is a top advisor to the Commander in Chief. And you guys, based on what we’ve heard, felt that he wasn’t being honest with the Vice President and wasn’t honest with two of your agents. And just 3 days later, you’re meeting with the President, and, oh, by the way, the conversation is about General Flynn. And you don’t tell the President anything?

  Mr. Comey. I did not.

  Mr. Meadows. So, Director Comey, let me make sure I understand this. You were so concerned that Michael Flynn may have lied or did lie to the Vice President of the United States, but that once you got that confirmed, that he had told a falsehood, you didn’t believe that it was appropriate to tell the President of the United States that there was no national security risk where you would actually convey that to the President of the United States? Is that your testimony?

  Mr. Comey. That is correct. We had an —

  The more we learn, the dirtier a cop Comey ends up appearing.

  9. Gowdy Destroys the Double Standard of Clinton vs. Flynn

  Check this out:

  Mr. Gowdy. …we are going to contrast the decision to not allow Michael Flynn to have an attorney, or discourage him from having one, with allowing some other folks the Bureau interviewed to have multiple attorneys in the room, including fact witnesses. Can you see the dichotomy there, or is that an unreasonable comparison?

  Mr. Comey. I’m not going to comment on that. I remember you asking me questions about that last week. I’m happy to answer them again.

  Mr. Gowdy. You will not say whether or not it is an unreasonable comparison to compare allowing multiple attorneys, who are also fact witnesses, to be present during an interview but discouraging another person from having counsel present?

  Mr. Comey. I’m not going to answer that in a vacuum…

  10. Comey May Have Been Involved With the Infamous Tarmac Meeting

  Another interesting vignette, this time from John Ratcliffe:

  Mr. Ratcliffe. Okay. So it would appear from this that there had been some type of briefing the day before, with reference to yesterday, June 27, 2016, where you had requested a copy of emails between President Obama and Hillary Clinton.

  Mr. Comey. I see that it says that.

  Mr. Ratcliffe. …The significance of that is, as we talked about last time, June 27th of 2016 was also the date that Attorney General Lynch and former President Bill Clinton met on a tarmac in Phoenix, Arizona. Do you recall whether or not this briefing was held at the FBI because of that tarmac meeting, or was it just happened to be a coincidence that it was held on that day? Mr. Comey. It would have to have been a coincidence. I don’t remember a meeting in response to the tarmac meeting.

  Muh don’t know!

  11. Comey confirms Obama knew Hillary Clinton was using a compromised, insecure email server

  Well, spank me on the fanny and call me Nancy!

  Mr. Ratcliffe. …Hillary Rodham Clinton and President Obama were communicating via email through an unsecure, unclassified server?

  Mr. Comey. Yes, they were between her Clinton email.com account and his — I don’t know where his account, his unclassified account, was maintained. So I’m sorry. So, yes, here were communications unclassified between two accounts, hers and then his cover account.

  Mr. Ratcliffe. …Did your review of these emails or the content of these emails impact your decision to edit out a reference to President Obama in your July 5th, 2016, press conference remarks?

  If Trump had done 1/1,000,000th of this crap, he’d be — yes — breaking rocks in Leavenworth right now.

  But there’s no double-standard, rabble! Just keep buying iPhones and playing Call of Duty!

  …Aaaaaaaaand I’m spent.

  Okay, done for now.

  But let’s recap the activities of Dr. “Higher Loyalty” Comey:

  • Did not investigate the felony leak to the press of the conversation between the Russian Ambassador and Flynn.

  • Did not advise Congress of the “investigation” into Trump-Russia collusion as required by statute.

  • Lied to the FISA court — another felony — about Carter Page being “an agent of a foreign power”.

  • Wrote an exoneration memo for Hillary Clinton before more than a dozen witnesses, including Clinton herself, had been interviewed.

  But, no, there’s no double-standard for the aggressiveness of law enforcement when it comes to Democrats like Clinton and Obama.

  Hat tip: BadBlue Uncensored News.

  *  *  *

  

• Blythe Masters Quits As CEO Of Fin Blockchain Startup

  A little over three years ago when bitcoin was trading in the low $200s, we first recommended purchasing the cryptocurrency for two main reasons: as we said at the time, it was only a matter of time before the Chinese started using it as a means to bypass China’s capital controls firewall (this took place less than a year later, launching Bitcoin’s stratospheric ascent which eventually culminated with Beijing’s crackdown on crypto and bitcoin hitting a price of $20,000); the second reason was the involvement of the notorious brain behind Credit Default Swaps then at JPMorgan, Blythe Masters, whose mere presence was – to us – assurance that with such a deep “institutional” backer, it was only a matter of time before bitcoin exploded, to wit:

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

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

  

  And just like that, a little over three years later, the fairy tale is over, at least for the person who was meant to “tell the banks Blockchain changes everything“, because as Bloomberg reports, Blythe Masters is leaving her role as CEO of blockchain startup Digital Asset Holdings, slightly more than three years after arriving to run the financial technology firm and being on the cover of Bloomberg magazine to provoke curiosity in what at the time was a technology – and asset class- only a handful had previously heard of.

  Why is she leaving?

  According to a release, Masters asked to step down for personal reasons, which naturally means that the true reasons she is leaving are anything but personal and may have something to do with the unprecedented collapse in cryptocurrency from their all time highs exactly one year ago. AG Gangadhar, who joined the board this year, will become chairman and acting CEO until the New York- based company finds a permanent replacement for Masters who will remain a board member, strategic adviser and shareholder.

  Digital Asset was… all right, all right still is among a group of startups trying to apply blockchain to financial markets. Advocates say the system, already being used to simplify supply chains, could also streamline trade settlement and stock issuance. Alas, despite early enthusiasm for the technology’s promise, many corporate advocates of distributed ledger technology cooled off in direct correlation with the price of bitcoin.

  After joining Digital Asset in 2015, Masters – who previously worked at JPMorgan for two decades and conceived of credit-default swaps which nearly led to AIG’s extinction – became a high-profile advocate of blockchain for finance and a mainstay on the speaking circuit. During her brief tenure there, Digital Asset struck up several partnerships and earned a contract to supply Australia’s main  stock exchange, ASX Ltd., with blockchain technology for processing equity transactions. ASX Deputy CEO Peter Hiom said in a statement Tuesday that the program remains on pace. In October Hong Kong Exchanges & Clearing Ltd. said it will work with Digital Asset on building a blockchain settlement system for trading Chinese stocks.

  As for Masters’ replacement, Gangadhar joined the Digital Asset board in April, and earlier in his career he worked at technology  giants including Google and Uber. Prior to Digital Asset, he spent less than half a year as CTO of Cruise Automation, the self- driving arm of General Motors. Amusingly, in his time at Cruise he was the subject of public complaints about his role in allegedly
  fostering a work environment that was inhospitable to women when he worked at Uber.

  And speaking of women, keep a close eye on where Blythe ends up next: while it remains to be seen if bitcoin (and blockchain) can ever inspire the type of bubble mania that emerged in the 2016-2017 period (yes, eventually, once money laundering using crypto becomes fashionable again, especially in Asia), one thing is certain: whatever product or asset Blythe is involved with next, will likely be the next thousand-bagger investment.

  

Digest powered by RSS Digest

• Russia Continues Military Build-Up On Disputed Islands Claimed By Japan Ahead Of PM's Visit

  Russia has signaled it will continue its controversial build-up of defensive fortifications on a disputed chain of islands near Japan at a time when the United States is increasingly active in the region and has maintained a stance in recent years of voicing support to Japan’s claims over the islands. 

  On Monday Russia announced it had built new barracks for troops in the Southern Kurils as they are known in Russia — referred to as the Northern Territories in Japan — and further said there were plans to construct more facilities for armored vehicles, in defiance of Japan’s urging Moscow to cease militarizing the disputed territory.

  

  Japan has long urged its powerful northern neighbor to cease its military build-up there, recently promising President Putin that the US would not put its forces there should Russia hand the islands back to Japan. Russian officials have expressed deep concerns that Japan could allow the US military a foothold in Russia’s eastern backyard, a legitimately heightened fear especially after Japan’s acquiring and testing of the Aegis Ashore U.S. missile system in recent months, which Russia officials have warned could be placed on the islands should they ever be returned to Japanese sovereignty.

  Putin and Japanese Prime Minister Shinzo Abe have held numerous face-to-face meetings to attempt to resolve the crisis, which has been a central issue in relations since the Soviet Union seized the island chain at the end of WWII.

  In recent years the Kremlin has gone so far as to authorize live military exercises and significant troop deployments on the islands, which have been interpreted by Japan as a clear sign Russia maintains them for military offensive purposes. 

  

  According to a Russian Defense Ministry (MoD) statement, Moscow plans “to shift troops into four housing complexes on two of the four disputed islands” by next week. “Also on both islands we have modern and heated storage facilities for weapons and armored vehicles,” the MoD said.

  This comes as the Japanese PM makes plans to potentially visit Russia on Jan. 21 to continue talks over the territorial dispute, according to the Kremlin. 

  

  The Sea of Japan has seen tensions soaring of late after an early December incident involving an American destroyer making a rare passage through waters claimed by Russia, which the US Navy has called “Russia’s excessive maritime claims”. It was the first time a US destroyer has sailed that close to the base of operations for the Russian Pacific Fleet at Peter the Great Bay since the Soviet era in 1987.

  The dispute would likely be more quickly resolved if it weren’t for current tensions between the US and Russia on multiple fronts, as the main question that remains is how the U.S.-Japan security treaty, the core of Japan’s diplomacy, would apply in this case, especially the question of whether Washington would maintain the right to put military bases on the islands.

  

• Paul Craig Roberts Exposes The Myth Of Western Democracy

  Authored by Paul Craig Roberts,

  How does the West get away with its pretense of being an alliance of great democracies in which government is the servant of the people?

  Nowhere in the West, except possibly Hungary and Austria, does government serve the people.

  

  Who do the Western governments serve? Washington serves Israel, the military/security complex, Wall Street, the big banks, and the fossil fuel corporations.

  The entirety of the rest of the West serves Washington.

  Nowhere in the West do the people count. The American working class, betrayed by the Democrats who sent their jobs to Asia, elected Donald Trump and the American people were promptly dismissed by the Democratic candidate Hillary Clinton as “the Trump deplorables.”

  The Democrats, like the Republicans, serve power, not the people.

  In Europe we see the squashing of democracy everywhere.

  British prime minister May has turned Brexit into subservience to the EU. She has betrayed the British people and has not yet been hung off of a lamp post, which shows how acceptance the British people are of betrayal. The British people have learned that they do not count. They are as a nothing.

  The Greeks voted for a leftwing government that promised to protect them from the EU, IMF, and big banks, but promptly sold them out with austerity agreements that destroyed what remained of Greek sovereignty and Greek living standards. Today the EU has reduced Greece to a Third World country.

  The French have been in the streets in revolt for weeks against the French president who serves everyone except the French people.

  There are currently massive protests in Brussels, Belgium, with half the government also resigning in protest against the government signing a pact that will replace the Belgian people with migrants from Africa, the Middle East, and Asia. The corrupt and despicable governments who signed this pact represent foreigners and George Soros’ money, not their own citizens.

  Why are citizens so powerless that their governments can elevate the interest of foreigners far above the interests of citizens?

  There are a number of reasons. The main one is that the people are disarmed and are propagandized to accept violence from the state against them, but not to deliver violence in return against the governments’ illegal use of force against citizens.

  In short, until the conquered peoples of Europe kill the police, who serve the ruling elite and delight in inflicting brutality against those whose taxes pay their salaries, take the weapons from the police, and kill the corrupt politicians who have sold them out, the peoples of Europe will remain a conquered and oppressed peoples.

  Some time past Chris Hedges, one of the remaining real journalists, made it clear that without violent revolution to excise the tumor of government superiority over the people, freedom throughout the West is dead as a door-nail.

  The question before us is whether the Western peoples are too brainwashed, too firmly locked in The Matrix, too exhausted to stand up and defend their freedom. Resistance is happening in France and Belgium, but the government that sold out Greece hasn’t been hung off of lamp posts. Americans are so brainwashed that they think Russia, China, Iran, Syria, North Korea, and Venezuela are their enemies when it is perfectly clear that their Enemy is “their” government in Washington.

  Except for my American readers, Americans are locked in The Matrix. And they will kill in order to stay in The Matrix, where the controlled explanations are reassuring. Anyone who looks to Washington for leadership is an idiot.

  Washington is a master of propaganda. Washington’s propaganda has even infected the Russian government, which from all reports stupidly believes that accommodation to Washington is the secret that will make Russia successful.

  A government this stupid has no chance of survival.

  

• Toronto Home Prices Just Plunged At A Rate Not Seen Since 1996

  A seismic shift is currently underway in the Toronto real estate market which may have finally pricked Canada’s biggest bubble. In October, home prices plunged at the fastest pace in more than two decades, according to new data published by Statistics Canada.

  Statistics Canada’s Price Index for new Toronto homes declined 1.4% in October from a year earlier, the most since September 1996. Across all provinces and territories, home prices increased 0.1%, the slowest pace since 2010, which signals the country’s real estate market has stalled and could reverse into 2020.

  The pace of new home construction crashed by a massive 40.3% in the Greater Toronto Area between October 2017 and October 2018.

  

  Bloomberg describes the turning point in the real estate market as a result of government measures, introduced in 2017 to help cool the city’s red-hot housing market, such as tighter mortgage lending laws.

  “The Bank of Canada also raised its trend-setting interest rate five times between July 2017 and October of this year,” notes Bloomberg.

  “New home prices were advancing at an annual pace of almost 4% late last year before the mortgage rules took effect.”

  Further, the current economic backdrop suggests storm clouds are gathering across the country. Last week, the Canadian 2 and five year bond yields inverted, for the first time since 2007.

  “This is often taken as a signal that investors are more optimistic about short-term prospects versus the long term, suggesting a lack of confidence in continued economic growth. This can also impact bank profitability, as banks pay short-term rates on deposits and take in long-term rates on loans. A flat or inverted yield curve, therefore, could lead to negative net interest margins,” said Steve Saretsky of VancityCondoGuide.

  As Saretsky shows, this can cause bank lending to further tighten, leaving borrowers high and dry when market liquidity is most needed.

  

  While the resulting slowdown from bank lending can be seen in the decline of sales volumes, it is now more noticeably reflecting in home prices. As shown below, Toronto housing sales continued dropping into the lower range of the usual seasonal activity. Inventory has dramatically expanded with listings out-numbering sales by 2.6 times. Rising inventory, declining sales; this market is expected to come under further stress in 2019. 

  

  Toronto’s real estate market is in the midst of a soft landing orchestrated by the government. As the global economy is expected to rapidly slow in 2019, there is a chance the soft landing could turn hard. Storm clouds are here.

  

• Stocks Slide As Xi Speech Disappoints: "China May Face Unimaginable Difficulties"

  There was much anticipation ahead of tonight speech by Chinese President Xi Jinping at the 40th Reforms Anniversary Event.

  

  Hope was high for Xi to highlight potential new reform measures, growth initiatives, and – what the markets want most – moar stimulus.

  He instead offered none of the above, choosing a propaganda-heavy discourse on the Communist Party’s contributions to the success of China.

  

  Main highlights include Xi pointing out that 1978 marked major turning point of far reaching significance and “China’s stability makes it one of the safest nations in the world…” (except if you’re a Canadian businessman)

  China’s had an average +9.5% growth for the past 40 years.

  

  But warned that:

  “China may face unimaginable difficulties ahead”

  The speech was dominated by role of the party in developing modern China

  Says the party has led China on a “soul stirring journey”

  “China has demonstrated the vitality of scientific socialism with indisputable facts.”

  There was no concrete message from Xi’s speech either on the trade friction with the U.S. or growth prospects for 2019.

  “No one is in a position to dictate to the Chinese people what should or should not be done,”

  Xi likens China’s current stage of development to swimming midstream in a river or climbing half way up a mountain:

  “There is no turning back.”

  On reforms, Xi warned:

  “The road of reform and opening are becoming more steep, but we must go forward with conviction, commitment and confidence.”

  On globalization, Xi talked about a “new form of international relations.”

  There should be no “bullying” and there should be respect for different development models.

  China “will never seek hegemony,” Xi says, but we note that China is expanding influence, however, in regions such as the South China Sea, where it has built islands and put military emplacements on them.

  “We will resolutely fight an uphill battle to prevent and defuse major risks, lift people out of poverty, and prevent and control pollution,”

  Xi closed on the same heavy Communist and Marxist evangelism theme, by saying that China is in the process of:

  • Standing up

  • Getting rich

  • Growing strong

  And remember, China is “standing tall and firm in the East.”

  But that was not what the market wanted to hear and investors are disappointed for now as Xi provided no new initiatives…

  

  US Futures are fading also…

  

  And early Yuan gains are leaking away…

  

  And for now, no new measures and the old stimulus measures aren’t working…

  Since June 2018, China has been loosening monetary and fiscal policies in an attempt to refloat the sinking red ponzi amid the shadow banking system’s deflation.

  

  As the following chart from Goldman Sachs shows, it is not working as the Current Activity Indicator continues to slump…

  

  It seems no matter what China throws at it, the economy (or the market) won’t behave as the text-books say it should.

  

• The Empire's Sea Of Woes

  Authored by Robert Gore via StraightLine Logic blog,

  The noose cinches…

  

  Second-rate George H.W. Bush got a first-rate Washington send-off. For one day it interrupted the downtrend in equity markets. It may mark the US apotheosis of inflated grandiosity. Across the Atlantic, Emmanuel Macron, pretentious popinjay of Gallic grandiosity, has gotten a deserved comeuppance. Brexit, Trump’s election, and nationalist uprisings in Southern and Eastern Europe apparently insufficient warning to the globalists who would rule us, the French rioters are sending yet another wake-up call. If that’s not enough, so too are many of the nations outside the Euro-American welfare state asylum.

  The crazies’ kings, queens, and courtiers face a dwindling inheritance and mounting debt, but spend lavishly to keep up appearances. Falling markets and rioting taxpayers are unwelcome reminders that the money’s running out, leaving behind a stack of IOUs that won’t be paid. The aristocracy wants to offload the pain to the peasantry, but the riots demonstrate that the peasantry has other ideas. Our betters also want to blame their sea of woes on Eurasia’s leaders, but Russia, China, Russia, Turkey, and Iran are having none of that. They are, however, delighted to see the West crumbling and will do nothing to stop it.

  Empire is America’s noose, hubris America’s curse. Once upon a time it didn’t matter much to the American people or their politicians what happened in Asia, Africa, the Middle East, or even Europe. During the nineteenth century, for the most part we minded our own business, and what a business it turned out to be. America became the world’s industrial, technological, and commercial powerhouse.

  Success may be the hardest human condition to endure. Few individuals withstand it. For empires, it’s always temporary. They fail and topple from the pinnacle with monotonous regularity. Preceding the fall is that heady feeling of invincibility, just as the those you ignored, scorned, or subjugated on the way up are putting in place their plans to take you down.

  World War II left America and its satrapies at the top of the global heap. They neither recognized that their position was the result of fortuitous circumstances nor that their embrace of income taxes, central banking, welfare and warfare states, and governments’ ever-expanding interference in the lives of their citizens would eventually undercut their preeminence. Not until financial catastrophe, insurrection, and the relative progress of nations outside the empire unmistakably confronts them will they recognize that things have changed.

  Donald Trump, titular leader of the empire, hasn’t gotten the news. He made some encouraging noises during the campaign and early in his administration about taking on corruption and reigning in military commitments, but it’s only been talk. He may yet get a scalp or two from the bungled attempt to depose him, but he hesitated and lost. The incoming Democrat-majority House of Representatives will stymie him at every turn.

  Trump’s foreign and military policy is indistinguishable from the policy of Bush father and son, Clinton husband and wife, Cheney, Obama, and the rest of the neoconservative/neoliberal clown posse who run this country. No kerfuffle is too trivial for the US not to intervene, no hamlet too remote to send the troops and hardware. The only requirements are that the intervention projects power—Washington-speak for forcing somebody to do what they don’t want to do – and funnels money to the connected.

  Trump, Pompeo, Bolton, and the motley menagerie of mendacious mendicants who run the European and Asian divisions of US Empire Inc. might want to ponder the meaning of place names, maps, and their countries’ balance sheets.

  Why is the Persian Gulf called the Persian Gulf, and the South China Sea the South China Sea? Here’s a hint: proximity. The former is next to Persia, the latter China. The difficulties of far-flung interventions are magnified when your naval staging areas are proximate to nations that can put up a fight. Persia, or Iran as it’s now called, would be a lot tougher nut to crack than uncracked nuts Afghanistan, Iraq, Syria, or Libya, no matter how many carriers we park in the Gulf. China is an economic and military superpower. Ludicrously, we’re trying to “contain” it in its own backyard while indulging in policy schizophrenia. Trump talks Let’s Make a Deal, but our northern satrapy arrests an important Chinese executive for not observing our Iranian sanctions.

  Russia throws off no handy nomenclatural clues; you have to know some geography for insight into Imperial idiocy. A glance at the map reveals that the Baltic and Black Seas, and the Sea of Azov are proximate—there’s that word again—to Russia. Ukrainian grifter Petro Poroshenko, who in the rogue’s gallery of dubious US allies ranks right up there with Mohammad bin Salman, decides to tickle the bear. Russia responds and the US talks tough while parking ships and flying jets over what are essentially Russian lakes. Putin is not reported to have lost any sleep.

  If hubris and stupidity don’t fell the Empire, insolvency will. France’s revolt can spread like a California wildfire. The dirty secret of the welfare state is that somebody has to pay for it. France has the highest tax burden in the developed world, but there’s a long list right behind where it is almost as onerous. Especially galling is the largess bestowed on immigrants The horror: taxpayers might get the idea that they—not the state and its wards—own their own lives. Around the globe, the French revolt could inspire those stuck with the tab to do something more drastic than vote for candidates who pledge to cut tax rates a percentage point or two.

  Crashing stock markets and a global recession, or worse, would expand the ranks of the Gilets Jaunes. Crashing bond markets would drive up interest rates for profligate governments and tighten the noose, just as they’re faced with aging populations, unfunded liabilities, shrinking economies, and demonstrations and riots. Any sympathy for the ruling class rather than its victims would be woefully misplaced.

  Meanwhile, the Eurasian powers are building a network of trade, telecommunications, infrastructure, and transport links spanning Halford Mackinder’s center of the world. If successful, such links could lead to unprecedented peace and prosperity in that historically troubled region.

  In America, particularly in Washington, the concept of patriotism has tragically transmuted from pride in one’s country and heritage to: We run the world. SLL has said that the eventual goal of President Trump’s foreign policy is to make peace with multipolarity, leaving superpowers China, Russia, and the US dominant in their geographic spheres of influence (see “Trump’s New World Order” and “The Eagle, the Dragon, and the Bear”). Alas, SLL may be wrong. With Pompeo and Bolton whispering in his ear, it now appears Trump is trying to turn the clock back to The Ugly American 1950s.

  To the consternation of faux patriots like Pompeo and Bolton, the effort is doomed. Hubris won’t generate prosperity, pay debts, keep the disaffected off the streets, or challenge the aspirations of competing global powers. The imperial delusion has felled another empire. Its potentates and subalterns won’t realize it until grasping creditors and deplorable barbarians have stormed the gates. By then, it will be too late to forestall the fate that lurks as their deepest fear.

  

• Investigation Reveals US Sportswear Made In Sweatshop By "Re-educated" Chinese Muslims

  Clothes made by detained Chinese Muslims living in a mass detention camp have been traced to a US sportswear company, according to AP, which tracked “recent, ongoing shipments” from a privately-owned, state-sponsored “internment” sweatshop. 

  

  The Associated Press has tracked recent, ongoing shipments from one such factory — Hetian Taida Apparel — inside an internment camp to Badger Sportswear, a leading supplier in Statesville, North Carolina. Badger’s clothes are sold on college campuses and to sports teams across the country, although there is no way to tell where any particular shirt made in Xinjiang ends up.

  The shipments show how difficult it is to stop products made with forced labor from getting into the global supply chain, even though such imports are illegal in the U.S. Badger CEO John Anton said Sunday that the company would halt shipments while it investigates. –AP

  The CEO of Hetian Taida Apparel, Wu Hongbo, confirmed the existence of a factory inside of a re-education compound – one of many across China where some 1 million Muslims, known as Uighurs, are estimated to live in detention where they are forced to give up their language and religion as they are politically indoctrinated. 

  

  “We’re making our contribution to eradicating poverty,” Wu told the AP via phone. 

  A Chinese Foreign Ministry spokeswoman, Hua Chunying, pushed back against the “many untrue reports” about the reeducation camps, though she did not elaborate. 

  “Those reports are completely based on hearsay evidence or made out of thin air,” Chunying added. 

  A dozen people AP interviewed who had either been in a camp or had friends or family in one beg to differ – telling the news agency that detainees are given no choice but to work at the factories. 

  Most of the Uighurs and Kazakhs, who were interviewed in exile, also said that even people with professional jobs were retrained to do menial work.

  Payment varied according to the factory. Some got paid nothing, while others earned up to several hundred dollars a month, they said — barely above minimum wage for the poorer parts of Xinjiang. A person with firsthand knowledge of the situation in one county estimated that more than 10,000 detainees — or 10 to 20 percent of the internment population there — are working in factories, with some earning just a tenth of what they used to earn before. The person declined to be named out of fear of retribution.

  Former Xinjiang TV reporter currently living in exile said that during his month-long detention he saw young people who were taken away in the mornings for work in carpentry and at a cement factory without pay. 

  “The camp didn’t pay any money, not a single cent,” said the man, only identified as Elyar due to fear of retaliation against his relatives still living in Xinjiang. “Even for necessities, such as things to shower with or sleep at night, they would call our families outside to get them to pay for it.”

  A Washington DC based Uighur, Rushan Abbas, said that her sister, Dr. Gulshan Abbas, is currently detained at a camp after being taken to what the Chinese government calls a “vocational center.” 

  “American companies importing from those places should know those products are made by people being treated like slaves,” said Rushan. “What are they going to do, train a doctor to be a seamstress?”

  Mainur Medetbek’s husband did odd repair jobs before vanishing into a camp in February during a visit to China from their home in Kazakhstan. She has been able to glean a sense of his conditions from monitored exchanges with relatives and from the husband of a woman in the same camp. He works in an apparel factory and is allowed to leave and spend the night with relatives every other Saturday.

  Though Medetbek is uncertain how much her husband makes, the woman in his camp earns 600 yuan (about $87) a month, less than half the local minimum wage and far less than what Medetbek’s husband used to earn.

  “They say it’s a factory, but it’s an excuse for detention. They don’t have freedom, there’s no time for him to talk with me,” she said. “They say they found a job for him. I think it’s a concentration camp.” –AP

  Congressman Chris Smith (R-NJ) who sits on the House Foreign Relations Committee called on the Trump administration Monday to formally ban products imported from Chinese companies linked to detention camps. 

  “Not only is the Chinese government detaining over a million Uyghurs and other Muslims, forcing them to revoke their faith and profess loyalty to the Communist Party, they are now profiting from their labor,” said Smith. “U.S. consumers should not be buying and U.S. businesses should not importing goods made in modern-day concentration camps.”

  

• The World Google Controls And Surveillance Capitalism

  Authored by Julian Vigo via Counterpunch.org,

  I have been following the scandal of the UK’s Investigatory Powers Act(also known as the Snoopers’ Charter) and Holland’s Sleepwet and their relationship to the encroaching government powers over private data, privacy, data collection, surveillance, and free speech for several years now.  And very much related to these bills created ostensibly to protest us from “terrorism,” is Google’s encroaching powers over our lives, to include the freedom of expression protected by most national laws, not to mention EU and UN Charters, around the planet today.

  

  When the Internet became a tool for communication and research in the late 1980s (usually through universities and research institutes) and later rendered public through commercial Internet service providers (ISPs) in 1991, most people were slow to catch on. Initially, I was inculcated into Internet culture by virtue of being a graduate student at New York University where I came to depend on their computer labs to churn out papers when not using friends’ computers. I still remember Archie, Telnet, and line mode browsers before the release of ViolaWWW.  By the mid 1990s students were curious about hypertext through Memex and Xanada while many others made their personal webpage which they would write in html with the help of on- or off-line instructions.  The concept of a free website builder had not yet emerged and everything was very much ad hoc, individuals figuring out how to fiddle with html as if a late 20th century Mini Cooper under whose hood the user would play around.  And yes, the flashing bright lights that every webpage seemed to embrace as if a will to trigger everyone visiting their page an epileptic seizure.

  These were the golden days of the Internet when anything was acceptable to include the esthetically challenging, old school graphics, and the simple layout with repeating background images that defies any description. These were the days that websites were entirely about content such that if you want to read up on the Klingon Language Institute, presentation was tertiary, if even a concern at all.

  Even by the mid 1990s most businesses had not caught onto the potential of the Internet for marketing, public relations, and advertising.  The finances needed for publicity were still largely functioning through traditional modalities and when companies did not think that people would be using the Internet for commerce, much less research.

  In 1995, when the NSF (National Science Foundation) began charging a fee for registering domain names there were only 120,000 registered domain names. By 1998, this number rose to over 3 million. And while Amazon started in 1994, the birth of eBay the year later kicked off e-commerce definitively.  Still most businesses did not actively incorporate the Internet into their structures and the cost of building a website was not even an afterthought for most given the Internet on a shoestring approach that many of us ran with. I was working on my PhD at this time and finding that my ability to learn languages was directly applicable to computer languages where I was able to volunteer for friends and even carve out a living writing web pages and making early e-commerce sites for friends.  Web designers in Manhattan were quickly becoming desirable and well paid as we rolled towards the new millennium with more and more businesses and individuals realizing the potential of the Internet.

  The thing is until 2000, the Internet existed for most people as this virtual encyclopedia, news reference, information center to check out cinema times. There were even early prototypes of Skype and messenger like ICQ where peer-to-peer communications were viewed as a novelty. I had my first Internet conversation from my apartment in Park Slope to a man living at the foot of Mount Kilimanjaro. The Internet was an information highway, unregulated, and quite flexible considering kinds of technology it was slowly replacing.  

  Privacyschmivacy, right?

  However, since 9/11 specifically and more recently around a series of culture wars, we are seeing how governments around the planet from the beginning of the new millennium had locked up ship and set out various legal initiatives that make it possible for governments to spy on its citizens. The US can be credited with fomenting such legislation that claims to do one thing (secure the “homeland”) while in reality, doing something quite different. So 45 days after 9/11 the Patriot Act, a vile piece of legislation that resulted in the disappearance of over 14,000 Muslim men within the United States, was born.  The residual force of the Patriot Act lay in the fact that this law made it easier for the US government to spy on its citizens with the government issuing National Security Letters (NSLs) without the need for a judge to sign off. The Patriot Act gave a new twist to McCarthyism since it put the power of the law into the hands of 43,000 law enforcement agents who had access to phone records collected through the NSLs. While most people today are aware of the importance of Edward Snowden’s and Julian Assange’s efforts to challenge the US government’s illegal acts of espionage on its own citizenry and illegal acts of violence, what many do not remember is how the Global War on Terror (GWOT) instigated much of the laws which rolled out enormous powers to Homeland Security, which decimated in the INS (Immigration and Naturalization Service) and put immigration in the same bracket as terrorology.

  From the US to the EU, one thing has become painfully clear to me in recent months: free speech, the freedom of conscience, and privacy are all under threat by big tech companies like Facebook, Twitter, and Google. In fact, these companies are far more the enemy of the people than the NSA (National Security Agency) or GCHQ, the UK’s Government Communications Headquarters. And Snowden has said as much referring to how he and his colleagues in the NSA were at the very least subject to some degree of democratic oversight while companies like Google and Facebook, as we saw recently with Zuckerberg’s testimony to Congress this past Spring, maintain a business model which perfectly combines capitalism with surveillance and it is all perfectly unregulated.

  In 2014, John Bellamy Foster and Robert W. McChesney introduced the term “surveillance capitalism” in Monthly Review, an independent socialist magazine where they explain its inception from the post-war architecture which combined the vehicle of sales framed within a Madison Avenue centralized corporate marketing revolution together with the creation of a permanent state of war headed by the Pentagon where the Cold War was buttressed by arms and fictional nuclear preparedness on the one hand, and the shop ‘til you drop on the other. The military-industrial complex and the marketing of society, according to Foster and McChesney, constituted the two principle surplus-absorption mechanisms until the financial crisis of the 1970s when a third vector of surplus-absorption was added: that of financialization which supplemented the system as the previous two mechanisms waned:

  Each of these means of surplus absorption were to add impetus in different ways to the communications revolution, associated with the development of computers, digital technology, and the Internet. Each necessitated new forms of surveillance and control. The result was a universalization of surveillance, associated with all three areas of: (1) militarism/imperialism/security; (2) corporate-based marketing and the media system; and (3) the world of finance.

  It is hard to do such a brilliant article justice, but suffice it to say that Foster and McChesney give an excellent history of how the hunt for Edward Snowden was not news. They chronicle a long history dating back to the “Army Files” (also known as CONUS) scandal where the Army had been spying on and keeping files on over seven million U.S. citizens through the use of over 1,500 plainclothes agents.  It was because of the CONUS scandal that Americans came to know of ARPANET, the precursor to today’s Internet where these secret files of Americans were kept and where the “limitless storage of data” proved a threat to healthy democracy.   

  Surveillance capitalism is now part of our everyday where even the follow-up quality control questionnaires and all the privacy tick boxes we are asked to tick form part of a larger private sector databank of information. The problem is that most people think that such information is “harmless” and that it is of little consequence to their safety or privacy. But surveillance capitalism, as Foster and McChesney show us, surveillance capitalism could go much further than any government surveillance:

  Like advertising and national security, it had an insatiable need for data. Its profitable expansion relied heavily on the securitization of household mortgages; a vast extension of credit-card usage; and the growth of health insurance and pension funds, student loans, and other elements of personal finance. Every aspect of household income, spending, and credit was incorporated into massive data banks and evaluated in terms of markets and risk. Between 1982 and 1990 the average debt load of individuals in the United States increased by 30 percent and with it the commercial penetration into personal lives.

  So now with the government having the private sector doing its bidding in terms of farming information of its “client base,” business was not making a killing but private individuals were going further into debt while losing their freedom of privacy. Conterminous to individuals being stripped of their democratic freedom of privacy came the removal of the freedom of speech, recently cemented by the recent “redrafting” of NAFTA whereby major corporations like Google, Facebook and Twitter were positioned to be the main benefactors of what is now called  United States-Mexico-Canada Agreement (USMCA):

  These big tech companies have been trying to reinvoke their immunity as previously held under Section 230 of the Communication Decency Act through NAFTA (North American Free Trade Agreement) renegotiations. And last month they were successful as NAFTA’s substitute, the United States-Mexico-Canada Agreement(USMCA), will now extend the immunity Congress had earlier provided with Section 230 of the Communications Decency Act of 1996 (CDA) into neighboring North American countries. Not only is this is a gift to the tech industry, but it is a complete paradox. The tech industry lobbied heavily to get back Section 230 immunity by invoking “free expression” for its users while conterminously taking on the policing free speech on its platforms. In short, big tech’s request for absolute immunity, in light of its use of Section 230 to justify political bias and censorship, reveals a troubling present for free speech on the net.

  Over the past year there has been an unprecedented amount of thought policing on social media by Facebook and Twitter where now there are rules that penalize users for “fake news” and other thought crimes while Facebook and Twitter have closed down hundreds of political media pages just before November’s midterm elections.  Censorship is now commonplace on these platforms just as Google is once again facing a fresh wave of criticism from human rights groups over its plan to launch a censored search engine in China, a project called Dragonfly. In an eery twist to the democratization of Information that was once predicted in the early 1990s with the public launch of the Internet, we are now seeing how information, in the wrong hands, is not only not progressive, but is proving to be quite dangerous.

  

  The masses of people playing Candy Crush and using Viber on their mobiles are overwhelmingly unaware of their participation in data mining how their participation poses a danger to a healthy democracy.

  We need to stay informed about the encroachment of big business and social media corporations in our private lives and the depths to which the private sector can farm information. In the end, who controls this information and how it is employed is another and far grimmer question that we must ask, even at the risk of uncovering terrifying and inexorable truths.

  

• New York Subway Facing "Death Spiral" Without $40 Billion Upgrade

  As the Metropolitan Transportation Authority, the state-controlled agency responsible for operating the New York City subway and its buses, prepares to shutter a heavily used subway line that connects Northern Brooklyn with Lower Manhattan so that it can undergo necessary maintenance to repair some of the lingering damage from Hurricane Sandy, the recently appointed head of the agency has warned that NYC and New York State are facing a stark choice: Either invest $40 billion in the subway for badly needed upgrades and improvements, or allow one of the world’s most heavily used mass transit systems to sink into a “death spiral,” according to Bloomberg.

  

  NYC Transit Authority President Andy Byford – who was credited with turning around Toronto’s mass transit system before heading to New York – has been telling anybody who will listen (subway riders, taxpayers, business executives and the city council, the name a few) that these upgrades are needed asap. And if Albany won’t allocate the money, the City must do something.

  “You don’t get the billions you need by just going to Albany with a begging bowl,” Byford, recruited a year ago to run New York City Transit, told executives at a Crain’s Magazine breakfast this month.

  As anybody who relies on the subway, or regularly reads the New York Times Metro Section, is probably aware, the subway has been struggling with acute signs of distress – typified by rapidly worsening service – that have intensified in the aftermath of Hurricane Sandy. So, why is Byford issuing this warning now?

  Well, after months of being stonewalled by the city, Byford is hoping to capitalize on a new power dynamic in Albany after Democrats won control of the State Assembly, creating a state of unified rule in Albany. The subway could be struggling with a nearly $1 billion operating deficit by 2022, which is clearly unsustainable.

  Already, credit ratings agencies like Moody’s have downgraded their outlook on the MTA’s bonds.

  Voters in November flipped control of the state Senate, putting Democrats in charge of both houses of the Legislature and increasing the chances of approving transit funding. Many support Democratic Governor Andrew Cuomo’s plan to charge motorists “congestion pricing” fees to enter Manhattan’s business core.

  Still, the MTA – which controls the subways and buses along with commuter trains and some bridges and tunnels – faces a $991 million deficit looming in 2022 and political arguments over who will pay to close it and how.

  On Dec. 13, Moody’s Investors Service revised its credit-rating outlook on the MTA to negative from stable, noting how deteriorating service has produced lower-than-expected revenue as subway and bus ridership declined. That situation could worsen if fares go up, as the MTA board prepares to vote on a 4 percent increase in January.

  Gov. Cuomo is planning to institute “congestion pricing” for cars entering Manhattan’s busiest areas – a plan he hopes will reduce traffic and bolster revenues for the subway. But while any additional money will help, the funds raised by this new tax are expected to merely offset debt service and some operating costs. Meanwhile, investors are becoming increasingly wary.

  “This is going to be a real test year,” said Howard Cure, director of municipal bond research for Evercore Wealth Management, who said he’s become more selective in considering MTA bonds. “Will they get enough revenue? Will they lower their really high construction costs? Will they be able to stop the loss of riders, reducing breakdowns and delays?”

  But with no obvious source to cover the funding shortfall – and the MTA board preparing to vote on a 4% rate hike in January even as the quality of service clearly declines, something that will almost certainly outrage riders – Byford is quickly realizing that there may be no way out of this crisis.

  “I don’t know of any business model where people can charge more money for worse service,” Shameek Robinson of Harlem told Byford during a Dec. 10 gathering in Manhattan.

  Budget analysts say without the fare increase, the agency would face a $1.6 billion operating deficit by 2022. Debt service is already projected to increase 26 percent to $3.3 billion by 2022, consuming 37 percent of fare and toll revenue, state Comptroller Thomas DiNapoli reported in October.

  The fare and toll hikes, and most of Cuomo’s “congestion pricing” plan, would merely help to pay annual expenses. While Mayor Bill de Blasio has dropped his opposition to the concept, he still has questions about its details, and some suburban lawmakers have objected to their constituents being asked to pay more.

  And as NYC becomes less hospitable to commuters, expect the crumbling subway to add one more source of downward pressure on already shaky rents and real-estate valuations.

  

• Twenty-One Thoughts On The Persecution Of Julian Assange

  Authored by Caitlin Johnstone,

  1. I write a lot about the plight of Julian Assange for the same reason I write a lot about the Iraq invasion: his persecution, when sincerely examined, exposes undeniable proof that we are ruled by a transnational power establishment which is immoral and dishonest to its core.

  

  2. Assange started a leak outlet on the premise that corrupt and unaccountable power is a problem in our world, and that the problem can be fought with the light of truth. Corrupt and unaccountable power has responded by detaining, silencing and smearing him. The persecution of Assange has proved his thesis about the world absolutely correct.

  3. Anyone who offends the US-centralized empire will find themselves subject to a trial by media, and the media are owned by the same plutocratic class which owns the empire. To believe what mass media news outlets tell you about those who stand up to imperial power is to ignore reality.

  4. Corrupt and unaccountable power uses its political and media influence to smear Assange because, as far as the interests of corrupt and unaccountable power are concerned, killing his reputation is as good as killing him. If everyone can be paced into viewing him with hatred and revulsion, they’ll be far less likely to take WikiLeaks publications seriously, and they’ll be far more likely to consent to Assange’s silencing and imprisonment. Someone can be speaking 100 percent truth to you, but if you’re suspicious of him you won’t believe anything he’s saying. If they can manufacture that suspicion with total or near-total credence, then as far as our rulers are concerned it’s as good as putting a bullet in his head.

  5. The fact that the mass media can keep saying day after day “Hey, you know that bloke at the embassy who shares embarrassing truths about very powerful people? He’s a stinky Nazi rapist Russian spy who mistreats his cat” without raising suspicion shows you how propagandized the public already is. A normal worldview unmolested by corrupt narrative control would see someone who circulates inconvenient facts about the powerful being called pretty much all the worst things in the world and know immediately that that person is being lied about by those in power.

  6. Relentless smear campaigns against Assange have given the unelected power establishment the ability to publicly make an example of a journalist who published uncomfortable truths without provoking the wrath of the masses. It’s a town square flogging that the crowd has been manipulated into cheering for. Narrative control has enabled them to have their cake and eat it too: they get to act like medieval lords and inflict draconian punishment against a speaker of undeniable facts and leave his head on a spike in the town square as a warning to other would-be truth tellers, and have the public believe that such a bizarre violation of modern human rights is perfectly fine and acceptable.

  7. There are people who worked really hard to get journalism degrees, toiled long hours to earn the esteemed privilege of appearing on the front pages of a major publication, only to find themselves writing articles with headlines like “Julian Assange is a stinky, stinky stink man.”

  8. Ordinary citizens often find themselves eager to believe the smear campaigns against Assange because it is easier than believing that their government would participate in the deliberate silencing and imprisoning of a journalist for publishing facts.

  9. And yes, Julian Assange is most certainly a journalist. Publishing important information about what’s going on in the world so the public can inform themselves is precisely the thing that journalism is. There is no conventional definition of journalism which differs from this. Anyone who says Assange is not a journalist is telling a lie that they may or may not actually believe in order to justify his persecution and their support for it.

  10. Another reason people can find themselves eager to believe smears about Assange is that the raw facts revealed by WikiLeaks publications punch giant holes in the stories about the kind of world, nation and society that most people have been taught to believe they live in since school age. These kinds of beliefs are interwoven with people’s entire egoic structures, with their sense of self and who they are as a person, so narratives which threaten to tear them apart can feel the same as a personal attack. This is why you’ll hear ordinary citizens talking about Assange as though he attacked them personally; all he did was publish facts about the powerful, but since those facts conflict with tightly held identity constructs, the cognitive dissonance that was caused to them can be interpreted as feeling like he’d slapped them in the face.

  11. We live in a reality where unfathomably powerful world-dominating government agencies are scrutinized and criticized far, far less than a guy trapped in an embassy who published inconvenient facts about those agencies.

  12. Assange disrupts establishment narratives even in his persecution. Liberal establishment loyalists in America still haven’t found a rational answer to criticisms that in supporting Assange’s criminal prosecution they are supporting a Trump administration agenda. You now have the same people who’ve been screaming that Trump is Hitler and that he’s attacking the free press cheering for the possibility of that same administration imprisoning a journalist for publishing facts.

  13. The precedent that would be set by the US prosecuting a foreign journalist for merely publishing factual information would constitute a greater leap in the direction of Orwellian dystopia than the Patriot Act, for America and for the entire world.

  14. The billionaire media has invalidated itself with its refusal to defend Assange. They know the precedent set by his prosecution for WikiLeaks publications would kill the ability of the press to hold power to account, but they don’t care because they know they never do that. For all their crying about Jamal Khashoggi and Jim Acosta’s hurt feelings, they do not actually care about journalism or “the free press” in any meaningful way.

  15. Whenever I see a blue checkmark account on Twitter bashing Assange I mentally translate whatever they’re saying into “There is nothing I won’t do to advance my career in corporate media. If you’re in a position to promote me I will literally get down on my knees right this very second and let you do whatever you want to my body.”

  16. I sometimes feel like I respect professional propagandists who smear Assange more than I respect ordinary citizens who go around smearing him for free. What do these people think they’ll get as a reward for their work as pro bono CIA propagandists? A gold star from Big Brother? They’re like slaves who beat and betray other slaves that fall out of line in order to win favor with the master, except they’re not even achieving that. The professional manipulators are at least cheering for their own class to continue to have its leadership’s interests advanced; ordinary people who do it are cheering for their own oppression.

  17. Even lower in my view are the self-proclaimed leftists and anarchists who view themselves as oppositional to the establishment but still help advance this smear campaign. It is impossible to attack Assange without supporting the Orwellian empire which is persecuting him. I don’t care what mental gymnastics you’re doing to justify your pathetic cronyism; what you are doing benefits the most powerful and depraved people on this planet.

  18. Anyone who participates in the ongoing smear campaign against Assange and Wikileaks is basically just saying “Extremely powerful people should be able to lie to us without any difficulty or opposition at all.”

  19. Everyone should always be extremely suspicious of anyone who defends the powerful from the less powerful. It’s amazing that this isn’t more obvious to more people.

  20. Contrary to the narratives promoted by establishment smear merchants, Julian Assange is not hiding from justice in the Ecuadorian embassy. He is hiding from injustice. Everyone who knows anything about the US government’s prosecution of leakers and whistleblowers knows he has no shot at a fair trial, and would face brutal mistreatment at the hands of the same regime which tortured Chelsea Manning.

  21. The persecution of Assange is essentially a question that mankind is asking itself: do we want to (A) continue down the path of omnicidal, ecocidal Orwellian dystopia, or do we want to (B) pull up and away from that trajectory and shrug off the oppressive power establishment which is driving us toward either total extinction or total enslavement? So far, A is the answer we’ve been giving ourselves to that question. But, as long as we switch before it’s too late, we can always change our answer.

  *  *  *

  That was fun. So, 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 articles are entirely reader-supported, so if you enjoyed this piece please consider sharing it around, liking me on Facebook, following my antics on Twitter, throwing some money into my hat on Patreon or Paypal, purchasing some of my sweet new merchandise, buying my new book Rogue Nation: Psychonautical Adventures With Caitlin Johnstone, or my previous book Woke: A Field Guide for Utopia Preppers.

  Bitcoin donations:1Ac7PCQXoQoLA9Sh8fhAgiU3PHA2EX5Zm2

  

Digest powered by RSS Digest

• Visualizing The West's Domination Of The Global Arms Market

  Overall, arms sales increased in 2017, with total global sales nearing 400 billion dollars, marking a 2.5 percent increase from last year and the third year of continued growth for the industry.

  But, as Statista’s Sarah Feldman points out, U.S. arms companies still produce the most weapons worldwide.

  

  You will find more infographics at Statista

  About 57 percent of weapons produced last year came from the United States, according to the Stockholm Peace Research Institute SIPRI.

  Russia comes in second, with year-over-year growth in arms production. In 2017, Russia provided the world with 10 percent of arms sales, closely followed by The UK.

  Only major arms companies were included in this study. China was excluded due to insufficient data.

  

• Signs Of Coming Collapse: Citizens Worldwide Revolt Against Taxation & Illegal Aliens

  Authored by Jeremiah Johnson (nom de plume of a retired Green Beret of the United States Army Special Forces) via SHTFplan.com,

  There are many serious issues to address, relevant to current events. Just to skim some of what has happened most recently, the Dow Jones (although a “lagging” indicator) has been extremely volatile within the past month, appearing to be headed toward a loss for the year overall. Spending is down, and the “bubble” of pseudo-consumer confidence prior to Thanksgiving seems to have dissipated.

  

  The main focus: the unrest that is swiftly crossing national borders has a common denominator in France, and now in Belgium and the Netherlands. That common denominator is that of the populace being fed up with the amount of taxation, coupled with the politicos pushing illegal Muslim aliens into nations that have been predominantly Christian for almost a thousand years.

  In countries such as Germany, Sweden, and Norway (whose ancestors were not known for playing “softball,” i.e. the Saxons and Vikings, respectively) we have been witness to rapes and beatings perpetrated by Muslim illegal aliens with the governments either looking the other way or encouraging it. Soros and those of his ilk in the EU have been pushing this “forced integration” of an invasion of illegals with a huge ethnic and religious gap between them and the host nations.

  The controllers (oligarchs and politicos) are pushing these (numerically speaking) armies of aliens into previously stable nations…for several express purposes:

  1. The denigration of the nations’ borders, language, religion, family structure, and culture

  2. To reduce the nations’ original populace to a state of abandoning their nationalities and nationalism

  3. To place these aliens into a position where they will weaken the economies of the nations (by being forced onto the dole) and also utilizing their numbers for support when it comes time to “vote” in these nations.

  We have been witnessing an internal conquest fomented upon each of these European nations more effective than any invasion with military resources. The controllers are “injecting” these aliens into the populations and allowing their destructive natures and habits (completely at odds with the host nation) to destroy those countries….from within.

  On December 7, 2018, Zero Hedge published a piece entitled Viral Video Of French Students Lined Up Execution-Style Sparks Outrage; Protesters Want Macron’s “Scalp” that really bears looking at. The cops there are way out of hand. The most interesting part of the article, however, may be the interview that was conducted with a Parisian cab driver, and his stance in that interview summarizes the rage and betrayal felt by the French people. Here’s a piece of it for you, and the article highlighted some words in the excerpt…and I’m leaving them that way, as they are worth reading and keeping in mind:

  One angry Paris taxi driver called for Macron’s “scalp” in a half-hour monologue, according to Bloomberg.

  “We’re going out there to fight,” he said, adding: “I want Macron’s scalp, I’m not afraid of anything. I have nothing to lose. You have to risk your life or you don’t get anything from these people.”

  And why does the cab driver feel this way about Macron? Read this other part, showing it is not “blind rage” for no reason:

  For people like the taxi driver, there’s no limit when it comes to removing the youngest French leader since Napoleon who, as the country’s economy minister between 2014 and 2016, deregulated the taxi business and was a strong supporter of car-booking apps.

  “He ruined us, he broke our business,” the taxi driver said. “He wants everything new, digital, the new world, and he did it all without thinking of the cost for us. Replace everyone, have everything young, new? Yeah, well that’s not how you do things. Now it’s payback time.”

  Reminds me of Jesse Ventura’s words in the movie “Predator,” but you see the point: after they push you into a corner, you have to come out swinging. We are facing a similar situation in this country. The President has been holding his own, and it appears with the Mueller witch hunt and the Democrat Party gathering torches and pitchforks, the offensive is going to take a new direction. In January, the House (now Democrat-controlled) is back in control of defense expenditures, and that is going to place actions that the President is taking (troops on the border to halt the illegal alien “caravan of love,” and to build a wall) in danger of being halted and/or defunded.

  Another article came out on December 3, 2018, entitled German biker gangs are standing up for their country’s women by beating the hell out of the Muslim ‘refugees’ in the[ir] midst who keep assaulting them, by ludinfo24.com.

  Here is an excerpt:

  Days after the sexual assaults on German women in Cologne city came to light, local gangs are uniting in a “manhunt” of foreigners.  And just this weekend, two Pakistanis and a Syrian man were injured in attacks by gangs of people in Cologne, German police said. On New Year’s Eve, Cologne was the scene of dozens of assaults on women, a number that has grown into hundreds as more and women have come forward to register complaints. Local newspaper Express reported that the attackers were members of rocker and hooligan gangs who via Facebook arranged to meet in downtown Cologne to start a “manhunt” of foreigners.

  You can plainly see the fawning media over there is no different than ours…as it labeled the bikers as “members of rocker and hooligan gangs.” Hooligans, eh? So, if they are “hooligans” for stepping up to the plate and defending their women, then what are the Polizei for permitting these crimes to occur against the women?

  What they are: conspirators, who are complicit with the crimes committed by the controlling politico-oligarchy…the crimes of not protecting the German citizens from these Muslim invaders. Here’s the picture posted by ludinfo24.com with the article:

  

  Look closely at the photograph. These guys are (even with the masks you can see it) pretty clean cut, dressed cleanly and normally…and they’re not “soy boys” by any stretch of the imagination. The prediction? German bikers 1, Arabs 0, plain and simple….and as it should be. It is a beautiful thing to see them stand up for their women…since their rights have been flushed into the toilet, or swept under a prayer rug or magic carpet.

  When law enforcement fails to enforce the law and protect citizens from illegal aliens…then it is no longer law enforcement….it is an armed tyrannical enforcer of a dictatorship….voted into office legally, but pursuing actions that are not approved by the populace. Just as Marbury vs. Madison pointed out under our system, if something is onerous to the Constitution, then it is not to be considered lawful in any way, shape, or form. That also includes [mis]representatives who circumvent the will of the people by using the power of their position.

  They were elected legally, but to represent the will of the people, not to accomplish the “fundamental transformations” of countries in stark contradiction to their constitutions, charters, and laws, and to the detriment and/or physical harm of their citizenry.

  In previous articles I outlined 3 measures the globalists will take to collapse the systems and usher in a totalitarian global government (in order): A pandemic (fostered or artificially-created), an EMP event, or a Nuclear war.

  You are seeing the final methods being used as a precursor to those three actions: the collapsing of the economies, the inculcation of the complete surveillance state, and the dissolution of the nations through internal subterfuge as has been outlined within this article.

  One of the advantages that the European nations have in dealing with confronting their governments is ethnic homogeneity. This leads to a single-minded purpose, in which they will not settle for anything less than the capitulation of the government, and at a bare minimum, forcing the resignation of the leadership. Look at Merkel: not going to run for office again. Now look at Macron, one step from being shown the door by the angry mobs. They called out almost 90,000 police to deal with these riots in France, only to find that a great number of the police are siding with the populace!

  Look at what is happening in the United States. Look at the crimes ranging from rape to murder that are being inflicted upon American citizens who live on our southern borders. Hungary has set up barbed wire and machine gun positions to keep out the illegals. We, on the other hand, send the National Guard…to do what? Play “Yahtzee” or “Scrabble” with the illegals? Best 3 out of 5 wins?

  It is an invasion, plain and simple. The controllers originally intended for the U.S. to be where South Africa is now…with the reins of power taken away from white South Africans…and soon for them to be completely vilified and driven off of their land…and worse. It hasn’t happened that way here yet, but they have been pushing the destruction of the country through forced “immigration” for decades. Remember that President Reagan gave amnesty to a million illegals. Such actions are not monopolized by the Democrats and Obama. The former President they just buried was the one who created NAFTA….Clinton merely signed it into law.

  In order for a nation to continue, it needs to maintain all of the elements that made it a nation. Those elements can be found within the borders, language, religions, and culture of its people. When the laws that are made within a nation to protect its citizens and maintain it are flagrantly disobeyed or circumvented by its politicians, courts, and legislators, it is time for that nation to return to the grass roots and exercise their rights. Just because a government is of and by the people doesn’t mean that it is “for” the people.

  The instabilities we are seeing are a precursor of things to come, and the Parisian cab driver was correct… in order to change an evil, sometimes you have to be willing to risk everything you have. Let’s close with a quote from our recently-departed former President, George H.W. Bush that may stem the flow of the single tear coursing down the cheek in mourning:

  “Sarah, if the American people ever find out what we have done, they would chase us down the street and lynch us.” – President George H.W. Bush to Sarah McLendon, Journalist, in 1992 Press Corps Interview, when he was asked about Iraq-gate and Iran Contra              

  

• Ukraine's President Says "High" Threat Of Russian Invasion, Urges NATO Entry In Next 5 Years

  Perhaps still seeking to justify imposing martial law over broad swathes of his country, and attempting to keep international pressure and media focus on a narrative of “Russian aggression,” Ukrainian President Petro Poroshenko denounced what he called the high “threat of Russian invasion” during a press conference on Sunday, according to Bloomberg. 

  Though what some analysts expected would be a rapid flair up of tit-for-tat incidents following the late November Kerch Strait seizure of three Ukrainian vessels and their crew by the Russian Navy has gone somewhat quiet, with no further major incident to follow, Poroshenko has continued to signal to the West that Russia could invade at any moment. 

  

  “The lion’s share of Russian troops remain” along the Russian border with Ukraine, Poroshenko told journalists at a press conference in the capital, Kiev. “Unfortunately, less than 10 percent were withdrawn,” he said, and added: “As of now, the threat of Russian troops invading remains. We have to be ready for this, we won’t allow a repeat of 2014.”

  Poroshenko, who declared martial law on Nov. 26, citing at the time possible imminent “full-scale war with Russia” and Russian tank and troop build-up, on Sunday noted that he will end martial law on Dec. 26 and the temporarily suspended presidential campaign will kick off should there be no Russian invasion. He also previously banned all Russian males ages 16-60 from entering Ukraine as part of implementation of 30 days of martial law over ten provinces, though it’s unclear if this policy will be rescinded. 

  During his remarks, the Ukrainian president said his country should push to join NATO and the EU within the next five years, per Bloomberg:

  While declining to announce whether he will seek a second term in the office, Poroshenko said that Ukraine should achieve peace, overcome the consequences of its economic crisis and to meet criteria to join the EU and the North Atlantic Treaty Organization during next five years.

  But concerning both his retaining power and his ongoing “threat exaggeration” — there’s even widespread domestic acknowledgement that the two are clearly linked.

  According to The Globe and Mail:

  While Mr. Poroshenko’s domestic rivals accuse him of exaggerating the threat in order to boost his own flagging political fortunes — polls suggest Mr. Poroshenko is on track to lose his job in a March election — military experts say there are reasons to take the Ukrainian president’s warning seriously.

  As we observed previously, while European officials have urged both sides to exercise restraint, the incident shows just how easily Russia and the West could be drawn into a military conflict over Ukraine.

  Certainly Poroshenko’s words appear designed to telegraph just such an outcome, which would keep him in power as a war-time president, hasten more and massive western military support and aid, and quicken his country’s entry into NATO — the latter which is already treating Ukraine as a de facto strategic outpost. 

  

• Soviet Dissidents, America's Academia, & The Weaponization Of Psychiatry

  Authored by Mark Hendrickson via The Mises Institute,

  The New York Times obituary opened with a simple recitation of facts:

  “Zhores A. Medvedev, the Soviet biologist, writer and dissident who was declared insane, confined to a mental institution and stripped of his citizenship in the 1970s after attacking a Stalinist pseudoscience, died … in London.”

  Zhores Medvedev, his twin brother Roy (still alive at 93), the physicist Andrei Sakharov, and the Nobel Prize-winning novelist Aleksandr Solzhenitsyn were leading dissidents. They courageously put their lives on the line to smuggle manuscripts out of the Soviet Union. They wanted the wider world to learn the truth about the “the workers’ paradise” that so many Western intellectuals (some deluded, others having gone over to the dark side) praised.

  

  A generation of Americans has been born since the Soviet Union, the USSR that President Ronald Reagan boldly labeled “the evil empire,” ceased to exist.

  They have little to no concept of how ferociously the USSR’s communist tyranny suppressed dissent. As the Times obit of Dr. Medvedev illustrates, one Soviet technique of oppression was to declare that political dissidents were insane. They were then incarcerated in psychiatric hospitals where they were tormented and tortured. Some were used as human guinea pigs for dangerous experiments. (Shades of Hitler’s buddy, Dr. Mengele.) Some even succumbed to the not-so-tender ministrations of those “hospitals.”

  I recall one particular example of the disgusting abuse of human beings in Soviet psychiatric hospitals. Vladimir Bukovsky, who will turn 76 later this month, spent a dozen years being shuffled between Soviet jails, labor camps, and psychiatric hospitals. One of the “therapies” administered in a psychiatric hospital was putting a cord into Bukovsky’s mouth, then threading it from his throat up through his nasal passages, and then drawing it out through one of his nostrils. (Maybe the cord went in the opposite direction; I’ve never been interested in memorizing torture techniques.) Alas, this communist “treatment” did not “cure” Bukovsky of his rational (NOT irrational) abhorrence of tyranny and brutality.

  The warped thought process that led to the perversion and weaponization of psychiatry in the Soviet Union can be traced back to communist icon and thought leader Karl Marx. Marx propounded a spurious doctrine known as “polylogism” to justify stifling dissent. According to Marx, different classes of people had different structures in their minds. Thus, Marx declared the bourgeoisie to be mentally defective because they were inherently unable to comprehend Marx’s (allegedly) revelatory and progressive theories. Since they were, in a sense, insane, there was no valid reason for communists to “waste time” arguing with them. On the contrary, communists were justified in not only ignoring or suppressing bourgeois ideas, but in liquidating the entire bourgeois class.

  The practice of categorizing one’s enemies as “insane” became a ready tool of suppression in the Soviet state founded by Lenin and developed under Stalin. The USSR’s infamous secret police energetically wielded quack psychiatry as a club with which to destroy political dissidents. If you want more information about how the Soviets kidnapped and misused psychiatry, here is a link to a document that describes what American agents of the USSR were taught about psycho-political techniques in the late 1930s. (The provenance of the booklet is murky, and Soviet apologists have long tried to discredit it, but in light of numerous psychiatric abuses known to have been committed with the approval of the USSR’s rulers, the content of the book is highly plausible.)

  The incarceration of Zhores Medvedev in psychiatric hospitals in the 1970s was a monstrous injustice. His “crime” was having exposed the bizarre pseudoscience of Lysenkoism that Stalin had embraced in the 1950s. Lysenko’s quack theories led to deadly crop failures and widespread starvation. Nevertheless, Stalin backed him by executing scientists who dared to disagree with Lysenko. Millions of innocents lost their lives because “truth” in the Soviet Union wasn’t scientific, but political.

  Another vivid example of the destructive consequences of politicizing truth is related in Solzhenitsyn’s exposé of Soviet labor camps, The Gulag Archipelago. Certain Soviet officials decided to increase the steel shipped to a certain area. When the planners issued orders for trains to carry double the steel to the designated destination, conscientious engineers informed them that it couldn’t be done. They pointed out that the existing train tracks could not support such great weights. The politicians had the engineers executed as “saboteurs” for opposing “the plan.” What followed was predictable: The loads were doubled, the tracks gave out, and the designated area ended up getting less steel, not more.

  This episode shows where the true insanity was in the USSR. The central planners believed that constructing their ideal country was simply a matter of will.

  Alas, reality doesn’t conform to the whims or will of any human being, but the arrogance of central planners remains stubbornly impervious to that inescapable fact of life. Instead, as the havoc wrought by Soviet central economic planners repeatedly demonstrated, the communist central planners refused to abandon their insufferable self-delusion and mystical belief in the power of their own will to alter reality. This was the true insanity, compounded by the error of persecuting competent scientists like Zhores Medvedev.

  Sadly, the practice of branding political opponents as “insane” is not confined to the now-defunct Soviet state. In 1981, when I was completing my master’s thesis on Solzhenitsyn, I telephoned an American college professor of history to ask whether he recalled if Solzhenitsyn had been granted honorary U.S. citizenship. (He hadn’t. President Ford didn’t want to offend the Soviet leadership.) The reply to my question was this: “Aleksandr Solzhenitsyn belongs in an insane asylum.” The virus of Marx’s polylogism is, unfortunately, alive and well in American academia.

  As for Zhores Medvedev, may he now rest in peace and receive his reward for his integrity and courage.

  

• FBI, CIA Told WaPo They Doubted Key Allegation In Steele Dossier

  FBI and CIA sources told a Pulitzer Prize-winning Washington Post reporter that they didn’t believe a key claim contained in the “Steele Dossier,” the document the Obama FBI relied on to obtain a surveillance warrant on a member of the Trump campaign.

  

  The Post‘s Greg Miller told an audience at an October event that the FBI and CIA did not believe that former longtime Trump attorney Michael Cohen visited Prague during the 2016 election to pay off Russia-linked hackers who stole emails from key Democrats, reports the Daily Caller‘s Chuck Ross. 

  “We’ve talked to sources at the FBI and the CIA and elsewhere — they don’t believe that ever happened,” said Miller during the October event which aired Saturday on C-SPAN. 

  We literally spent weeks and months trying to run down… there’s an assertion in there that Michael Cohen went to Prague to settle payments that were needed at the end of the campaign. We sent reporters to every hotel in Prague, to all over the place trying to – just to try to figure out if he was ever there, and came away empty. -Greg Miller

  Ross notes that WaPo somehow failed to report this information, nor did Miller include this tidbit of narrative-killing information in his recent book, “The Apprentice: Trump, Russia, and the Subversion of American Democracy.”

  Miller also admits that the dossier’s broad claims are more closely aligned with reality, but that the document breaks down once you focus on individual claims. 

  Steele, using Kremlin sources, claimed in his dossier that Cohen and three associates went to Prague in August 2016 to meet with Kremlin officials for the purpose of discussing “deniable cash payments” made in secret so as to cover up “Moscow’s secret liaison with the TRUMP team.” 

  Cohen’s alleged Prague visit captured attention largely because the former Trump fixer has vehemently denied it, and also because it would seem to be one of the easier claims in Steele’s 35-page report to validate or invalidate.

  Debate over the salacious document was reignited when McClatchy reported April 15 that special counsel Robert Mueller had evidence Cohen visited Prague. No other news outlets have verified the reporting, and Cohen denied it at the time.

  Cohen last denied the dossier’s allegations in late June, a period of time when he was gearing up to cooperate with prosecutors against President Donald Trump. Cohen served as a cooperating witness for prosecutors in both New York and the special counsel’s office. –Daily Caller

  Cohen’s attorney and longtime Clinton pal Lanny Davis vehemently denied on August 22, one day after Cohen pleaded guilty in his New York case – that Cohen had never been to Prague, telling Bloomberg “Thirteen references to Mr. Cohen are false in the dossier, but he has never been to Prague in his life.” 

  

• How School Districts Weaponize Child Protection Services Against Uncooperative Parents

  Authored by Kerry McDonald via The Foundation for Economic Education,

  Parents are increasingly required to obey, to conform to a school’s demands even if they believe such orders may not be appropriate for their child…

  

  Schooling is adept at rooting out individuality and enforcing compliance. In his book, Understanding Power, Noam Chomsky writes:

  “In fact, the whole educational and professional training system is a very elaborate filter, which just weeds out people who are too independent, and who think for themselves, and who don’t know how to be submissive, and so on—because they’re dysfunctional to the institutions.”

  This filtering process begins very early in a child’s schooling as conformity is rewarded and divergence is punished.

  Public Schooling Breeds Obedience

  Most of us played this game as schoolchildren. We know the rules. The kids who raise their hands, color in the lines, and obey succeed; the kids who challenge the rules struggle. The problem now is that the rules are extending beyond the classroom. Parents are increasingly required to obey, to conform to a school’s demands even if they believe such orders may not be appropriate for their child.

  In my advocacy work with homeschooling families across the country, I frequently hear stories from parents who decided to homeschool their kids because schools were pressuring them to comply with various special education plans, push medications onto their children, or submit to other restrictive procedures they felt were not in their child’s best interest. Even more heartbreaking is the growing trend of school officials to unleash child protective services (CPS) on parents, homeschooling or not, who refuse to give in to a district’s demands.

  Weaponizing Child Protective Services

  An investigative report by The Hechinger Report and HuffPost released last month revealed that schools are increasingly using child protective services as a “weapon” against parents. It said:

  Fed up with what they see as obstinate parents who don’t agree to special education services for their child, or disruptive kids who make learning difficult, schools sometimes use the threat of a child-protection investigation to strong-arm parents into complying with the school’s wishes or transferring their children to a new school. That approach is not only improper, but it can be devastating for families, even if the allegations are ultimately determined to be unfounded.

  More troubling, these threats disproportionately target low-income and minority parents. According to the report:

  Such families also have fewer resources to fight back. When a family in a wealthy Brooklyn neighborhood learned roughly two years ago that their child’s school had initiated an ACS [New York’s Administration for Children’s Services] investigation against them, they sued the city education department. Parents from lower-income, majority-black and Latino neighborhoods, few of whom can afford that option, say such investigations can be a regular, even expected, part of parenting.

  Bullying Proactive Parents

  For parents who are unhappy with their child’s school and decide to withdraw their child for homeschooling, threats of child welfare investigations can sometimes turn to actions. In Massachusetts, a mother is reportedly suing the Worcester Public Schools after school officials called the Massachusetts Department of Children and Families (DCF) on her for alleged “educational neglect,” even though the mother contends that she dutifully filed her homeschooling paperwork for her eight-year-old son mid-year.

  Brian Huskie, a public high school teacher and homeschooling father in New York, noted a similar case last year with one of his students. Dissatisfied with the school, the parents decided to remove their daughter from the district, filed the necessary homeschooling paperwork, and were soon visited by child protective services investigating “educational neglect.” Huskie detailed the incident on his blog, writing that the school made a “decision to weaponize CPS against a district family.”

  Parents who push back against a district’s recommendations or withdraw their child from school for homeschooling are often trying to ensure their child’s well-being. Questioning various educational interventions and examining alternatives is part of a parent’s job. They should be praised for looking out for their child’s best interest, while schools should be sure that they use social services agencies to investigate serious claims of abuse and neglect—not just district snubs or paperwork quarrels.

  If, as Chomsky suggests, many of us have grown acquiescent to power due to our successful schooling, it can be hard to challenge authority. It can be even harder when that authority is strengthened by government force and when we may not have the resources to fight it.

  Supporting parents, broadening their education choices, and respecting their decisions are crucial steps in liberating families and curbing government coercion.

  

• Amazon Denies Warehouse Workers' Request For Air Conditioning As "Robots Can't Work In Cold Weather"

  Thanks to the notoriously brutal working conditions at its fulfillment centers, Amazon has become a lighting rod of criticism from the American labor movement and the Democratic Socialists of America, who claim to champion the rights of workers (despite the fact that most of the organization’s members are college students and creative-class workers relying on handouts from their parents to pay their expensive Brooklyn rents). The e-commerce giant even won the dubious distinction of being specifically called out in a bill proposed by Socialist champion Bernie Sanders (his “Stop BEZOS” act).

  As investigative reporters on multiple continents have burnished Amazon CEO Jeff Bezos’ reputation as a ruthless capitalist by exposing some of the company’s more extreme labor abuses, like effectively forcing employees to pee in bottles to avoid taking unpaid bathroom breaks and hiring ambulances to wait outside some of its warehouses to cart away workers suffering from heat stroke.

  As the debate about what, exactly, Amazon owes its workers and the municipalities that host its facilities has taken on renewed relevance following the backlash to the generous tax breaks offered by NYC for Amazon to build a new headquarters in Long Island City (the city’s subway is crumbling, but Amazon is getting taxpayer-funded handouts to build a helipad!), more Amazon workers are rising up to protest their brutal working conditions.

  

  This month, workers at the Amazon’s MSP1 fulfillment center in Shakopee, Minnesota gathered outside the facility on a cold Friday evening to protest several of these ‘abuses’, including the company’s refusal to accommodate Muslim workers by not providing adequate space and time for prayer as well as its refusal to accommodate workers observing the Muslim holy month of Ramadan, which this year coincided with the company’s Prime Day sale. 

  A Gizmodo story about the protest in Minnesota included an interesting detail about another demonstration at a facility in Staten Island. Workers at the Amazon facility in Staten Island who recently announced their intention to unionize complained about the company’s refusal to install air-conditioning in its sweltering facility.

  The reason given by Amazon for refusing to provide the air conditioning? The robots in its facility can’t function optimally in cold weather.

  MSP1 is a fairly new and heavily-roboticized factory, much like the facility on Staten Island, New York, where workers recently announced their intention to unionize with the Retail, Wholesale and Department Store Union (RWDSU). One worker at the Staten Island facility, in a protest outside New York’s City Hall last week, expressed concern over long shifts, non-functioning smoke detectors and sprinkler systems, and inhumane temperatures. “We have asked the company to provide air conditioning,” she explained to the crowd, “but they told us that the robots inside can’t work in the cold weather.”

  One worker who was leaving work during the demonstration in Minnesota, which involved some 250 workers and labor activists, told Gizmodo that he felt “utterly expendable” and offered a comment that sounded like a line of dialogue ripped straight from Upton Sinclair’s “The Jungle.”

  One worker getting off his shift at MSP1 (we were unable to get his name) told Gizmodo that the rate of the work continues to climb while the workers remain utterly expendable, toiling in poor conditions. “If you work with me,” he said, “you will be sick within a week.” Another MSP1 worker, Khadra Kassim, told the crowd through a translator that due to a workplace injury she nearly miscarried her unborn daughter.

  Amazon pulled out all the stops in trying to suppress the action and play down coverage in the media – including requesting the presence of police officers, who mostly stood around in confusion unable to discern which workers were demonstrating, and which were just leaving work (sound familiar?).

  Just before 5pm, the crowd of protesters moved from the sidewalk in front of MSP1 – where they had set up a massive prayer rug as well as an amplification system from the bed of a pickup truck – and marched on the building itself.

  Police officers, who had not been present earlier in the day, lay in wait in the parking lot and were joined by additional units including Minnesota State Patrol officers and the Scott County sheriff, approximately 16 vehicles in total. The Shakopee Police Department confirmed in a phone call with Gizmodo, “no arrests, no property damage, no injuries.” In the moment, officers seemed confused as to which individuals were protesters and which were simply leaving work.

  The crowd, meanwhile, dispersed peacefully, chanting, “Amazon – we’ll be back.”

  Unfortunately for the striking workers, Amazon has every incentive to dig in its heels. Amazon’s economic heft is enough to cow municipal and state governments into cooperation, and as management seeks to assuage investors’ festering fears about ‘peak earnings’, we imagine the company’s much-maligned productivity targets will become increasingly stringent.

  And while Amazon’s workers gripe about the company treating them like they’re expendable, the fact is that as Amazon robotics’ continues to innovate and upgrade, pretty soon, the company’s dependence on its human workers will decline, leading to lower head counts and – by extension – fewer jobs.

  

• Sundar Pichai And The Ethics Of Algorithms

  Authored by Max Albert via HackerNoon.com,

  The latest congressional technology hearing was as cringeworthy as you would expect.

  

  There were politicians who thought Google was the same company as Apple.

  There were politicians that wondered why Google was censoring hate-speech.

  There were politicians that thought Sundar Pichai’s salary and some aggressive alpha-male shouting would enable him to reveal the answer to the age old mystery of “is Google tracking our every step?”

  Confused? So am I.

  Through all the hardships, Pichai remained calm and collected. He provided insight to a group of politicians who clearly lacked expertise. This is difficult to do and I give him credit. For 99% of the hearing, Sundar Pichai was on fire.

  But there’s one crucial question that Pichai botched. It was about the ethics of algorithms.

  Listen to this question by Rep. Zoe Lofgren (D-CA),

  Right now, if you google the word ‘idiot’ under images, a picture of Donald Trump comes up. I just did that,” she said. “How would that happen?”

  This is Pichai’s response,

  Any time you type in a keyword, as Google we have gone out and crawled and stored copies of billions of [websites’] pages in our index. And we take the keyword and match it against their pages and rank them based on over 200 signals — things like relevance, freshness, popularity, how other people are using it. And based on that, at any given time, we try to rank and find the best search results for that query. And then we evaluate them with external raters, and they evaluate it to objective guidelines. And that’s how we make sure the process is working.

  Representative Zoe Lofgren later concludes that she looks forward to working with Pichai on serious issues and,

  It’s pretty obvious that bias against conservative voices is not one of them [google’s priorities].

  Pichai’s response was not wrong or nefarious. Pichai did an excellent job at explaining the technical-side of how Google handles queries in Layman’s terms.

  However this exchange as a whole may be misleading to the public eye. It lends itself to a common, dangerous misconception that sophisticated algorithms are always unbiased.

  

  With this exchange, Rep. Lofgren and Pichai establish a defensive narrative that Google takes hundreds, thousands, even billions of data points into consideration before listing a website at the top. Furthermore, Google’s algorithm takes into account an unfathomable number of ‘objective guidelines’ and ‘external raters’ to evaluate. Lastly but most importantly, algorithms like this are too sophisticated to experience bias.

  Of course Pachai knows this narrative is not true. But does Rep. Lofgren know? Do the other congressmen and congresswomen know? Does the public know?

  Well the fact remains that algorithms were built by people. People have agendas. When people get to define what is a success and what is a failure, there will always be at least some inherent bias.

  Just because a solution was discovered by an algorithm doesn’t necessarily make the solution unbiased. Sometimes, algorithms can make bias decisions and the amount of ‘data’ and ‘guidelines’ the algorithm has access to does not make the algorithm more credible.

  For instance, there are criminal justice algorithms that are prone to label African Americans as ‘high risk’ (and thus ineligible for parole) more often than Caucasians. This algorithm has access to a wide array of ‘data’ and ‘objective guidelines’ yet it still makes biased decisions. Why? Because the court system is bias. All of the data the algorithm has access to is bias.

  Additionally, there is an infamously bias flight algorithm that chose to remove Dr. Dao from a United Airlines flight and resulted in this traumatic video:

  This is another extremely sophisticated algorithm that failed to provide biased-free judgement. So to suggest that Google’s search algorithm is unbiased because it’s a sophisticated algorithm is false. Algorithms can be incredibly prejudice if not careful.

  The fact of the matter is, Google’s search algorithm is very close to being unbiased because of meticulous evaluation and consistent reevaluation by the team.

  To my knowledge, the only way to validate an algorithm’s credibility is to consistently reevaluate the results by a third party. But even then, the term ‘bias’ is subjective. So this evaluation process is more like a short-answer question than a true or false question.

  Pichai’s answer to the question of “how does searching ‘idiot’ reveal a picture of Donald Trump” was technically true but culturally disappointing.

  Instead, consider what would’ve happened if Pachai answered Rep. Lofgren’s question with, “we have policies in place so that humans can not directly manipulate search results to make Donald Trump appear on the search of idiot. We’ve proven through independent parties that Google’s search does not show political bias and that this particular query-result could happen to a democratic president under the same conditions. Furthermore we are always reevaluating how the search engine could improve.”

  This answer may not instill the same confidence of Pichai’s original answer, but it’s the most honest and complete answer in the context of bias.

  Moving into an era where algorithms have more decision-making power, the general public is going to need to learn about what makes an algorithm credible and what makes an algorithm biased.

  

• The Bond Market Has Frozen: For The First Month Since 2008, Not A Single Junk Bond Prices

  Late last week, we reported that in the aftermath of a dramatic drop in loan prices, a record outflow from loan funds, and a general collapse in investor sentiment that was euphoric as recently as the start of October, the wheels had come off the loan market which was on the verge of freezing after we got the first hung bridge loan in years, after Wells Fargo and Barclays took the rare step of keeping a $415 million leveraged loan on their books after failing to sell it to investors.

  

  The two banks now “plan” to wait until January – i.e., hope that yield chasing desperation returns – to offload the loan they made to help finance Blackstone’s buyout of Ulterra Drilling Technologies, a company that makes bits for oil and gas drilling.

  The reason the banks were stuck with hundreds of millions in unwanted paper is because they had agreed to finance the bridge loan whether or not there was enough demand from investors, as the acquisition needed to close by the end of the year. The delayed transaction means the banks will have to bear the risk of the price of the loans falling further, as well as costs associated with holding loans on their books.

  The pulled Ulterra deal wasn’t alone.

  As we reported previously, in Europe the market appears to have already locked up, as three loans were scrapped over the last two weeks. To wit, movie theater chain Vue International withdrew a 833 million pound-equivalent ($1.07 billion) loan sale. While the deal was meant to mostly refinance existing debt, around 100 million pounds was underwritten to finance the company’s acquisition of German group CineStar.

  More deals were pulled the prior week when diversified manufacturer Jason Inc. became at least the fourth issuer to scrap a U.S. leveraged loan. Additionally, Perimeter Solutions also pulled its repricing attempt, Ta Chen International scrapped a $250MM term loan set to finance the company’s purchase of a rolling mill, and Algoma Steel withdrew its $300m exit financing. Global University System in November also dropped its dollar repricing.

  Today, the FT picks up on the fact that the junk bond market – whether in loans or bonds – has frozen up, and reported that US credit markets have “ground to a halt” with fund managers refusing to fund buyouts and investors shunning high-yield bond sales as rising interest rates and market volatility weigh on sentiment (ironically it is the rising rates that assure lower rates as financial conditions tighten and the Fed is forced to resume easing in the coming year, that has been a major hurdle to floating-rate loan demand as the same higher rates that pushed demand for paper to all time highs are set to reverse).

  Meanwhile, things are even worse in the bond market, where not a single company has borrowed money through the $1.2tn US high-yield corporate bond market this month according to the FT. If that freeze continues until the end of the month, it would be the first month since November 2008 that not a single high-yield bond priced in the market, according to data providers Informa and Dealogic.

  Separately, as we already reported, the FT notes that in the loan market at least two deals – including the Barclays/Wells bridge loan – were postponed and could be the first of several transactions pulled from the market this year, bankers and investors said, as mutual funds and managers of collateralised loan obligations — the largest buyer by far in the leveraged loan sector — wait out the uncertainty.

  

  “This is clearly more than year-end jitters,” said Guy LeBas, a strategist at Janney Montgomery Scott. “What we’re seeing now is pretty typical for end-of-credit-cycle behaviour.”

  A prolonged period of low interest rates since the financial crisis a decade ago has seen companies binge on cheap debt. However, as financial conditions have tightened, the high level of corporate leverage has raised widespread concern among regulators, analysts and investors.

  In the loan market, it’s not a total disaster just yet, because even as prices have slumped over the past two months, banks that committed to finance highly leveraged buyouts – including JPMorgan Chase and Goldman Sachs –  have offered loans at substantial discounts to entice investors. As the chart below shows, the average new issue yield by month has exploded to the highest in years, with CCC-rated issuers forced to pay the most in 7 years to round up investor demand.

  

  Still, as the following table from Bank of America shows, quite a few deals have priced, if only in the loan market:

  

  Even so, other banks including Barclays, Deutsche Bank, UBS and Wells Fargo, have had to pull deals altogether as they just couldn’t find enough buyers no matter how generous the concessions.

  In addition to the Ulterra deal, technology services provider ConvergeOne postponed a $1.3bn leveraged loan offering that backed its takeover by private equity group CVC last week. As the FT notes, Deutsche Bank and UBS had marketed the deal to investors in a package that included senior and subordinated loans, with the junior debt expected to yield as much as 12 per cent in November when prices were first floated. While the banks attracted some bids for the debt, orders failed to surpass the overall size of the deal, which was postponed to the new year, according to people with knowledge of the transaction.

  Why delaying deals into 2019? One word: hope.

  One person familiar with the deal said the banks would market the loans again in January, when they hope market conditions will improve, and that other leveraged loans being marketed could be postponed to 2019.

  The trouble lenders have faced in the leveraged loan market has mirrored the exasperation felt by investors in other asset classes. Higher-quality investment-grade bonds have also sold off, with a number of planned deals pulled from the market in recent weeks.

  That said, for now the junk bond freeze and loan indigestion has remained confined to lower-rated issuers. However, that may change too, and should the “Ice-9” spread to the high-grade sector, where the bulk of issuance is to fund buybacks and M&A, that’s when the real pain begins.

  

Digest powered by RSS Digest

• Escobar: How The New Silk Roads Are Merging Into Greater Eurasia

  Authored by Pepe Escobar via The Asia Times,

  Russia is keen to push economic integration with parts of Asia and this fits in with China’s Belt and Road Initiative…

  

  The concept of Greater Eurasia has been discussed at the highest levels of Russian academia and policy-making for some time. This week the policy was presented at the Council of Ministers and looks set to be enshrined, without fanfare, as the main guideline of Russian foreign policy for the foreseeable future.

  President Putin is unconditionally engaged to make it a success. Already at the St Petersburg International Economic Forum in 2016, Putin referred to an emerging “Eurasian partnership”.

  I was privileged over the past week to engage in excellent discussions in Moscow with some of the top Russian analysts and policymakers involved in advancing Greater Eurasia.

  Three particularly stand out: Yaroslav Lissovolik, program director of the Valdai Discussion Club and an expert on the politics and economics of the Global South; Glenn Diesen, author of the seminal Russia’s Geoeconomic Strategy for a Greater Eurasia; and the legendary Professor Sergey Karaganov, dean of the Faculty of World Economy and International Affairs at the National Research University Higher School of Economics and honorary chairman of the Presidium of the Council on Foreign and Defense Policy, who received me in his office for an off-the-record conversation.

  The framework for Great Eurasia has been dissected in detail by the indispensable Valdai Discussion Club, particularly on Rediscovering the Identity, the sixth part of a series called Toward the Great Ocean, published last September, and authored by an academic who’s who on the Russian Far East, led by Leonid Blyakher of the Pacific National University in Khabarovsk and coordinated by Karaganov, director of the project.

  The conceptual heart of Greater Eurasia is Russia’s Turn to the East, or pivot to Asia, home of the economic and technological markets of the future. This implies Greater Eurasia proceeding in symbiosis with China’s New Silk Roads, or Belt and Road Initiative (BRI). And yet this advanced stage of the Russia-China strategic partnership does not mean Moscow will neglect its myriad close ties to Europe.

  Russian Far East experts are very much aware of the “Eurocentrism of a considerable portion of Russian elites.” They know how almost the entire economic, demographic and ideological environment in Russia has been closely intertwined with Europe for three centuries. They recognize that Russia has borrowed Europe’s high culture and its system of military organization. But now, they argue, it’s time, as a great Eurasian power, to profit from “an original and self-sustained fusion of many civilizations”; Russia not just as a trade or connectivity point, but as a “civilizational bridge”.

  Legacy of Genghis Khan 

  What my conversations, especially with Lissovolik, Diesen and Karaganov, have revealed is something absolutely groundbreaking – and virtually ignored across the West; Russia is aiming to establish a new paradigm not only in geopolitics and geoeconomics, but also on a cultural and ideological level.

  Conditions are certainly ripe for it. Northeast Asia is immersed in a power vacuum. The Trump administration’s priority – as well as the US National Security Strategy’s – is containment of China. Both Japan and South Korea, slowly but surely, are getting closer to Russia.

  Culturally, retracing Russia’s past, Greater Eurasia analysts may puzzle misinformed Western eyes. ‘Towards the Great Ocean’, the Valdai report supervised by Karaganov, notes the influence of Byzantium, which “preserved classical culture and made it embrace the best of the Orient culture at a time when Europe was sinking into the Dark Ages.” Byzantium inspired Russia to adopt Orthodox Christianity.

  It also stresses the role of the Mongols over Russia’s political system. “The political traditions of most Asian countries are based on the legacy of the Mongols. Arguably, both Russia and China are rooted in Genghis Khan’s empire,” it says.

  If the current Russian political system may be deemed authoritarian – or, as claimed in Paris and Berlin, an exponent of “illiberalism” – top Russian academics argue that a market economy protected by lean, mean military power performs way more efficiently than crisis-ridden Western liberal democracy.

  As China heads West in myriad forms, Greater Eurasia and the Belt and Road Initiative are bound to merge. Eurasia is crisscrossed by mighty mountain ranges such as the Pamirs and deserts like the Taklamakan and the Karakum. The best ground route runs via Russia or via Kazakhstan to Russia. In crucial soft power terms, Russian remains the lingua franca in Mongolia, Central Asia and the Caucasus.

  And that leads us to the utmost importance of an upgraded Trans-Siberian railway – Eurasia’s current connectivity core. In parallel, the transportation systems of the Central Asian “stans” are closely integrated with the Russian network of roads; all that is bound to be enhanced in the near future by Chinese-built high-speed rail.

  Iran and Turkey are conducting their own versions of a pivot to Asia. A free-trade agreement between Iran and the Eurasia Economic Union (EAEU) was approved in early December. Iran and India are also bound to strike a free-trade agreement. Iran is a big player in the International North-South Transport Corridor (INSTC), which is essential in driving closer economic integration between Russia and India.

  The Caspian Sea, after a recent deal between its five littoral states, is re-emerging as a major trading post in Central Eurasia. Russia and Iran are involved in a joint project to build a gas pipeline to India.

  Kazakhstan shows how Greater Eurasia and BRI are complementary; Astana is both a member of BRI and the EAEU. The same applies to gateway Vladivostok, Eurasia’s entry point for both South Korea and Japan, as well as Russia’s entry point to Northeast Asia.

  Ultimately, Russia’s regional aim is to connect China’s northern provinces with Eurasia via the Trans-Siberian and the Chinese Eastern Railway – with Chita in China and Khabarovsk in Russia totally inter-connected.

  And all across the spectrum, Moscow aims at maximizing return on the crown jewels of the Russian Far East; agriculture, water resources, minerals, lumber, oil and gas. Construction of liquefied natural gas (LNG) plants in Yamal vastly benefits China, Japan and South Korea.

  Community spirit

  Eurasianism, as initially conceptualized in the early 20th century by the geographer PN Savitsky, the geopolitician GV Vernadsky and the cultural historian VN Ilyn, among others, regarded Russian culture as a unique, complex combination of East and West, and the Russian people as belonging to “a fully original Eurasian community”.

  That certainly still applies. But as Valdai Club analysts argue, the upgraded concept of Greater Eurasia “is not targeted against Europe or the West”; it aims to include at least a significant part of the EU.

  The Chinese leadership describes BRI not only as connectivity corridors, but also as a “community”. Russians use a similar term applied to Greater Eurasia; sobornost (“community spirit”).

  As Alexander Lukin of the Higher School of Economics and an expert on the SCO has constantly stressed, including in his book China and Russia: The New Rapprochement, this is all about the interconnection of Greater Eurasia, BRI, EAEU, SCO, INSTC, BRICS, BRICS Plus and ASEAN.

  The cream of the crop of Russian intellectuals – at the Valdai Club and the Higher School of Economics – as well as top Chinese analysts, are in sync. Karaganov himself constantly reiterates that the concept of Greater Eurasia was arrived at, “jointly and officially”, by the Russia-China partnership; “a common space for economic, logistic and information cooperation, peace and security from Shanghai to Lisbon and New Delhi to Murmansk”.

  The concept of Greater Eurasia is, of course, a work in progress. What my conversations in Moscow revealed is its extraordinary ambition; positioning Russia as a key geoeconomic and geopolitical crossroads linking the economic systems of North Eurasia, Central and Southwest Asia.

  As Diesen notes, Russia and China have become inevitable allies because of their “shared objective of restructuring global value-chains and developing a multipolar world”. It’s no wonder Beijing’s drive to develop state-of-the-art national technological platforms is provoking so much anger in Washington. And in terms of the big picture, it makes perfect sense for BRI to be harmonized with Russia’s economic connectivity drive for Greater Eurasia.

  That’s irreversible. The dogs of demonization, containment, sanctions and even war may bark all they want, but the Eurasia integration caravan keeps moving along.

  

• Mapping America's Most-Distressed Communities

  Despite a recent slump in the markets, the U.S. economy is still putting up strong numbers. Unemployment is at its lowest point since the 1960s, and the U.S. manufacturing sector is thriving.

  But, as Visual Capitalist’s Nick Routley points out, looking beyond these big picture gains, many communities in the United States are struggling. Check cashing stores outnumber McDonald’s locations, the opioid epidemic rages on, and tens of millions are living in poverty around the country. It’s becoming more clear that the recovery from the financial crisis has been highly uneven.

  THE DATA BEHIND DISTRESS

  To understand the disconnect between struggling counties and a high-flying national economy, researchers at the Economic Innovation Group (EIG) created the Distressed Communities Index:

  To calculate the “health” of communities around the country, the Economic Innovation Group (EIG) looked at everything from vacancy rates to median income ratios. When visualized, a picture emerges of an America divided into superstar regions and broad expanses of struggling communities.

  Distressed and prosperous ZIP codes […] represent two almost diametrically opposed experiences of living in the United States.

  – Distressed Communities Index Report (2018)

  COMMUNITY QUINTILES

  When communities are divided into quintiles, stark patterns emerge. In the most distressed zip codes, over 40% of “prime-age” adults are unemployed, one-in-five adults did not graduate high school, and the housing vacancy rate is nearly double the U.S. average.

  

  As well, deaths related to substance abuse and mental illness are 64% higher in distressed communities.

  STRUGGLING STATES AND CITIES

  The DCI data reveals that those living in the lower half of the United States are more likely to call a distressed community home. In Alabama, Arkansas, Mississippi, and West Virginia, one-third or more of the population resides in the bottom quintile of zip codes.

  

  On the flip side, in Colorado, Minnesota, Massachusetts, New Hampshire, and Utah well over 40% of the population live in prosperous zip codes.

  Zooming in beyond the state-level, a geographical trend becomes clear: many of the struggling communities in the index are classified as rural. Between 2007 and 2016, nearly a third of all rural zip codes were considered “downwardly mobile”, compared to only 16% of those in urban areas.

  Though rural zip codes tend to fare worse than their more urban counterparts, there are exceptions to that trend. One example is Bakersfield, California, where almost half of the city’s population lives in a distressed community.

  

  

• The Navy Wants Swarm Weapons (That Can Steal Electricity)

  Authored by Michael Peck via The National Interest,

  The U.S. Navy wants to develop drones that are powered by harvesting “battlefield energy.”

  

  Which is a more charitable way of describing a drone that flies by stealing electricity from power lines.

  The problem is that future conflicts are likely to feature clouds of small drones, whether operating in swarms to overwhelm an enemy, or a mini-drone carried in a soldier’s pocket that flies ahead to scout out a building. But tiny drones have tiny batteries measured in thirty minutes or so of flight, and the battlefield is not the place to search for an electrical outlet to recharge.

  “The infrastructure to manage a future fleet of sUAS [small UAVs] in the field under austere conditions may be daunting considering the magnitude of battery recharging needs,” the navy notes.

  “It is also desirable to simultaneously increase mission duration and persistence; therefore, the ability to scavenge power directly from the battlefield would be an important military technology with other dual-use civilian applications.”

  But what if the fighting is in a city, where there will likely be plenty of electrical poles and power lines?

  This would allow a drone “to ‘dock’ on a power line in an urban environment, scavenging magnetic energy as a means to trickle-charge its onboard batteries prior to mission continuation, could provide significant tactical benefits,” according to the navy research solicitation , which is looking for answers from industry and academia.

  “If the energy scavenging source is collocated at the mission area, full mission persistence might be achieved and the micro- and small UAS may never need to return to base.”

  Remarkable is the amount of energy that’s floating around a battlefield.

  “The types of energy harvesting that fall into this category are broad, and include vibrational energy, simple mechanical energy, and electromagnetic energy,” says the navy. “Sources of electromagnetic energy that is abundant and available for harvesting and conversion include high-voltage substations, transformers, and alternating current transmission line (i.e., power lines).”

  High-voltage substations on the power grid generate AC electric field strengths that are “comparable to solar panels operating on a cloudy day.” As if that wasn’t tempting enough for drone designers fretting over how maximize the juice that keeps their progeny flying, the navy also suggests that wireless sensors could be placed around these power nodes to also siphon off energy to keep their batteries topped off.

  All of which conjures images of flocks of drones hanging from electrical lines like pigeons. It sounds comical, but it actually revives an age-old concept. Napoleon’s armies were legendary for their ability to “live off the land,” foregoing the need for cumbersome supply by looting food and supplies from the regions they passed through.

  A drone that can recharge its batteries from an enemy’s energy sources will have enough juice to conduct operations for as long as it is mechanically able. All at the enemy’s expense.

  

• Robot Trucks Coming To US Army in 2019 

  The US Army has recently stated that two transportation battalions will receive a fleet of autonomous leader-follower vehicles by summer 2019. This is a developing theme in the service of ‘take the man out of the machine’ has led to a new era of autonomous systems entering the modern battlefield as the Pentagon prepares for the next series of conflicts. 

  “The Ground Vehicle Systems Center’s work with the Robotic Operating System – Military (ROS-M) covers a spectrum of autonomy and robotics, including small explosive ordnance disposal-assist robots that have been fielded as part of the advanced leader-follower capabilities that Soldiers in two transportation battalions will see by summer 2019,” said an article published in the January – March 2019 issue of Army AL&T magazine.

  

  According to the Defence Blog, the ROS-M “uses an open-source approach and a widely accepted software framework with common government and industry software to develop military robotics and autonomous systems. The open-source approach allows developers to create software modules for different applications and enables integrators to build modular systems using the best software modules available for military autonomous systems.”

  

  During the Afghan war, the Army consumed around 45 million gallons of fuel per month; the human cost was one death or injury for every 24 fuel convoys brought in. 

  Pentagon figures show in 2013 alone, about 60% of US combat causalities were related to convoy resupply.

  In the post IED era, removing the human element from the supply chain has been a significant focus for the Army and the primary driver for developing new autonomous systems.

  

  Robotic vehicles can help the Army in multiple ways: “It eliminates the need for Soldiers to conduct mundane, dangerous or repetitive tasks that can be automated, and it increases the standoff distance between Soldiers and a threat, which can greatly enhance safety. Additionally, automation can increase logistics on convoy missions,” said the Defense Blog.

  For example, two soldiers can operate an entire convoy that usually requires dozens of soldiers or about two per vehicle. This frees up soldiers to conduct other missions, and or tasks that involve defending the caravan from enemy forces.  

  The Army is expected to procure the autonomous vehicles sometime in 2019. Robots will take the place of humans in ground-based resupply missions. These autonomous vehicles will be used for delivering ammunition, fuel, weapons, and casualty evacuation. 

  

• Former FBI SSA Exposes McCabe & Mueller's "Unethtical, Target & Destroy Coercion" Tactics, Defends Flynn

  Via SaraCarter.com,

  Former FBI Supervisory Special Agent Robyn Gritz has asked SaraACarter.com to post her letter to Judge Emmet G. Sullivan in support of her friend and colleague retired Lt. Gen. Michael T. Flynn, who will be sentenced on Dec. 18. The Special Counsel’s Office has requested that Flynn not serve any jail time due to his cooperation with Robert Mueller’s office. Based on new information contained in a memorandum submitted to the court this week by Flynn’s attorney, Sullivan has ordered Mueller’s office to turn over all exculpatory evidence and government documents on Flynn’s case by mid-day Friday. Sullivan is also requesting any documentation regarding the first interviews conducted by former anti-Trump agent Peter Strzok and FBI Agent Joe Pientka -known by the FBI as 302s- which were found to be dated more than seven months after the interviews were conducted on Jan. 24, 2017, a violation of FBI policy, say current and former FBI officials familiar with the process. According to information contained in Flynn’s memorandum, the interviews were dated Aug. 22, 2017.

  

  Read Gritz’s letter below… (emphasis added)

  The Honorable  Emmet G. Sullivan. December 5, 2018   U.S. District Court for the District of Columbia

  333 Constitution Avenue, N.W.

  Washington D.C. 20001

  Re: Sentencing of Lt. General Michael T. Flynn (Ret.)

  Dear Judge Sullivan:

  I am submitting my letter directly since Mike Flynn’s attorney has refused to submit it as well as letters submitted by other individuals. I feel you need to hear from someone who was an FBI Special Agent who not only worked with Mike, but also has personally witnessed and reported unethical & sometimes illegal tactics used to coerce targets of investigations externally and internally.

  About Myself and FBI Career

  For 16 years, I proudly served the American people as a Special Agent working diligently on significant terrorism cases which earned noteworthy results and fostered substantial interagency cooperation.  Prior to serving in the FBI I was a Juvenile Probation Officer in Camden, NJ.  Currently, I am a Senior Information Security Metrics and Reporting Analyst with Discover Financial Services in the Chicago Metro area.  I have recently been named as a Senior Fellow to the London Center for Policy Research.

  While in the FBI, I served as a Special Agent, Supervisory Special Agent, Assistant Inspector, Unit Chief, and a Senior Liaison Officer to the CIA. I served on the NSC’s Hostage and Personnel Working Group and brought numerous Americans out of captivity and was part of the interagency team to codify policies outlining the whole of government approach to hostage cases.

  In November 2007, I was selected over 26 other candidates to become the Supervisory Special Agent, CT Extraterritorial Squad; Washington Field Office (WFO) in Washington, DC.  At WFO, I led a squad of experts in extraterritorial evidence collection, overseas investigations, operational security during terrorist attacks/events, and overseas criminal investigations. I coordinated and managed numerous high profile investigations (Blackwater, Chuckie Taylor, Robert Levinson, and other pivotal cases) comprised of teams from US and foreign intelligence, military, and law enforcement agencies. I was commended for displaying comprehensive leadership performance under pressure, extensive teamwork skills, while conducting critical investigative analysis within and outside the FBI.

  In December 2009, I was promoted to GS-15 Unit Chief (UC) of the Executive Strategy Unit, Weapons of Mass Destruction Directorate (WMDD).  While the UC, I codified the WMDD five-year strategic plan, formulated goals and objectives throughout the division, while translating the material into a directorate scorecard with cascading measurements reflecting functional and operational unit areas. This was the only time in Washington, DC when I did not work with of for McCabe.

  From September to December 2010, I was selected as the FBI’s top candidate to represent the FBI, and the USG in a rigorous, intellectually stimulating; 12 week course for civilian government officials, military officers, and government academics at the George C. Marshall Center in Garmisch, Germany, Executive Program in Advanced Security Studies. The class was comprised of 141 participants from 43 countries.

  I have received numerous recommendations and commendations for my professionalism, liaison and interpersonal ability and experience. Additionally, I have been rated Excellent or Outstanding for my entire career, to include by Andrew McCabe when I was stationed at the Washington Field Office.  Further, other awards of note are: West Chester University 2005 Legacy of Leadership recipient, Honored with House of Representatives Citation for Exemplary record of Service, Leadership, and Achievements: Commonwealth of Pennsylvania, and Awarded with a framed Horn of Africa blood chit from the Department of Defense and Office of the DASD (POW/MPA/MIA) for my work in bringing Americans Out of captivity, “Patriot, Law Enforcement Warrior, and Friend.”

  Length of Association with Flynn, McCabe, and Mueller

  I met Michael Flynn in 2005, while working in the Counterterrorism Division (CTD) at FBI Headquarters (FBIHQ).

  I met then Supervisory Special Agent Andrew McCabe, when he reported to CTD at FBIHQ, around the same time.  McCabe subsequently was the Assistant Section Chief over my unit, my Assistant Special Agent in Charge at the Washington Field Office, and the Assistant Director (AD) over CTD when I encountered the discrimination and McCabe spearheaded the retaliation personally (according to documentation) against me.

  I have known both men for 12-13 years and worked directly with both throughout my career.  They are on the opposite spectrum of each other with regard to truthfulness, temperament, and ethics, both professionally and personally.

  I regularly briefed former FBI Director and Special Prosecutor Mueller on controversial and complex cases and attended Deputies meetings at the White house with then Deputy Director Pistole. I got along with both and trusted both.  Watching what has been done to Mike and knowing someone on the 7th floor had to have notified Mueller of my situation (Pistole had retired), has been significantly distressing to me.

  Lt.G. Michael T. Flynn:

  Mike and I were counterparts on a DOJ-termed ground-breaking initiative which served as a model for future investigations, policies, legislation and FBI programs in the Terrorist Use of the Internet. For this multi-faceted and leading-edge joint operation, I was commended by Gen. Stanley McChrystal, Gen. Keith Alexander (NSA Director), and LtG. Michael Flynn as well as others for leading the FBI’s pivotal participation in this dynamic and innovative interagency operation. I received two The National Intelligence Meritorious Unit Citation (NIMUC) I for my role in this operation.  The NIMUC is an award of the National Intelligence Awards Program, for contributions to the United States Intelligence Community.

  Mick Flynn has consistently and candidly been honest and straightforward with me since the day I met him in 2005. He has been a mentor and someone I trust to give me frank advice when I ask for his opinion.  His caring nature has shown through especially when he saw me being torn apart by the FBI and he felt compelled to write a letter in support of me.  He further took the extra step to comment on my character in an NPR article and interview exposing the wrongdoings in my case and others who have stood up for truth and against discrimination/retaliation.  Senator Grassley also commented on my behalf.  NPR characterized this action against me as a “warning shot” to individuals who stood up to individuals such as McCabe.

  The day after I resigned from the FBI, while I was crying, Mike reached out and congratulated me on my early retirement. I really needed to hear that from someone I respected so much.  His support for the last 13 years has been unparalleled and extremely valuable in helping me get through the trauma of betrayal, unethical behavior, illegal activity executed against me and to rebuild my life. Additionally, his support has helped my family in dealing with their painful emotions regarding my situation. My parents wanted me to pass on to you that they are blessed that I have had a compassionate and supportive individual on my side throughout this trying time.

  Mike has been a respected leader by his peers and by FBI Agents and Analysts who have interacted with him. I personally feel he is the finest leader I have ever worked with or for in my career. Our continued friendship and subsequent friendship with his family has helped all of us cope with the stress a situation like this puts on individuals and families.

  It is so very painful to watch an American hero, and my friend, torn apart like this.  His family has had to endure what no family should have to. I know this because of the damaging effect my case had on my parent’s health, finances, and emotional well-being. Mike and I both had to sell our houses due to legal fees, endured smear campaigns (mostly by the same individual, McCabe). I ended up being deemed homeless by the Commonwealth of Pennsylvania, was on public assistance and endured extensive health and emotional damage due to the retaliation. Mike kept in touch and kept me motivated.  He has always reached out to help me with whatever he could.

  The Process is the Punishment

  Thomas Fitton of Judicial Watch commented to me that the “Process is the punishment.”  This is the most accurate description I have heard regarding the time Mike has gone through with this process and the year and a half I was ostracized and idled before I resigned.  This process is one which many FBI employees, current, retired and former, feel was brought to the FBI by Mueller and he subsequently brought this to the Special Prosecutor investigation. It also fostered the behavior among FBI “leadership” which we find ourselves shocked at when revealed on a daily basis. Is this the proper way to seek justice? I say no.  I swore to uphold the Constitution while protecting the civil rights of the American people. I believe many individuals involved in Mike’s case have lost their way and could care less about protection of due process, civil and legal rights of who they are targeting. Mike has had extensive punishment throughout this process. This process has punished him harder than anyone else could.

  Andrew McCabe

  I believe I have a unique inside view of the mannerisms surrounding Andrew McCabe, other FBI Executive Management and Former Director Mueller, as well as the unethical and coercive tactics they use, not to seek the truth, but to coerce pleas or admissions to end the pain, as I call it. They destroy lives for their own agendas instead of seeking the truth for the American people. Candor is something that should be encouraged and used by leadership to have necessary and continued improvement.  Under Mueller, it was seen as a threat and viciously opposed by those he pulled up in the chain of command.

  I am explaining this because numerous Agents have expressed the need for you to know McCabe’s and Mueller’s pattern of “target and destroy” has been utilized on many others, without regard for policies and laws. I, myself, am a casualty of this reprehensible behavior and I have spoken to well over 150 other FBI individuals who are casualties as well.

  I am the individual who filed the Hatch Act complaint against McCabe and provided significant evidentiary documents obtained via FOIA, open source, and information from current, former, and retired Special Agents. The Office of Special Counsel (OSC) asked why my filing of the complaint was delayed from the actual acts. I said I personally thought I was providing additional information to what should have been an automatic referral to OSC by FBI OPR. I was notified I was the only complainant. This illustrates not only a fatal flaw in OPR AD Candice Will not making the appropriate and crucial referral, but also shows the fear of those within the FBI to report individuals like McCabe for fear of retaliation.

  While serving at the CIA, detailed by the FBI in January 2012, I was responsible for overseas investigations, as opposed to Continental United States-based (CONUS) cases. Unfortunately, during my assignment at the CIA, I encountered extensive discrimination by two FBI Special Agents and subsequently, in 2012, I filed an Equal Employment Opportunity (EEO) complaint.  Instead of addressing the issues, then CTD Assistant Director Andrew McCabe chose to authorize a retaliatory Office of Professional Responsibility (OPR) investigation against me, five days after my EEO contact. The OPR referral he signed was authored by the two individuals I had filed the EEO complaint against.  In his signed sworn statement, McCabe admitted he knew I had filed or was going to file the EEO.

  Numerous members of my department at the CIA requested to be spoken with by CTD executive management, regarding my work ethic and accomplishments.  However, CTD, Inspection Division, and OPR disregarded the list of names and contact numbers I submitted.  This is an example of knowing you are being targeted and the truth is not being sought.

  Although my time at this position was short, I was commended by my CIA direct supervisor for: “having already contributed more than your predecessor in the short time you have been here.” My predecessor had been assigned to the post for 18 months; I had been there four months.

  In contrast and showing lack of candor, McCabe wrote on official documents the following statement, contradicting the actual direct supervisor I worked with daily:

  “SA Gritz had to be removed from a prior position in an interagency environment, due to inappropriate communications and general performance issues”

  This is one of many comments McCabe used to discredit my reputation and to ostracize me.  McCabe knew me as someone who told the truth, worked hard, got results, and   was always willing to be flexible when needed. He was also acutely aware of the excellent relationships I had formed in the USG interagency due to comments made by individuals from numerous agencies. Yet, he continued to make false statements on official documents. He has done this to numerous other very valuable FBI employees, destroying their careers and lives. He used similar tactics of lies against Flynn. It should be noted, McCabe was very aware of my professional association with Mike Flynn.

  In July 5, 2012, I was involuntarily pulled back to CTD from the CIA. I was told McCabe made the decision. A year and a month later, I resigned from the job I absolutely loved and was good at.  All because of the lack of candor of numerous individuals within the FBI.

  Unethical and dishonest investigative tactics

  Throughout the last year, I have kept abreast of the revelations surrounding anything related to Mike’s case. I believe, from my years at the FBI and in exposing corruption and discrimination, the circumstances surrounding the targeting, investigation, leaking, and coercion of him to plea are all consistent with the unethical process I and many others have witnessed at the FBI. The charge which Mike Flynn plead to was the result of deception, intimidation, and bias/agenda. Simply, Mike is being branded a convicted felon due to an unethical and dishonest investigation by people who were malicious, vindictive, and corrupt. They wished to silence Mike, like they had once silenced me.

  The American people have read the Strzok/Page text messages, the conflicting testimony and lack of candor statements of former Director Comey, the perceived overstepping of the reasonable scope of the Special Prosecutor’s investigation, the extensive unethical, untruthful, and outright illegal behavior of Andrew McCabe, to include slanderous statements against Flynn, and the facts found within FOIA released documents and Congressional testimony. As a former/retired Agent, I have combed through every piece of information regarding Mike’s case, as if I was combing through evidence in the hundreds of cases I have successfully handled while in the FBI.

  The publicly reported Brady material alone, in this case, outweighs any statement given by any FBI Agent (we now know at least one FD-302 was changed), Special Prosecutor investigator report, and any other party still aggressively seeking that this case remain and be sentenced as a felony. Quite simply, I cannot see justice being served by branding LtG. Michael Flynn a convicted felon, when the truth is still being revealed while policies, ethics, and laws have been violated by those pursuing this case.

  We now know all FBI employees involved in Mike Flynn’s case have either been fired, forced to resign or forced to retire because of their excessive lack of candor, punitive biases, leaking of information, and extensive cover-up of their deeds.

  Summation

  Michael Flynn has always displayed overwhelming candor and forthrightness.  One of the main individuals involved in his case is Andrew McCabe, who used similar tactics against me in my case, of which Mike Flynn defended me by penning a letter of character reference and is a witness.  Seeing McCabe was named as a Responding Management Official in my case, he should have recused himself with anything having to do with a character witness on my behalf against him and DOJ.

  I’m told by numerous people, but have been unable to confirm, that McCabe was asked why he was so viciously going after Flynn; my name was mentioned. I do know, from experience with McCabe, he is a vindictive individual and I have no doubt Mike’s support of me fueled McCabe’s disdain and personally vindictive aggressive unethical activities in this case. It matches his behavior in my case.

  Reliable fact-finding is essential to procedural due process and to the accuracy and uniformity of sentencing.  I’m unsure if the fact-finding in this case is reliable, nor do I think we currently have all the facts.

  The punishment which LtG. Flynn has already endured this past year, due to the nature of the case, legal fees and reputation damage, is punishment enough.  He is a true patriot, a loving husband and father, a devoted grandfather, a trusted friend, and has a close knit family made up of compassionate and honest individuals. To be branded a felon, is a major hit to a hero who protected the American people for 33 years. I do not think society would benefit from Mike Flynn going to jail nor being branded as a convicted felon. Not knowing the sentencing guidelines for this charge but if there is any chance that the case can be downgraded to a misdemeanor, this would be an act of justice that numerous Americans need to see to stay hopeful for further justice.

  Respectfully yours,

  Robyn L. Gritz

  

• "Peak TV": Streaming Originals Overtake Basic Cable

  A brand new report from FX Research determined that for the first time, more scripted television shows were released by online streaming platforms like Amazon, Hulu, and Netflix in 2018 than aired on basic cable, pay cable and broadcast television.

  In total, there were 495 scripted shows produced in 2018, and 160 of those or 33% debuted on streaming services, a monumental shift that has big cable worried, reported Variety.

  

  For comparison, 146 shows or 29.5% aired on broadcast networks like ABC, CBS, and NBC, 144 shows or 29% aired on basic cable channels like Disney and MTV, and about 45 shows or 9% aired on pay cable like HBO and Showtime in 2018.

  While many streaming platforms experienced a jump in output compared to last year, scripted shows on basic cable and broadcast television saw a rapid decline. Last year, basic cable controlled the largest percentage of scripted show market share, but those times have ended, as originals on streaming platforms are now dominant.

  

  Streaming services last year produced 117 shows compared to 160 this year, a 37% jump in output that has outpaced all traditional broadcasting platforms. Streaming service has come a long way in the last seven years when there were only six streaming shows.

  The total number of shows across all of television was up 1.6%, rising from 487 in 2017 to 495 this year. Year-to-year growth has plateaued in the last several years, as the television industry has now reached “peak TV.”

  

  Networks like WGN America, MTV, and A&E are dropping scripted television, focusing instead on unscripted reality shows. Fox has also “geared down on its number of scripted originals, with the network having launched just three new shows this fall with two on deck for midseason,” said Variety.

  FX CEO John Landgraf famously coined the term “peak TV” several years ago, referring to an overwhelming rise in the number of scripted shows being produced.

  FX Research’s study shows that “peak TV” has been reached as the year-to-year growth rate in shows plateaued, but there is a silver lining when the global and US economy rolls over and thousands are laid off. The unemployed will be able to Netflix and chill with hundreds of shows.

  

• The Festering Social Rift Over Pensions

  Authored by Adam Taggart via PeakProsperity.com,

  Why does he get to retire and I don’t?

  

  Most Americans will never be able to afford to retire.

  We laid out the depressing math in our recent report Will Your Retirement Efforts Achieve Escape Velocity?:

  • The median retirement account balance among all working US adults is $0. This is true even for the cohort closest to retirement age, those 55-64 years old.

  • The average (i.e., mean) near-retirement individual has less than 8% of one year’s income saved in a retirement account

  • 77% of all American households aren’t on track to have enough net worth to retire, even under the most conservative estimates.

  

  (Source)

  There a number of causal factors that have contributed to this lack of retirement preparedness (decades of stagnant real wages, fast-rising cost of living, the Great Recession, etc), but as we explained in our report The Great Retirement Con, perhaps none has had more impact than the shift from dedicated-contribution pension plans to voluntary private savings:

  The Origins Of The Retirement Plan

  Back during the Revolutionary War, the Continental Congress promised a monthly lifetime income to soldiers who fought and survived the conflict. This guaranteed income stream, called a “pension”, was again offered to soldiers in the Civil War and every American war since.

  Since then, similar pension promises funded from public coffers expanded to cover retirees from other branches of government. States and cities followed suit — extending pensions to all sorts of municipal workers ranging from policemen to politicians, teachers to trash collectors.

  A pension is what’s referred to as a defined benefit plan. The payout promised a worker upon retirement is guaranteed up front according to a formula, typically dependent on salary size and years of employment.

  Understandably, workers appreciated the security and dependability offered by pensions. So, as a means to attract skilled talent, the private sector started offering them, too. 

  The first corporate pension was offered by the American Express Company in 1875. By the 1960s, half of all employees in the private sector were covered by a pension plan.

  Off-loading Of Retirement Risk By Corporations

  Once pensions had become commonplace, they were much less effective as an incentive to lure top talent. They started to feel like burdensome cost centers to companies.

  As America’s corporations grew and their veteran employees started hitting retirement age, the amount of funding required to meet current and future pension funding obligations became huge. And it kept growing. Remember, the Baby Boomer generation, the largest ever by far in US history, was just entering the workforce by the 1960s.

  Companies were eager to get this expanding liability off of their backs. And the more poorly-capitalized firms started defaulting on their pensions, stiffing those who had loyally worked for them.

  So, it’s little surprise that the 1970s and ’80s saw the introduction of personal retirement savings plans. The Individual Retirement Arrangement (IRA) was formed by the Employee Retirement Income Security Act (ERISA) in 1974. And the first 401k plan was created in 1980.

  These savings vehicles are defined contribution plans. The future payout of the plan is variable (i.e., unknown today), and will be largely a function of how much of their income the worker directs into the fund over their career, as well as the market return on the fund’s investments.

  Touted as a revolutionary improvement for the worker, these plans promised to give the individual power over his/her own financial destiny. No longer would it be dictated by their employer.

  Your company doesn’t offer a pension? No worries: open an IRA and create your own personal pension fund.

  Afraid your employer might mismanage your pension fund? A 401k removes that risk. You decide how your retirement money is invested.

  Want to retire sooner? Just increase the percent of your annual income contributions.

  All this sounded pretty good to workers. But it sounded GREAT to their employers.

  Why? Because it transferred the burden of retirement funding away from the company and onto its employees. It allowed for the removal of a massive and fast-growing liability off of the corporate balance sheet, and materially improved the outlook for future earnings and cash flow.

  As you would expect given this, corporate America moved swiftly over the next several decades to cap pension participation and transition to defined contribution plans.

  The table below shows how vigorously pensions (green) have disappeared since the introduction of IRAs and 401ks (red):

  

  (Source)

  So, to recap: 40 years ago, a grand experiment was embarked upon. One that promised US workers: Using these new defined contribution vehicles, you’ll be better off when you reach retirement age.

  Which raises a simple but very important question: How have things worked out?

  The Ugly Aftermath

  America The Broke

  Well, things haven’t worked out too well.

  Four decades later, what we’re realizing is that this shift from dedicated-contribution pension plans to voluntary private savings was a grand experiment with no assurances. Corporations definitely benefited, as they could redeploy capital to expansion or bottom line profits. But employees? The data certainly seems to show that the experiment did not take human nature into account enough – specifically, the fact that just because people have the option to save money for later use doesn’t mean that they actually will.

  And so we end up with the dismal retirement stats bulleted above.

  The Income Haves & Have-Nots

  In our recent report The Primacy Of Income, we summarized our years-long predictions of a coming painful market correction followed by a prolonged era of no capital gains across equities, bond and real estate.

  Simply put: the ‘easy’ gains made over the past 8 years as the central banks did their utmost to inflate asset prices is over. Asset appreciation is going to be a lot harder to come by in the future.

  Which makes income now the prime source of building — or simply just maintaining — wealth going forward.

  That being the case, it’s obvious that those receiving a pension will be in far better shape than those who aren’t. They’ll have a guaranteed income stream to partially or fully fund their retirement.

  Resentment Brewing

  While the total number of people expecting a pension isn’t tiny, it’s certainly a minority of today’s workers.

  31 million private-sector, state and local government workers in the US participate in a pension plan. 3.3 million currently-employed civilian Federal workers will receive a pension; as will some percentage of the 2 million people serving in the active military and reserves.

  Combined, that’s about 25% of current US workers; roughly 13% of total US adults.

  Now that the Everything Bubble is bursting and a return to economic recession appears increasingly probable within the next year or two, the disparity in prospects between these 35 million future pensioners and the rest of the workforce will become increasingly obvious.

  The danger here is of festering social discord. The majority, whom we already know will not be able to retire, will highly likely start regarding pensioners with envy and resentment.

  “Hey, I worked as hard as Joe during my career. How come he gets to retire and I don’t?” will be a common narrative running in the minds of those jealous of their neighbors.

  This bitterness will only increase as taxes continue to rise to fund government pension payouts, already a huge drain on public budgets. “Why am I paying more so Joe can relax on the beach??”

  Humans are wired to react angrily to perceived injustice and unfairness. This short clip shows how it’s hard-coded into our primate brains:

  So it’s not a stretch at all to predict the divisive tension and prejudice that will result from the growing gap between the pension haves and have-nots.

  The negative stereotypes of union workers will be tightly re-embraced. This SNL sketch captures a good number of them:

  The steady news reports of pension fraud and abuse will anger the majority further. Any projected decreases in Social Security (benefit payouts will only be 79 cents on the dollar by 2035 at our current trajectory) will only exacerbate the ire, as the small governmental income the have-nots receive becomes even more meager.

  The growing potential here is for an emerging social schism, possibly accompanied with intimidation and violence, not dissimilar to that which has occurred along racial or religious lines during darker eras of our history.

  As people become stressed, they react emotionally, and look for a culprit to blame. And as they become more desperate, as many elderly workers with no savings often do, they’ll resort to more desperate measures.

  Broken Promises

  And it’s not all sunshine and roses for the pensioners, either. Being promised a pension and actually receiving one are two very different things.

  Underfunded pension liabilities are a massive ticking time bomb, certain to explode over the next few decades.

  For example, many pensions offered through multi-employer plans are bad shape. The multiemployer branch of the Pension Benefit Guaranty Corporation, the federally-instated insurer behind private pensions, will be out of business by 2025 if no changes in law are made to help. If that happens, retirees in those plans will get only 10% of what they were promised.

  Moreover, research conducted by the Pew Charitable Trusts shows a $1.4 trillion shortfall between state pension assets and guarantees to employees. There are only two ways a gap that big gets addressed: massive tax hikes or massive benefit cuts. The likeliest outcome will be a combination of both.

  So, many of those today counting on a pension tomorrow may find themselves in a similar boat to their pension-less neighbors.

  No Easy Systemic Solutions, So Act For Yourself

  There’s no “fix” to the retirement predicament of the American workforce. There’s no policy change that can be made at this late date to reverse the decades of over-spending, over-indebtedness, and lack of saving.

  All we can do at this time is influence how we take our licks. Do we simply leave the masses of unprepared workers to their sad fate? Or do we share the pain across the entire populace by funding new social support programs via more taxes?

  Time will tell. But what we can bet on is tougher times ahead, especially for those with poor income prospects.

  So the smart strategy for the prudent investor is to prioritize building a portfolio of income streams in order to have sufficient dependable income for a sustainable retirement. Or for simply remaining afloat financially.

  Sadly, accustomed to the speculative approach marketed to us for so long by the financial industry, most investors are woefully under-educated in how to build a diversified portfolio of passive income streams (inflation-adjusting and tax-deferred whenever possible) over time.

  Those looking to get up to speed can read our recent report A Primer On Investing For Inflation-Adjusting Income, where we detail out the wide range of prevalent (and not-so-prevalent) solutions for today’s investors to consider when designing an income-generating portfolio. From bonds, to dividends (common and preferred), to real estate, to royalties — we explain each vehicle, how it can be used, and what the major benefits and risks are.

  And in the interim, make sure the wealth you have accumulated doesn’t disappear along with the bursting of the Everything Bubble. If you haven’t already read it yet, read our premium report from last week What To Do Now That ‘The Big One’ Is Here.

  

• "Pretty Loud Bang": Boeing 737 Jet Damaged In Possible Midair Drone Strike 

  Grupo Aeromexico, an airline holding company, headquartered in Mexico City that owns and operates Aeromexico, is investigating a possible drone strike that severely damaged one of its Boeing 737 jetliners as the aircraft approached its final destination in Tijuana, Mexico, reported Bloomberg.

  Several social media reports and local Mexican news media confirmed by Grupo Aeromexico that Flight 773 from Guadalajara was in final approach (also called the final leg and final approach leg) to the airport when the crew heard a “very strong blow” to the aircraft. The pilots were able to land without further incident, as no passengers were injured.

  Desde Tijuana nos hacen llegar estas imágenes del Radomo de un B737 de Aeromexico en Tijuana.

  Nuestra fuente indica que se trató de un impacto a un dron en la aproximación final. pic.twitter.com/YJhKVGKY4W

  — FsMex.com (@FsMexcom) December 12, 2018

  https://platform.twitter.com/widgets.js

  2018-12-12 Aeromexico B737-800 (XA-ADV) sustained damage to its radome on approach to runway 09 at Tijuana-Intl AP (MMTJ), Mexico. Flight #AM770 from Guadalajara landed safely. Unconfirmed reports indicate the aircraft may have hit a drone. https://t.co/L7aG5OlLDp pic.twitter.com/g0Mfpw1po3

  — JACDEC (@JacdecNew) December 13, 2018

  https://platform.twitter.com/widgets.js

  Local reports suggested that it was a drone that caused the terrifying impact and have provided numerous pictures of the badly damaged nosecone and radome of the aircraft.

  Avión de Aeroméxico choca con dron en #Tijuana https://t.co/5ffb6yCDCy pic.twitter.com/KyB9eyZncw

  — Milenio.com (@Milenio) December 13, 2018

  https://platform.twitter.com/widgets.js

  “The exact cause is still being investigated,” Aeromexico said in a statement. “The aircraft landed normally and the passengers’ safety was never compromised.”

  

  

  More photos have emerged on social media showing a large dent punched into the front of the plane.

  

  Incidents involving planes and drones have become more common in the last several years as the number of consumer drones around the world has exploded. 

  Take, for example, the US, the Federal Aviation Administration (FAA) said drone registrations stood at the 670,000 in January 2017. Fast forward to 2018, and the latest figures show more than a million consumer drones have been registered.

  With more consumer drones in the sky, there have been 6,000 drone sightings by pilots, some of them by airline crews, through June, according to FAA data.

  So far, the US National Transportation Safety Board has investigated one confirmed midair collision involving a drone. An Army Sikorsky UH-60 Black Hawk helicopter collided with a consumer drone near Staten Island, New York, in September 2017, causing minor damage. 

  It is only a matter of time before a consumer drone strikes another passenger jet, not on the nosecone and radome, but rather a direct engine hit, which would be catastrophic.

  

• US Medicare-For-All & Big-Tech: The Future Of Mass Patient Surveillance

  Authored by Tho Bishop via The Mises Institute,

  As tech executives continue to be grilled in front of Congress, the growing Bernie Sanders-wing of the Democratic Party is preparing to push its misnamed “Medicare for All” into the political mainstream after its political gains in the midterms. While these two stories seem to have very little in common, it’s not difficult to imagine a not-so-distant future where the two are dangerously connected. After all, so long as the scope of government grows, the continued politicization of all aspects of life will follow – the inevitable consequences of which could be quite horrific.

  

  The State’s Shadow over Silicon Valley

  First let’s consider some of the overlooked causes behind the increased censorship from Silicon Valley.

  While Republican politicians relish in collecting cheap soundbites railing against the censorship practices of widely despised tech executives, few are willing to point out the obvious influence of government in Big Tech’s growing hostility to free speech.

  For example, just recently Facebook announced it was following the lead of Tumblr by cracking down on “sexualized content” on its platform. While both decisions were widely ridiculed by users and pundits alike, largely ignored was the role that recent Congressional laws aimed at cracking down on sex trafficking played in sparking the new policy. Similarly, “anti-hate speech” laws from Europe had very real consequences for American social media users as mechanisms designed to police speech oversees are inevitably used to manage content throughout their global communities.

  While tech censorship began with isolated bans on individual social media platforms, it has evolved over time into a far more sinister crackdown of modern-day thought criminals. Alex Jones, for example, saw multiple social media accounts closed in a coordinated campaign earlier this year in what’s been likened to a modern version of Orwell’s “unpersoning.” Increasingly we are seeing financial services platforms, such as PayPal and Patreon, become another particularly effective form of censorship for those found guilty of violating the norms of political correctness.

  The traditional libertarian response to these issues is to simply build another platform, but that seems increasingly impotent in the face of the union between Big Tech and state.

  Gab, for example, is a product that arose in direct response to increased censorship on Twitter. The app has found itself deplatformed from both major phone app stores, even before user Robert Barnes killed 11 people at a Pennsylvania synagogue earlier this year and heightened law enforcement’s attention to the site. It’s worth noting that Facebook, a prolific donor to America’s political class, did not receive similar treatment when it was used to broadcast torture and murder. Similarly, cryptocurrency exchanges have faced backlash from government officials, traditional financial services companies, and tech companies in their effort to build alternatives to state-controlled financial networks.

  Of course the answer to this new era of Big Brother (Sister?) isn’t government regulation, as many on the populist right advocate. The history of government involvement in communication platforms has been one of increased censorship. Instead, the best way to confront the Silicon Valley’s censorship is to recognize the inherently perverse influence of government and pursue a separation of tech and state. For example, attack all forms of state privileges enjoyed by companies that don’t recognize freedom of speech: such as government contracts, and liability waivers. Additionally, allow private citizens to sue when companies violate their terms of service or mislabel themselves as “open platforms.”

  Socialism and Political Correctness are a Dangerous Mix

  Unfortunately instead of working to depoliticize tech, it’s far more likely that we will see increased politicization of other vital parts of American life – and perhaps none is more dangerous than that applied to healthcare.

  While it is easy to mock the economic illiteracy of politicians like Alexandra Ocasio-Cortez, there is no question that her brand of democratic socialism is growing in popularity – and not just on the left. It’s worth remembering that only a few years ago candidate Donald Trump gave his own endorsement to a healthcare vision similar to that held by AOC and Bernie Sanders.  

  Consider the troubling potential of a progressive government that drops all pretense of valuing free speech, and then giving that government complete control of the healthcare system.

  While this perhaps sounds like the makings of an outlandish dystopian novel, imagine the sort of policies we’ve already seen come from the executive branch. Under the Obama Administration, we saw the use of the IRS, Department of Homeland Security, and even intelligence agencies to target and punish political opponents. Meanwhile, the progressive left has increasingly identified those who believe the “wrong ideas” – such as skeptics of anthropogenic climate change – as dangerous threats guilty of the crimes equivalent to murder.

  In an age where a new generation of doctors increasingly rejects the Hippocratic oath, a government take over of medical care – as the honest advocates of “Medicare for All” propose – could inevitably lead to politicized regulators making life and death decisions for Americans.

  Now does this mean I think it’s likely that a President Ocasio-Cortez would instruct a “political death panel” to not provide Alex Jones with life saving treatment? Not necessarily. The issue, however, is that the greater control the state has on medicine, the more decisions are influenced by the concerns of government, rather than the needs of patients. In such a dark timeline, if socialized healthcare forced America to face the sort of medical rationing that Britain’s prized National Health Service has been reduced to, it would be fair to wonder if Gavin McInnes would receive the same sort of treatment as an Ezra Klein.

  At the end of the day the more socialist a country is, the greater the danger in opposing the narrative of the state.

  As Mises warned in Omnipotent Government:

  Within a socialist community there is no room left for freedom…There can be neither freedom of conscience nor of speech where the government has the power to remove any opponent to a climate which is detrimental to his health.

  Now obviously the US is far away from such a terrorizing future, and there are far more immediate threats than the specter of political death panels. Can we be so confident about China, with its new social credit system? Or even the UK with the previously mentioned stress placed on its health system, and its own growing political polarization? It’s fair to wonder. 

  No matter where you are in the world, the danger is the same. Grow the scope of government and expand the weapons of the state that can be deployed against its political enemies.

  It’s Big Tech today. Let’s not allow it be healthcare in the future.